Trademarks and Internet Domain Name Conflicts: A Practical and Cost-Effective Strategic Approach to Protect Your Valuable Trademarks from Identical / Similarly-Spelled Domain Names which are Infringing or Tarnishing Your Trademarks

Before you assert trademark rights over a domain name, understand the limits of your rights. This will help you cost-effectively avoid asserting excessive and unreasonable rights which you may never be able to truly enforce in a court of law. As courts continue to adjudicate conflicts emanating from the intersection of “real world” traditional trademark theory and technology created “virtual space” internet domain names, there are crucial decisions that need to be made by the trademark owner before allocating large sums of money towards trademark enforcement efforts. 

    The inconsistent but emerging consensus on domain name / trademark conflicts sets out caution to trademark owners to be more pragmatic and probe for alternatives to stay on top of their necessary trademark policing and enforcement duties while keeping their costs at the least amount possible to still effectively protect their investment in their trademark.  Some critical questions are:

* Is it really worth pursuing inactive domain names that are identical to or resemble your trademark?  Not always – consider sending a cease and desist demand letter asserting your trademark rights and then conducting only weekly or monthly searching / policing of the Internet to verify that the domain name is “inactive” or “not in use”. If it is inactive or not in use,  then it’s not damaging the strength of your trademark. You will likely be better off and ultimately save money by policing use of the domain name and only bringing enforcement action if the domain name is activated or in use.

** Is it worth acquiring hundreds of misspelled or similarly spelled domain names comprising of your trademark from a registrar or cybersquatter considering the administrative and/or settlement costs and the duration of the registration of each domain name?  In the majority of cases, the answer is “No”.

    This article will explain the friction caused by the intersection of trademarks and domain names, limitations of trademark holder rights and the various options available to resolve the trademark / domain name conflicts. This article will also focus on advising on cost-effective strategies for trademark policing from a domain name perspective.

    As you may be aware, a trademark is a word, phrase, symbol, slogan, design or combination of such used to identify the source of goods or services, thereby linking traders with commodities. United States Patent and Trademark Office registration of a trademark gives the owner the exclusive right to use that trademark in U.S. Commerce in relation to the particular category of goods and services.

    Domain names are unique numeric Internet Protocol addresses (such as 206.191.60.210) that have been made easy to understand by using letters to match the numeric code (e.g. "weaveramin.com"). It is these letters that are referred to as "domain names." They are hierarchically structured character strings that serve as Internet addresses. The uniqueness requirement of the hierarchically structured character creates an exclusivity that has important economic consequences as no two users can use the exact same character string as a domain name to attract internet traffic.

    The character strings used for domain names sometimes correspond to the character strings of registered trademarks. This resemblance could be accidental or may be bad faith cyber-squatting / typo-squatting to redirect internet traffic, to cause a likelihood of confusion, or deliberate passing off to confuse or deceive customers as to the original source of the goods / services. The situation is further aggravated as domain names are no longer confined to the internet as virtual space identifiers. Domain Names cross paths with the trademarks in the “real world” as well – on billboards, television commercials, magazine advertisements, and even the sides of buses. Further, they are gradually but significantly emerging as the new form of business identifiers. The friction caused by the intersection of the traditional business identifiers / source indicators (i.e. trademarks) and the lately emerging new form of business indicators (i.e. the domain names) has opened a pandora box of legal tangles on a global scale.  The seamless world of the Internet further deepens the proportions of the issues.

    Despite the U.S. Anti-Cybersquatting Act and ICANN-approved WIPO Internet-Arbitrations being available as remedies to obtain the infringing domain names via a Court / NSI mandated transfer, trademark holders still have limits over their rights.  First, Courts do not even consider a domain name as “property”, but rather only as a service that you pay for provided by some registrar Lockheed v. Network Solutions 194 F.3d 980 (9th Cir. 1999). Second, mere registration of domain names does not constitute “Use in Commerce”, a pivotal element in trademark infringement determination. Beth Cline v. 1-888-Plumbing Group, Inc. 2001 U.S. Dist. LEXIS 6899.

