Thursday, February 13, 2020
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Ninth Circuit:
Claims Against Amazon.com Not Barred Which Arose After Prior Suit Was Settled
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday reinstated an action by the maker of skin-exfoliation products against Amazon.com alleging violations of the Lanham Act, holding that a lawsuit mimicking a prior one is not barred by collateral estoppel if new violations are alleged.
A three-judge panel reversed summary judgment for the defendant in an action filed by Ayse Sen, whose company makes products, marketed under the trademark “Baiden,” which remove dead skin. Sen said in her complaint, filed in 2016, that if that name is searched on the Amazon website, it will bring up a page not only featuring displays of her products, but competing ones.
By clicking on an image, the user lands on a page from which that product can be purchased. The plaintiff sued under the Lanham Act, which bars trademark infringement and unfair competition. No consent was given to Amazon to use her mark, Sen alleged, asserting that Amazon unfairly diverted persons wishing to purchase her products to rival merchandise.
In particular, she pled tortious interference with prospective and actual business relations, and interference with an economic advantage.
Sen put forth the same allegations in a 2012 action which was settled.
In finding, sua sponte, that collateral estoppel, or issue preclusion, applied, District Court Judge John A. Houston of the Southern District of California said:
“The Court notes that all relevant portions of Plaintiff s complaint concerning Defendant’s use of pay-per-click campaigns are copied verbatim from the complaint in the initial action….Additionally, Plaintiff submitted screenshots of search engine results and of Amazon’s landing page that arc substantially identical to ones filed in the initial action….Plaintiff fails to distinguish—either factually or temporally—her current trademark infringement claim based on Defendant’s pay-per-click campaign from that which she alleged in the initial action.”
Houston said that satisfies the first requirement for issue preclusion: the same “nucleus of facts.” That, combined with the parties being identical and a final adjudication of the previous action—a dismissal with prejudice based on a settlement—entitled Amazon to summary judgment on the claim.
He also granted summary judgment to the e-marketplace on a claim based on use of the Baiden mark on user review pages, saying the fair use doctrine applied, and on the content of the reviews, based on immunity under the Communications Decency Act. Those determinations were affirmed by the Ninth Circuit.
The panel—composed of Senior Circuit Judges Ferdinand F. Fernandez, Barry G. Silverman, and Richard C. Tallman said with respect to the click-throughs that Houston “erred because it is not clear that claim preclusion applies.”
The 2017 Ninth Circuit case of Howard v. City of Coos Bay was cited. There, Circuit Judge Diarmuid F. O’Scannlain (now a senior judge) that “claim preclusion does not apply to claims that accrue after the filing of the operative complaint.”
Yesterday’s opinion notes, however, that under the Ninth Circuit’s 2002 decision in Jarrow Formulas, Inc. v. Nutrition Now, Inc., a Lanham Act claim accrues at “the time the plaintiff knew or should have known about his…cause of action.” The matter was remanded for further proceedings.
The case is Sen v. Amazon.com, Inc., 18-56413.
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