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Trademark: Internet Implications

    Internet trademark cases, although perhaps followed less widely than copyright cases (e.g. by the media and other non-legal stakeholders) have nonetheless had a significant impact with respect to how business is done online. The legal disputes cover a wide range of Internet specific contexts including: cybersquatting,  domain name trademark dilution, genericide, keywords, meta tags, popup ads, email, spamming and more. To the uninitiated (including some "bricks and mortar" trademark attorneys) this bewildering array of technical jargon is daunting. Yes, the old doctrine still applies (e.g. "likelihood of confusion") as discussed elsewhere, but the fact patterns vary significantly from the "world of atoms."

    This section highlights legislation dealing with some specific issues as well as controversies that are yet to be settled. Even where there is legislation on point, there still appears to be varying shades of gray with respect to how the law is applied. It is certainly not possible to cover all permutations of Internet related trademark issues that may arise, and therefore the illustrations provided here are necessarily constrained.

    Anticybersquatting Consumer Protection Act (ACPA)

    The ACPA was enacted in 1999 to address "the unauthorized registration or use of trademarks as Internet domain names or other identifiers of online locations (commonly known as 'cybersquatting')." Congress found that this unauthorized registration had the following deleterious effects: (1) results in consumer fraud and public confusion as to the true source or sponsorship of products and services; (2) impairs electronic commerce, which is important to the economy of the United States; and (3) deprives owners of trademarks of substantial revenues and consumer goodwill.

    The ACPA added section 1117(d) to the Lanham Act providing statutory damages (in  lieu of actual damages) for the specified domain name infringement. It also added provisions under section 1125(d). In general, to succeed in an action under the ACPA a plaintiff must show: (1) that the mark in question is a distinctive or famous mark entitled to protection; (2) that the defendant registered domain names that are "identical or confusingly similar to" the plaintiff's mark; and (3) that the defendant registered the domain names with the bad faith intent to profit from them (see Shields v. Zuccarini (3d Cir. 2001) citing section 1125(d)(1)(A)).

    Comments: Certainly the ACPA amendments to the Lanham Act have made it easier for a plaintiff to bring a "domain dispute" cause of action (e.g. section 1125(d)(2) provides an "in rem" civil action), but this nonetheless involves all the associated downsides of bringing suit, namely litigation costs and the time required to get resolution. It also requires an international plaintiff to have "substantial ties" with the U.S. in order to bring an action under the federal statute. For these, and other reasons, many plaintiffs prefer to arbitrate a solution through ICANN as discussed below.

    ICANN, Registrars & the UDRP

    What is ICANN? ICANN is an acronym that stands for the "Internet Corporation for Assigned Names and Numbers" and its website is found here. It was formed in 1998 and describes itself as a "not-for-profit partnership of people from all over the world dedicated to keeping the Internet secure, stable and interoperable." While this may sound (and is) a somewhat lofty "mission statement" the organization's primary mission is to manage and coordinate the Internet's Domain Name System (i.e. the system that translates IP addresses into recognizable names such as www.google.com). The U.S. Department of Commerce selected ICANN for this role in 1998 and the DNS has remained under its care ever since.

    While ICANN is responsible for registrar accreditation (e.g. for an organization such as GoDaddy that allows consumers to purchase domain names) and other activities, what is of primary interest here is its Uniform Domain Name Dispute Resolution Policy (“UDRP”). The UDRP is a policy between a registrar and its customer and is included in registration agreements for all ICANN-accredited registrars (to see a list all ICANN-acredited registrars go here).The UDRP allows a trademark holder to initiate dispute proceedings arising from alleged abusive or inappropriate registration of domain names. The UDRP is conducted under the Rules for Uniform Domain Name Dispute Resolution Policy and is essentially a non-judicial form of resolution.

    The way it works is that when you buy a domain name (actually it is more like "renting" because of the requirement to renew) from an accredited registrar you are agreeing to submit to a mandatory administrative proceeding in the case that a third party complains to a Provider (i.e. an organization approved by ICANN to resolve disputes) about the registered domain. A third party has a right to complain if:

    (1) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

    (2) you have no rights or legitimate interests in respect of the domain name; and

    (3) your domain name has been registered and is being used in bad faith.

    If the third party prevails in front of the administrative panel the remedies available are limited to requiring the cancellation of your domain name or the transfer of your domain name registration to the third party. Money damages are not available. However, nothing within the UDRP prevents either party from submitting the dispute to a court of competent jurisdiction for resolution either before the proceeding is commenced or after it is concluded. Additional information regarding the UDRP process can be found here.

