46-840 ecommerce law and regulation spring 2003 © 2003 michael i. shamos lecture 9: trademark and...

46-840 ECOMMERCE LAW AND REGULATION SPRING 2003 © 2003 MICHAEL

I. SHAMOS

Lecture 9:Trademark and Domain Names


I. SHAMOS

Outline

• Trademarks and domain names– Registration– Cybersquatting– Typopiracy

• FTC Internet regulation


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History of Trademarks

• Function: identify the source of goods and services– Protects consumers against fakes– Streamlines the buying decision– Protects producers against unfair competition

• Ancient producer’s marks (Etruscan, Lake Bolsena)

• Medieval guilds ,e.g. silver “hallmark”• State trademark laws• Federal legislation 1870, 1876

– Declared unconstitutional 1879• Trademark Acts 1881, 1905, 1946 (Lanham Act)


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Trademark Concepts

• Trademark rights relate only to commercial activity. • Every company that interacts with the public has

trademarks.• “Goodwill” in trademark law = tendency of the public

to associate a trademark with a particular business.• “Distinctiveness” = tendency of a mark to be identified

with only 1 supplier in a “channel of trade”. More distinctive is better.

• We see hundreds of marks each day


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Confusion• Public must not be confused, misled or deceived as

to– source of goods or services– sponsorship– association– approval

• Trademark law is founded on preventing public confusion– Policing is done by trademark owners

• Tension: all merchants must be allowed to describe their goods fairly


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What Is a Trademark?

“any word, name, symbol or deviceor any combination thereof, …used by a person …to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others andto indicate the source of the goods, even if that source is unknown.”

15 U.S.C. §1127

• Many products may use the same mark if no confusion results, e.g. “Cadillac”


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What Can Be a Trademark?

• Word: AT&T• Stylized writing

• Logo

• Combination• Slogan

– “The Right Choice” for “telecommunications services” in Class 38


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Secondary Meaning

• Trademarks usually have more than one meaning• First (primary) meaning

– The literal words of the mark, e.g. “Apple” is a kind of fruit

• Second (secondary) meaning– Source indicator, e.g. “Apple” is a source of

computers• If a descriptive term has secondary meaning, it

functions as a trademark and can be protected.


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Spectrum of Distinctiveness

• Generic– The name for a product. E.g. “screwdriver” for hand tools.

No trademark rights. Term available to everyone for that purpose.

• Descriptive– Describes a characteristic, property, quality or use of the

goods. E.g., “Crunchy Bites” for rice cakes. Need proof of secondary meaning.


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Spectrum of Distinctiveness

• Suggestive– Indicates but does not describe product, e.g. “Workmate” for

portable workbench; “Workmate” for tobacco. No secondary meaning needed for protection.

• Arbitrary– A real word, but no connection to product, e.g. “Apple” for

computers.

• Coined– A made-up word, e.g. “Xerox”, “Kodak”, “Lycos”. Strongest

possible TM protection.– “Kodak the Magician” case


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What is Trademark Infringement?

use in commerce of “any

reproduction, counterfeit, copy, or colorable imitation of a … mark

in connection with the sale, offering for sale, distribution, or advertising

of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive”

15 U.S.C. §1114


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Forms of Trademark Infringement

• “Actual confusion”

– Significant incidents in which a potential purchaser approached one source thinking it was another

• “Likelihood of confusion”

– Acts creating a substantial chance of actual confusion

– Likelihood is enough for a lawsuit

• “Palming off”, “passing off”

– A sells A’s product under B’s name

• “Reverse passing off”

– A sells B’s product under A’s name


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Some DuPont Factors(for likelihood of confusion)

• Similarity of marks– appearance, sound, connotation, “commercial impression”

• Similarity of established trade channels

• Conditions under which and buyers to whom sales are made, – impulse v. sophisticated purchasing

• Fame of the prior mark• Similar marks for similar goods• Actual confusion

– concurrent use without confusion?


