The Ninth Circuit holds that Internet Domain Name E-mail and Web Service Provider is not a Cybersquatter for Trademark Dilution Purposes, Avery Dennison Corp. v. Sumpton
Richard Margiano
White & Case LLP
New York, USA
[email protected]
As published in IDEA, The Journal of Law and Technology, Volume 40-2.
Abstract
A horse of a different color, or not a horse at all? The Ninth Circuit said no horse, in effect, when it declared that defendant Sumpton, the president of 'Mailbank,' an Internet e-mail and web site provider, was not a cybersquatter, in Avery Dennison Corp. v. Sumpton (decided Aug. 23, 1999).[ 1 ] In yet another recent Ninth Circuit Internet Trademark Law decision,[ 2 ] seeking to define the metes and bounds of Intellectual Property law on the Net, the Avery Dennison decision is sure to inspire debate.
In Avery Dennison , an appeal of a summary judgment and injunction decision in favor of plaintiff, the court analyzed whether a company by its business of owning and leasing 12,000 domain names, including <avery.net>[ 3 ] and <dennison.net>, to third parties for use as e-mail and web site addresses, diluted plaintiff Avery Dennison's registered trademarks 'Avery' and 'Dennison.' In so analyzing, the Ninth Circuit had to determine two major issues: (1) whether plaintiff's marks were famous within the meaning of the Federal Trademark Dilution Act ('Dilution Act'); and (2) whether defendant engaged in 'commercial use' of the marks. The court concluded that on the evidence it had before it, plaintiff's marks were not famous and defendants did not make commercial use of the marks - reversing the district court on both grounds, with instructions to enter summary judgment for defendants.
Since Avery Dennison is a circuit court decision on trademark law as applied to the Internet, this makes the case prima facie significant. Furthermore, the court's discussion concerning showing famousness of a mark in a specialized market segment for dilution purposes, adds to a sparse and controversial body of law. Also, the facts comprising defendants' activities make this domain name case unique in terms of whether there is 'commercial use' for dilution purposes. The court's ruling on commercial use may have long-term effects and significantly reduce the ability of a mark owner to exploit its mark on the Internet.
This article discusses the district court opinion and the facts of the dispute next. The circuit court opinion is then summarized, followed by an analysis and conclusion.
This is a Case Note published on 29 October 1999.
Citation: Margiano R, 'The Ninth Circuit holds that Internet Domain Name E-mail and Web Service Provider is not a Cybersquatter for Trademark Dilution Purposes, Avery Dennison Corp. v. Sumpton ', Case Note, 1999 (3) The Journal of Information, Law and Technology (JILT). <http://elj.warwick.ac.uk/jilt/99-3/margiano.html>. New citation as at 1/1/04: <http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1999_3/margiano/>
1. Introduction: Background and the District Court Decision
The very first lines of the district court opinion state: 'Defendants are 'cybersquatters,' as that term has come to be commonly understood. They have registered over 12,000 internet domain names not for their own use, but rather to prevent others from using those names without defendants' consent . . .And like all 'cybersquatters,' defendants seek to make a financial return by exacting a price before consenting to allow others to use the domain names on which they have chosen to 'squat.'[ 4 ]
Defendants operate a web site at <mailbank.com>.[ 5 ] At this web site a browser can obtain an e-mail or web site address reflecting his name, interest, business, hobby, etc., from the 12,000 domain names defendants have registered.[ 6 ] Defendants charged an initial fee of $19.95 and then $4.95 per year for leasing a name, at the time of suit.[ 7 ] The domain names available for lease included <avery.net> and <dennison.net>, which defendants had listed in its 'surnames' category.[ 8 ]
Plaintiff owns the federally registered marks 'Avery' and 'Dennison' under which it has marketed office products and industrial fasteners since the late 1800s.[ 9 ] Plaintiff has sales of $3 billion per year under its marks and spends more than $5 million per year in advertising.[ 10 ] Plaintiff maintains several domain names on the Internet, including <avery.com>, <averydennison.com> and several other similar names in the <.com> Tld, in which it conducts business.[ 11 ] Plaintiff filed suit in the Central District of California asserting federal and state claims of trademark infringement, dilution and unfair competition, stemming from defendants' use of the <avery.net> and <dennison.net> domain names.
