GO-TO.COM, Inc. v. Walt Disney Company

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 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 Sec. 43(a)(1)(A) of the Lanham Act, 15 U.S.C. Sec. 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 have developed eight factors, the so-called Sleekcraft factors, to guide the determination of a likelihood of confusion. 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.


In Brookfield, we noted that the eight-factor test is a "pliant" one, in which "some factors are much more important than others." 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."

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. 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

The first Sleekcraft factor -- the similarity of the marks -- has always been considered a critical question in the likelihood-of-confusion analysis. 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.

. . .

We have no difficulty 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. We emphasize that observation here, and now turn to the remaining two factors in that subset.

B

The first of the other two controlling Sleekcraft considerations is that "related goods are generally more likely than unrelated goods to confuse the public as to the producers of the goods." 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, the Web is a very different world.

Our ever-growing dependence on the Web may force us eventually to evolve into increasingly sophisticated users of the medium, but, for now, we can safely conclude that the use of remarkably similar trademarks on different web sites creates a likelihood of confusion amongst Web users. The ever-growing number of tentacled conglomerates may force us to conclude that even one hundred and one products could all be sponsored by a single consortium.

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 Fleischmann Distilling Corp. v. Maier Brewing Co., 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.

C

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." 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.

In determining whether there is a likelihood of confusion, we rely heavily on the fact that the marks are similar, that Disney and GoTo offer very similar services, and that they both use the web as their marketing channel. This trinity constitutes the most crucial body of the Sleekcraft analysis, and, in this case, it suggests that confusion is indeed likely. We discuss the remaining Sleekcraft factors only because the parties raised them.

D

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. This "strength" of the trademark is evaluated in terms of its conceptual strength and commercial strength.

. . .

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." We underline that conclusion here. . . .

H

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. 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.

Navigating amongst web sites involves practically no effort whatsoever, and arguments that Web users exercise a great deal of care before clicking on hyperlinks are unconvincing. Our conclusion is further supported by the Third Circuit's rule that "the standard of care to be exercised by the reasonably prudent purchaser will be equal to that of the least sophisticated consumer."

. . .

We conclude that the district court correctly found that two remarkably similar marks displayed commercially on the Web were likely to cause consumer confusion. We therefore confirm our order of January 27, 2000 vacating our stay of November 18, 1999 and reinstating the preliminary injunction as it was modified on November 16, 1999 by Judge Hatter.

AFFIRMED; preliminary injunction REINSTATED.