September 2002

Domain-Name Registrations and Online Trademark Infringement

by Kristina Tung Kitts and Cindy L. Caditz

The Internet has presented a new frontier of commerce, information and opportunity. Unfortunately, every new frontier also spawns associated problems, and trademark infringement on the Internet has plagued trademark owners. This new medium of trademark infringement should be considered and evaluated by trademark owners using the same cost/benefit factors that have guided trademark owners prior to the advent of the Internet.

Federal law requires that a trademark owner enforce the exclusive right to use the mark that can be rightfully claimed only by a single owner of the mark. This obligation is essential to the purpose and policy underlying the entire structure of trademark law. Consumers must be able to rely upon a trademark as an indication of the nature, characteristics and source of a product or service. If use of the mark is not controlled, then consumers will be deceived when purchasing the product or service. Without control of the use of a mark, consumers will pay for a product or service that they did not intend to purchase. For this reason, trademark law requires that trademark owners stop use of their trademark or any other trademark that is confusingly similar to their trademark in association with goods or services that consumers are likely to believe may originate from a single source.

Trademark owners are finding that their Web sites are being "linked to" by various parties; their Web pages, logos, names, trademarks or stories are being "framed" into the Web pages of others; and domain names are being registered by third parties for their similar or exact marks, solely or primarily for the purpose of diverting customer traffic.

Because the Internet has presented a plethora of new infringement in a new medium, this article attempts to provide some factors for consideration by the trademark owner when faced with an infringement on the Internet.

Trademark owners have an affirmative duty to police their trademarks. Failure to police a trademark diligently can result in a finding that the trademark owner has abandoned the trademark. Policing is not intended to impose an unreasonable burden on the trademark owner, and no case law specifically obligates a trademark owner to police the Internet.1  However, trademark infringement on the Internet must be included in an overall policing strategy.

Trademark rights are established by the use of a word, term, name, symbol or device (or any combination thereof) in commerce to identify the source of the goods or services being sold. The Lanham Act defines "use in commerce" as follows:

"Use in commerce" means a bona fide use of a mark in the ordinary course of trade (1) on goods when (a) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, and (b) the goods are sold or transported in commerce; and (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce.2 

Registration of a domain name without use of the domain name cannot constitute the basis for a claim of rights in a trademark.3 

Conversely, mere registration of a domain name that includes a trademark without use of the domain name may not constitute trademark infringement. If the registration is being offered for sale or is the subject of other activity that may cause injury to a trademark owner, the law allows the trademark owner to obtain an order requiring transfer of the domain name or cancellation of the domain-name registration. 15 U.S.C. Section 1125. Use of the domain name as a trade name or as a trademark may constitute trademark infringement under statutory and common law.

The prior use of a domain name as a trademark or trade name creates rights under common law and statutory law to the same extent as the prior use of any other trademark or trade name. The fact that the trademark or trade name is also a domain name does not alter the evaluation of the relative rights of the parties.

The U.S. Patent and Trademark Office does not consider any common-law uses of names or marks when evaluating the registrability of marks, and thus a finding of registrability will not include consideration of prior rights that may have been established by uses of the same or similar names or marks on the Internet. The owner of any such prior rights may oppose a pending trademark application or seek cancellation of the registration during the first five years after issuance.

The rights of a trademark owner include the ability to stop use of confusingly similar marks on products that are sold in the same channels of trade in which the trademark owner has used its mark. 15 U.S.C. §§ 1051-1128. In addition, some courts have found that the exclusive rights of a trademark owner extend to channels of trade in which the trademark owner has not actually used the mark, but in which the use of a similar mark may cause confusion among customers. For example, prior use of a trademark in association with the sale of skis may be sufficient to stop use of a similar mark by another party in association with clothing. Although skis and clothing are sold in different channels of trade, use of the same or similar marks by two separate companies may cause customers to mistakenly believe that the products originate from the same source.4

The basic factors to evaluate in determining whether there is a "likelihood of confusion" between the marks at issue was articulated by the 2nd Circuit in Polaroid Corp. v. Polarad Elecs. Corp.5 The eight non-exclusive factors included in the Polaroid test are:

the strength of the plaintiff's mark;6 

the degree of similarity between the two marks;

the proximity of the party's products;

the likelihood that the plaintiff will bridge the gap;

actual consumer confusion;

the defendant's good faith in adopting his/her mark;

the quality of the defendant's product or service; and

the sophistication of the consumers in question.7 

The 9th Circuit employs a very similar eight-factor test for analyzing the "likelihood of confusion" issue.8 In addition, the 9th Circuit test considers the "marketing channels used by both parties" in lieu of the Polaroid factor of the quality of the defendant's goods or services.9 The 1st, 3rd, 4th, 6th and 7th Circuits all employ similar tests for determining "likelihood of confusion." Thus, similarity of the marks alone will generally not support a claim of likelihood of confusion, unless the mark is famous. (See endnote 6.)

