Feeds:
Posts
Comments

Posts Tagged ‘litigation tactics’

So it seems the gun world is up in arms (that’s right, I went there) about the fact that the Spearmint Rhino chain of strip clubs has sued gun manufacturer Chiappa Firearms for using a confusingly similar mark on its RHINO 40DS model .357 magnum (Spearmint Rhino Companies Worldwide Inc. v. Chiappa Firearms Ltd et al., 2:11-cv-05682-R–MAN, Central District of California).  I’ve seen no comment from the strip club community.  Apparently they have what they regard as better things to focus on.

Let me mention at the outset that a good friend and eminent member of the Michigan bar tipped me off to this, uh, tussle.  I appreciate it very much because a) it provides a great opportunity to talk about an enduring public misconception about trademark infringement, and b) nothing drives traffic to a blog like the phrase “strip club” in a post title.

The Spearmint Rhino and Chiappa trademarks at issue in the law suit.

Here’s a good photo showing a comparison of the marks, courtesy of this article on the GUNS.COM site.  (I couldn’t help smiling at the phrase “PLENTY of VIDEO” in the title – another savvy web marketer at work.  Touche, my friend.)

I don’t think it’s unreasonable to observe that, aside from the rhinos facing in different directions, the marks actually do look quite similar.  Spearmint Rhino has registered its rhino-outline-in-a-circle mark for “T-shirts and hats; lingerie, namely panties, g-strings, brassieres and corsets for semi-nude and erotic dancers; golf clothing, namely golf shirts, jackets, vests and caps.”  Chiappa has registered its rhino-outline-in-a-circle mark for firearms, but not clothing.

If you clicked over to the GUNS.COM article (and I hope you did), you’ll notice that both the article itself and the reader comments express some surprise and doubt that Spearmint Rhino’s suit has any merit.  I believe the phrase “snowball’s chance in hell” shows up prominently.  This line of thinking can perhaps be summed up as: no one would ever confuse pistols for panties.  Or maybe: how can you mix up guns and G-strings?  Or how about: one holds bullets, the other holds boobs – case closed!  (Sorry.  Traffic, you understand.)

So, would anyone really go out to buy a gun and come home with a G-string instead?  Okay, I’ll grant that one can imagine situations where that might happen.  But would it happen because of confusion caused by the trademarks involved?

The answer to that question is, probably not – but it doesn’t matter.  This is where the enduring public misperception comes into play.  Trademark infringement is not limited to situations where customers are confused into buying one party’s product thinking they’re buying another’s.  This is the important take-away from this article.

People often don’t realize that trademark infringement also exists when the nature of the marks and goods could cause the public to believe there is some connection (such as license, for instance) between the two companies, when in fact that connection doesn’t exist.  Again, not the undies.  This is the important part.

Looked at in that light, maybe Spearmint Rhino’s legal claims don’t seem so ridiculous after all. 

First of all, while the frilly underwear may be more fun to focus on, hopefully you noticed that Spearmint Rhino’s trademark registration also covers T-shirts, hats, golf shirts, jackets, vests and caps.  It’s not unusual at all for makers of outdoor lifestyle products to use their marks on that kind of clothing.

-          The famous GLOCK gun trademark is registered for firearms, but also for “clothing, namely, footwear; headgear, namely, caps, baseball caps, earmuffs, headbands, and headcloths; T-shirts; polo shirts; fleece sweaters; wind-resistant jackets; track suits; neckerchiefs; neckties.”  Perhaps it bears mentioning that T-shirts (at least the white ones) are also a type of underwear?

-          The famous REMINGTON mark is registered for guns, but also for similar clothing goods.

-          Heck, for that matter, the famous HARLEY-DAVIDSON MOTOR CYCLES trademark is registered for motorcycles, but also for hats and caps, and even for “T-Shirts, Tank Tops, Halters, [and] Panties.”

Second, how are these kinds of lifestyle trademarks commonly used on clothing?  By licensing the trademark to another company that’s already in the clothing business.  For some reason, people who spend all day boring out gun barrels don’t want to spend their evenings with straight pins in their mouths, basting seams. 

So, when we strip away (sorry) all the rhetoric, what do we have here?  Two marks that are pretty darn similar in appearance.  One is used on guns, and one is used on a line of products that often have famous gun trademarks on them, via trademark license. 