On cross motions for summary judgment, the district court granted plaintiff summary judgment on its claim for dilution. Judge Letts found the 'Avery' and 'Dennison' marks to be 'famous' based on 'plaintiff's longstanding use of these marks and the degree to which these marks are recognized by individuals in the community.'[ 12 ] The court also held that defendants made 'commercial use' of the marks.[ 13 ] The court promulgated a broad rule declaring that there is commercial use of a mark where '(a) it is registered as a domain name by a registrant who is not otherwise identified by or associated with any of the commonly accepted meanings of the domain name, and (b) it is not used by the registrant as its own domain name, but rather is held by the registrant for sale or license to others.'[ 14 ] Although the defendants claimed that it licensed domain names for non-commercial e-mail use only, the court held that eventually 'the laws of economics would require the defendants to sell or license each of their 12,000 names to the highest bidder for whatever use the buyer or licensee wished to make of them.'[ 15 ]
Upon finding famousness and commercial use, the court then cited the rule that where 'someone other than the trademark holder registers the trademark name as an internet domain name' this does 'lessen the capacity of a famous mark to identify and distinguish goods or services.'[ 16 ] The court reasoned that not to find dilution here, would eliminate 12,000 last names, giving examples of such as 'Ford, Edison and Wrigley,' from their 'highest and best use as domain names.'[ 17 ] Defendants appealed.
2. The Ninth Circuit Decision
The Ninth Circuit in Avery Dennison , held that defendants' actions in licensing the <avery.net> and <dennison.net> domain names did not constitute dilution of the 'Avery' and 'Dennison' marks. In order to show dilution, under the Federal Trademark Dilution Act, plaintiff must prove three elements: (1) his mark is 'famous;' (2) the defendant's use is 'in commerce;' and (3) that the defendant's use has had the effect of 'lessening the capacity of a famous mark to identify and distinguish goods and services.'[ 18 ] The Ninth Circuit granted summary judgment in favor of defendants on elements (1) and (2), and found a genuine issue of material fact on element (3), thus holding no dilution. A discussion of the court's holding regarding elements (1) and (2), famousness and commercial use, follows next. Its' finding concerning element (3) was not necessary to the decision, and has little precedential value so is not evaluated.
2.1. Famousness
The Dilution Act protects only 'famous' marks.[ 19 ] A famous mark is a mark that is 'truly prominent and renowned.'[ 20 ] The Dilution Act provides eight nonexclusive factors for use in determining whether a mark is famous.[ 21 ] The circuit court analyzed the level of distinctiveness of 'Avery' and 'Dennison' under the statutory list of factors, finding that although the marks were distinctive enough for trademark protection, they did not rise to the level of distinctiveness required for dilution protection.[ 22 ]
Ruling that plaintiff could establish famousness under the Dilution Act by showing fame in either a localized trading area or a specialized market segment,[ 23 ] rather than the 'a substantial part of the United States,'[ 24 ] where the ''diluting uses are directed narrowly at the same market segment,''[ 25 ] the court found that defendants direct their uses at a different market segment.[ 26 ] The court reasoned that since defendants target Internet users who desire vanity e-mail addresses, and plaintiff targets purchasers of office products and industrial fasteners, plaintiff could not establish famousness in this way.[ 27 ]
After finding that plaintiff failed to show famousness under the specialized market segment analysis, the Ninth Circuit also held that Avery Dennison's marks lacked famousness among consumers in general. One reason the court so held was 'use of the marks by third parties.'[ 28 ] The court relied on evidence indicating use of the 'Avery' mark in the names of 800 businesses, and the 'Dennison' mark in the names of 200 businesses, including businesses who market products on the Internet.[ 29 ] Furthermore, although plaintiff submitted three market research studies in an attempt to show famousness, the court discredited all of them. The court held that the relevant universe of respondents should have been 'consumers in general' and not consumers in the specialized market segment of office supply purchasers, as plaintiff's surveys used, since plaintiff and defendant targeted different market segments. So the court gave no weight to plaintiff's 'flawed' survey evidence.
The Ninth Circuit held that the 'Avery' and 'Dennison' marks did not possess the 'famousness' level of distinctiveness required by the Dilution Act and directed summary judgment for defendants on this issue. The court then discussed commercial use.
2.2. Commercial Use
The defendants argued that they reserved 12,000 'surnames' as domain names, and just incidentally, most happened to also be trademarks. The defendants alleged that their business in licensing out these names/marks as e-mail and web site addresses did not constitute commercial use of the trademarks. The circuit court agreed and reversed the district court's holding regarding commercial use. The court ruled that where one does not trade 'on the value of marks as marks'[ 30 ] by, for example, attempting to 'sell the trademarks themselves,'[ 31 ] there is no commercial use. The court believed that defendants intended 'to capitalize on the surname status of 'Avery' and 'Dennison'' and not the trademark status of the words, so defendants made no commercial use of the marks, only of the surnames .[ 32 ] Without commercial use plaintiff's claim for dilution failed. The circuit court directed summary judgment for defendant on this issue.
3. Analysis and Conclusion
The plaintiff in Avery Dennison handed the Ninth Circuit two tough issues to resolve. The famousness and commercial use components of the decision had little precedent to draw on, and what precedent existed, went in different directions. The resulting opinion created new law in the relatively sparse body of Internet dilution case law that has developed in the precious few years since the President signed the Dilution Act into law.
