202 F.3d 1199 (9th Cir. 2000), 99-56691, GoTo.Com v. Walt Disney Co.

Docket Nº:99-56691
Citation:202 F.3d 1199
Party Name:GOTO.COM, INC., a Delaware corporation, Plaintiff-counter-defendant-Appellee, v. THE WALT DISNEY COMPANY, a Delaware corporation; DISNEY ENTERPRISES, INC., a Delaware corporation; INFOSEEK CORPORATION, a California corporation; MONTROSE CORPORATION, a Delaware corporation, Defendants-counter-claimants-Appellants.
Case Date:February 02, 2000
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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202 F.3d 1199 (9th Cir. 2000)

GOTO.COM, INC., a Delaware corporation, Plaintiff-counter-defendant-Appellee,

v.

THE WALT DISNEY COMPANY, a Delaware corporation; DISNEY ENTERPRISES, INC., a Delaware corporation; INFOSEEK CORPORATION, a California corporation; MONTROSE CORPORATION, a Delaware corporation, Defendants-counter-claimants-Appellants.

No. 99-56691

United States Court of Appeals, Ninth Circuit

February 2, 2000

Argued and Submitted January 19, 2000

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COUNSEL: 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: Robert R. Beezer, Diarmuid F. O'Scannlain, and Sidney R. Thomas, Circuit Judges.

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether two remarkably similar logos used commercially on the World Wide Web are likely to confuse consumers under federal trademark law.

I

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 Web1 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.

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Michael Eisner, the chairman of Disney, approved the CKS logo at the end of August 1998. Then, in December 1998, Disney beta-launched 2 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 S 43(a)(1)(A) of the Lanham Act, 15 U.S.C.S 1125(a)(1)(A). On July 12, 1999, GoTo moved for a preliminary injunction.

On November 12, 1999, the district court granted GoTo's motion for a preliminary injunction. On November 15, Disney filed a notice of appeal and moved the district court to modify and to stay the preliminary injunction. GoTo responded by proposing an amendment to the preliminary injunction, which allowed Disney to phase out its use of the logo in many of its incarnations. On November 16, the district court amended its preliminary injunction order by adding language proposed by GoTo.

Disney again filed a timely notice of appeal on November 17. On November 18, 1999, this Court granted Disney's motion to stay the preliminary injunction pending this expedited appeal.

II

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 trademark3 case

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when it demonstrates either (1) a combination of "probable success on the merits" and "the possibility of irreparable injury"4 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 to 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).

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."5 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)).

III

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. S 1125(a); Brookfield, 174 F.3d 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.

A

[3] The first Sleekcraft factor -the similarity of the marks -has always...

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