Could anyone see the Spearmint Rhino mark on, say, a baseball cap and mistakenly believe that the mark was licensed by the gun maker Chiappa?  You can draw your own conclusions, but hopefully I’ve given you a better legal framework to think the matter through.

Read Full Post »

There’s an old comedy bit where the comic offers to teach you “everything you’re going to remember from college, ten years after graduation.”  The crash course is offered at a hefty price, but much less than four years of actual college tuition.  There’s a little of that in what we’re going to discuss here today, except for the hefty price of course.

Once you absorb all the knowledge in this article, people will come from miles around to meet you and marvel at your Giant Trademark Brain. And the Law of Averages says that some percentage of them will buy your product, too.

In more than 20 years of advising business owners in the area of trademark law, I’ve noticed many little tidbits of knowledge that I find myself passing along to client after client.  These are things that most business owners and marketing people either don’t know at all or have enduring misunderstandings about. 

Each of these nuggets of information, standing by itself, is not very impressive – but knowing all of them will really increase your comprehension of the trademark process.  For that reason, I have decided to present them all in one place.  So gird your loins and get ready for a crash course in trademark knowledge.

Thing 1:  Trademark rights are created by use of the mark on your goods or services.  Registration of your mark is an important way to increase and extend those rights.

Thing 2:  There is no functional difference between “trademarks” and “service marks” – trademarks identify goods (for example, BUDWEISER® for beer) and service marks identify… that’s right, services (e.g., HOLIDAY INN® for hotel services.)  So for the rest of this post, let’s simplify things by calling them all trademarks, or just marks.

Thing 3:  You don’t register a trademark for “everything,” you register it for specifically identified goods and/or services that are spelled out in your application.  The more types of “things” you want to cover, the more you’ll pay in filing fees for the application.

Thing 4:  Give a lot of thought to what goods/services you want to cover before filing your trademark application, because once the application is filed you cannot broaden its coverage (you can only narrow it, by taking things out.)

Thing 5:  New trademark applications literally are filed every minute at the U.S. Patent and Trademark Office.  Once you decide on a mark and goods/services, file your application as soon as possible to minimize the chances that someone else will “beat you to the punch.”

Thing 6:  No, you cannot file a trademark application or keep alive a registration for a mark you have no current intention of using, just to “keep people away from it.”

Thing 7:  The designations TM and SM that you see everywhere really have no official significance.  They are used unofficially, to indicate that the user regards the name as proprietary.

Thing 8:  You may not use the ® symbol with your mark until your mark is actually registered (not just filed.)  After the registration issues, you should always use it at least once on every package, advertisement, marketing piece, etc.

Thing 9:  You should always search a new product name (the earlier the better) before committing to it or using it.  Not doing so is a dare to the Trademark Infringement Gods.

Thing 10:  Because trademark rights arise from use (see Thing 1 above), trademark searching is an art and not a science.  When searching for potential users of conflicting marks in the vast universe of information out there, you have to choose some logical place to stop.  Always remember that, for these reasons, no trademark search is perfect – just the best search reasonably feasible at the time it’s conducted.

Thing 11:  Minor differences in spelling and inventive spellings won’t make an otherwise infringing mark “safe” to use or register.

Thing 12:  In a similar vein, you probably attach a much greater significance to small product differences within your industry than the general public (or a judge) will.  This means that when comparing products to determine whether you infringe someone else’s mark, the judge is not going to be swayed by the argument that “no one could be confused because the products are totally different – theirs is a 6-pin device and ours is an 8-pin device!”

Thing 13:  When choosing a new name, remember that the more closely it describes the product (or some feature or function of it), the more likely you are to have problems with availability and/or protection.  I could give you a half hour on why, but just trust me on this.  You’re much better off picking a name that is not descriptive.

Thing 14:  Word mark registrations are inherently more flexible than logo/design marks, because use of a registered word mark as a part of your logo is covered by the registration.  The reverse is not true.

Thing 15:  Because of Thing 14, when first starting down the registration path (and anytime cost/budget is a large factor), it’s usually advisable to register the word form of your mark first and register the logo version when finances allow.