3.1. Famousness
The Ninth Circuit analyzed the famousness of the 'Avery' and 'Dennison' marks in two different consumer universes. The court first discussed whether the marks proved strong enough in a specialized market segment, office supply product purchasers. McCarthy calls this the ''big fish in a small pond' theory of relative strength.'[ 33 ] In Avery Dennison the court declared that this particular fish can be diluted only where the defendant uses the mark in the same market segment.[ 34 ]
Satisfying the 'famous' element of dilution by showing fame in a small market segment only is an unsettled area of the law.[ 35 ] Some case law suggests that a mark owner cannot establish fame in this way.[ 36 ] Other authorities advocate dilution protection from marks that are famous only in a particular market segment. McCarthy, in discussing 'Marks famous to a small segment,' argues that a court should categorize such a mark as 'famous' only where 'it is known to more than 50 percent of the defendant's potential customers.'[ 37 ] McCarthy, citing the Restatement, also advocates that 'fame in only a small, segmented line of business cannot give rise to a viable claim for dilution when another uses the mark in a much broader market.'[ 38 ]
Avery Dennison adopted a different approach. It now seems clear that in the Ninth Circuit, plaintiff will have to show that defendant uses the mark in the same market segment, to prove 'at least some subliminal connection in a buyer's mind between the two parties' uses of their marks' in order to satisfy the famousness requirement.[ 39 ] The 'at least some subliminal connection' implies less than a majority, so under the Avery Dennison approach a plaintiff would not have to show that 50 percent or more of defendant's potential customers know of the mark, Avery Dennison advocates a lower threshold, where the uses are in the same market segment. Under McCarthy, this type of dilution may occur even where the defendant and plaintiff operate in different market segments but not in Avery Dennison . A report of the Trademark Review Commission provides authority for the Avery Dennison view: '[d]ilution is possible with respect to one purchaser universe but not another. For example, if a mark is famous at the industrial level but not at the consumer level, protection may be appropriate at the industrial level but not at the consumer level.'[ 40 ]
Although the Avery Dennison approach has support from the Report upon which the Dilution Act is based, it nonetheless seems at odds with the language of the statute as enacted, while McCarthy's view expands it without violating it. The statute suggests that Dilution may occur in different consumer universes but does not address the particular 'big fish in a small pond' scenario. Washington Speakers Bureau says: 'it seems an odd act of statutory interpretation that permits the owner of a famous mark to prevent dilution only by competitors in the owner's niche market, particularly since in such an instance, relief would already be available to the mark's owner under a § 43(a) infringement theory.'[ 41 ]
To adopt either the Avery Dennison or the McCarthy approach may unduly expand dilution protection to marks that are not really famous, as famous was intended.[ 42 ] Furthermore, both approaches adopt what sounds like a 'likelihood of confusion' component in spite of the fact that the statute expressly says that Dilution applies without the need to show likelihood of confusion.[ 43 ]
In Avery Dennison , the Ninth Circuit also discussed famousness in the universe comprising consumers in general, or more specifically, Internet consumers. The key evidence relied on in determining this is usually survey evidence. But the court in Avery Dennison acknowledged that it did not have proper survey evidence before it, since it found plaintiff's surveys flawed. The court could have remanded so that plaintiff or defendant could take new surveys to develop the necessary evidence. The court did not. Without key information concerning consumer awareness of plaintiff's marks, the court decided against plaintiff, entering judgment in favor of defendants on this issue. A better course would have been to find a genuine issue of material fact on this issue, since the defendant would still win based on the court's commercial use holding. The court stripped Avery Dennison of dilution protection in the Ninth Circuit for its Avery and Dennison marks, acknowledging that the survey evidence on the issue was flawed, without giving Avery Dennison a chance to produce an admissible survey, where the outcome of the case did not depend on this holding anyway.[ 44 ] This part of the Avery Dennison decision seems controversial in the least; and it will be interesting to see how other courts in the future treat Avery Dennison's approach to showing famousness in a small market segment.
3.2. Commercial Use
The Avery Dennison court found 'Mailbank's' use of the 'Avery' and 'Dennison' terms non-trademark use, so not 'commercial use' within the meaning of the Dilution Act.[ 45 ] To understand the Avery Dennison decision, a brief summary of the pertinent general concepts and precedents is helpful to put Avery Dennison in context, so this follows next.
Commercial use is use 'in connection with the sale, offering for sale, distribution or advertising of any goods or services.'[ 46 ] The Supreme Court has ruled that the 'in commerce' requirement is to be construed broadly.[ 47 ] But mere registration of a domain name is not enough to constitute commercial use.[ 48 ] Registration of a domain name with the ' intent to use it commercially is insufficient to convey trademark rights.[ 49 ] The general rule is that it is not enough that there is a web site and a domain name registered in the <.com> domain (much less the <.net> domain that Avery Dennison is concerned with), in determining whether there is commercial use.[ 50 ] But where the web site, in whatever Tld it is located, advertises or offers for sale any good or service using the mark, this will trigger the Lanham Act.[ 51 ] The courts have had some difficulty in defining the boundaries of the spectrum bordered on the one side by commercial use, and on the other by non -commercial use.
