Source: https://casetext.com/case/gotocom-inc-v-walt-disney-co
Timestamp: 2019-10-16 02:27:10
Document Index: 443894270

Matched Legal Cases: ['§ 43', '§ 1125', '§ 32', '§ 43', '§ 1125', '§ 11', '§ 11']

Goto.com, Inc. v. Walt Disney Co, 202 F.3d 1199 | Casetext
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Goto.com, Inc.v.Walt Disney Co.
United States Court of Appeals, Ninth CircuitFeb 2, 2000
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Argued and Submitted January 19, 2000 — San Francisco, California
Peter E. Moll (argued), Howrey Simon, Washington, D.C.; Charles H. Samel, Los Angeles, California; David M. Kelly, Finnegan Henderson Farabow Garrett Dunner, Washington, D.C., for the defendants-appellants.
Pierce O'Donnell (argued), Gary L. Urwin, Lisa R. Brant, Daniel C. Tepstein, O'Donnell Shaeffer, Los Angeles, California; David S. Fleming, Brinks, Hofer, Gilson Lione, Chicago, Illinois, for the plaintiff-appellee.
Appeal from the United States District Court for the Central District of California Terry J. Hatter, District Judge, Presiding, D.C. No. CV-99-01674-TJH.
Before: BEEZER, O'SCANNLAIN, and THOMAS, Circuit Judges.
"The Internet is a global network of
interconnected computers which allows individuals and organizations around the world to communicate and to share information with one another. The Web, a collection of information resources contained in documents located on individual computers around the world, is the most widely used and fastest-growing part of the Internet except perhaps for electronic mail ("e-mail"). With the Web becoming an important mechanism for commerce, companies are racing to stake out their places in cyberspace. Prevalent on the Web are multimedia "web pages" computer data files written in Hypertext Markup Language ("HTML") which contain information such as text, pictures, sounds, audio and video recordings, and links to other web pages."
The Walt Disney Company ("Disney") appeals the district court's grant of a preliminary injunction against it that was sought by GoTo.com ("GoTo"). The injunction prohibits Disney from using a logo confusingly similar to GoTo's mark. GoTo operates a web site that contains a pay-for-placement search engine, which allows consumers to locate items on the Web using a search algorithm weighted in favor of those advertisers who have paid to have their products given a priority by the engine. In December 1997, GoTo began using on its web site one of the two logos at issue in this appeal. The GoTo logo consists of the words "GO" and "TO" in a white font stacked vertically within a green circle. Although this green circle has been displayed against backgrounds of various colors, it is very often rendered against a square yellow background. To the right of the word "TO" are the characters ".com" in black, spilling out of the green circle onto the background color.
In preparing to launch a web site of its own, Disney commissioned a design firm, U.S. Web/CKS ("CKS"), to devise a logo for its Web portal, the Go Network, in April 1998. The Go Network is an interconnected collection of web sites, all belonging to Disney properties, designed to provide an easy starting point for consumers who use the Web. The Go Network integrates sites such as disney.com, abc.com,abcnews.com, abcsports.com, espn.com,family.com, and infoseek.com. CKS designed a logo that resembles a traffic light: it contains a green circle within a yellow square, with details and contouring that is suggestive of a traffic light with a single lens. Within the green circle, the word "GO" appears in a white font, and next to the traffic light, the word "Network" appears in a black font.
Michael Eisner, the chairman of Disney, approved the CKS logo at the end of August 1998. Then, in December 1998, Disney beta-launched the Go Network, displaying its logo prominently on all of the interconnected sites. On December 22, 1998, shortly after this beta launch and more than a fortnight before the formal launch, GoTo complained to Disney about its use of the logo on its Go Network web sites. Disney did not cease using the logo, and GoTo subsequently filed this lawsuit on February 18, 1999, alleging inter alia a violation of § 43(a)(1)(A) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A). On July 12, 1999, GoTo moved for a preliminary injunction.
