Whenever we talk about Internet Trademark Law, it is necessary to touch upon domain names in connection with trademark dilution and trademark infringement. Trademark dilution is a legal concept that has persisted in this electronic or Internet age we are in right now.
Generally speaking, while trademark infringement protects and guards against a likelihood of confusion, trademark dilution protects famous trademarks from being diluted, even if there is no likelihood of confusion. A recent example is "microsoft" being used to describe pillows. Perhaps no one will think that the world-renowned software company manufactured the pillows, but use of the trademark in this way could dilute the trademark’s ability to identify the company’s computer products and services.
Dilution can be viewed under two theories: under the first, a respondent’s use of a plaintiff’s trademark tarnishes the trademark by creating an association with the trademark that is demeaning or contrary to the image the trademark has attained.
For example, using Swatch – a well-known youthful and innovative brand of watches – to describe a brand of toilet paper, or Starbucks to describe a brand of sanitary napkins, or Criselda – a beautiful line of ladieswear –to describe a dog-food product.
Under the second theory, a defendant’s use of a plaintiff’s trademark whittles away at the distinctive quality of the trademark by diluting the strong association the public has between the mark and the plaintiff, as in the abovementioned Microsoft pillows.
From the universal point of view, only "famous" marks qualify for protection, and determining whether a mark is famous rests on the following factors (although this is not an exhaustive enumeration): (a) the geographic coverage of the trading area in which the mark is used; (b) the degree of inherent or acquired distinctiveness of the trademark; (c) the duration and extent of use of the trademark in connection with the goods or services with which the mark is used; (d) the degree of recognition of the mark in the trading areas and channels of trade used by the mark’s owner and the person against whom the injunction is sought; (e) the duration and extent of advertising and publicity of the mark; (f) the channels of trade for the goods or services with which the mark is used; and (g) the nature and extent of use of the same or similar marks by third parties.
Courts have found many trademarks to be famous that are not as well known as Microsoft or Coca-Cola. Especially in Internet cases, some courts have over-extended themselves to find a trademark famous, hence protecting it if the essence of bad faith is obvious in regard to the defendant.
Courts in domain-name disputes will analyze and assess the same legal factors to determine whether a defendant’s use of a domain name creates a likelihood of confusion. And the courts have generally considered at least some of the following factors: (a) the strength of the trademark; (b) the similarity of the parties’ goods or services; (c) the similarity of the trademark to the domain name; (d) evidence of actual confusion; (e) the degree of care likely to be experienced by consumers; (f) the domain-name registrant’s intent in choosing the domain name.
Because domain-name disputes are relatively new, courts are still struggling with the problem of how to apply traditional infringement law within the context of the Internet. What is important to remember is the fact that, generally, courts appear especially eager to make a finding of trademark infringement where the domain name is identical or very similar to a well-known trademark, or where the registrant is purposely using the domain name to damage a trademark owner.
In the final analysis, any domain-name lawsuit based on trademark infringement is highly fact-specific. The actual facts of the case have to be analyzed closely and compared with the dimension of "likelihood of confusion" factors. Furthermore, the judge will have to decide how to balance the factors because trademark law does not dictate how to do so.
The "use in commerce" theory is not as important under generally considered Internet law principles as it used to be in the early 1990s. It used to be an important principle governing court rulings. In fact, a majority of court rulings in the US and Europe now regard the necessary "use in commerce" requirement as stretching it too much, declaring that prior registration of the domain name is sufficient.
In the celebrated Toeppen cases, defendant Dennis Toeppen’s name has become synonymous in the Internet world with "cyber squatter," since he registered the names of well-known companies as domain names, including ramadainn.com, deltaairlines.com, crateandbarrel.com, neimanmarcus.com, etc. He also, with audacity, registered intermatic.com, although Intermatic was protected by five US trademark registrations owned by the manufacturer of an extensive variety of electronic and electrical products that commenced its business in 1891.
According to the court ruling, it was not so much the fact that the manufacturing firm had been using the name in commerce for more than half a century, but the fact that it had attained prior registration. Applying the theory of dilution, the court ruled that Toeppen’s use of the domain name – even without use in commerce – diluted Intermatic’s trademark rights because he lessened the capacity of Intermatic to identify and distinguish its goods and services by means of the Internet. The court issued a permanent injunction against Dennis Toeppen.
Probably the most celebrated Toeppen case that involves the use of a domain name that he had registered was the Panavision case. He had registered the domain name panavision.com, equivalent to the trademark owned by Panavision International in connection with the motion picture and television industry. Toeppen offered to sell the domain name to the company for US$13,000. Hauled into court by Panavision International, Toeppen lost again. The US court ruled against him, finding that the Panavision trademark was famous and that Toeppen’s use of the domain name amounted to dilution.
What is an important aspect of this ruling is the fact that even if Toeppen defended himself by saying that he had never used the domain name in business or in commerce, the fact remains that he was in the business of registering domain names and selling them. This was interpreted by the court as the "use in commerce" required.
Companies that carry well-known business names, whether the geographical coverage is national or global, would therefore – now that the Internet is upon us – be well advised to register their domain names as soon as possible to avoid clashing with cyber squatters like Dennis Toeppen.