During the infancy of the Internet, courts held that where individuals profited by reserving and 'warehousing' domain names likely to be useful to trademark owners, intending to subsequently sell them to the owners of the respective marks for prices much higher than the cost of reserving the names, this was not commercial use.[ 52 ] Today, courts have shut down these 'cybersquatters' by finding such a practice to be 'commercial' use.[ 53 ]
Then a new twist to 'commercial use' of a mark via a domain name, came in Green Products Co. v. Independence Corn by-Products Co.[ 54 ] In that case, the defendant registered domain names which were also the marks of the plaintiff. The defendant merely warehoused the names, without creating a web site for them, and the twist was that defendant had no intention of selling the names to anyone.[ 55 ] The court still found commercial use, however, reasoning that plaintiff and defendant were competitors in the same market segment and defendant's ownership of the domain names might have actually resulted in a diversion of business to the defendant.[ 56 ]
Now in Avery Dennison , the defendants were selling the domain names, similar to the cybersquatter cases. So the defendants were profiting off of the domain names, but not from the mark owner, as in the cybersquatter cases, and not by diverting business as in Green Products . So the defendants were making commercial use of the domain names, but the court held that this does not equate to commercial use of the trademarks. There is support for this view in the cases.[ 57 ] On the other hand some courts adopt liberal interpretations of the 'commercial use' requirement which favor mark holders.[ 58 ] These cases seem heavily dependent on their facts and circumstances, what will happen in the future remains unclear.
4. Conclusion
Perhaps the Ninth Circuit was right in its characterization of defendants' use of the marks. A purpose of the Dilution Act was to 'stem the use of deceptive Internet addresses taken by those who are choosing marks that are associated with the products and reputations of others.'[ 59 ] The Ninth Circuit believed that the defendants did not have a deceptive purpose, they did not intend to 'cybersquat' when they reserved 12,000 domain names. The district court on the other hand, predicted that ultimately defendants would, even if not originally intended, become cybersquatters: 'the laws of economics would require the defendants to sell or license each of their 12,000 names to the highest bidder for whatever use the buyer or licensee wished to make of them.'[ 60 ] Time will tell whether the district court's prediction was correct. But what about the district court's alternative basis, that the Internet is a scarce resource and this kind of use prevents the 'highest and best use' of the domain names, minimizing the utility of the Internet. Perhaps this is the kind of policy question better left to the legislature, but meanwhile the Ninth Circuit may have allowed a new breed of cybersquatters.
Footnotes
1 . Avery Dennison Corp. v. Sumpton, Free View Listings, Ltd , 51 U.S.P.Q.2d 1801 (9 th Cir. 1999) [note that pagination is not yet available for this case].
2 . See, e.g., Brookfield Comm., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9 th Cir. April 22, 1999); Panavision v. Toeppen , 141 F.3d 1316 (9 th Cir. April 17, 1998).
3 . This article uses <> marks around an Internet address to highlight that it is an Internet, World Wide Web address.
4 . Avery Dennison Corp. v. Sumpton , 999 F. Supp. 1337, 1338, 46 U.S.P.Q.2d 1852 (C.D. Cal. 1998).
5 . Visited on Sept. 27, 1999.
6 . Sumpton , supra note 4, at 1338. The defendant organizes its domain names into various categories, including: 'hobbies, careers, pets, sports interests, favorite music,' business, rude, and surnames. Id . Today the web site no longer contains the 'rude' category. See <mailbank.com> (visited Sept. 27, 1999).
7 . Avery Dennison , supra, note 1. Note that defendants alleged that they have invested $1,200,000 in this business. Sumpton , 999 F. Supp. at 1342.
8 . Sumpton , supra note 4, at 1338; Avery Dennison , 51 U.S.P.Q.2d at . Note that this case does not involve any competing trademark rights and neither defendants nor any of their licensees have 'any individual color of right to the use of the names Avery or Dennison, except that derived from defendants' domain name registration.' Id . at 1341 n.4.
9 . Avery Dennison , supra note 1, at . More specifically, ''Avery' has been in continuous use since the 1930s and registered since 1963, and 'Dennison' has been in continuous use since the late 1800s and registered since 1908.' Id .
10 . Id .
11 . Id .
12 . Sumpton , supra note 4, at 1339.
13 . Id .
14 . Id . at 1339-40. Note that there was no evidence of commercial use of these names by any of defendants' licensees.
15 . Id . at 1341-42. The court noted that at defendants' current fee structure and customer base, '[e]ven if defendants quadruple their customer base on present terms, defendants will never recover their initial investment [$1,200,000] and will continue to lose money every year thereafter.' Id . at 1342 n.6.
