United States
Internet issues for trademark owners
Roberta Jacobs-Meadway
Ballard Spahr Andrews & Ingersoll LLP
In 1993, an article on internet concerns for trademark owners would have been very short and replete with hypotheticals. In this rapidly changing landscape, matters of concern fade into insignificance as technology, practice and law evolve.
In the current environment, what internet issues are of most concern, particularly to the extent they impact on the value of marks and related IP assets? No consensus exists; but at least the following warrant consideration:
• registration strategy;
• licensing and other transfers of names;
• First Amendment and fair use;
• banners and pop-ups; and
• internet surveillance.
Registration strategy
It is well established that certain domain names may be registered as trademarks. The US Patent and Trademark Office (PTO) guidelines on registration of domain names as trademarks provide that domain names are entitled to protection as trademarks if arbitrary, fanciful, suggestive or descriptive, with acquired secondary meaning. Domain names that are merely descriptive or generic are not entitled to registration. PTO policy does not allow registration of domain names that “function as ‘merely an information indication of the domain name address used to access a website’”.
In addressing trademark registration, domain name issues increasingly must be taken into account: a new company, organisation, product or service name or mark has some unique concerns; a standard trademark search will not be enough to rely on, especially if the Internet is critical to the success of the new venture; while a mark or name may be ‘clear’ in the traditional sense, the most valuable domain names associated with that mark or name may not. The availability of these domain names may have a significant impact on whether to pursue the desired mark or name. Internet searches through major search engines are helpful. Any comprehensive trademark search performed by an outside vendor should include a search of domain names. Check registrar sites for available domain names through their availability searches.
Failure to know what domain names are available prior to the decision to proceed with a mark or name can prove problematic and costly, especially if a successful internet presence is required. There normally can be no bad-faith registration of a domain name if the trademark rights sought to be established or defended did not exist at the time the domain name was registered.
Secrecy and speed are important in dealing with registration issues. If a company is set on a new name or mark for its venture, this should be registered fast and in one effort. Any hints of pending mergers, upcoming events or any other circumstances that would be ripe for internet traffic may prove valuable targets to cybersquatters.
If a company needs to bargain for a domain name and legal action is not possible, some precautions should be taken. Consider hiding identity so that ‘deep pockets’ do not factor into the negotiations. Know your opponent. If the registrant is a domain name reseller, it may be more willing to part with the domain name for a smaller amount. The cease-and-desist letter, the offer letter and letters somewhere in the middle may be considered. A number of factors may determine the best approach, including:
• budget/legal expense policy;
• product ‘shelf life’; and
• geographic location.
In developing a registration strategy, companies need to look to how many names to register and which ones. Extensions and variations can multiply to the point where the whole effort may look wasteful and silly. How far does the company need to go? An almost unlimited amount of variations can be available for a domain name. Some of the more common variations historically pursued by cybersquatters, which should thus be evaluated as part of a registration strategy, include:
• plurals and hyphens;
• business designations;
• product designations and characteristics;
• geographic designations;
• typosquatting and phonetics; and
• negatives and positives.
Licensing and other transfers of names
Like other forms of property, domain names can be licensed or transferred. In the internet context, trademark and domain name considerations become international, notwithstanding that both are separate and distinct.
When drafting a domain name transfer agreement, a company should be sure to include the following points in the agreement:
• an agreement to transfer the domain name;
• a commitment by the transferor to cease using any marks and other domain names that include the mark;
• an acknowledgement of the company’s trademark rights in the name or mark included in the domain name, and an agreement not to claim or seek trademark rights or apply for registration of the domain name or any variation thereof; and
• an agreement that, upon execution of the agreement, the domain name holder will provide the company with the current domain name/administrator login information for the domain name registration so that the company may have full administration and management functionality of the registration.
A website owner should take advantage of the safe harbour provisions found in the Digital Millennium Copyright Act for internet service providers. Section 512(d) provides a limitation on liability for service providers that have linked to a site containing infringing material. The definition of ‘service provider’ is vague and conceivably encompasses all websites. To take advantage of this limitation on liability, a service provider:
• must not have actual knowledge of infringing material on the linked site;
• must not be aware of facts or circumstances from which infringing activity is apparent; and
• cannot receive any financial benefit directly from the infringing activity in situations where the service provider has control over such activity.
Also, when the service provider is given a detailed notice of a claimed infringement, it must act expeditiously to terminate the link.
A website owner should examine all of the links appearing on its site. A party may be liable for contributory copyright infringement where it knows or has reason to know of a third party’s direct infringement, and a party may be vicariously liable if it has the right and ability to supervise the infringing activity. With respect to vicarious liability, a website owner should examine whether it has a direct financial interest in connection with its links.