We review the district court's grant of a preliminary injunction for an abuse of discretion. See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1045 (9th Cir. 1999). The grant of a preliminary injunction will be reversed only when the district court has based its decision on an erroneous legal standard or on clearly erroneous findings of fact. See FTC v. Affordable Media, 179 F.3d 1228, 1233 (9th Cir. 1999). The legal issues underlying the injunction are reviewed de novo because a "district court would necessarily abuse its discretion if it based its ruling on an erroneous view of law." Brookfield, 174 F.3d at 1046. As to findings of fact, we may affirm the district court "as long as `the findings are sufficiently comprehensive and pertinent to the issues to provide a basis for the decision, or if there can be no genuine dispute about the omitted findings.'" Ocean Garden, Inc. v. Marktrade Co., 953 F.2d 500, 509 (9th Cir. 1991) (quoting Vance v. American Haw. Cruises, Inc., 789 F.2d 790, 792 (9th Cir. 1986). We review a legal and factual determination of likelihood of confusion under the trademark laws for clear error. See Brookfield, 174 F.3d at 1061.
A plaintiff is entitled to a preliminary injunction in a trademark case when it demonstrates either (1) a combination of "probable success on the merits" and "the possibility of irreparable injury" or (2) the existence of "serious questions going to the merits" and that "the balance of hardships tips sharply in his favor." Sardi's Restaurant Corp. v. Sardie, 755 F.2d 719, 723 (9th Cir. 1985). To prevail on a claim under the Lanham Act, GoTo must establish that Disney is using a mark confusingly similar its own, which it began using a year earlier. See AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979). Or, as the court in Brookfield clarified: "[m]ore precisely, because we are at the preliminary injunction stage, [GoTo] must establish that it is likely to be able to show . . . a likelihood of confusion." 174 F.3d at 1052 n. 15 (citing Sardi's Restaurant, 755 F.2d at 723).
Although there is some dispute among the parties concerning whether either of the marks is officially registered, "the same standard" applies to both registered and unregistered trademarks. Brookfield, 174 F.3d at 1046 n. 6. While § 32 of the Lanham Act covers only registered marks, the provision at issue here § 43 protects against infringement of unregistered marks and trade dress as well as registered marks. See, e.g., Kendall-Jackson Winery, Ltd. v. E. J. Gallo Winery, 150 F.3d 1042, 1046 (9th Cir. 1998). Regardless of this difference, the analysis under the two provisions is practically identical in this situation. See Brookfield, 174 F.3d at 1046 n. 8.
Any person who, on or in connection with any goods or services, . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which
The likelihood of confusion is the central element of trademark infringement, and the issue can be recast as the determination of whether "the similarity of the marks is likely to confuse customers about the source of the products." Official Airline Guides v. Goss, 6 F.3d 1385, 1391 (9th Cir. 1993) (quoting E. J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (9th Cir. 1992)). We have developed eight factors, the so-called Sleekcraft factors, to guide the determination of a likelihood of confusion. 599 F.2d at 348. Applied to this case, they are (1) the similarity of the marks; (2) the relatedness of the two companies' services; (3) the marketing channel used; (4) the strength of GoTo's mark; (5) Disney's intent in selecting its mark; (6) evidence of actual confusion; (7) the likelihood of expansion into other markets; and (8) the degree of care likely to be exercised by purchasers. See id. at 348 49.
In Brookfield, we noted that the eight-factor test is a "pliant" one, in which "some factors are much more important than others." 174 F.3d at 1054. In the context of the Web in particular, the three most important Sleekcraft factors are (1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the "simultaneous use of the Web as a marketing channel." Id. at 1034 n. 16 (citing Comp Examiner Agency, Inc. v. Juris, Inc., No. 96-0213, 1996 WL 376600, at *1 (C.D.Cal. Apr. 26, 1996)).