Thing 16:  It can take many months for an application to mature into a trademark registration, but there’s no reason to hold off on using the mark in the meantime.  Quite the opposite, in fact – usually you’re better off starting use as soon as possible.

Thing 17:  The time to think about whether your new name will actually be available for you to use is as soon as possible.  Yesterday, if possible.  A month ago, better yet.  Leaving that issue until the last minute invites bad decision-making and disaster.

Thing 18:  Most trademark infringement disputes are resolved through negotiation before any suit is filed, usually with the “junior user” being provided some time period to shift over to a new name.  But don’t take this as an excuse to go forward with a name you know is questionable, because the first sentence often doesn’t apply where the infringement appears intentional.  In those cases, the aggrieved party may go straight to court.

Thing 19:  Using or registering your new name as a domain name does not create trademark rights, unless you use that domain name in a trademark-like way on your website. 

Thing 20:  Similarly, merely registering your corporate name with your state’s secretary of state does not create any trademark rights or constitute any type of government approval for you to use the name as a trademark.

Thing 21:  In the trademark world, as elsewhere, what goes around comes around.  Don’t try to nestle up to a competitor by using a similar mark.  You wouldn’t want anyone doing that to you.  Don’t make me be your mom on this – Golden Rule, and all that.

This is not, of course, intended as a complete list.  Hopefully it is helpful, though.  If I get good response on this article, I’ll think up some more bits of important knowledge.  And then, dear reader, together we can venture down the uncertain path of the sequel.

Read Full Post »

What's in the pocket there, chief? Don't let this employee walk away with your trade secret!

The first post in this series discussed what defines a trade secret.  The second post considered what reasonable steps must be taken to guard the secrecy of your trade secret. 

But what happens if, despite your best efforts, your trade secret is discovered?  This post will focus on some specifics you should know if you are thinking of taking action against the “bad guys.”

What is misappropriation of a trade secret?

If someone learns, uses or discloses your trade secret as a result of improper means, that generally constitutes an unlawful taking or “misappropriation” of that trade secret.  So if you want to take action for misappropriation of a trade secret, you must show that it leaked out as a result of “improper means.”  That in turn raises the question of what constitutes “improper means,” in this context.

In the last post in this series which covered maintaining the confidentiality of your trade secret, we learned that if someone learns a trade secret through theft or “spying,” that can be improper means.  Generally, obtaining a trade secret through bribery or misrepresentation will be considered improper means.  The same can be true (though not always) if the secret leaks out the result of a breach of someone’s duty to maintain secrecy.

One common scenario for claims of trade secret misappropriation is when an employee with access to confidential trade secrets leaves to work for a competitor.  Consider, for instance, a salesman with access to a confidential customer list; a marketing person with knowledge about upcoming advertising and marketing plans; a tech employee with extensive knowledge about upstream research and development activities. When these kinds of employees are hired away by a competitor, it’s only natural to assume that they will use and/or disclose the trade secret in the course of their new employment. 

What is not misappropriation?

You should bear in mind, though, that there are ways a competitor can learn your trade secret that are not regarded as misappropriation.  If someone learns your trade secret as a result of your failure to take reasonable precautions to protect its secrecy, that is not improper means and thus not misappropriation.  Similarly, if someone learns your trade secret by purchasing your product and taking it apart to learn how it works (called “reverse engineering”), that is not improper means either, and thus not misappropriation.

Even if your trade secret has been misappropriated by one party, in some cases others who learn the secret from the original “thief” may not have any liability.  This is particularly true of the second parties engaged in no misconduct in learning the secret. 

The problem of Internet posting

This issue of the “innocent” second party is a real problem if, for example, the thief posts your trade secret on the Internet.  There are interesting cases on this subject from California, Virginia and Colorado courts, involving the Internet posting of alleged trade secret materials of the Church of Scientology. 

In the Church of Scientology cases, the courts found that the original posters may have liability, but those who merely downloaded the posted information committed no misconduct.  The courts went on to find that trade secret protection had been lost through the posting, because the information had become “generally known” and thus no longer secret. 

What remedies can I get through a misappropriation lawsuit?