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Trademarks in Cyberspace

“The terms of the Lanham Act do not limit themselves in any way which would preclude application of federal trademark law to the Internet.” Cardservice International, Inc. v. McGee, 950 F.Supp. 737

(E.D. Va 1997)

(Case involved domain name cardservice.com)


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Domain Names as Trademarks

• Must function as a mark, not just a web address– must identify source of goods or services

• Must be distinctive, or not protectible– bank.com not protectible for banks– soft.com for facial tissues is merely descriptive– shamos.com is “primarily merely a surname”


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Internet Trademark Problems

• In the physical world: trademarks are seen in context, often alleviates confusion

• On the Internet, domain names may have no context, often creates confusion

• On the Internet, only ONE company can have cadillac.com

• Solution: worldwide domain name index

• Note: can apply for trademarks on-line with JPEGs! http://www.uspto.gov/teas/e-TEAS


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Cadillac Domains

• cadillac.org Cadillac, MI Chamber of Commerce

• cadillac.net MichWeb• cadillacs.com Wilson Web Works• cadillacs.net Will Tinney• cadillacs.org Matthew T. Smith• cadillaccar.com Try Harder & Co. (porno)• cadillaccars.com Burke Internet (squatter)• cadillac.co.kr UsedCar.com• cadillac.dk Danish car dealer• cadillac.de Cadillac Filmstheaters, Munich• cadillac.tv dotTV


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Assignment of Domain Names

• ICANN: Internet Corporation for Assigned Names and Numbers

• Formed 1998: International coalition of Internet interests“global, consensus-driven, non-profit organization”

• No statutory or government authority!• “Shared Registration System” (SRS)• Authorizes “registrars” to issue domain names

– 159 accredited registrars


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Uniform Dispute Resolution Policy (UDRP)

• Approved by ICANN• Complex procedure equivalent to arbitration• “Provider” (not ISP) = approved arbitrator• Parties: “Complainant,” “Respondent” (has the domain),

“Registrar” (organization that registered the domain)

• Complaint, then Response• Three-member panel is appointed• Language used = language of registration agreement• Usually no hearing• No administrative appeal• Does not remove jurisdiction of courts


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Cybersquatting

• Cybersquatting = registering, trafficking in, or using a domain name confusingly similar to a registered mark

• Anticybersquatting Consumer Protection Act,15 U.S.C. §1125(d) (Nov. 29, 1999)– Prohibits bad faith intent to profit from cybersquatting– in rem jurisdiction against a foreign cybersquatter or a

cybersquatter who has provided fictitious contact information

– action may be brought where the registrar or the registry is located.


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Cybersquattingporschecar.com, porschagirls.com, 928porsche.com, accessories4porsche.com, allporsche.com, beverlyhillsporsche.com, buyaporsche.com, calporsche.com, e-porsche.com, everythingporschie.com, formulaporsche.com, ianporsche.com, idoporsche.com, laporsche.com, myporsche.com, newporsche.com, parts4porsche.com, passion-porsche.com, porsche.net,porsche-911.com, porsche-944.com, porsche-autos.com,porsche-books.com, porsche-carrera.com, porsche-cars.com, porsche-classic.com, porsche-net.com, porsche-nl.com,porsche-online.com, porsche-rs.com, porsche-sales.com,porsche-service.com, porsche-supercup.com, porsche-web.com, porsche356.com, porsche4me.com, porsche4sale.com, porsche911.com, porsche911.net, porsche911.org, porsche911parts.com, porscheag.com, porscheaudiparts.com, porschebooks.com, porschecars.com, porschecarsales.com porschecasino.com, porschechat.com, porschedealer.com


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AntiCybersquatting Consumer Protection Act

• “A person shall be liable in a civil action by the owner of a mark ... if, without regard to the goods or services of the parties, that person-- (i) has a bad faith intent to profit from that mark … ; and (ii) registers, traffics in, or uses a domain name that -- in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark.”

• “In any civil action involving the registration, trafficking, or use of a domain name under this paragraph, a court may order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark.”

15 U.S.C. §1125(d) (1999)

• In rem action authorized in district where registrar is located


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Deep Linking

“Deep hyperlinks point directly to Web pages or other content of a different Web site. This may possibly result in bypassing the advertising-rich home pages or other identifying pages for the different Web site. Also, the original source, i.e., the content provider, of the content of a deep link can become obscure.”