As in all cases of infringement, the first course of action should be to explore the possibility of a negotiated resolution. Assuming all other settlement attempts have failed, there are two major avenues available to attack the registration of an infringing domain name: (1) an administrative action under the Uniform Domain Name Dispute Resolution Policy (UDRP); or (2) the filing of a lawsuit pursuant to the U.S. Anti-Cybersquatting Consumer Protection Act (ACPA), or, if the facts warrant, pursuant to federal infringement or anti-dilution laws. The key requirement of both the UDRP and ACPA is proof of bad faith on the part of the domain-name registrant. Therefore, plaintiffs who are not certain they can establish bad faith on the part of the domain-name registrant are best advised to pursue alternative causes of action such as a lawsuit claiming trademark infringement or dilution under the Lanham Act. (See Section II, C above.)

Implemented October 24, 1999, the UDRP sets out the legal framework for the resolution of disputes between a domain-name registrant and a third party over the abusive registration and use of an Internet domain name in the generic TLDs such as .com, .net, .org, .info, .biz and .name (gTLD); and those country code TLDs (ccTLD), such as .jp for Japan, .uk for United Kingdom, and .br for Brazil, that have adopted the UDRP on a voluntary basis.10 

The UDRP is incorporated by reference into all gTLD domain-name registration agreements. This includes domain names in these TLDs that were registered at any time in the past. These agreements require a domain-name registrant to submit to a mandatory administrative proceeding under the UDRP in circumstances where a complaint is filed regarding the domain name.

In order to succeed in a complaint under the UDRP, a complainant must provide written submissions and documents or other evidence which meet the following criteria:

The domain name registered by the domain-name registrant is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

A domain- name registrant has no rights or legitimate interest in respect of the domain name in question; and

The domain name has been registered and is being used in bad faith.11 

The Anti-Cybersquatting Consumer Protection Act (ACPA) was adopted in 1999. 15 U.S.C. Section 1125. Actions under this act must be instituted in federal court. The ACPA provides relief to the trademark owner in those cases where a domain name has been registered in bad faith with intent to profit, traffic in, or use a domain name that:12 

is identical or confusingly similar to a mark that was distinctive when the domain name was registered;

is identical or confusingly similar or dilutive of a mark that was famous when the domain name was registered; or

infringes marks and names protected by statute such as the Olympic Symbol or Red Cross.

The main difference between an ACPA proceeding and a UDRP proceeding is that the ACPA is a civil proceeding which must be the basis of a federal court action, and the UDRP procedure is an administrative arbitration proceeding that is not binding on federal courts. The main advantage of the UDRP administrative procedure is that it is a more efficient and cost-effective way to resolve a dispute regarding the abuse of registration and use of an Internet domain name than going to court. The UDRP procedure is considerably less formal than litigation, and the decision-makers are experts in such areas as international trademark law, domain-name issues, electronic commerce, online commerce, and dispute resolution. The UDRP procedure is also international in scope, and provides a single mechanism for resolving a domain-name dispute regardless of the location of the registrar, the domain-name holder, or the complainant.

Because there is no mechanism for conducting discovery in a UDRP action, the trademark owner must state and establish all necessary facts in the initial complaint. Thus, this forum is effective only for complainants with clear-cut cases who seek only to have a domain name transferred or cancelled. For more complex cases, or where the element of bad faith must be proven by facts that may be contested, an action under the ACPA is more effective.

The remedies provided by the UDRP include only cancellation or transfer of the domain name(s) at issue. The remedies provided by the ACPA are much broader, and include cancellation or transfer of the domain name; compensatory damages or statutory damages between $1,000 and $100,000 per domain name, as the court deems just; attorneys' fees; costs; and injunctive relief.

Although the UDRP and ACPA have generally proven helpful to trademark owners, traditional trademark infringement and unfair competition principles have generally not been helpful to the trademark owner faced with "fan" or "gripe" Web sites and associated derogatory domain names. Such trademark owners must show that use of the domain name or site would cause likelihood of confusion of source or sponsorship. This is frequently difficult, because such domain name or Web site owners do not make use of the domain name to identify any goods or services.

Cybersquatter case law under the Federal Anti-Dilution Act is also of little assistance to the trademark owner in these situations. Because the mere reservation of a domain name and attempt to sell it to an owner causes no blurring of the trademark in the minds of the consumer, courts generally stretch notions of "fame" and "commercial use" in order to address problems of cybersquatting. Such domain-name cases often involve trademarks that are not "truly famous" and defendants that make no "commercial use" of a plaintiff's trademark.13 

The ACPA is a bit more helpful in addressing fan or gripe Web sites and derogatory domain names. Pre-ACPA case law held that the use of a company name or mark in a domain name or on a Web site used solely to criticize the goods or policies of a company is a fair use that does not constitute infringement.14 The ACPA's "safe harbor" element somewhat affirms this principle and tends to permit the use of another's mark in a domain name where the use is solely in the exercise of valid free-speech rights to criticize a target product or company symbolized by the mark. However, Congress cautioned that the "safe harbor" factor is not intended to create a loophole that could swallow the act by allowing a domain-name holder to evade liability merely by putting up a seemingly innocent site under an infringing domain name. House Judiciary Committee Report on HR3028, Hr Rep. No. 106-412, p. 11 (October 5, 1999); Senate section-by-section analysis, Congressional Report, S14713 (November 17, 1999).