    Comments: The policy indicates that any decision by the panel will be published in full over the Internet. This is clearly targeted at using the normative rules (i.e. reputation value) of the Internet to control inappropriate behavior. While this has no effect on "rogue" opportunists, it is likely to have an impact on organizations that have an incentive to play by the rules. The current UDRP fee schedule can be found at National Arbitration Forum and circa 2008 ranges from $1,300 (USD) for 1-2 disputed domain names and a single member panel to $5,000 (USD) for 11-15 disputed domain names and a three-member panel. The fees are in addition to any attorney fees that a respective party may incur.

    Comments: There are a number of advantages related to using the UDRP (i.e. as opposed to a law suit) including resolution time (usually within a few months or less) and a significant reduction in dispute resolution costs. In addition, the UDRP can be enforced against all domain holders (i.e. nationally and internationally regardless of jurisdiction) as opposed to the jurisdictional enforcement limits imposed on the courts.

    Search, Advertising & Trademarks

    There have a been quite a few (well in the hundreds) of cases that deal with the intersection of trademark doctrine and online advertising. These cases are obviously important to the Internet and its further evolution since so much of the content that consumers find useful is "ad sponsored" (i.e. it is mostly advertising spend the has fueled the explosive growth). In addition to the case law, there are FTC regulations and statutes that implicate what can pass as fair advertising in the online world. This section will highlight some of the leading cases and point to where controversies still exist. There are some "rules of the road" that have been established but this an area that is still evolving.

    Case Law

    One of the early cases was Playboy v. Netscape (9th Cir. 2004). This case dealt with the doctrine of "initial interest confusion" which, as mentioned in the Infringement section, is somewhat controversial because it creates liability despite the fact that there is no confusion at the time the sale is made. The theory is that the seller (via banner ads in this case) has gained an advantage through the inappropriate use of the holder's mark. The 9th Circuit rejected all of Netscape's defenses including fair use, nominative use, and functionality. However, the 9th Circuit emphasized that this was a "narrow holding" based on "unlabeled banner ads" and that clearly labeled ads would not trigger liability, apparently because there would be "no initial confusion." This case was a victory of sorts for trademark holders, but the victory celebration was not long lasting.

    Playboy was followed by GEICO v. Google (E.D. Va. 2004) which was considered a victory for Google and its advertisers. The GEICO court held that Google's technology that allowed the triggering of ads that did not contain GEICO's marks was "not likely to cause confusion." The GEICO decision was arguably an important factor in Google's rise to prominence via its relentless leveraging of the "money machine" contained within its AdWords program. Ads that are identified as to "source" and do not use a competitor's mark are apparently OK and will not cause the "consumer confusion" that triggers liability.

    However, this was not the end of the story as the continuing battle between Google & American Blind indicates. That said, on August 31, 2007 Google entered into a settlement agreement with American Blind and many commentators, including Eric Goldman, view this as a "stunning victory for Google." Clearly, keyword advertising is (apparently) here to stay. This settlement, wherein Google paid no damages and American Blind is arguably the worse off, should dissuade future  plaintiffs from pursuing similar suits. This result (despite no holding) is not surprising given the important role search and keyword advertising now play in the global economy. It may in fact help clear the way for the next wave of growth.

    It may be premature to consider the legal issue at the intersection of trademark doctrine and online advertising completely settled, although it is hard to imagine a scenario where a future holding could go the other way, especially if Google continues to adhere to its current AdWords trademark policy. But, hard to imagine does not mean impossible. It is likely that American Blind is simply not the "deep pocket" plaintiff that has the staying power to see this type of litigation (spanning four years) all the way through to conclusion (i.e. a jury trial on the issue). The U.S. Supreme Court has not spoken on the issue and a powerful interest may yet persuade it to hold in its favor, but the odds are against it. Many powerful interests are themselves users of AdWords and this may be another example of where the marketplace is leading the law.

    The Federal Trade Commission (FTC) Regulations & Other Applicable Law

    Many FTC regulations apply to the "brick and mortar" world as well as to the world of online advertising. FTC policy supports competitor "brands" used in comparative advertising as long as the appropriate disclosures are provided and the advertising is "truthful, non-deceptive and clear." The FTC website contains useful information regarding how its policies apply to online advertising but, as with all websites, some of the information is dated. In addition, as mentioned in What Law Controls? state law regarding unfair competition is also applicable.

    The "law of the Internet" is a misnomer since many (if not most) laws that regulate business activity apply online. There is simply not much of a distinction that is warranted except for the nuances related to the context. It is these nuances that make "Internet Law" a separate and distinct practice area, more so than controlling doctrine.


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