Video Professor, Inc. v. Amazon.com, Inc.

Filing 39

BRIEF in Opposition to 30 MOTION for Summary Judgment and Memorandum of Law in Support Thereof (Oral Argument Requested) filed by Plaintiff Video Professor, Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10)(Smith, Gregory) Modified on 11/20/2009 to remove repetitive text (sah2, ).

Video Professor, Inc. v. Amazon.com, Inc.

Doc. 39

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 09-cv-00636-REB-KLM VIDEO PROFESSOR, INC. a Colorado corporation, Plaintiff, v. AMAZON.COM, INC., a Delaware corporation, Defendant. ______________________________________________________________________ PLAINTIFF' RESPONSE IN OPPOSITION TO DEFENDANT' S S MOTION FOR SUMMARY JUDGMENT ______________________________________________________________________ Plaintiff Video Professor, Inc. ("PI" by and through its counsel, Fairfield and V ), Woods, P.C.--who certify that they have read and complied with the Court' Practice s Standards--and in response to Defendant' Motion for Summary Judgment and s Memorandum of Law in Support Thereof (Oral Argument Requested) [Doc. No. 30] dated October 27, 2009 (" otion" states: M ), INTRODUCTION This case primarily involves Amazon' intentional infringement of VPI' s s trademarks. After recognizing Amazon' bait and switch scheme, among other s

malfeasance, VPI sent two demands to cease and desist. Each went unanswered. First, Amazon uses VPI' famous trademarks to divert Internet traffic searching s for "ideo professor"away from VPI' Web site and to Amazon' own Web site by v s s purchasing VPI' trademark from Google in order to generate "ponsored Links."One s S

Dockets.Justia.com

such sponsored link uses VPI' trademark to promise savings on VPI products at s Amazon.com. This constitutes initial interest confusion. Second, once diverted,

Amazon presents consumers with a landing Web page prominently entitled "mazon.com: video professor"and "ideo professor." In Amazon' search box A v s appearing on the same page, Amazon automatically populates the search box with the search term, i.e., "ideo professor,"yet intentionally places Amazon' own directlyv s
1 competing and confusingly-similar "rofessor Teaches"products above VPI products in P

the search results.

Amazon asserts that the search results are " al-time natural re

results,"however, they are in actuality intentionally manipulated unnatural results designed to confuse consumers and sell Amazon'own product as VPI' s s. Due to the totality of the circumstances surrounding the infringement--including the confusingly similar brands, coupled with the consumers'easonable expectations to r find VPI' products in response to their search--Amazon' Web site capitalizes on the s s confusion to generate attention for and to promote the sales of its own competing products. These acts constitute direct confusion and represent classic trademark Genuine issues of material fact exist and Amazon is not entitled to

infringement.

judgment as a matter of law. The Motion must be denied. STATEMENT OF DISPUTED MATERIAL FACTS 1. W hether Amazon is authorized to use VPI' trademarks to sell Amazon' s s

products in direct competition with VPI, especially after VPI' termination of the Vendor s Manual on September 19, 2008. Exhibit 1 (affidavit of Bettye Harrison).
1

Amazon is the seller of the products and so they are Amazon' products, although manufactured by a s third-party.

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2.

W hether Amazon, through an individual or some other operation,

intentionally places its Professor Teaches products above or before VPI' products in s the Amazon search results for "ideo professor." v 3. Amazon claims that its internal search results for "ideo professor"are v

" al-time natural search results[,]" re when in fact they are intentionally manipulated and unnatural so that Amazon' Professor Teaches products appear above or before the s exact word matches, i.e., "ideo professor" v products. Compare Motion at pg. 5, with Exhibit 2 (screen shot of search results 3/20/09). 4. Amazon need not display its competing Professor Teaches products as

search results for the search query "ideo professor," could have the results appear v or in order of relevance, with exact word matches first. 5. W hether VPI' historical sales data establishes that as a result of the s

6,188 admitted diversions, VPI has suffered lost net profits as a direct result of Amazon'infringement. See Exhibit 1. s 6. W hen a consumer searches for "ideo professor"through Amazon' v s

internal search box, Amazon' "rofessor Teaches"products appear as the first six sP products. See Exhibit 2. Yet when a search for "rofessor teaches" performed, p is VPI' products do not appear anywhere in the search results. See Exhibit 3. This s comparative search evidences the intentional manipulation of the search results to allow Amazon to trade off VPI'mark and goodwill. s

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7.

