Infotech and the Law

Courts Set Cyberstandards for Two Key Areas

Jonathan Cain

By Jonathan Cain

Two federal courts of appeal decided important cases in February concerning the Internet use of trademarks. The cases demonstrate the importance of careful selection of domain names and how use of trademarks on the Internet differs from the brick-and-mortar world.

The decisions recognize the practical limitations of identifying who really owns an Internet Web site, and that the Internet is a marketplace without geographic borders. The courts concluded that cyberconsumers are more likely to be misled by similar marks than their brick-and-mortar counterparts, and that advertisers must show correspondingly greater care.

In the first case, the court was presented with a trademark infringement claim against the Disney companies for using a mark to identify its Go Network. Disney selected a logo that resembled a traffic light, with the "Go" over the green light. Unfortunately, another company had started using a similar logo as a trademark for its Internet search engine approximately one year earlier than the Disney launch.

The court of appeals agreed that the Disney logo was confusingly similar to the earlier mark and affirmed the injunction against Disney's use of its Go Network logo by the lower court. The court employed a trademark infringement analysis that was tailored to Internet commerce.

The three most important factors in deciding whether one mark infringes another in the Internet context are the apparent similarity of the marks, the similarity or "relatedness" of the goods or services, and the "simultaneous use of the Web as a marketing channel."

Courts have struggled for years to articulate a formula to determine whether two marks have similar appearance. The marks must be considered in their entirety and as used in the marketplace, similarities being weighed more heavily than differences. Courts have invented other factors.

At the end of the analysis, however, there is always the purely subjective judgment: Do "these two look a lot alike?"

The significance of the Disney decision is that it recognizes how difficult it is for a consumer to determine who is sponsoring an e-commerce Web site. In a market where geography is meaningless and inventory is virtual, marks are almost the only means available to a consumer to distinguish among sellers. Therefore, even the use of similar marks by companies selling very different goods from widely separated locations may well be likely to mislead customers and result in trademark infringement.

The likelihood of confusion among marks is judged from the viewpoint of the least sophisticated consumer. Using the Web as a marketing channel imposes special burdens on advertisers to avoid consumer confusion. As the court stated, "Although the use of computers may once have been the exclusive domain of an elite intelligentsia, even modern day Luddites are now capable of navigating cyberspace."

One lesson of the Disney case is that when a company adopts a mark for use in e-commerce, it is essential that the mark obtain U.S. registration. Foreign registrations are more important than ever. Reliance on common law trademark protection, arising from use of a mark within a defined geographic area without registration, cannot be relied upon. Searches for potentially similar marks must be even more thorough and evaluated with greater care.

The second decision is the first time a federal appeals court has considered the Anticybersquatting Consumer Protection Act, enacted in 1999. Under the ACPA, an injunction and damages can be awarded by a federal court if it is found that the cybersquatter registered or used a domain name that is identical or confusingly similar to a "distinctive" mark or a "famous" mark with the intent to profit from the use of that mark in the domain name.

Before adoption of the ACPA, famous marks could be protected under so-called "anti-dilution" sections of the federal trademark law, but no protection was granted to the registration of domain names incorporating marks that had not attained the requisite degree of "fame." Famous marks obtain their status through long and widespread use. Distinctiveness is an inherent quality of the mark. A mark may be distinctive before it has been used and its fame is nonexistent. Marks that obtain federal registration are presumptively inherently distinctive, another benefit to federal trademark registration.

Jonathan Cain is an attorney specializing in intellectual property and litigation for information technology companies at Mintz Levin Cohn Ferris Glovsky & Popeo PC in Reston, Va. He can be reached at jcain@mintz.com

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