A website owner should take steps to minimise an appearance of an endorsement or association with the linked site. In this regard, links should be confined to minimum text only and avoid the use of any registered logos. Furthermore, websites should link to a home page or index page of the linked-to site, and not directly to a location deep within the site. A disclaimer may be added as to the relationship or lack of relationship between sites to avoid any impression that the two sites are somehow associated.
Permission to link is not a prerequisite, but may avoid issues as to confusion with respect to sponsorship or association. A website owner may consider a linking agreement with the linked-to site. Such agreements may be more difficult to obtain if there is no benefit to the linked-to site or if the linked-to site is a competitor. The Committee on the Law of Commerce in Cyberspace of the American Bar Association’s Section of Business Law has published a guide with model contract provisions.
Banners and pop-ups
The courts’ treatment of banners and pop-ups highlights the difficulties in using traditional trademark theory to deal with non-traditional uses of trademarks.
The sounder view is that the use of a word which is another’s mark, not in association with goods or services, but simply to trigger an advertising message whose sponsorship or origin is immediately evident, is not trademark use and so should trigger no liability under the Lanham Act.
In 1-800-Contacts v WhenU.com (2006 WL 1524515, (2d Cir June 27 2006)), the Second Circuit appears to have solidified the courts’ statement on whether pop-ups infringe on the trademarks that are typed into web browsers by Internet users. The court held that the use of trademarks to trigger pop-up ads is not a “use in commerce” when the ads are clearly labelled and not directly linked to a specific trademark.
The fair use defence succeeds where the use is not trademark use. In Playboy Enterprises, Inc v Netscape Communications Corp (55 F Supp 2d 1070 (CD Cal 1999); aff’d 202 F 3d 278 (9th Cir 1999)), the defendant marketed and sold words including ‘playboy’ and ‘playmate’ to advertisers and programmed banner ads to run in response to these search terms. The sale of these keywords was not a trademark use. But see also:
• Playboy Enterprises, Inc v Netscape Communications Corp (354 F 3d 1020 (9th Cir 2004)), in which a motion to dismiss was denied because use could cause initial interest confusion and “fair use cannot be a confusing use”;
• Google Inc v American Blind & Wallpaper Factory, Inc (74 USPQ 2d 1385, 2006 WL 832398 (ND Cal March 30 2006)), in which a motion to dismiss American Blind’s counterclaim for trademark infringement was denied on the “novel” issue of whether selling a trademark as a keyword to trigger sponsored results constituted use of American Blind’s trademarks; and
• Government Employees Ins Co v Google, Inc (30 F Supp 2d 700 (ED Va 2004)), in which a motion to dismiss was initially denied because the plaintiff made out allegations of trademark use. Four months after denying the motion to dismiss, the court found that the plaintiff had not established that Google’s use of a trademark as a keyword standing alone (without using the trademark in the ad itself) caused confusion.
A trademark owner whose mark is used to trigger an advertising message for another may disapprove, but there is no misuse of the mark in any traditional sense, no confusion of customers possible and no diversion of trade.
Is it trademark use to secure a domain name which contains another’s mark and then not use it? There appears to be no use in connection with any goods or services. There is no trademark offence. However, there may be a claim to be made successfully against the registered name. In some circumstances, registration is a form of use, even if not traditional trademark use.
As long as there is no right in gross in a mark, the non-trademark use of a mark for other purposes is outside the purview of the Lanham Act. If a remedy is broadly desired, the remedy is the province of legislation.
First Amendment and fair use
There are two species of fair use, each predicated at least in part on First Amendment considerations, operating in different ways to define what uses of others’ marks are permitted on the Internet. The doctrine of fair use in trademark law has two aspects: descriptive fair use and nominative fair use. Descriptive fair use is the use of ordinary English words in their ordinary English sense, not as a trademark and not in any manner analogous to trademark use. Nominative fair use is the use of another’s trademark to identify, truthfully, the trademarked product or service. How do the various fair use doctrines play out in the context of the Internet, and what are the First Amendment considerations which the decisions reflect?
The contexts for the examination and application of the defence include:
• references, which may be unflattering, to another’s product;
• use of the same word in connection with the same or a different product;
• parody/satire; and
• use to draw traffic to a website which may or may not discuss the product sold under the mark.
Factors have been identified and are looked to in determining whether use is fair:
• Does the use falsely suggest a connection, affiliation or sponsorship?
• Is the use necessary or appropriate to convey information about the user’s or another’s product, service or business?