W hen a computer user enters a search term in a search engine, they

expect exact word matches to appear fist, and, thereafter in descending order, the most relevant results.2 8. The fact that consumers who have bought Professor Teaches products

and have the CDs, the packaging material, and the user manual(s) in their possession, yet still attempt to return the products to VPI, is evidence of actual confusion, even postsale. See Exhibits 4-8. 9. Consumers post-sale are actually confused regarding the Professor

Teaches product being VPI' a fortiori, pre-sale consumers are even more likely to be s, confused. 10. Since 2007, VPI has converted approximately 3% of visitors to its Web

site into a sale (73,654 out of 2,409,271). See Exhibit 1. 11. VPI' average net profit per customer is $112.00, resulting in net profits of s

$8.2 million over the last three years. See id. 12. 13. In the last three years, Internet sales constitute 45% of VPI'sales. Id. s In the last 20 years, VPI has invested hundreds of millions of dollars in

advertising its products using the marks across the United States. Id. 14. 15. VPI has 90% of the market awareness in computer learning CDs. Id. Professor Teaches has 5% of the market awareness. Id.

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See J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, Section 25:70.25, p. 25204 (2009) (" any users [think] search engine[s] list [results] in order of relative importance." see also, M ); Rescuecom Corp. v. Google Inc., 562 F.3d 123, 131 (2nd Cir. 2009) (" the searcher sees a different If brand name as the top entry in the response to the search for [a particular trademark], the searcher is likely to believe mistakenly that the different name which appears is affiliated with the brand name sought in the search and will not suspect . . . that this is not the most relevant response to the search." ).

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ARGUMENT I. AMAZON IS NOT ENTITLED TO SUMMARY JUDGMENT ON THE LANHAM ACT CLAIMS. A.-B. No dispute. C. Material Disputed Facts: VPI disputes the following facts asserted by Amazon as undisputed: (2) VPI denies that it granted Amazon a license to use its marks in the manner Amazon has used them; see Section I(E), infra; (3) Amazon does not adequately identify the sellers of the products, as evidenced by Exhibit 2; (5) VPI receives numerous attempted returns for Professor Teaches products post-sale, thereby evidencing actual confusion. Exhibits 4-8. VPI asserts the following additional material facts, which Amazon may dispute: (1) Amazon used VPI' marks to intentionally divert potential customers looking s for "ideo professor" its Web site, thereby creating " itial interest confusion;" v to in Exhibit 9; see also Motion; (2) Due to the fact that the Professor Teaches products are computer learning CDs, as well as its confusingly-similar name and packaging, Amazon' products s are inherently confusing in their similarity to VPI'products; see, e.g., Exhibit 2; s (3) Despite claiming its search feature offers " al-time natural search results," re Amazon' Professor Teaches products appear above products that would be an s exact word match, thereby evidencing Amazon' intentional manipulation of its s search feature to favor its own product and capture VPI' mark recognition; s compare Motion at p. 5, with Exhibit 2; see also Exhibit 1 (providing 90% share of market vs. 5%); (4) The fact that VPI' products do not appear for a search in Amazon' search s s feature for "rofessor teaches," but when "ideo professor" is searched, p v Amazon' "rofessor Teaches"products are predominantly and prominently sP displayed above VPI products, which further evidences Amazon' manipulation s of its search function to favor its own competing product and trade off of VPI' s mark; compare Exhibit 3, with Exhibit 10; (5) Amazon' purported use of one or more "lgorithms" create the infringing s a to search results for its Web site is irrelevant, as someone employed by Amazon or acting at its direction created the algorithm(s), and Amazon is actually aware of the infringing affects thereof; see, e.g., Thompson v. Alpine Motor Lodge, Inc.,

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296 F.2d 497 (5th Cir. 1964) (providing that infringers are presumed to intend the natural and probable consequences of their conduct); and (6) Professor Teaches product are generally less than $15.00. See Exhibit 2. D. VPI Can Prove the Contested Material Facts. (1) As stated above, VPI can establish that Amazon was not authorized to infringe on VPI' marks. Exhibit 1. s (2) Amazon' use of VPI' marks caused initial interest confusion, as well as s s