16 . Id . at 1340 ( quoting Intermatic, Inc. v. Toeppen , 947 F. Supp. 1227 (N.D. Il. 1996); Panavision Int'l L.P. v. Toeppen , 945 F. Supp. 1296 (C.D. Cal. 1996), aff'd, 141 F.3d 1316 (9 th Cir. 1998)).
17 . Id .
18 . 15 U.S.C. §§ 1125(c), 1127 (1999).
19 . 15 U.S.C. § 1125(c)(1) (1999).
20 . 3 McCarthy § 24.91 at 24-147 (12/98) ( citing 77 Trademark Rep. 375, 459-60 (1987)); Avery Dennison , supra note 1, at (noting that this is a higher standard than the level of secondary meaning needed to acquire trademark protection) ( quoting I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 46 (1 st Cir. 1998) ( quoting 3 McCarthy § 24.91)).
21 . 15 U.S.C. § 1125(c)(1)(A-H) (1999).
22 . Avery Dennison , supra note 1, at .
23 . This falls within the fifth and sixth statutory factors of famousness: the channels of trade for plaintiff's goods and the degree of recognition of the mark in the trading areas and channels of trade used by plaintiff and defendant. 15 U.S.C. § 1125(c)(1)(E), (F).
24 . The Avery Dennison court claimed that the Dilution Act did not follow the recommendation of the Trademark Review Commission which would have granted dilution protection only to marks that become 'famous throughout a substantial part of the United States.' Avery Dennison , 51 U.S.P.Q.2d at ( quoting , The United States Trademark Association Trademark Review Commission Report and Recommendations to USTA President and Board of Directors , 77 Trademark Rep. 375, 456); Teletech Customer Care Mgt., Inc. v. Teletech Co ., 977 F. Supp. 1407, 1413 (C.D. Cal. 1997). The actual language in the report, which is the precursor to the Dilution Act, is: 'a famous mark should be in substantially exclusive use and be well known throughout a substantial portion of the United States.' This language appears on p. 459, not on 456. The language is slightly different but does not seem to differ in a significant way, from Avery Dennison's take of it. The report also recommends that '[t]he geographical fame of the mark must extend throughout a substantial portion of the United States.' Report and Recommendations , 77 Trademark Rep. at 460. Although Avery Dennison misquotes and miscites the Report and Recommendations , and although the Report's discussion of the fourth factor (geographical extent of the trading area) provides some support for Avery Dennison's claim that the actual Dilution Act departs from the Act recommended in the Report , regarding establishing fame in a specialized market segment, in the section of the Report that discusses the fifth and sixth factors the report states: '[d]ilution is possible with respect to one purchaser universe but not another. For example, if a mark is famous at the industrial level but not at the consumer level, protection may be appropriate at the industrial level but not at the consumer level.' Id . at 461. Furthermore the fifth and sixth factors as stated in the Report don't seem to differ in any meaningful way from the Dilution Act. So it doesn't seem that the Dilution Act departed from the Report as Avery Dennison suggests.
25 . Avery Dennison , supra note 1, at ( quoting Washington Speakers Bureau, Inc. v. Leading Authorities, Inc., 33 F. Supp.2d 488, 503 (E.D. Va. 1999)).
26 . Id .
27 . The Ninth Circuit also held that plaintiff's marks did not possess the requisite degree of distinctiveness among Internet users as a whole, so plaintiff could not establish fame in a 'localized trading area' either. Thus the court impliedly recognized the Internet as a 'localized trading area.' Avery Dennison , supra note 1, at .
28 . Id . This is the seventh factor for analyzing fame under the Dilution Act. 15 U.S.C. § 1125(c)(1)(G) (1999).
29 . Id .
30 . Id . ( quoting , Panavision , 945 F. Supp. at 1303).
31 . Panavision , 945 F. Supp. at 1325. The Intermatic court referred to the practice of selling the domain name corresponding to the trademark as 'aribitrage' when it concluded that such a use of the mark was commercial use. Intermatic , 947 F. Supp. at 1239.
32 . Avery Dennison , supra note 1, at [emphasis added].
33 . McCarthy § 24:112 at 24-203 (12/98).
34 . This sounds like an infringement analysis and the court acknowledges this, attempting to defend its opinion by citing itself in Fruit of the Loom, Inc. v. Girouard , 994 F.2d 1359, 1363 (9 th Cir. 1993) (explaining that whittling away (blurring dilution) will not occur 'unless there is at least some subliminal connection in a buyer's mind between the two parties' uses of their marks.'). In Fruit of the Loom , the court found plaintiff's mark 'Fruit of the Loom' to be famous but not 'Fruit' separately. Defendant used 'Fruit Cups' and 'Fruit Flops.' Both plaintiff and defendant used these designations to sell clothing, unlike in Avery Dennison where the court found that plaintiff marketed to purchasers of office products whereas defendant provided vanity e-mail addresses and web sites. Because of this distinction the court's reliance on Fruit of the Loom seems misplaced.