• Is the use descriptive of the nature, characteristics or quality of the material?
Generally accepted principles with respect to fair use also apply to internet-related issues in the trademark context. For the use to be fair, it must be undertaken in good faith and not for the purpose of causing confusion. In this context, it is important to differentiate between trademark use and domain name use.
In considering whether use of a domain name is fair, the principles of nominative fair use have come into play in Uniform Dispute Resolution Policy (UDRP) proceedings. The recent decision in Dr Ing Lic F Porsche AG v Del Fabbro Laurent (Case D 2004-0481 WIPO, August 20 2004), is illustrative. The owner of the PORSCHE mark challenged the owner of Porsche-buy.com and Porschebuy.com. The challenge was unsuccessful. The panel found the domain names descriptive. In creating these websites, the use of the word ‘Porsche’ had an evident logic, as this is the normal term to signify the products offered. The complainant did not produce any evidence according to which the respondent would be able to describe in the domain names the goods offered under the domain names without making any reference to the trademark of the complainant. The respondent was not using the domain names in bad faith, as a mere ‘piggyback’ for other products unrelated to those referred to in the domain names.
The fair use defence fails when the finder of fact determines the adoption was not undertaken in good faith. The panel in CBS Broadcasting Inc v Nabil Z aghhloul (Case D2004-0988 WIPO, February 5 2006) confirmed that under the UDRP, the fair use defence will fail even when the domain name relates to a purely non-commercial ‘gripe site’ if the evidence shows bad-faith registration. In Washington Speakers Bureau, Inc v Leeding Authorities, Inc (33 F Supp 2d 488 (ED Va 1999)) bad faith was found when the defendant had registered four variations of the Washington Speakers name.
The decisions under the UDRP relating to ‘sucks’ marks demonstrate the same consistency, or lack thereof. With ‘ballysucks’, it seemed established that a mark + ‘sucks’ = no likelihood of confusion as to source. Then the UDRP panels, particularly those with arbitrators from non-US jurisdictions, decided that outside the United States, people might not appreciate the negative connotation of ‘sucks’, so that mark + ‘sucks’ could = likely confusion, opening up the way for consideration of other factors.
The courts thus grapple with a balancing between prevention of confusion and interference with First Amendment rights. In Nissan Motor Co v Nissan Corporation Corp (378 F 2d 1002 (9th Cir 2004)), the appellate court reversed the part of an injunction that precluded the defendant from linking to websites that published material critical of the plaintiff’s case. The appellate court rejected Nissan’s argument that the First Amendment was not implicated because the trademark was being used not as part of a communicative message, but only as a service identifier. The appellate court found that the injunction did not enjoin use of ‘nissan.com’, but enjoined certain content on the site. Therefore, the communication was constrained and the First Amendment was implicated.
Internet surveillance
The array of products and services available for surveillance of marks on the Internet is changing, options growing. Visual images cannot be tracked readily, but as digital watermarking develops, misuse or unauthorised use of two and three-dimensional marks can be monitored as well as word marks.
CompanyEthics.com lists links to sites that use the word ‘sucks’ in the URL. CyberAlert, a monitoring service, is basically a clipping service that tracks mentions of companies, products and people. The service monitors message boards and news groups to gather intelligence about companies and products. Monitoring and clipping services include: eWatch, a service of PR NewsWire; Bacon’s NetClips; Cyveillance, which focuses on infringement monitoring; NetCurrents; and eSleuth. Name Protect offers identity theft and fraud protection products, market intelligence analysis, agent and channel compliance verification (grey market), dilution reports, design monitoring, trademark and domain name watches, and research into offensive and defamatory content. SRA International offers a multilingual surveillance system which includes a web crawler, concept-based indexing, automated hyperlinking for browsing and translations.
These and other services exist to assist trademark owners in identifying sites that infringe on marks, misuse brand names, offer diverted goods or counterfeits, manipulate search engines to divert traffic, falsely claim relationships, disparage the brand or associate it with objectionable content.
Companies may adopt diverse policies to deal with unauthorised trademark use in the internet context. One may want to pursue only counterfeits, grey market goods and pornographic content. Another may want to pursue a wider range of use, from critical sites and parodies outside the scope of the First Amendment to arguable infringements. The important thing is to have a policy - and a reason for the policy - to guide determinations. Considerable energy and funds can be expended pursuing uses that are transitory or inconsequential. Not all marks are of the same importance. Not all misuses carry the same risks. On the other hand, a reluctance to engage a non-competitor or a competitor making use of the company’s mark may complicate later enforcement efforts and weaken the ambit of protection for the mark.