subsequent actual direct confusion. (3) VPI was damaged by Amazon'conduct by the s admitted diversion of not less than 6,188 potential customers looking for "ideo v professor"through Google. See Exhibit 9; see also Motion. VPI' well-documented s historical sales data establishes with reasonable certainty that such diversions directly resulted in lost net profits. See Exhibit 1. E. Amazon' Use Was Unauthorized. Amazon first alleges that its use of s VPI' marks was authorized, and, therefore, VPI' Lanham Act claims fail. Amazon' s s s use was not authorized. VPI and Amazon entered into the Vendor Manual agreement solely to allow Amazon to purchase VPI' products directly from VPI and resell them on s its Web site. See generally, Motion at Exhibit A-6. In that limited context, VPI granted Amazon a license to use its trademarks in order for Amazon to advertise and sell VPI' s products on its behalf. Id. at pg. 7 (Section III (4)). Amazon claims that this license is without limit and allows Amazon to use VPI' s trademarks to sell its competing "rofessor Teaches" P products. The assertion is without merit. In Bunn-O-Matic Corp. v. Bunn Coffee Servs., Inc., 88 F. Supp. 2d 914 (C.D. Ill. 2000), the court recognized that if a license is silent on a particular use, it does not mean a licensee can use the mark in a confusing manner, which would be infringement.

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Further, the implied covenant of good faith and fair dealing--implied in every contract--precludes Amazon from claiming that VPI has authorized Amazon' s intentional infringement of VPI' trademarks. Amoco Oil Co. v. Ervin, 908 P.2d 493, s 499 (Colo. 1995) ("he covenant of good faith and fair dealing exists in every contract to T enforce the reasonable expectations of the parties." see also Miller v. Othello Packers, ); Inc., 410 P.2d 33, 34 (W ash. 1966) ("here is an implied covenant of good faith and fair T dealing in every contract, a covenant or implied obligation by each party to cooperate with the other so that he may obtain the full benefit of performance."3 ). Moreover, Amazon' assertion would make the clause unconscionable and void s as against the public policy against consumer confusion embodied in trademark law. See, e.g., Davis v. M.L.G. Corp., 712 P.2d 985, 991 (Colo. 1986) (unconscionability); F.D.I.C. v. American Cas. Co. of Reading, Pa., 843 P.2d 1285, 1290 (Colo. 1992) (public policy).4 Therefore, Amazon'construction of the license is unenforceable. s While the language of the license states it is perpetual, when the agreement is construed as a whole, it is clear that the parties' intent was that the license was limited to Amazon' sale of VPI products on VPI' behalf and would expire when Amazon' s s s stock of VPI'products expired following the termination of the agreement. If the clause s was not included, Amazon'sale of the remaining inventory of products post-termination s of the license would be infringement. See, e.g., Bill Bass, Ltd. v. SAZ Corp., 751 F.2d 152 (3rd Cir. 1984). Regardless, a genuine issue of material fact exists regarding the
3

Citation is made to Washington law regarding contract interpretation as the Vendor Manual contains a choice of law provision naming Washington. 4 Yakima County (West Valley) Fire Prot. Dist. No. 12 v. City of Yakima, 858 P.2d 245, 256 (Wash. 1993) (unconscionability); Danzig v. Danzig, 904 P.2d 312, 314 (Wash. App. 1995) (public policy).

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intention of the parties, the scope of the license and Amazon' actions, thereby s precluding summary judgment. F. Nominative Fair Use Fails. 1. Nominative Fair Use is Not the Test in the Tenth Circuit. Amazon next claims that the so called "ominative fair use"doctrine insulates Amazon from liability. n In so

arguing, Amazon attempts a legal slight of hand; claiming that the nominative fair use is the controlling law and somehow has displaced the Tenth Circuit' traditional multis factor likelihood of confusion test. See Motion at pp. 9-10. The Ninth Circuit alone has adopted the nominative fair use analysis in some circumstances as a test for likelihood of confusion; the Tenth Circuit has not. Despite Amazon' attempt to rely on the Ninth Circuit' analysis, the test for s s likelihood of confusion in this circuit remains the consideration of the six non-exclusive factors set forth in Sally Beauty Co. v. Beautyco, Inc., 304 F.3d 964, 972 (10th Cir. 2002). John Allan Co. v. Craig Allan Co., 540 F.3d 1133, 1138 (10th Cir. 2008). They are: " ) the degree of similarity between the marks; (2) the intent of the alleged infringer (1 in adopting the mark; (3) evidence of actual confusion; (4) similarity of products and manner of marketing; (5) the degree of care likely to be exercised by purchasers; and (6) the strength or weakness of the marks." Id. No one factor is dispositive and the determination of likelihood of confusion must be based on all relevant factors. See id. The issue of likelihood of confusion is a question of fact. Id. In its brief--and

recognizing the traditional test is devastating to Amazon' argument--Amazon fails to s even mention this circuit'test. See generally, Motion at pp. 8-14. s

