Archives for August 2015

Congress enacted the Anti-Cybersquatting Consumer Protection Act which prohibits certain types of cybersquatting. The statute amended the Lanham Act to make it a type of trademark
infringement if a domain name containing a distinctive or famous trademark is registered in bad faith.

The Act provides certain benefits not previously available to trademark owners:

• Beyond the damages which are conventionally available in a trademark infringement action, the Act gives trademark owners the opportunity to elect to recover statutory damages between $1000 and $100,000 per domain name.
• When a trademark owner cannot obtain in personam jurisdiction over a domain name registrant, either because the person used an alias in registering the domain name or is outside the jurisdiction of the United States courts, the trademark owner may file a civil in rem action against the domain name. In these civil in rem actions, the relief is limited to transfer of the domain name to the trademark owner, cancellation or forfeiture.

Cybersquatting is a broad term used in the trademark and internet communities to describe the bad faith registration of domain names. Cybersquatting encompasses registration of domain names containing trademarks, either to sell back to the trademark owner or prevent the trademark owner from using the domain name. Cybersquatting has also been used to define certain types of wholesale domain name registration and wharehousing.

In the United States, mere registration of a domain name does not constitute use of the domain name as a trademark. Accordingly, the courts have found that mere registration of a domain name, with no other act, does not constitute trademark infringement. Use of the domain name in connection with an active website, may however, trigger liability. In addition, registration of a domain name that consists of or contains a well-known trademark may constitute trademark infringement or dilution if the domain name registrant registered the domain name with the intent to sell it back to the trademark owner for a profit, or otherwise registered the domain name in bad faith.

Like any other user of a mark, a domain name registrant should consider having a thorough clearance of the domain name performed before embarking upon an extensive marketing campaign using the name or other activity that might subject the domain registrant to liabiltiy. Due to the international nature of the internet, the domain name registrant may be well advised to consider performing availability searches in foreign countries where the website is expected to be frequently accessed.

No. It is true that an internet site may be accessed through the domain name by internet users anywhere in the world. Courts in the United States have ruled that mere registration of a domain does not constitute use of the domain name as a trademark. The offering of goods or services through a website, however, usually does constitute interstate use for the purposes of U.S. trademark protection. Accordingly, if the domain name is distinctive, common law trademark rights will arise upon activation of the website. Domain names that consist merely of a descriptive or generic term for the goods or services offered on the website may be difficult to protect as trademark.

The foregoing is not necessarily true outside of the United States. Trademark rights are territorial, and the trademark laws of foreign countries vary widely. In fact, a number of countries will accord trademark protection only to a mark that has been registered in their country. Therefore, if the domain name owner seriously intends to effectively deter or prosecute infringers abroad, foreign trademark registrations may have to be sought.

A particularly egregious form of trademark infringement is called counterfeiting. Counterfeiting consists of the use of a substantially identical copy of a registered trademark on the same goods or services for which the original mark is registered. There are special remedies for counterfeiting including ex parte seizure orders, treble damages and statutory damages.

Section 43(c) of the Lanham Act defines three defenses to a claim of dilution under the federal statute: comparative advertising, noncommercial use, and news reporting and commentary. The comparative advertising defense is conditioned on the challenged use being “fair.” For example, use of a famous mark in a purely nontrademark, descriptive sense would be fair, while altering the famous mark in an advertisement so as to lead consumers to associate undesirable characteristics with the mark would be unfair. The noncommercial use defense is intended to permit the use of a trademark in, for example, a negative product review in the media. Defendants may also raise the traditional defenses of laches, acquiescence, estoppel, and unclean hands.

Trademark dilution is the use of a mark or trade name in a way that dilutes the distinctive quality of a famous mark. Unlike traditional infringement claims, to establish a claim for dilution, the owner of a famous mark does not need to demonstrate that there is any competition between its goods or services and those offered under the offending mark, or that there is any likelihood of confusion. Traditionally, the courts have found two types of dilution to be actionable: dilution by blurring and dilution by tarnishment.

Dilution by blurring is the traditional injurious impact of dilution as envisioned by its original and occurs when customers or prospective customers see the plaintiff’s mark used by other persons to identify different sources on many different goods and services. The unique and distinctive significance of the mark to identify and distinguish one source may be diluted and weakened, but no confusion as to source, sponsorship, affiliation, or connection has occurred. A hypothetical example of dilution by blurring would be the effect on the famous KODAK mark if it were used on pianos or ball gowns. While the average consumer would be unlikely to believe that Eastman-Kodak had begun to manufacture these items, KODAK would cease to become a unique identifier of Eastman-Kodak cameras and related products.

Dilution by tarnishment can arise where the effect of the defendant’s unauthorized use is to degrade positive associations of the mark and thereby dilute the distinctive quality of the mark. Since a tarnishing use lessens the ability and capacity of a famous mark to identify a certain standing or reputation of type, quality, or wholesomeness of goods or services, the definition of dilution under the federal statute may be read to include tarnishment. In Hasbro, Inc. v. Internet Entertainment Group, Ltd., the court held that the mark “candyland.com,” which was used for an Internet web site showing sexually explicit pictures, diluted by tarnishment the famous mark CANDYLAND for a children’s board game.

Unfair competition is the same as trademark infringement except without the requirement of the existence of an enforceable trademark. Seriously, unfair competition is the creation of a false impression as to the source, origin, sponsorship or endorsement of products or services without the use of a trademark. There is a federal version of unfair competition embodied in section 43(a) of the Lanham Act, which prohibits the use, with goods or services, of a false designation of origin or a false or misleading description or representation of fact. A claim of unfair competition may arise from the same facts as a claim for trademark infringement if a trademark is used in a way which creates a false designation of origin or a false or misleading description or representation of fact.

New York, like many states, has a body of legislation aimed at “deceptive business practices.” Often, causes of action for unfair competition under state common law are accompanied by such claims. This “amorphous” cause of action may be used for claims sounding in false designation of origin, false advertising, etc., and has a six-year statue of limitations compared with the three-year period available for claims for common law unfair competition.

The key issue in determining infringement is whether there is a likelihood of confusion caused by the alleged infringer’s use of the owner’s mark (or something similar). The courts look at several factors in assessing likelihood of confusion. The factors are:

• The strength of the mark. Is the mark well-known? Has the owner devoted much time, money and effort to publicize the mark? How closely is it associated with the owner and its products and services?
• The degree of similarity between the mark and the thing alleged infringer is using–how close are they in appearance, meaning or sound?
• The proximity of the parties’ products–are they in the same product category? Do they
  use the same channels of distribution?
• The likelihood that, if the parties’ products do not directly compete, they will sometime in the future ‘bridge the gap’ that currently exists.
• Actual confusion. Is there anecdotal evidence of confusion? Does the owner have a survey of consumers demonstrating confusion?
• The intent of the defendants–did defendant know of plaintiff’s mark? Did defendant
  deliberately copy plaintiff’s mark?
• The quality of the products–is defendant’s product clearly inferior to plaintiff’s?
• The sophistication of the purchasers–are they discerning or careful enough that confusion is unlikely?

The court will balance these factors, and a trademark plaintiff need not prevail on each of them to succeed on its claim. For example, actual confusion is not required. Malicious intent is not required–a defendant who acts in complete good faith may still be prevented from using its own mark. Generally, and as one might expect, courts use common sense in balancing the relevant factors.

If at any time after a mark has been registered, a third party believes that the registration is statutorily invalid, that party may file a petition for cancellation of the registration. Cancellation proceedings are similar to oppositions and are also considered by the Trademark Trial and Appeal Board.