We now examine whether GoTo can show that the public is likely to be confused about the source or sponsorship of Disney's logo. See 15 U.S.C. § 1125(a); Brookfield, 174 F.3d at 1053. Although we review the district court's finding for clear error, its summary analysis merits an expanded discussion of the basis for that finding.
The first Sleekcraft factor the similarity of the marks has always been considered a critical question in the likelihood-of-confusion analysis. See Brookfield, 174 F.3d at 1054. Together with the relatedness of the services and the use of a common marketing channel, this first factor constitutes part of the controlling troika in the Sleekcraft analysis.
Because the similarity of the marks is such an important question, we must begin our analysis by comparing the allegedly infringing Disney logo to the GoTo mark. Obviously, the greater the similarity between the two marks at issue, the greater the likelihood of confusion. We have developed certain detailed axioms to guide this comparison: first, the marks must be considered in their entirety and as they appear in the marketplace, see Filipino Yellow Pages, Inc. v. Asian Journal Publications, Inc., No. 98-55366, 1999 WL 1093122, at *4 7 (9th Cir. Dec. 6, 1999); second, similarity is adjudged in terms of appearance, sound, and meaning, see, e.g., Dreamwerks Prod. Group v. SKG Studio, 142 F.3d 1127, 1131 (9th Cir. 1998); and third, similarities are weighed more heavily than differences, see Goss, 6 F.3d at 1392.
Quibbles over trivial distinctions between these two logos are unimpressive. The logos are glaringly similar. We are unmoved by Disney's arguments to the contrary. The fact that the Patent and Trademark Office has not found the two confusingly similar is not surprising, given that Disney's application to that agency was not lined for color. It is precisely the identical colors that create the confusion: white script in a green circle on a yellow square. See Amsted Indus. Inc. v. West Coast Wire Rope Rigging Inc., 2 U.S.P.Q.2d 1755, 1758 59 (T.T.A.B. 1992) (pointing out that the Trademark Trial and Appeal Board determines the likelihood of confusion based upon the mark as it is presented for registration, regardless of how the mark may be used in the marketplace).
While the record indicates that GoTo has occasionally displayed its logo on non-yellow backgrounds, and at times on no background at all, the vast majority of impressions of the logo have been of the logo in its prototypical form, i.e., on a yellow background. Viewings of the prototypical logo with the yellow background therefore account for almost ninety-eight percent of all impressions of the GoTo logo.
We have no difficultly concluding that the two marks are overwhelmingly similar. In Brookfield, we noted how only a subset of the Sleekcraft factors are needed to reach a conclusion as to whether there is a likelihood of confusion. 174 F.3d at 1054. We emphasize that observation here, and now turn to the remaining two factors in that subset.
The first of the other two controlling Sleekcraft considerations is that "[r]elated goods are generally more likely than unrelated goods to confuse the public as to the producers of the goods." Brookfield, 174 F.3d at 1055. With respect to Internet services, even services that are not identical are capable of confusing the public. Although even Web tyros can distinguish between a web site that, for example, provides discounted travel tickets and one that provides free Web-based e-mail, a user would almost certainly assume a common sponsorship if the sites' trademarks were the same. The web site is just one example of Web genies that coordinate a bevy of distinct services under a common banner. Indeed, Disney's own portal shows the potential for one company to provide a host of unrelated services. Whereas in the world of bricks and mortar, one may be able to distinguish easily between an expensive restaurant in New York and a mediocre one in Los Angeles, see, e.g., Sardi's Restaurant, 755 F.2d at 723 24, the Web is a very different world.
In this case, the services offered by GoTo and Disney are very similar. Both entities operate search engines and are, therefore, direct competitors on this score. In Fleishmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 153 55 (9th Cir. 1963), we concluded that beer and whiskey were sufficiently similar products to create a likelihood of confusion regarding the source of origin when sold under the same trade name. Competing Internet search engines are even more similar services.