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Judge Kane recently had the occasion to consider the nominative fair use as a legal defense to a Lanham Act claim in the Rule 12(b)(6) context. See Health Grades, Inc. v. Robert Woods Johnson Univ. Hosp., Inc., 643 F. Supp. 2d 1226, 1239 (D. Colo. 2009). In Health Grades, supra, the plaintiff had established ratings for hospitals and registered " ealth Grades" a trademark. Id. at 1231-32. The company then sold H as licenses to healthcare providers in order for them to use the Health Grade mark, among other things. Id. at 1231. The hospital defendant used the Health Grades mark in sundry press releases and on its Web site without a license. Id. After being notified of the infringement, the hospital defendant continued to use the mark. Id. The hospital moved to dismiss the trademark claims under Rule 12(b)(6), asserting the nominative fair use concept as a legal defense. Id. at 1231-32; 1239. After setting forth the multi-factor likelihood of confusion test (quoted above), Judge Kane noted that the Ninth Circuit "as devised a different method for analyzing the h likelihood of confusion arising from certain uses of a . . . mark."Id. at 1239. The court noted that in the Ninth Circuit, a nominative fair use exists, and so no infringement, if, inter alia, the defendant' use of the mark does not attempt to capitalize on consumer s confusion or to appropriate the cache of one product for a different one. Id. at 1239-40 (quoting New Kids on the Block v. News America Publsh., Inc., 971 F.2d 302, 307-08 (9th Cir. 2002)). Examples include where a garage truthfully advertises that it fixes "olkswagen"cars or where an imitator of brand name perfumes advertises that its V perfumes smell like a trademarked brand. Id. at 1239 (citing 9th Circuit precedent). The Ninth Circuit considers it a "ominative fair use"because there is no consumer n

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confusion that the garage is associated with Volkswagen or that the imitator is the brand name perfume. See id. For nominative fair use to apply, there must be no confusion at all. McCarthy, at Section 23:11, p. 23-62. Judge Kane provided that to apply, " e user [can do] nothing that would, in th conjunction with the mark, suggest sponsorship or endorsement by the trademark holder[,]" id. at 1240, and that analysis has not been widely adopted. Id. " ]ll of the [A circuit courts that have considered it to date have either rejected [it] outright , or modified it . . . to allow likelihood of confusion to be determined based largely on the traditional multi-factor analysis. . . ." Id. "find that the nominative fair use doctrine, if I applied here, would supplement this circuit'traditional six-factor test . . . ."Id. (internal s citations omitted, emphasis added). Accordingly, Amazon' reliance on the Ninth Circuit' disfavored doctrine is s s misplaced and summary judgment based thereupon cannot enter. It is not the law of this circuit and has been met with studied criticism by those circuits that have directly considered it. See id. At best, it represents but three additional factors a court may choose to consider in analyzing whether a defendant' use of a mark in a particular s fashion is likely to confuse consumers. See id.; see also Frontrange Solutions USA, Inc. v. Newroad Software, Inc., 505 F. Supp 2d 821, 835 (D. Colo. 2007) (Judge Miller stating that the nominative fair use analysis had not been adopted in the 10th Circuit, but could inform the confusion analysis).5
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It certainly is not the panacea upon which

Amazon'citation to Frontrange, supra, in its brief gives the false impression that the nominative fair use s doctrine is the law in this circuit. See Motion at p. 9 (citing Frontrange, supra, for the elements of the nominative fair use doctrine, but failing to qualify the citation with an appropriate signal such as "ut see" b so as to recognize and apprise the court that the nominative fair use is not the test in this circuit).

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Amazon attempts to rely. Moreover, because Amazon has sought to "apitalize on c consumer confusion [and] to appropriate the cache of [VPI' product for [Amazon'own s] s product,]" is inapposite. Health Grades, Inc., 643 F. Supp. 2d at 1239-40 (quoting it New Kids, supra). Regardless, even if the additional three factors are considered, Amazon' s intentionally infringing actions preclude the analysis' application. To wit: (1) diversion of consumers by using VPI'trademarks in its sponsored links; (2) placement of Amazon' s s confusingly similar "rofessor Teaches" P products on a Web page conspicuously entitled "ideo professor" two places, one of which constitutes an affirmative representation v in by Amazon that the page is Amazon' video professor page; (3) manipulation of its s internal search box and results to list products not in order of natural relevance as expected by consumers, but in an unnatural reverse order so as to sell its competing products by using VPI'marks; (4) the use of small icons on its products so that only the s common and dominant word "rofessor"is readily legible in order to further the p confusion; and (5) the failure to adequately inform consumers that Amazon' products s are not VPI'(" fringing Acts" s In ). Accordingly, Amazon clearly has misused VPI' mark in a manner that, " s in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder." Each of these Infringing Acts represent Amazon' attempt to "apitalize on s c consumer confusion [and] to appropriate the cache of [VPI' product for [Amazon'own s] s product,]" and so the defense is inapplicable on these facts. Health Grades, Inc., 643 F.

