Protecting Trademarks and Domain NamesBy David M. Nadler and Lauren A. DegnanContributing WritersAs use of the Internet became widespread, entrepreneurs capitalizedon some companies' slower e

8a & Small
Business Report

Integrator
Insider

Infotech
and the Law

Channel News

Intergration
Focus

Contracts

Spotlight on
Procurement

Wall Street
Review

Protecting Trademarks and Domain Names

By David M. Nadler and Lauren A. Degnan

Contributing Writers

As use of the Internet became widespread, entrepreneurs capitalized on some companies' slower entry into cyberspace by
registering trademarks as domain names in the hope of selling the names to the companies at a profit. These entrepreneurs are less affectionately known as "domain name squatters." Recent statutory and case law, however, has made stockpiling domain names more risky than it once was.

Domain names are assigned on a first come, first served basis by Network Solutions Inc., Herndon, Va. Because NSI does not examine whether a selected domain name is a registered mark or whether the applicant's use of the name will infringe any trademarks, domain name squatters have been able to obtain domain names for mcdonalds.com, harrods.com and other famous trademarks.

However, a company may reclaim its name from a squatter without tendering the ransom in several ways. The first step is to institute NSI's on-hold procedure.

When presented with evidence of a registered mark, NSI will place a disputed name "on hold" unless the domain name predates the registration or the domain name owner produces evidence that it owns a registration for the name. Under the on-hold procedure, NSI assigns the domain name owner a new domain name and keeps the name on hold until the parties resolve the dispute in court or by arbitration.

Resolution in court may take several forms. Owners of federal trademark registrations may file suit against a domain name owner for either trademark infringement or trademark dilution. Infringement under trademark law occurs when someone uses a substantially similar mark, which causes a likelihood of confusion in the minds of the public as to the origin of a good or service.

Commentators have suggested that in the domain name context, there may be no likelihood of confusion if the products promoted under the domain name are completely dissimilar to the products identified by the mark. Nevertheless, one court has enjoined a domain name because its use was likely to cause confusion as to the source or sponsorship of the goods and services offered in connection with the domain name.

The new federal anti-dilution statute offers greater protection than traditional federal trademark law because dilution does not require proof of likelihood of confusion. The anti-dilution statute protects famous marks from acts that might lessen the capacity of the mark to identify and distinguish goods or services. Even if a mark is not famous, a trademark owner may resort to state anti-dilution statutes, which may be broader than the federal statute. Use of a mark as a domain name by someone not affiliated with the trademark owner may qualify as dilution, therefore, where a cause of action for trademark infringement is unavailable.

In order to state a cause of action for federal dilution, a party must show that both the mark is famous and the use is commercial, in commerce, and likely to cause dilution. Under the statute, dilution includes "lessening the capacity of a famous mark to identify and distinguish goods or services," and covers "all forms of dilution recognized by the courts, including dilution by blurring, by tarnishment and disparagement, and by diminishment."

The statute exempts, however, some uses of famous marks, such as use in comparative commercial advertising and news reporting.

Courts have held that use of a trademark as a domain name qualifies as use in commerce that is likely to cause dilution. These courts have reasoned that use of another's registered mark as a domain name eliminates the trademark's capacity to identify and distinguish the owner's goods and services on the Internet and prevents the owner from using its mark in a new and important business medium.

Furthermore, the trademark owner's reputation is threatened because every page printed from the World Wide Web site displays the mark, but the trademark owner does not have control over the type of information presented on the site, which could be inconsistent with the trademark owner's image.

Even without a federal registration, trademark owners may resort to federal and state unfair competition laws to oust domain name squatters.

One court has found that use of a trademark as a domain name violates federal and state unfair competition laws because it qualifies as both unauthorized use and misappropriation of the mark, and false designation of origin.

The court also found that the use of the domain name is likely to cause confusion as to whether the squatter and the trademark owner are affiliated and whether the trademark owner sponsors or approves the domain name owner's commercial activities.

Armed with these legal remedies, trademark owners can reclaim their marks without enriching domain name squatters.

David M. Nadler is a partner in the Washington law firm of Dickstein Shapiro Morin & Oshinsky LLP, where he specializes in technology matters. He can be reached at NadlerD@dsmo.com. Lauren A. Degnan is an associate with the firm.

©1997, Washington Technology. All rights reserved.