A panel of federal appeals judges has taken the unusual step of reversing a position it reached just three months ago when it decided Amazon must face a trademark lawsuit due to search results it produced related to a watch.

In a superseding opinion (PDF) published Wednesday, the same three-judge panel from the US Court of Appeals for the 9th Circuit says that Amazon's search results aren't likely to produce the consumer confusion anticipated by watchmaker Multi Time Machine. "[B]ecause the page clearly labeled the name and manufacturer of each product offered for sale and even included photographs of the items, no reasonably prudent shopper accustomed to shopping online would likely be confused as to the source of the products," wrote Judge Barry Silverman for the majority.

Circuit Judge Carlos Bea dissented from the opinion, and voted against having a rehearing at all. The judge who appears to have changed his views is Gordon Quist, a senior judge from the Western District of Michigan who was sitting on the panel by designation.

The case centers on what happens when an Amazon customer does a search for the phrase "MTM special ops," one of the military-style watches that Multi Time Machine (MTM) sells. Amazon doesn't sell MTM watches, and instead shows users a page full of military-style watches made by competing brands it does carry, such as Luminox.

"Amazon is responding to a customer’s inquiry about a brand it does not carry by doing no more than stating clearly (and showing pictures of) what brands it does carry," writes Silverman in the new opinion. "Not only are the other brands clearly labeled and accompanied by photographs, there is no evidence of actual confusion by anyone."

Now-dissenting Judge Carlos Bea continues to believe that Amazon should face a trial over MTM's claims, which could lead to "initial interest confusion." Bea notes that Amazon competitors would let a searcher know that a search for "MTM special ops" either "returned no results" (as in the case of Overstock.com) or "did not return an exact match" (as happens at Buy.com).

In Bea's view, the decision about whether confusion is likely should be left up to a jury, and the district court judge shouldn't have ruled in Amazon's favor at the summary judgment phase. MTM "might well lose" at a trial, writes Bea, but there's a genuine issue of fact and there should be a trial. "By usurping the jury function, the majority today makes new trademark law," he writes.

If the MTM decision had been upheld, it may well have been an important outlier in trademark law. For years, various trademark owners had sued search engines, as well as their competitors who buy search ads on them, saying that purchasing their trademark as a search "keyword" violated the law. One by one, those suits were all defeated, with Google and Yahoo defeating the last remaining keyword advertising suit earlier this year.