35 . Washington Speakers Bureau , 33 F. Supp. 2d at 504 (characterizing the issue as a 'still-unsettled question').
36 . Id . at 503 (criticizing theory that would allow mark holder to satisfy famousness requirement of dilution in this way); I.P. Lund , 163 F.3d at 46; Breuer Elec. Mfg. Co. v. Hoover Co. , 1998 WL 427595, at *16 (N.D. Il. July 23, 1998); Michael Caruso & Co., Inc., v. Estefan Enterprises, Inc., 994 F. Supp. 1454, 1463 (S.D. Fl. 1998); King of the Mountain Sports, Inc. v. Chrysler Corp., 968 F. Supp. 568, 578 (D. Colo. 1997).
37 . McCarthy § 24:112 at 24-204 (12/98). Note that an early version of the Dilution Act combined the fifth and sixth factors (factors (E) and (F)) into one factor (factor (E)) which read: 'whether the mark has substantial renown in its and the other person's trading area and channels of trade.' 134 Cong. Rec. S 5864, 100th Cong. 2nd Sess. 134 (Senate Friday, May 13, 1988). McCarthy's view seems in accord with this bill.
38 . Id. ( citing Restatement (Third) of Unfair Competition , § 25, comment e (1995); Report and Recommendation , 77 Trademark Rep. 461 ('[d]ilution is possible with respect to one purchaser universe but not another. For example if a mark is famous at the industrial level but not at the consumer level, protection may be appropriate at the industrial level but not at the consumer level.'); Mead Data Cent., Inc. v. Toyota Motor Sales, Inc., 875 F.2d 1026, 10 U.S.P.Q.2d 1961 (2d Cir. 1989) (holding that although mark was famous among attorneys and accountants it was not famous in the broader universe of potential buyers of luxury automobiles)).
39 . Avery Dennison , supra note 1, at ( quoting Fruit of the Loom , 994 F.2d at 1363); see also Teletech , 977 F. Supp. at 1413 (finding that since mark is famous in the teleservicing industry and defendant competes in same industry, plaintiff's mark is famous for dilution purposes).
40 . Report and Recommendation , 77 Trademark Rep. at 460, 461.
41 . Washington Speakers Bureau , 33 F. Supp. at 503.
42 . '[A] famous mark should be in substantially exclusive use and be well known throughout a substantial portion of the United States.' Report and Recommendation , 77 Trademark Rep. at 459.
43 . 15 U.S.C. § 1127.
44 . In another domain name case, SNA, Inc. v. Array , 51 F. Supp. 2d 554 (E.D. Pa. 1999), the district court had made a finding in a pretrial decision that plaintiff's mark was weak. But during the trial, plaintiff presented additional evidence on the issue. In the court's post-trial final judgment, the court acknowledged that based on the new evidence its prior finding was 'wrong' and that the mark was actually 'strong.' SNA , 51 F. Supp. 2d at 562 n.9. Similarly in Avery Dennison , had the court given plaintiff the opportunity to prove its case at trial or at least to submit further evidence, the famousness issue may have eventually come out differently.
45 . 'Appellants use words that happen to be trademarks for their non-trademark value.' Avery Dennison , supra note 1, at .
46 . Lanham Act § 32(1), 15 U.S.C. § 1114(1).
47 . Intermatic v. Toeppen , 947 F. Supp. 1227, 1239, 40 U.S.P.Q.2d 1412 (N.D.Il. 1996) ( citing Steelle v. Bulova Watch Co., 344 U.S. 280, 283 (1952)).
48 . Brookfield Comm., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1052 (9 th Cir. 1999).
49 . Id . [emphasis added]; Allard Enters. v. Advanced Programming Resources, Inc. 146 F.3d 350, 356 (6 th Cir. 1998); Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 504 (7 th Cir. 1992); Hydro-Dynamics, Inc. v. George Putnam & Co., 811 F.2d 1470, 1473-74 (Fed. Cir. 1987).
50 . Lockheed Martin Corp. v. Network Solutions, Inc., 985 F. Supp. 949, 44 U.S.P.Q.2d 1865 (C.D. Cal. 1997) ('[w]hen a domain name is used only to indicate an address on the Internet, the domain name is not functioning as a trademark'); Intermatic v. Toeppen , 947 F. Supp. 1227, 1230 (N.D. Ill. 1996) (noting that <.com> is really a catchall designation for all domain names that do not fall under the other Tlds, so there cannot be a presumption that registration in the '.com' Tld is commercial use); Brookfield Comm., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1045 (9 th Cir. 1999) (noting, however, that '[w]eb users often assume, as a rule of thumb, that the domain name of a particular company will be the company name followed by '.com.'').