“Also, if advertising-rich home pages are bypassed, then the owner of those sites may suffer diminished revenue .”

page.html•

DEEP LINK

REFERRING PAGE:

WEBSITE


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Deep Linking

• Linking to web page of another beneath the home page– user does not necessarily know that the link is to a different

website• Is it copyright infringement?• Is it trademark infringement? Dilution?• Ebay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058

(N.D. Cal. 2000)– Bidder’s Edge site accumulates information about online auction– Requires numerous “hits” to eBay to assemble information and links to

eBay– Successful theory: trespass to chattels– Preliminary injunction issued


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US 6,539,424, issued Mar. 25, 2003

Restricting deep hyperlinking on the World Wide Web

1. A computer program on a computer usable medium having computer

readable program code means, comprising:

• means for receiving a request for a desired page deeply linked within

other pages;

• means for sending a higher level page, in response to the request,

along with an indication of a next page having a next sequential link

to subsequently reach the desired page; and

• means for repeatedly sending the next page, in response to each

request for the next page from the client, along with an indication of a

subsequent page having a subsequent link for the client to follow,

until the desired page has been sent.

OWNER: IBM


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Framing

• Showing the web page of another framed with one’s own border (usually with logo and banner advertising)

• Washington Post Co. v. Total News, Inc., No. 97 Civ. 1190 (PKL) (S.D.N.Y., filed Feb. 20, 1997). Settled.

• Issues:– deceptive?– likelihood of association? – dilution?– unfair? (using content of another to draw advertising viewers)– First Amendment freedom to link?– Trespass theory?

• More links


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Metatagging

• Placing hidden text in a web page (usually another party’s trademark) so that one’s own page will be retrieved when a search is done for the other party’s mark (cyberstuffing)

• Issues:– deceptive?– likelihood of association? – dilution?– unfair? (using content of another to draw advertising viewers)– First Amendment freedom to link?– Trespass theory?

• Only one defendant has ever won a metatagging case (on special facts): Playboy Enterprises, Inc. v. Terri Welles, Case 98-CV-0413-K (JFS) (S.D. Cal. 1998)


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Typopiracy

• Registering misspellings of domain names in the hope of tricking users who make typing errors

• www.chrysler.com www.chrsyler.com www.chrylser.com• www.procterandgamble.com www.proctorandgamble.com

• Is it trademark infringement? False advertising? Deceptive trade practice?


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Need for Consumer Protection• Businesses may be large; consumers are “small”• Consumers make “whim” purchases• Individual consumer loss may be small

– Not enough to justify a lawsuit

• Total consumer loss may be large– Consumers do not easily organize

• Government can act more effectively– Tremendous enforcement powers– Government is a heavy threat– Sometimes threat to regulate is enough

• Federal Trade Commission (FTC)• State laws (“little FTC acts”)


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Federal Trade Commission (FTC)

• FTC Act, 15 U.S.C. §41ff (1914).– “The Commission is hereby empowered and

directed to prevent persons, partnerships, or corporations, [exceptions] from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. §45(a)(2)

– “Commerce” means “commerce that may lawfully be regulated by Congress, e.g. interstate, DC, airwaves, Internet


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FTC Action AgainstDeceptive and Unfair Business Practices

• What’s “Deceptive”? What’s “Unfair”?

• Deceptive. Likely to:– mislead consumers; and

– affect consumers’ behavior or decisions about the product or

service.

• Unfair. The injury it causes, or is likely to cause, is:– substantial;– not outweighed by other benefits; and– not reasonably avoidable


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Advertising Practices Regulated by the FTC

• Deceptive pricing, 16 C.F.R. §233.1

• Use of the word “free”, 16 C.F.R. §251.1

• Product endorsements, 16 C.F.R. §255.0

• Advertising and marketing on the Internet• Internet prompt delivery rules, 16 C.F.R. §435.1

– The “Mail Order/Telephone Order (MOTO) Rule”

• Pyramid schemes• See FTC advertising guidelines• See FTC DotCom Disclosures

• Journal of Interactive Advertising


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Comparative Advertising

• Permitted, even for famous marks!– Unknown mark may be juxtaposed with well-known one

• Requirements (FTC)– Objective truth

• Product comparisons require advance experimental data (“reasonable basis”)

• Demonstrations must show the product under normal use

– Subjective truth (not calculated to mislead or deceive)– No likelihood of confusion as to source


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Regulatory Status of the Internet

• The Internet per se is unregulated– Some laws apply to the Internet as well as other media

• Contrast: TV content is regulated by the FCC– Tobacco and alcohol advertising is banned on TV– Tobacco and alcohol advertising are not banned on the

Internet• The FTC’s authority extends to “unfair or deceptive acts or

practices,” not to dangerous or undesirable products


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State Consumer Protection Acts

• States now enacting protective legislation dealing specifically with the Internet

• California Business and Professions Code §§17530-17539.6– Real estate. “It is unlawful … to make or disseminate any

statement … over the Internet, in any language in this state, concerning … any real estate located in this state or elsewhere, which is known to be untrue and which is made or disseminated with the intention of misleading.”