    Although federal trademark registration or even mere common law trademark use allows you to sue under the US Anti-Cybersquatting Act and federal registration allows you to file an Internet WIPO Complaint for the mandated transfer of the domain name back to the trademark holder, it makes little sense to do it because mere domain names are not property nor damaging to your trademark if not  “active” or “in use”. If the domain name is not active or in use, then it cannot possibly cause harm to your trademark by: 1) redirecting internet traffic or by competing; 2) tarnishing your trademark; 3) blurring your trademark; 4) weakening your trademark; or 5) otherwise decreasing the strength and value of your trademark by causing a likelihood of confusion. For example, using an infringing domain name in connection with a pornographic website or as link to other infringing  health related sites should be considered an actionable “active” usage of the domain name which is damaging your trademark and such actions can attract various trademark related causes of action like willful infringement, dilution, cybersquatting unfair competition, counterfeiting etc. In such circumstances, a mere cease and desist demand would not suffice. Steps should be taken to enforce and ensure compliance with the cease and desist demand. On the other hand, sites that are actually inactive or activated sites that are still “under construction” but with no links to infringing web sites, or domains “for sale” but without links to other infringing sites can be considered “inactive” web sites because such sites usually cannot harm the strength or value of your trademark. A mere cease and desist demand would put the potential infringer on notice of the potential infringement and preserves rights to initiate an enforcement action if the circumstances warrant such an action.

    Thus, we strongly recommend our clients to file Anti-Cybersquatting or WIPO Complaints if and only if the offending domain name is active and actually damaging your trademark rights. The ensuing section provides an insight into the most common options available to resolve trademark / domain name disputes.

Two Common Remedies to Resolve Domain Names / Trademark Conflicts

1. ICANN Uniform Dispute Resolution Policy

Forums:    World Intellectual Property Organization (WIPO) Arbitration and Mediation Center, National Arbitration Federation and eResolution Consortium.

The Uniform Dispute Resolution Policy (“Policy”) sets the legal standards and framework for the resolution of the disputes between a domain name registrant and a trademark owner over alleged “bad faith” registration and use of an Internet Domain Name. The policy provides a cost effective and expedited dispute resolution process.

Typically a trademark owner can file a ICANN-affiliated complaint by alleging the following elements:

•       The domain name registered is identical or confusingly similar to a trademark or service mark in which the Complainant has rights;

•       The domain name registrant has no rights or legitimate interests in respect to the domain name in question; and

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

 The pivotal “Bad faith registration” requisite can be established through the following  non-exhaustive list:

•      Circumstances indicating the domain name was registered or acquired primarily for the purpose of selling, renting or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complaint, for valuable consideration in excess of the domain name registration expenses directly related to the domain name; or

•       The domain name was registered in order to prevent the owner of the trademark or service mark from using the mark in a corresponding domain name; or

•       The domain name was registered primarily for the purpose of disrupting the business of a competitor;

•       By using the domain name, the domain name registrant intentionally attempted to attract, for financial gain, internet users to the registrant’s web site or other online location, by creating a likelihood of confusion with the complainant’s mark.

Nature of the Remedy: Transfer of Domain name—No monetary Damages 

2. Federal Cause of Action under the Anti-Cybersquatting Consumer Protection Act  (“ACPA”)

The ACPA added Section 43(d) to the United States Lanham Act, 15 U.S.C.§ 1125(d) and created a new cause of action for bad faith registration, trafficking in or use of domain names that infringe or dilute distinctive or famous trademarks. The following is a non-exhaustive list of factors that Federal Courts consider in reaching a “bad faith registration” determination:

• Does the alleged cybersquatter own trademark rights in the same name;

• Does the alleged cybersquatter have the same name as its legal name or other identity;

• Is the alleged cybersquatter making “fair use” of a trademark;

• Does the alleged cybersquatter intend to divert traffic to an infringing or tarnishing site;

• Is the alleged cybersquatter trying to sell the name without using it;

• Has the cybersquatter disguised its identity to the registrar; or

• Has the cybersquatter registered the domain name as part of a pattern of conduct.

Nature of the Remedy:      The Plaintiff has an option to seek traditional remedies under the Trademark Act or elect an award of statutory damages between $ 1, 000 to $100,000 per domain name, the amount of which is discretionary to the Judge. The Panel can also order transfer or forfeiture of the domain name.

Are ICANN Decisions binding on U.S. Courts?

    United States District Judge Marvin E. Aspen ruled in Weber-Stephen v. Armitage Hardware, 54 U.S.P.Q.2D (BNA) 1766 that the courts are not bound by the administrative proceedings of an ICANN panel. The ruling indicates that the amount of deference to be accorded to an administrative panel decision is left to the discretion of the court. 

    To sum up, although the extent of enforceability of a trademark holder’s rights in relation to infringing domain name registrations is a factual question, prudence suggests that the trademark holders adopt a consistent “track and monitor” approach and at the least put a potential infringer on notice of infringement via a cease and desist demand letter. A cease and desist letter and “track and monitor” approach not only serves as a deterrent for the cybersquatter to actually use the domain name but also enables the trademark owner to decide whether it is absolutely necessary to initiate a lawsuit / arbitration action. Such a policing strategy preserves rights for an inevitable trademark enforcement action and also saves money for the trademark holders in the long term because an enforcement action may never be necessary if the domain remains inactive, not in use, or otherwise is not damaging the value or strength of your trademark.