51 . 3 McCarthy, § 25:76 at 25-144 (West 12/98). Note that for trademark and dilution purposes, most courts now acknowledge that there is no real distinction, for commercial use considerations, between registration in the <.com> and <.net> Tlds. Avery Dennison , supra note 1, at ('evidence on the record also demonstrates that the .com and .net distinction is illusory'). While the original intent of the <.net> Tld may have been that it should be used exclusively by Internet service providers, 'the '.net' designation has not been preserved according to the original intent, and many registrants, including trademark holders [who are not internet service providers], have registered domain names with '.net' designations . . . .' Sumpton, supra note 4, at 1341. Note that when a user conducts a search for a term, a search engine will produce a list of sites not limited to the <.com> directory, and will include the <.net> Tld. In Playboy Enterprises International, Inc., v. Global Site Designs, Inc., 1999 WL 311707 (S.D. Fl. May 15, 1999), defendants owned the domain names <playboyonline.net> and <playmatesearch.net.> also using the names as metatags. at *1. The court did not find it significant that defendants' domain names existed in the <.net> Tld for purposes of infringement and dilution. The court granted a preliminary injunction in favor of plaintiff reasoning that 'the PLAYBOY trademark is accessible to individuals or Internet search engines which attempt to access Plaintiff under Plaintiff's PLAYBOY registered trademark . . . .' Id. 'Users of the Internet can locate websites either by typing in the domain name (i.e., the address) of the website, or by using a search engine and entering a word or phrase to locate websites using that keyboard . . . [T]he use of search engines to navigate the World Wide Web multiplies the possible associations between words and goods or services that consumers might take advantage of when they go about locating particular sources.' Radio Channel Networks, Inc., v. Broadcast.Com, Inc., 1999 WL 124455 at *5 (S.D.N.Y. March 8, 1999).
52 . Intermatic v. Toeppen , 947 F. Supp. 1227, 1233, 40 U.S.P.Q.2d 1412 (N.D.Il. 1996); Peter A. Schuman, Yockai Benkler, Rules of the Road for the Information Superhighway: Electronic Communications and the Law, § 33A.2[3] (1998 Pocket Part). 'There is no doubt that some of these pirates, if not most, anticipated a lottery-like bonanza, selling the domain registration to the trademark owner or canceling it for a huge amount of money.' 1 Gilson, Trademark Protection and Practice, § 5.11[4] at 5-237 (1996). A domain name registrar had no obligation to screen domain names for possible trademark infringement. Brookfield Comm., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9 th Cir. 1999); Panavision Int'l L.P. v. Toeppen , 945 F. Supp. 1296, 41 U.S.P.Q.2d 1310 (C.D. Cal. 1996), aff'd, 141 F.3d 1316, 46 U.S.P.Q.2d 1511 (9 th Cir. 1998); Lockheed Martin Corp. v. Network Solutions, Inc., 985 F. Supp. 949, 44 U.S.P.Q.2d 1865 (C.D. Cal. 1997) (reasoning that infringement comes from use of mark, not mere registration of it as a domain name); Academy of Motion Picture Arts & Sciences v. Network Solutions, Inc., 45 U.S.P.Q.2d 1463 (C.D. Cal. 1997). NSI follows a first-come, first served policy with regard to domain name reservation and registration. Schuman & Benkler at § 33A.2 (1998 Pocket Part). Cybersquatter, or arbitrageurs 'understood the importance of domain names early, and registered domain names that were likely to be chosen by well known corporations in the hope of being able to sell these valuable alphanumeric strings to the companies who would one day realize they needed the right to use them.' Schuman & Benkler at § 33A.2[1] (1998 Pocket Part). Cybersquatters obtained large payments in exchange for giving up their warehoused domain names. 'Dozens of companies, including Taco Bell, MTV, Kentucky Fried Chicken and others have had to cajole, pay thousands of dollars or even sue to gain the rights to domain names that match trademarks they have spent millions of dollars cultivating and protecting.' Miller, Cyber Squatters Give Carl's Jr., Others Net Loss , Los Angeles Times, 1996 WL 11004750.
53 . In the landmark 'cybersquatter' case, Intermatic v. Toeppen , 947 F. Supp. 1227, 40 U.S.P.Q.2d 1412 (N.D.Il. 1996), plaintiff owned the registered trademark 'Intermatic.' Intermatic, 947 F. Supp. at 1232. The defendant had registered 240 domain names consisting of famous marks, including <intermatic.com> with the purpose of selling these names to the owners of the respective trademarks. Id . at 1230 (defendant owned the rights to domain names such as <deltaairlines.com>, <britishairways.com>, and <ussteel.com>). Defendant did not use <intermatic.com> 'in connection with the sale of any available goods or services,' Id . at 1233 (although the defendant had at one time employed the Intermatic mark in connection with a computer program, none were sold), rather, a map of Champaign, IL could be viewed at the web site, free of charge. Id . at 1232. Furthermore, defendant made no prior use of the Intermatic name before registering it as an Internet domain name. Id . at 1233. The court held that reserving domain names for the purpose of selling them to the owners of the corresponding trademarks constituted 'commercial use' of the names within the meaning of the Dilution Act. Id . at 1239. The court also reasoned that to allow the sort of arbitrage practiced by the defendant would 'seriously undermine' the trademark policies of encouraging registration and development of trademarks to assist the public in differentiating products. Id .
