## Facts

- Perfumebay.com, Inc., an online perfume seller, used several forms of its name, including the conjoined “perfumebay”/“PerfumeBay” and the separated “Perfume Bay.”
- eBay, Inc. operated a widely known online marketplace where perfumes were sold through its platform and related fragrance listings.
- Perfumebay sought federal registration for “Perfume Bay,” and eBay opposed the application.
- After unsuccessful settlement negotiations and a suspended administrative opposition, Perfumebay filed a federal declaratory-judgment action seeking a ruling of noninfringement under the Lanham Act.
- eBay counterclaimed for trademark infringement and dilution and asserted a breach-of-contract claim tied to alleged settlement-negotiation obligations.
- Following a bench trial, the district court enjoined use of conjoined forms as infringing, permitted continued use of separated “Perfume Bay,” rejected dilution as to “Perfume Bay,” rejected the breach-of-contract claim, and denied Perfumebay attorneys’ fees.
- Both sides appealed.

## Issues

1. Whether Perfumebay’s conjoined “PerfumeBay”/“perfumebay” created a likelihood of confusion with eBay’s “eBay” mark, including initial interest confusion in online search and advertising contexts.
2. Whether eBay’s request for injunctive relief was barred by unclean hands.
3. Whether eBay’s famous mark was diluted by Perfumebay’s use of conjoined and/or separated forms of its mark.
4. Whether the injunction should extend to non-conjoined uses such as “Perfume Bay.”
5. Whether eBay proved an enforceable settlement-related contract and breach.
6. Whether Perfumebay was entitled to attorneys’ fees as a prevailing party.

## Decision

- The Ninth Circuit affirmed the finding that conjoined “PerfumeBay”/“perfumebay” infringed eBay’s mark, including under an initial interest confusion theory.
- The court held that separated “Perfume Bay” did not create a likelihood of confusion and could continue if the words remained separate.
- The court reversed in part to recognize dilution of the famous “eBay” mark by the conjoined “PerfumeBay,” but agreed there was no dilution from the separated “Perfume Bay.”
- The court approved a permanent injunction barring conjoined use (including in domain names, websites, and internet advertising) and declined to broaden the injunction to prohibit separated “Perfume Bay.”
- The court affirmed rejection of eBay’s breach-of-contract counterclaim.
- The court affirmed denial of attorneys’ fees to Perfumebay because it was not the prevailing party overall.

## Legal Principles

- Likelihood of confusion may be shown where a junior internet mark closely resembles a strong senior mark, the parties’ goods/services are related, and marketing channels overlap, even if confusion is most likely at the point of initial consumer contact.
- Initial interest confusion supports infringement when a junior user diverts consumer attention through domain names or search/advertising presentations that trade on the senior mark’s goodwill, even if confusion dissipates before purchase.
- In evaluating similarity, presentation matters: a conjoined mark incorporating the entirety of a famous mark can be materially more confusing than separated wording.
- A famous mark can be diluted by blurring even when the junior mark is not identical or nearly identical, if consumers would view the junior mark as essentially the same in context.
- Injunctive relief in trademark cases should be tailored to proven confusion and dilution; relief need not reach uses where evidence does not show actionable harm.
- Unclean hands does not bar equitable trademark relief absent a close connection between the alleged misconduct and the trademark rights being enforced.
- Attorneys’ fees are properly denied where the fee applicant is not the prevailing party in the litigation as a whole.

## Conclusion

The Ninth Circuit largely sustained relief for eBay by holding that Perfumebay’s conjoined “PerfumeBay” both infringed and diluted the famous “eBay” mark and could be enjoined in online uses, while permitting continued use of the separated “Perfume Bay” because the evidence did not show actionable confusion or dilution from that presentation.


Perfumebay.com, Inc. v. eBay, Inc., 506 F.3d 1165 (9th Cir. 2007)