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Supp. 2d at 1239-40 (quoting New Kids, supra). In short, even if this case were in the Ninth Circuit, the defense is inapposite and would utterly fail. Amazon' next argument, i.e., " e pot is calling the kettle black,"is equally s th without merit. VPI' use of Microsoft' or eBay' trademarks is not confusing in the s s s least, as no one would mistake VPI or its products for Microsoft or eBay. The argument is factually flawed and is a red herring. 2. Application of the Tenth Circuit' Test Defeats Summary Judgment. Although s intentionally avoided by Amazon in its brief, an application of the actual multi-factor test used in this circuit to Amazon' conduct is fatal to its Motion. With respect to the first s factor, i.e., the degree of similarity between the marks, they are the same for the initial interest confusion issue,6 and are confusingly similar (Video Professor and Professor Teaches) for the direct confusion issue, as they share a common dominant word ("rofessor" and invoke the same mental impact (i.e., learning from the Professor). P ) See, e.g., First Sav. Bank, F.S.B. v. First Bank Syst., Inc., 101 F.3d 465 (10th Cir. 1996) (similarity in sight, sound and meaning in analyzing issue of similarity of marks).7 Similarly, where a junior user' mark shares a common element or word with the s senior user'mark, confusion can be found. For example, confusion was found to exist s

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Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10 Cir. 2006) (stating that for use of trademarks as keywords to divert internet traffic, thereby establishing initial interest confusion, the similarity of the marks factor is established as they are identical). 7 See also, e.g., Kenner Parker Toys, Inc. v. Rose Art Inds., Inc., 963 F.2d 350 (Fed. Cir. 1992) (stating that mental impact of similar marks informs confusion issue and holding that "lay-Doh" P and "un Dough" F were confusingly similar marks because "lay"and " n"convey very similar impression); see also p fu th Northam Warren Corp. v. Univ. Cosmetic Co., 18 F.2d 774 (7 Cir. 1927) (noting that when similarities in mark are significant, differences may be de minimis); Saxlehner v. Eisner & Medelson Co., 179 U.S. 19 (1900) (not every name in a mark need be appropriated for it to be confusingly similar).

th

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8 for the marks "lockbuster Video"and "ideo Buster," " iracle Whip"and "alad B V M S 9 10 11 Whip,"" -Tips" Q and " otton Tips," and " hic" C C and ".A. Chic." The " hic" L C and ".A. L

Chic" example is significant, as consumers looking for "ideo professor," v and, being told by Amazon that they are seeing VPI products on the Web page, would, a fortiori, believe that the "rofessor Teaches" roducts were simply a line of VPI' products. Id. P p s There is a higher likelihood of confusion as the products compete. Beer Nuts, supra.12 Amazon' intent was admittedly to attract potential VPI customer' to its site by s s using VPI' trademarks, thereby creating initial interest confusion, and, therefore, the s second factor weighs in favor of VPI. See Exhibit 9 at Request for Admission 4; see also Australian Gold, Inc., supra. Further, by compounding and perpetuating the initial interest confusion by, inter alia, its manipulation of its search box and results, as well as the use of small icons and fonts, Amazon evidences its intent to directly confuse consumers looking for VPI' products. Once intent to confuse is shows, a presumption s of actual confusion arises. See Fleishmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149 (9th Cir. 1963).13