Even if Disney were to narrow the focus of its portal to concentrate on the areas in which is has traditionally been successful such as entertainment and leisure our analysis would remain the same since its network still features a search engine. We are aware, though it is not in the record, that Disney has announced such a change to its Go Network, and it does not affect our decision. See Bruce Orwall, Disney Plans To Narrow Portal's Focus, Wall St. J., Jan. 28, 2000, at A3.
Both GoTo and Disney use the Web as a substantial marketing and advertising channel, and we have given special consideration to that forum. In Brookfield, we stated that the use of the Web is a factor "that courts have consistently recognized as exacerbating the likelihood of confusion." 174 F.3d at 1057 (citations omitted). We now reiterate that the Web, as a marketing channel, is particularly susceptible to a likelihood of confusion since, as it did in this case, it allows for competing marks to be encountered at the same time, on the same screen.
The more likely a mark is to be remembered and associated in the public mind with the mark's owner, the greater protection the mark is accorded by trademark laws. See Kenner Parker Toys Inc. v. Rose Art Indus., Inc., 963 F.2d 350, 353 (Fed. Cir. 1992). This "strength" of the trademark is evaluated in terms of its conceptual strength and commercial strength. See 2 J. Thomas McCarthy, Trademarks and Unfair Competition § 11:83, at 11-143 (rev. ed. 1999).
GoTo's logo may appear to be weakened by the fact that the term "Go" and green "Go" circles are certainly common sights on the Internet, but it is the mark in its entirety that must be considered not simply individual elements of that mark. See California Cooler Inc. v. Loretto Winery, Ltd., 774 F.2d 1451, 1455 (9th Cir. 1985). Further, many of these other "Go" circles might be considered forms of functional trade dress in that they primarily serve as easily recognized command entry devices rather than marks like GoTo's logo and are therefore in a separate category not protected by trademark law. See American Greetings Corp. v. Dan-Dee Imports, Inc., 807 F.2d 1136, 1143 (3d Cir. 1986) (holding that "tummy graphics" conveying emotive messages "to help children and adults express their feelings and share them with others" on stuffed toys were nonprotectable functional elements). The record discloses that GoTo's logo in its entirety has been displayed many billions of times, providing compelling evidence of the strength of GoTo's logo. Helpfully, Disney has enthusiastically underscored this point; in its attempt to show that GoTo has not been harmed by any possible infringement, Disney has cited the tremendous success of GoTo and its rise to the twenty-sixth most visited web site on the Internet. Such success only strengthens GoTo's mark.
We do not believe this factor to be of much importance in either the context of the Internet generally or in this case specifically, regardless of whether either logo had herculean strength. In Brookfield, we noted that in situations in which the appearance of the conflicting marks and the services provided are almost identical, "the strength of the mark is of diminished importance in the likelihood of confusion analysis." 174 F.3d at 1059 (citing McCarthy § 11:76). We underline that conclusion here.
Another of the Sleekcraft factors that does not carry much weight in this setting despite the vigor with which the parties have contested it is Disney's intent in devising its mark. Disney has produced thousands of pages of alternative logo designs in an attempt to persuade us that it devised its logo completely with its own creative talents, or rather, those of its designer, CKS. Those documents, however, have done little more than persuade us that Disney has many options on which to fall back should it need to find itself a new logo.
In its analysis of the degree of care that users of the Internet take, at least one federal court has ascribed a certain sophistication to Web denizens. See Alta Vista Corp. v. Digital Equip. Corp., 44 F. Supp.2d 72, 77 (D.Mass. 1998). Although the use of computers may once have been the exclusive domain of an elite intelligentsia, even modern-day Luddites are now capable of navigating cyberspace. Furthermore, the question in this analysis is not how sophisticated web surfers are but, rather, how high the cost is of choosing one service that is, one web site over another on the Web. We agree with our previous conclusion that this cost is negligible: it is simply a single click of a mouse.
