## Facts

- Network Automation, Inc. and Advanced Systems Concepts, Inc. sold competing job-scheduling and management software marketed online.
- Advanced Systems owned the registered trademark “ActiveBatch”; Network sold software under the mark “AutoMate.”
- Network purchased “ActiveBatch” and similar terms as keywords from search engines so that searches for “ActiveBatch” could trigger Network’s sponsored link.
- Advanced Systems asserted trademark infringement under the Lanham Act and sought to stop Network’s keyword advertising.
- Network filed a declaratory judgment action for non-infringement; Advanced Systems counterclaimed and moved for a preliminary injunction.
- The district court applied the Sleekcraft factors, treated the “Internet troika” factors as most important, found likely initial interest confusion, and enjoined Network from using “ActiveBatch” as a keyword.
- Network appealed the grant of the preliminary injunction.

## Issues

1. Whether Advanced Systems showed a likelihood of consumer confusion under Lanham Act § 1114 sufficient to support a preliminary injunction against Network’s use of “ActiveBatch” as a search-advertising keyword.
2. Whether the district court erred by mechanically prioritizing the “Internet troika” and by inadequately weighing context-specific factors such as labeling of sponsored links and purchaser care.

## Decision

- The Ninth Circuit vacated the preliminary injunction and reversed and remanded.
- Trademark ownership was undisputed; the appeal turned on likelihood of confusion.
- The court held the record did not support a sufficient showing of likely confusion to justify preliminary injunctive relief.
- The court rejected treating the “Internet troika” as controlling in all Internet-related trademark cases and required a fact-specific application of Sleekcraft.

## Legal Principles

- Lanham Act § 1114 infringement requires (1) protectable ownership and (2) likelihood of consumer confusion; consumer confusion is the central requirement.
- The Sleekcraft factors are a nonexhaustive, flexible set of considerations; their weight depends on the facts and the relevant marketplace context.
- In keyword advertising disputes, courts should evaluate what consumers actually encounter on the search results page, including how sponsored links are labeled and whether the advertisement identifies the advertiser’s own brand and URL.
- Shared use of the Internet as a marketing channel is often of limited probative value because online advertising is ubiquitous.
- The degree of purchaser care can strongly affect the analysis; sophisticated buyers of expensive, technical products are less likely to be confused by sponsored links.
- Competitive intent to bid on a rival’s trademark as a keyword does not, by itself, establish intent to confuse.
- For a preliminary injunction, the movant must show likely success on the merits; a speculative or weak showing of likely confusion is insufficient.

## Conclusion

The Ninth Circuit vacated an injunction barring a competitor’s purchase of a trademark as a search keyword because the plaintiff did not show a likelihood of confusion on the existing record, and because the likelihood-of-confusion inquiry in online advertising requires a flexible, context-sensitive application of Sleekcraft rather than rigid reliance on an “Internet troika.”


Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011)