Use of Merchant Name an Affiliate Trademark Violation?

Overnight, I was surprised to receive an email notifying me that one or more of my pages were in violation of a trademark infringement. The company sending me this notice is one in which I am currently an approved ShareASale and GoldenCan affiliate marketeer. As an affiliate, I have the opportunity to earn a commission for any product sale generated from one of the links they have provided me and others.

At present, I will not name the company, but will simply refer to it as:  XYZs Things.

For years, XYZs Things has been a prominent member of Internet Retailer’s Top 500 list. One reason for its success is its utilization of affiliate marketing services which it authorized both ShareASale and GoldenCan to manage. I joined its ShareASale program at the end of February 2007. When XYZs Things joined GoldenCan in June 2008, it provided an integration solution for its affiliate data feed, coupons, and search functionality. This service is funded by XYZs Things and is free to its affiliates only. GoldenCans distribution encourages affiliates to create individual stores for each individual merchant.

Having met GoldenCan's requirements, I established my own XYZs Things store, and linked to it from my website. I do not advertise and have never received any income from this merchant. However, one day I hope that it will generate income. My stores page is clearly labeled "XYZs Things" so that it does not confuse any visitor about the source of products displayed. The items are not mislabeled to prevent the true merchant source from being misrepresented.

For reference, I have provided a description of trademark infringement from Harvard Law's Overview of Trademark Law:

If a party owns the rights to a particular trademark, that party can sue subsequent parties for trademark infringement. 15 U.S.C. �� 1114, 1125. The standard is "likelihood of confusion." To be more specific, the use of a trademark in connection with the sale of a good constitutes infringement if it is likely to cause consumer confusion as to the source of those goods or as to the sponsorship or approval of such goods. In deciding whether consumers are likely to be confused, the courts will typically look to a number of factors, including: (1) the strength of the mark; (2) the proximity of the goods; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the similarity of marketing channels used; (6) the degree of caution exercised by the typical purchaser; (7) the defendant's intent. Polaroid Corp. v. Polarad Elect. Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820 (1961).

Prior to writing this article, I performed a search for XYZs Things. There I found three interesting things.

1. My XYZs Things store appears on the first page of the results in 6th place and below the XYZs Things site listing, even though I do not advertise or promote this store.
2. Since Google implemented Panda, XYZs Things traffic plunged by 2/3rds, site ranking was lowered, and XYZs Things earnings dropped dramatically.
3. The CEO fired the firm he used to acquire inbound links and hired new copywriters.

Learning this information, I concluded that XYZs Things considers my site to be a threat to their income. This is evident by the fact that they reduced my affiliate commission from their standard 6% to 2.5%. They really do not want to pay out affiliate income and are trying hard to build up their traffic to their site once again.

By requiring me to remove their name from my XYZs Things store by saying that I am in violation of trademark infrigement, they believe that my store will drop off the search engine cliff, which is true. However, I believe that by not labeling the store's content with the XYZs Things name would truly place my page and content in jeopardy of a trademark violation. The reason is because visitors would believe they are purchasing items from me, and not XYZs Things, thus the "likelihood of confusion" would exist.

I understand the actions that XYZs Things has taken, but I believe that if they really wanted to eliminate my store as competition, they would simply remove me as an authorized affiliate. However, it is possible that another one of their affiliates would take my place on the search engine results. Thus, they would have to remove that affiliate as well. Eventually, they would conclude that all of their affiliate marketing efforts must be stopped completely in order to ensure that they do not pay out commissions.