– Second-hand goods. “It is unlawful … over the Internet to advertise, call attention to or give publicity to the sale of any merchandise, which merchandise is secondhand or used merchandise … unless there is conspicuously displayed … a direct and unequivocal statement … which will clearly indicate that the merchandise … is secondhand [or] used.

– “surplus”, newspaper circulation, “prize”, “tear gas”, “steroids”, “energy conservation”


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California Prompt Delivery Rule• California Business and Professions Code §17538• “It is unlawful … for any person conducting sales or leases

by … the Internet or other electronic means …, whether payment to the vendor is made directly, through the mail, by means of a transfer of funds from an account … or by any other means, and then permit 30 days, unless otherwise conspicuously stated in the offering or advertisement … to elapse without doing any one of the following things:– (1) Shipping, mailing, or providing the goods or services

ordered– (2) Mailing a full refund– (3) [P]roposing the substitution of goods or services of

equivalent or superior quality, and … offering to make a full refund … within one week if the buyer so requests …”

• Penalty: 6 months and $1000


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Banner Ads

• User searches for “Estée Lauder.” Search engine displays a banner ad for “The Fragrance Counter”

• Is it trademark infringement? False advertising? Deceptive trade practice?

• Brand scanning services: BrandScanner– Brand Awareness Service


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Unsolicited Email (SPAM)

• May be the subject of FTC TSR rulemaking– FTC has no jurisdiction unless “unfair” or “deceptive.

– FTC position: “unsubscribe” links that do not function are deceptive. FTC is using “current law” to stop spam

• Much pending federal legislation• California Bill 1629 (1998)

– Permits ISPs to sue senders of unsolicited email through ISP (if prohibited by ISP policy)

– $50 for each e-mail up to a maximum of $25,000 per day

• California Bill 1676 (1998)– Requires opt-out with free telephone number or email address– Ads must be identified in subject line

• Nevada similar


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Unsolicited Email

• Washington State: Unsolicited Commercial Email Act (1998)• Illegal to include false or misleading information in the subject

line in any e-mail sent by a Washington resident or to a Washington resident’s e-mail address

• Sender is assumed to know or have reason to know that a Washington resident is the recipient of such an e-mail if the information identifying the recipient as a Washington resident is available from the registrant of the domain name contained within the recipient’s e-mail address


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Major Ideas

• Trademarks protect the consumer from confusion• Trademarks also protect the supplier• Domain names can function as trademarks, but are

rarely seen in context• Consumers need protection

– Can’t afford to investigate– Often make small “whim” purchases

• The FTC regulates consumer advertising on the Internet in the U.S.


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QA&


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What Can Be a Trademark?

• Sound– “N-B-C”: a sequence of chime-like musical notes which are

in the key of C and sound the notes G, E, C, the G being the one just below middle C, the E the one just above middle C and the C being middle C, thereby to identify applicant’s broadcasting service

– Tarzan yell

• Aroma– But not for perfume!

• Color– Pink Owens-Corning Fiberglas® insulation


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Trademark Dilution

• Dilution– Dilution of the distinctive quality of a “famous” mark– What’s famous? Depends on channel of commerce– “The owner of a famous mark [is] entitled ... to an

injunction against another person's commercial use ... of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark”

15 U.S.C. §1125(c)• No competition required for dilution


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Choosing Trademarks

• ALWAYS a marketing decision + legal clearance• Marks have connotations and suggestive features

– Must be discussed explicitly• Brainstorming

– Define goals for the mark. e.g. “catchy”, “conveys strength”, “high-tech”

– Generate terms and fragments– Mix and match– Narrow down for legal clearance


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Trademark Searching

• Good news: trademark applications are public. • Bad news: must check all 50 states, DC and federal.• Bad news: registration is not required to obtain rights.• Terrible news: must search trade literature,

directories, Internet, news stories, ….• Good news: Intent-to-use applications

46-840 ecommerce law and regulation spring 2003 © 2003 michael i. shamos lecture 9: trademark and...

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