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Network Automation, Inc. v. Advanced Systems Concepts, Inc.
CourtUnited States Court of Appeals for the Ninth Circuit
Full case name Network Automation, Inc. v. Advanced Systems Concepts, Inc.
DecidedMarch 8, 2011
Court membership
Judges sittingStephen S. Trott, Kim McLane Wardlaw, & Michael W. Mosman.

Network Automation, Inc. v. Advanced Systems Concepts, Inc. is a California court case where the United States Court of Appeals for the Ninth Circuit reversed the district court's preliminary injunction against Network Automation on the issue of trademark infringement of the Advanced Systems Concepts' "ActiveBatch" trademark. The court evaluated the factors relevant to likelihood of customer confusion outlined in AMF Inc. v. Sleekcraft Boats [1], and concluded that was customer confusion was not likely, vacated the injunction, and reversed the decision. [2]


Trademark Infringement Background

An essential condition for trademark infringement is customer confusion. A 1979 Ninth Circuit Court case, AMF Inc. v. Sleekcraft Boats, identified eight factors in determining whether confusion between related goods was likely. The eight factors are:

  1. strength of the mark
  2. proximity of the goods
  3. similarity of the marks
  4. evidence of actual confusion
  5. marketing channels used
  6. type of goods and the degree of care likely to be exercised by the purchaser
  7. defendant's intent in selecting the mark
  8. likelihood of expansion of the product lines [1]

In 1999, another Ninth Circuit Court case, Brookfield Communications, Inc. v. West Coast Entertainment Corp., determined that of the eight Sleekcraft factors, three of them were most significant for cases involving the internet.

  1. the similarity of the marks
  2. the relatedness of the goods and services offered
  3. the simultaneous use of the Internet as a marketing channel [3]

These three Brookfield factors are now known as the "Internet trinity" or "Internet troika". [2]

Background

Network Automation ("Network") and Advanced Systems Concepts ("Systems") both sell job scheduling and management software. Network's product is called Automate and Systems' product is called ActiveBatch, and both companies run keyword advertisements on the internet. Network decided to buy the keyword "ActiveBatch" so that when users searched for "ActiveBatch", Network's website would be displayed as a sponsored link on search engines including Google Search and Microsoft Bing. Systems sent a letter to Network saying Network's usage of "ActiveBatch" was infringing Systems' trademark rights, then Network filed a lawsuit seeking declaratory judgement of non-infringement. Systems counterclaimed asserting trademark infringement under the Lanham Act, 15 U.S.C. § 1114 [4] and seeking preliminary injunction against Network's usage of "ActiveBatch". [2]

The district court analyzed the eight Sleekcraft factors and emphasized that the "Internet troika" from Brookfield were most significant, and they all favored Systems. Network used the identical mark, "ActiveBatch", to sell a product directly competing with Systems' product, and both Network and Systems used the Internet to advertise. The district court also concluded that many of the other Sleekcraft factors were in favor Systems, including the degree of consumer care because "there is generally a low degree of care exercised by Internet consumers." The district court ordered the preliminary injunction against Network using the "ActiveBatch" mark, and Network promptly appealed. [2]

Court's Finding

The United States Court of Appeals for the Ninth Circuit concluded that likelihood of confusion was insufficient to support trademark infringement, and vacated the injunction, reversed and remanded. The Ninth Circuit Court decided that the district court applied the Brookfield factors too rigidly, and emphasized flexibility over rigidity for the "Internet troika" from Brookfield. The Brookfield case also emphasized flexibility:

We must be acutely aware of excessive rigidity when applying the law in the Internet context; emerging technologies require a flexible approach.

— Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1054 (9th Cir. 1999). [3]


The potential infringement in this context arises from the risk that while using Systems’ mark to search for information about its product, a consumer might be confused by a results page that shows a competitor’s advertisement on the same screen, when that advertisement does not clearly identify the source or its product.

Strength of Mark

Proximity of Goods

Similarity of Marks

Evidence of Actual Confusion

Marketing Channels

Type of Goods and Degree of Care

Defendant's Intent

Likelihood of Expansion of the Product Lines

Other Relevant Factors

Notes...

This is the court case primary source. [2]

This is from a harvard law blog. [5]

Eric Goldman blog. [6]

Article in Law360. [7]

Ninth Circuit Clarifies Standards For Keyword Advertising Trademark Cases. [8]

gibson dunn. [9]

lewis and roca. [10]

national law review. [11]

bullivant. [12]

techdirt. [13]

public citizen. [14]

internet troika, Brookfield Communications, Inc. v. West Coast Entertainment Corp. [3] (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, for any case addressing trademark infringement on the Internet

AMF Inc. v. Sleekcraft Boats original trademark case

legal cite [15]

lanham act [4]

custom link names this is my google text

primary sources: no original research, no personal opinion

search for templates, search for: "template:XXXXXXX"

you dont have to put too many refs in the first summary paragraph

use background on how case arose, quote judge opinion, ...



References

  1. ^ a b "Opinion for: AMF INCORPORATED V. SLEEKCRAFT BOATS".
  2. ^ a b c d e "Opinion for: NETWORK AUTOMATION, INC. V. ADVANCED SYSTEMS CONCEPTS, INC".
  3. ^ a b c "Brookfield Communications, Inc. v. West Coast Entertainment Corp".
  4. ^ a b 15 U.S.C. § 1114
  5. ^ "Ninth Circuit Vacates Injunction in Keyword Advertising Case".
  6. ^ "Important Ninth Circuit Ruling on Keyword Advertising, Plus Recaps of the Past 4 Months of Keyword Ad Decisions".
  7. ^ "A Key Victory for Keyword Advertising Programs: The Ninth Circuit's Decision in Network Automation, Inc. v. Advanced Systems Concepts, Inc".
  8. ^ "Ninth Circuit Clarifies Standards For Keyword Advertising Trademark Cases" (PDF).
  9. ^ "Ninth Circuit Addresses Use in Commerce, Likelihood of Confusion Issues in Search Engine Advertising Trademark Claims".
  10. ^ "New Guidance in an Internet Keyword Ad Case".
  11. ^ "Ninth Circuit Establishes Factors to Determine Keyword Advertising Infringement".
  12. ^ "Will Ninth Circuit Decision Open Floodgates on Bidding for Trademarked Keywords?".
  13. ^ "Finally: Clear Ruling That Realizes That Just Buying Ads On Trademarked Keywords Is Not Infringing".
  14. ^ "Ninth Circuit Decision Protects Keyword Advertising Against Trademark Claim".
  15. ^ a vs b, 2 yes (9th circuit 1/2/2011) (""yes to a"").
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