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See Blockbuster Ent. Group v. Laylco, Inc., 869 F. Supp. 2d 505 (E.D. Mich. 1994). Kraft Cheese Co. v. Leston Co., 43 F. Supp. 782 (D. Mo. 1941). 10 rd Q-Tips, Inc. v. Johnson & Johnson, 206 F.2d 144 (3 Cir. 1953). 11 See Henry Siegel Co. v. M & R Int'Mfg. Co., 4 WL 123838 (T.T.A.B. 1987) (unpublished opinion) l (stating that customers who may see junior user' mark may mistakenly believe it is a line of clothing of s the senior holder). 12 Moreover, the Professor Teaches products were not presented in a side-by-side manner with VPI products, but, rather, the Professor Teaches products were grouped together as the first seven results, with used VPI products appearing in subsequent pages not likely to be viewed. See Daddy' Junky s th Music Stores, Inc. v. Big Daddy'Family Music Ctr., 109 F.3d 275 (6 Cir. 1997) (recognizing that where s products at issue are not displayed side-by-side, the analysis is whether the mark at issue would confuse the public when viewed alone). 13 Bad faith is also relevant to the issue and amount of lost profits and other damages. Champion Spark Plug Co. v. Sanders, 331 U.S. 125 (1947).

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Due to the confusingly-similar names and Amazon' Infringing Acts, it is not s surprising that purchasers of the Professor Teaches products--and with the benefit of the product, the packaging and the user manuals in hand--remain confused well after the sale as to its affiliation with VPI and actually attempt to return the products to VPI, thereby constituting evidence of actual confusion and conclusively establishing the third factor. See Exhibits 4-8; see also AmBrit, Inc. v. Kraft, Inc., 805 F.2d 974 (11th Cir. 1986) (where goods inexpensive, evidence of actual confusion difficult to obtain and even few instances significant), opinion superseded by 812 F.2d 1531 (11th Cir. 1986), cert. denied, 481 U.S. 1041 (1987). The numbers involved are not de minimis, as many hundreds of Professor Teaches customers have sought to and attempted to return the products to VPI. See Exhibits 4-8; compare, King of the Mountain Sports, Inc. v.

Chrysler Corp., 185 F.3d 1084 (10th Cir. 1999) (nine examples of actual confusion is de minimis and not sufficient to find a genuine issue of fact). Of course, evidence of actual confusion is the best proof of a likelihood of confusion. See, e.g., Frito-Lay, Inc. V. Morton Foods, Inc., 316 F.2d 298 (10th Cir. 1963). With respect to the fourth factor--the similarity of products and manner of marketing--they are identical, i.e., both products are computer learning CDs sold through the Internet. The fifth factor also weighs heavily in favor of VPI, as a consumer looking for computer learning software will exercise a relatively low degree of care as compared to those seeking to purchase a more expensive product, such as a car or a computer. See, e.g., Beer Nuts, supra; see also Commncs. Satellite Corp. v. Comcet, Inc., 429 F.2d 1245 (4th Cir. 1970).

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Finally, the sixth factor--the strength or weakness of the marks--likewise weighs in VPI' favor, as its marks are extremely well-known, whereas the Professor Teaches s brand is virtually unknown. Exhibit 1. To the extent Amazon attempts to misdirect any blame on Professor Teaches by claiming Amazon was acting merely as a distributor or dealer of its products, the argument fails. Even an innocent dealer or distributor that does not affix an infringing mark is still strictly liable for infringement, and can be made to account for profits. See, e.g., Gucci America, Inc. v. Action Activeware, Inc., 759 F. Supp. 1060 (S.D.N.Y. 1991); see also Hard Rock Café Licensing Corp. v. Concessions Srvs., Inc., 955 F.2d 1143, n.6 (7th Cir. 1992). As the application of the Tenth Circuit' test establishes, each and every factor s militates decidedly and overwhelmingly in favor of a finding of a likelihood of confusion. Even if credited--which it should not be--the Ninth Circuit'nominative fair use analysis s would not save Amazon. Amazon'use of VPI'trademark to divert Internet traffic to its s s site, and, thereafter, further directly confuse consumers, constitutes initial interest confusion and direct confusion, thereby satisfying the likelihood of confusion element.14 Regardless, VPI has submitted sufficient evidence to defeat summary judgment. 3. Amazon' conduct constitutes direct confusion. s Direct confusion is established

where a "efendant' use of the trademark is likely to cause consumers to believe . . . d s that the plaintiff is the source of the defendant' products . . . ." Australian Gold, Inc., s 436 F.3d at 1238. In this case, Amazon' use of VPI' marks are extremely likely to s s cause consumers searching for VPI' products to believe that Amazon' Professor s s
14

Moreover, its intent to confuse establishes a presumption of confusion. Fleischmann Distilling Corp., supra.