In the Internet context, in particular, entering a web site takes little effort usually one click from a linked site or a search engine's list; thus, Web surfers are more likely to be confused as to the ownership of a web site than traditional patrons of a brick-and-mortar store would be of a store's ownership.
As to the question of unclean hands, again we disagree with Disney. We conclude that the record supports the district court's ruling, sub silentio, in favor of GoTo. We note that the district court's silence in this regard is not an abuse of discretion. See K-Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907, 912 (1st Cir. 1989) ("Overruling the `unclean hands' defense, even without comment, cannot be deemed an abuse of discretion on this record."). While the record does not necessarily demonstrate that GoTo's hands were clean as snow, it does provide evidence to support the district court's decision to ignore Disney's allegations. First, evidence exists to support GoTo's assertion that it did not alter its logo to resemble Disney's; from March 1998 until December 1998, there were approximately 240 million impressions of the GoTo logo with yellow boxes. In fact, the version of the GoTo logo that most resembles the Disney logo was published in Time magazine well before Disney's beta launch. Patrick E. Cole, Capitalist Tool, Time, Mar. 8, 1998, at 20. As for the contention that GoTo manipulated Disney's logo shown in a press release, we recognize that the version of the Disney logo in the press release does, indeed, appear different from the usual image proffered by Disney. Nevertheless, GoTo correctly points to many available variations of the Disney logo that look less like the prototypical Disney lamp than the image used in the press release. Finally, as to GoTo's order to its public relations firm to destroy old drafts of the press release, evidence suggests that this was simply an attempt to avoid a leak of the press release to the media or to Disney. Although the district court did not catalog its findings on this issue, it did not abuse its discretion by failing to do so, because evidence in the record supports the denial of Disney's unclean hands defense.
Nonetheless, while it is a close case, we do not believe we must remand for more detailed findings, for despite the factual shortcomings, the basis for the court's decision is clear. The record gives substantial and unequivocal support for the ultimate conclusion. . . .
Unt v. Aerospace Corp., 765 F.2d 1440, 1444 (9th Cir. 1985). In the case before us, we are equally capable of finding support for the district court's ruling in the record. So long as there "can be no genuine dispute about omitted findings" we may affirm the district court, and we do so now. Ocean Garden, 953 F.2d at 509 (quoting Vance, 789 F.2d at 792 (9th Cir. 1986)).
Disney contends that the district court abused its discretion by crafting the preliminary injunction too vaguely and broadly. We do not agree. See SEC v. Interlink Data Network, 77 F.3d 1201, 1204 (9th Cir. 1996) (holding that the scope of injunctive relief is reviewed for an abuse of discretion or application of erroneous legal principles). Although the preliminary injunction certainly does not catalog the entire universe of possible uses of Disney's logo, it is nevertheless sufficiently clear to protect GoTo's interests and to provide Disney with adequate notice. See Fed.R.Civ.P. 65(d); Granny Goose Foods, Inc. v. Brotherhood of Teamsters Auto Truck Drivers, 415 U.S. 423, 444 (1974) (stating that the party enjoined should "receive fair and precisely drawn notice of what the injunction actually prohibits").
Finally, as to whether the bond was adequate, we conclude that the district court did not abuse its discretion in requiring a bond of only $25,000. See Walczak v. EPL Prolong, Inc., 198 F.3d 725 (9th Cir. Dec. 3, 1999). Disney would have us increase that bond 800 times to at least $20,000,000. We decline to do so, and look to Rule 65(c), which places within the discretion of the district court the amount of the bond. Fed.R.Civ.P. 65(c). We have rejected similar requests to raise the bond dramatically. See, e.g., Brookfield, 174 F.3d at 1043 44 (rejecting the defendant's request to increase the bond from $25,000 to $400,000). Were we to grant Disney's request, we would risk denying GoTo access to judicial review since the preliminary injunction would not take effect until GoTo posted the bond. We decline to do so.