Amazon will face a trademark lawsuit over the way it returns search results on its website, a federal appeals court has ruled.

Watchmaker Multi Time Machine (MTM) wants to take Amazon to court for making things confusing for consumers who search for MTM products.

When searching for a product on Amazon, the online retailer will often return search results listing various similar items from other companies. Consumers may appreciate this practice because it gives them more alternatives and helps them discover other products, but MTM doesn't like it one bit.

The watchmaker makes military-style timepieces and its watches are not available for sale on Amazon. Conducting a search for an MTM watch on Amazon, however, doesn't tell the user that Amazon doesn't sell any MTM products. Instead, it displays a list of competing products as an alternative.

MTM has been gunning for Amazon since 2011, but a Los Angeles, California federal court previously ruled in Amazon's favor before it got to trial. A new 2-1 vote in the 9th U.S. Circuit Court of Appeals in San Francisco now reverses the previous court ruling, allowing MTM to proceed with its lawsuit. Consequently, the case will now go to trial.

Instead of clearly stating that it doesn't carry MTM Special Ops watches, Amazon's search results are confusing, MTM alleged. If you conduct a search on Amazon using the term "MTM Special Ops," for instance, the search results page will show the term in the search field above, but the results will list other items from companies that have no relationship with MTM.

Amazon lists the manufacturer of each product, which could make it clear for consumers that the items in the search results are not from MTM, but the watchmaker believes it could nonetheless mislead consumers and steer them toward the competition.

"MTM alleged this could cause customers to buy from one of those competitors, rather than encouraging the shopper to look for MTM watches elsewhere," Reuters reported.

Consequently, because Amazon doesn't mention that it doesn't sell any MTM products, the Court of Appeals believes that MTM is entitled to a trademark lawsuit against the retailer.

"We think a jury could find that Amazon has created a likelihood of confusion," the ruling noted [pdf].

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