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Teaches products are VPI' i.e., direct confusion. Amazon' Infringing Acts, discussed s, s supra, establish a likelihood of direct confusions. Due to the totality of the confusing circumstances surrounding the Infringing Acts, many consumers will simply think that "rofessor Teaches"is simply one of VPI' P s brands. See Henry Siegel Co. v. M & R Int' l Mfg. Co., supra. Most consumers do not get past the first screen of search results, and, therefore, they are not likely to see the used VPI products appearing on subsequent screens and being sold by individual unaffiliated third-party resellers, and so not likely to realize the mistaken association. The relative low cost of the CDs means that consumers are not likely to exercise a high degree of care, and will simply buy Amazon' Professor Teaches product mistakenly s believing it is VPI' See, e.g., Recot, Inc. v. Becton, 214 F.3d 1322 (Fed. Cir. 2000); s. see also Beer Nuts, supra (same). In this manner, a likelihood of direct confusing

exists, thereby precluding summary judgment. 4. Amazon' conduct constitutes initial interest confusion. s The Tenth Circuit has

expressly held that it is a violation of the Lanham Act to use another' trademarks to s divert Internet traffic away from the trademark holder' Web site to sell competing s products, even where the plaintiff'products are also offered for sale.15 Australian Gold, s Inc., 436 F.3d at 1239. That is precisely what Amazon has done in this case.

Amazon' attempt to distinguish this precedent is ineffective. See Motion at pp. 13-14. s

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Amazon claims that the availability of VPI'products (though not being sold by VPI) on its site absolves s it of liability for trademark infringement. As this case demonstrates, that reliance is misplaced. Further, Amazon'identification of the sellers of used VPI products on its website is the functional equivalent of a s disclaimer of affiliation; however, a disclaimer is ineffective to mitigate initial interest confusion, as the damage has already been done at the time of the improper diversion. Australian Gold, Inc., 436 F.3d at 1240 (rejecting disclaimer argument).

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As explained by the Tenth Circuit, Amazon' use of VPI' mark falls squarely within the s s proscribed conduct, thereby establishing a likelihood of confusion. 5. Amazon' remaining arguments are equally unpersuasive. s Amazon' "roduct sp

placement" analogy is without merit. In Rescuecom Corp. v. Google Inc., 562 F.3d 123, 130 (2nd Cir. 2009), Google argued that its sale of plaintiff' trademark to plaintiff' s s competitors such that "ponsored links"to the competitors' s Web sites would appear above plaintiff' Web site in search results, constituted mere "roduct placement" s p and so did not state a claim under the Lanham Act. Id. In dismissing the argument and finding a cause of action under the Lanham Act had been stated, the court noted that Google' argument " issed the point"and that product placement was not a " agic s m m shield." Id. If a scheme of product display confuses and deceives customers into

believing they are buying a trademarked brand, " e practice would [not] escape liability th merely because it could claim the mantle of ` oduct placement.' Id. pr " Amazon' reliance on Designer Skin, LLC v. S & L Vitamins, Inc., 560 F. Supp. s 2d 811 (D. AZ. 2008) is misplaced. First, Designer Skin--a case from the district court of Arizona bound by Ninth Circuit law--expressly recognizes that its holding regarding the requirements of initial interest confusion were contrary to the Tenth Circuit' s Australian Gold, supra. Id. at 820. Accordingly, Amazon cannot rely on it even for persuasive effect, as it admittedly stands in contrast with binding Tenth Circuit precedent. Moreover, and bound by Ninth Circuit' nominative fair use analysis, the s court did not apply the traditional multi-factor test. See generally, id.

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16 Designer Skin holds that "eception" must be shown for initial interest confusion d

to lay. Id. at 818-19. In this circuit, however, initial interest confusion is established at the moment the customer is improperly lured away. See Australian Gold, Inc., 436 F.3d at 1238-39. Designer Skin is further distinguishable by the fact that the case dealt only with initial interest confusion, where, here, direct confusion is also alleged. See

Designer Skin, LLC, 560 F. Supp. 2d at 819. Moreover, Designer Skin holds that if both the plaintiff'products and competitor'products are available and no direct confusion is s s alleged, no initial interest confusion can lay. See id. This circuit'Australian Gold holds s otherwise and states that the mere improper diversion is sufficient to state a claim, regardless of what transpires thereafter. See Australian Gold, Inc., 436 F.3d at 1238-39 (setting forth three ways in which damages occur at the time of the diversion, even where the confusion is resolved or no sales occur). Designer Skin offers no shelter. Amazon' reliance on Tiffany (NJ) Inc. v. eBay, Inc., 576 F. Supp. 2d 463 s (S.D.N.Y. 2008) is also unavailing. Tiffany is distinguishable on various grounds,

including the fact that it applied the nominative fair use analysis instead of the multifactored test applied in this circuit. Id. at 496-97. Further, it does not discuss initial interest confusion. See generally, id. Tiffany is distinguishable on the facts as well. Unlike in this case, eBay did not use Tiffany' mark to sell its own confusingly-similar product, but rather, simply notified s