54 . 992 F. Supp. 1070 (N.D. Iowa 1997).
55 . Green Products , 992 F. Supp. at 1074.
56 . Id . at 1078. ICANN's 'Model Domain Name Dispute Resolution Policy for Voluntary Adoption by Registrars' recognizes this scenario as a ground for being stripped of the domain name registration. See < http://www.icann.org/santiago/registrar-dispute-policy.htm > (visited 9/14/99).
57 . See, e.g., Data Concepts, Inc. v. Digital Consulting, Inc., 150 F.3d 620 (6 th Cir. 1998). In Data Concepts , the Sixth Circuit held that using a domain name for e-mail purposes did not constitute commercial use, even though there was competitiveness between plaintiff and defendant. Data Concepts , 150 F.3d at 628. This in spite of the fact that such communication generated revenues 'in excess of $80,000 for the company.' Id . (reasoning that 'Data Concepts' vague assertion that it received customer inquiries through the address that resulted in revenue is not enough to establish that its use of [the] dci.com domain name constituted 'use' of the DCI trademark. For instance, there is no evidence in the record indicating whether Data Concepts disseminated advertisements of its services displaying the dci.com address or whether the company's customers or employees simply passed the dci.com address along to potential customers in the same way someone might give out a telephone number.' Id . See also , Schuman & Benkler, supra note 51, at ? 33A.2[3] (1998 Pocket Part). Schuman & Benkler argue that '[t]he primary designation of goods or services . . . is found in the content of the Web site, not in its domain name.' Schuman & Benkler compare a domain name to a telephone number and a mere address, not a use in commerce and points out that a trademark conflict arises from a likelihood of confusion in commerce. He also argues that the inability of a company to utilize its trademark in a new way is not a use in commerce, but a lack of a use. But Schuman & Benkler also advocate that cybersquatting is not commercial use.
58 . See Standard Oil Co. of New Mexico v. Standard Oil Co. of California , 56 F.2d 973, 975 (10 th Cir. 1932) (concluding that defendant's reservation of a corporate name that resembled plaintiff's constituted unfair competition even though defendant had not actually begun to promote the name in commerce); ActMedia, Inc. v. Active Media Int'l, Inc., 1996 WL 466527 (N.D. Ill. 1996) (defendant was not a competitor and had not yet established a web site but the court still held that '[d]efendant's reservation of the Domain Name has precluded plaintiff from reserving an Internet domain name incorporating its registered mark' and was thus a violation of the Lanham Act); Intermatic, Inc. v. Toeppen , 947 F. Supp. 1227, 1239-40 (N.D. Il. 1996) ('use of the Internet is sufficient to meet the 'in commerce' requirement of the Act' (where the use was cybersquatting)). In Planned Parenthood Federation of America v. Bucci , 42 U.S.P.Q.2d 1430 (S.D.N.Y. 1997), where defendant owned <plannedparenthood.com> the defendant argued that his use of a domain name identical to plaintiff's mark did not constitute commercial use. Planned Parenthood , 42 U.S.P.Q.2d at 1434. The court disagreed and found commercial use of the domain name because 'the effect of those activities on plaintiff's interstate commerce activities would place defendant within the reach of the Lanham Act.' Id . The court further reasoned that 'defendant's actions affect plaintiff's ability to offer plaintiff's services on the Internet. Id . Defendant's actions are 'likely to prevent some Internet users' from reaching plaintiff since after typing in the mark as a domain name and not finding plaintiff user's may give up due to 'anger, frustration, or the belief that plaintiff's home page does not exist.' Id . The court cited to the testimony of a witness/user who explained: 'We didn't resume the search [for plaintiff's web site] after [finding defendant's web site] because . . . we were pretty much thrown off track.' Id .; see also Jews For Jesus v. Brodsky , 993 F. Supp. 282, 301 (D.N.J. 1998) ( quoting Planned Parenthood , 42 U.S.P.Q.2d at 1434). Planned Parenthood , proposes that any web site would satisfy the 'in commerce' requirement since a web site must be accessed through interstate telephone lines and is accessible internationally. Planned Parenthood , 42 U.S.P.Q.2d at 1434.
59 . 141 Cong. Rec. S 19312 (daily ed. Dec. 29, 1995) (statement of Sen. Leahy) (cited by Intermatic , 947 F. Supp. at 1238).
60 . Sumpton, supra note 4, at 1341-42. The court noted that at defendants' current fee structure and customer base, '[e]ven if defendants quadruple their customer base on present terms, defendants will never recover their initial investment [$1,200,000] and will continue to lose money every year thereafter.' Id . at 1342 n.6.
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