Congress specifically noted that the ACPA gives courts the flexibility to weigh appropriate factors in determining whether the name was registered and/or used in bad faith, and it recognizes that one such factor may be the use the domain-name registrant makes of the mark.15 

Therefore, unless derogatory domain names are linked to a site conducting activity against which the trademark owner would normally take action, or bad faith can be established, trademark owners must simply tolerate such use. Many companies realize that no person looking for a legitimate Web site would expect to find it through any such derogatory domain names, and therefore avoid taking action against such domain names and/or fan or gripe sites because they do not want to implicate First Amendment issues, especially with all the attendant bad press that may result.

If a trademark owner wants to send a strong deterrent message to cybersquatters, then federal litigation under the ACPA or, if warranted, the infringement or anti-dilution laws should be utilized because the remedies are significantly more expansive. If, however, a trademark owner merely wants to acquire the domain name at issue, then the UDRP provides sufficient relief.

Many cases of online infringement constitute trademark infringement or dilution and therefore can be effectively addressed through the initiation of a conventional federal court infringement action. The nature and scope of this litigation is beyond the scope of this article, but this "garden variety" litigation is more generally known to practitioners.

The most basic answer to this question is established by the duty of the trademark owner to police its mark as discussed above. Failure to stop infringement in any medium, including the Internet, may result in a finding that the trademark owner has abandoned its rights in its mark. Beyond this very basic requirement, the scope of enforcement to be undertaken against online infringement will turn upon the available resources and the value of the mark. The degree of aggression taken against online infringement need not be any broader or any narrower than that implemented in other cases of infringement. A trademark owner should implement a consistent enforcement campaign and treat any act of infringement, in any medium, with the same degree of attention.

NOTES

1. Playboy Enters. v. Chuckleberry Publishing Inc., 486 F.Supp. 4414 (S.D.N.Y. 1980). The court stated that a trademark owner is not obligated to police every conceivable related use in order to protect a definable area of primary importance.

2. 15 U.S.C. § 1127.

3. Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1051 (9th Cir. 1999) (registration of the domain name "moviebuff.com" with NFI does not in itself constitute use for purposes of acquiring trademark priority).

4. See Recot, Inc. v. Becton, 214 F.3d 1322, 54 U.S.P.Q.2d 1894 (Fed. Cir. 2000) on remand 56 U.S.P.Q.2d 1859 (T.T.A.B. 2000) (on remand, the board found a likelihood of confusion between the senior mark FRITO LAY used for snack foods and the junior user's FIDO LAY for dog treats).

5. 287 F.2d 492 (2d Cir. 1961).

6. If the mark is famous, see the Federal Dilution Act of 15 U.S.C. § 1127. "Dilution" is defined as the lessening of the capacity of a famous mark to identify or distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and the other parties; or (2) likelihood of confusion, mistake or deception…

7. 287 F.2d at 495.

8. See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1054 (9th Cir. 1999).

9. See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979).

10. See http://arbiter.wipo.int/domains/cctld/ for a listing of the ccTLDs in which the World Intellectual Property Association offers arbitration services.

11. Paragraph 4(b) of the UDRP sets out examples of circumstances that will be considered evidence of bad faith.

12. See 15 U.S.C. § 1125(B)(i) of the ACPA for a non-exclusive list of nine factors that a court can examine to determine the existence or non-existence of bad faith.

13. See Sporty's Farm LLC v. Sportsman's Markets, Inc., 202 F.3d 489 (2nd Cir. 2000) 489, 495-496, cert. denied, 530 U.S. 1262 (2000).

14. See Bally Total Fitness Holding Corp. v. Faber, 29 F.Supp.2d 1161, 50 U.S.P.Q.2d 1840 (CD Cal. 1998) (defendant registered ballysucks.com). The court stated that no reasonably prudent Internet user would believe that ballysucks.com is the official site or is sponsored by Bally.

15. See Shields v. Zuccarini, 87 F.Supp.2d, 634, 54 U.S.P.Q.2d 1166 (EDPA 2000) (ACPA violation found and preliminary injunction granted). A defendant who was making a bad-faith use of a plaintiff's mark, upon being sued, opened a Web page criticizing the trademark owner's product. The court rejected the safe-harbor defense: "We conclude that defendant's claim of good faith and fair use is a spurious explanation cooked up purely for this suit and we reject it out of hand."