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McCarthy has stated that to avoid "eception," advertiser must make explicitly clear that a consumer d an looking for one product is going to be shown other products. See J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, Section 25:70.25, pp. 25-211-12 (2009). Amazon, of course, fails to make that fact clear in its Sponsored Link, which, in conjunction with the trademarked search term "ideo v professor," implies that consumers can save on video professor products at Amazon. Accordingly, even if this case was pending in Arizona, Amazon would lose.

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consumers that third-parties were selling items that they identified as Tiffany brand items on its Web site. Id. at 498. In this case, however, Amazon is improperly using VPI' marks to divert customers (initial interest confusion), and then pawning off its own s competing products as VPI' (direct confusion). Therefore, to the extent Tiffany could s provide some persuasive guidance, it is inapposite. G. VPI Can Establish Damages. Beyond the fact that once initial interest

confusion is established, damages are presumed, see Australian Gold, Inc., 436 F.3d at 1239 (setting forth three ways that damages result from initial interest confusion even where consumer becomes aware of sources' actual identity or where no actual sales to the competitor results from the diversion),17 here, VPI can establish actual damages within a reasonable degree of probability. Where possible, businesses can prove damages, including lost profits, through "traightforward, common sense calculations . . ."without need of expert testimony. s See, e.g., LifeWise Master Funding v. Telebank, 374 F.3d 917, 929-30 (10th Cir. 2004). In Ripple Resort Media, Inc. v. Skiview Corp., 2008 WL 4678518 (D. Colo., Oct. 20, 2008) (unreported decision), the court utilized the net profits for the first year of a wrongfully-terminated contract to calculate and extrapolate the lost profits for the two remaining years. Id. at * 4-7. In this case, VPI can establish with relative certainty it lost profits due to Amazon' improper diversion of potential VPI customers. s
17

Approximately 3% of

Moreover, in a trademark cases, irreparable injury is ordinarily presumed once the plaintiff has established a likelihood of confusion. Big O Tires, Inc. v. Bigfoot 4X4, Inc., 167 F. Supp. 2d 1216, 1227 (D. Colo. 2001).

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individuals who land on VPI'Web site by clicking on a link in the Google search results s for "ideo professor," purchase VPI' products. Exhibit 1. Amazon has disclosed v will s that approximately 6,200 individuals clicked on its ad appearing on Google' site after s entering in the search term "ideo professor." Exhibit 9. Further, VPI' historic sales v s data reflects the average net profit per customer is $112. Exhibit 1. W ith these facts, the net lost profits damages are approximately $20,800. II.-III VPI' COLORADO CONSUMER PROTECTION CLAIM AND TORTIOUS S INTERFERENCE CLAIMS ARE VALID.

A.-B.: No dispute. C. Material Disputed Facts: See supra, Section I.C. D.-G. Based upon the foregoing, VPI has presented evidence on each of the disputed facts and elements of the CCPA and Tortious Interference claims, so that genuine issues of fact remain. Summary judgment cannot enter for Amazon on those claims. CONCLUSION VPI has established genuine issues of material fact regarding each and every claim brought against Amazon. Therefore, summary judgment cannot enter. Respectfully submitted this 19th day of November, 2009. FAIRFIELD AND WOODS, P.C. s/ Gregory C. Smith _____________ Gregory C. Smith Kieran A. Lasater 1700 Lincoln Street, Suite 2400 Denver, CO 80203 Telephone: [phone] Facsimile: [phone] ATTORNEYS FOR PLAINTIFF

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CERTIFICATE OF SERVICE I hereby certify that on the 19th day of November, 2009, a true and correct copy of the foregoing PLAINTIFF' RESPONSE IN OPPOSITION TO DEFENDANT' MOTION S S FOR SUMMARY JUDGMENT was sent CM/ECF system addressed as follows: Marc C. Levy Faegre & Benson LLP 1700 Lincoln Street, Suite 3200 Denver, Colorado 80203 Email: [e-mail] s/ Julie Boling Julie Boling

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