If you are successful in your trade secret misappropriation lawsuit, you can get a permanent injunction that bars the misappropriating party from use or further disclosure of the trade secret.  You may also be able to obtain a temporary restraining order and preliminary injunction while the lawsuit is pending, to prevent a threatened misappropriation or to prevent use of the trade secret until a judgment is rendered.

You also can seek money damages for your actual injury and/or the defendant’s profits from the use of the trade secret.  In the case of willful misappropriation the court may even double the award and/or award you attorneys’ fees.

Get Legal Advice

My comments here are general in nature, of course.  As I noted earlier in this series, there is no preemptive federal statute on the subject and thus trade secret laws vary from state to state. 

If you suspect misappropriation has occurred, you should work with an attorney with experience in the field of trade secrets.  He or she can look closely at the circumstances with reference to your state’s trade secret statute, to determine whether you may have an action for misappropriation.

Read Full Post »

Having not read this blog post, Smedley and Popoff thought they were about to get rich by stealing a competitor's trade secret.

The first post in this series discussed exactly what defines a trade secret.  In many states any piece of information you possess, which has value to your business because it is unknown to the general public and to your competitors, can potentially be a trade secret.

But in order to qualify for protection for your trade secret, you must also take reasonable steps to guard the secrecy of that information.  This post will examine how that is accomplished.  We also will explore the circumstances under which trade secret protection may be preferable to seeking a patent. 

If I Have A Trade Secret, How Do I Protect It?

By its very definition, a trade secret must remain a secret.  That means that, as noted above, you must take reasonable steps to maintain the actual secrecy of your trade secret. 

What kinds of steps are recommended?  To some extent, it depends on the nature of the secret.  In every case, you should limit access to and disclosures of the trade secret to those with a need to know, requiring your employees and contractors to sign non-disclosure agreements if they may be exposed to a trade secret. 

You also should keep all trade secret materials in a secure place.  In the case of secrets that encompass paperwork, the papers should be locked up and marked “CONFIDENTIAL.”  If your trade secret is a manufacturing technique or process, you should carefully restrict access to/visibility of the production areas where that method is used.

How Far Must I Go To Maintain Secrecy?

To what lengths must you go to protect the secrecy of your trade secret?  Generally speaking, the key word here is reasonableness.  You don’t need to take wildly expensive measures to defeat even the most imaginative forms of industrial espionage.  The courts usually find such spying constitutes trade secret misappropriation.

In duPont v. Christopher, a famous case arising in Texas, a competitor chartered a plane and flew over the plaintiff trade secret owner’s factory while it was under construction.  By taking aerial pictures of the plant in this way, the competitor was able to figure out duPont’s trade secret.  duPont sued, and the court held that the trade secret owner need not have taken the extraordinary precaution of preventing airborne espionage while its factory was built – the competitor’s actions were misappropriation of the trade secret. 

On the other hand, if your measures are effective in avoiding discovery of your trade secret, you won’t have to go to the expense of litigating to protect it.  How extensive your confidentiality measures should be boils down to a judgement call, based on the level of competition your industry. 

Why Not Just Get A Patent?

With all the precautions necessary to maintain a trade secret it is reasonable to ask, “Why not just get a patent instead of bothering with all of that?”  There are at least two good reasons to use trade secret protection instead of seeking a patent, under the right set of circumstances.

First, patents are expensive and difficult to register.  Not everything that might be useful in the competitive arena would qualify for patent protection – in fact, most things would not.

And second, put very simply, patents expire.  A patent provides a window of time during which the patent owner has a complete monopoly over the manufacture and use of the patented invention.  Once the patent expires, the invention falls into the public domain and anyone can make or use that invention.  So a patent is basically a trade-off – you’re trading long-term exclusivity for the absoluteness of the patent monopoly.

Trade secret protection, by contrast, is easier to arrange.  And, if you take the proper precautions, you may be able to exploit your trade secret forever – it has no automatic expiration date, in any event. 

Get Legal Advice

If you think you may have a trade secret and want to protect it, it is a very good idea to consult an attorney with experience in trade secret law.  That attorney can help you set up the appropriate safeguards and precautions in order to maintain the secrecy of your trade secret.

Read Full Post »

The alleged infringing "Hell's Four Finger" Ring marketed by Alexander McQueen Trading Limited.

Someone didn’t do their homework, and it’s going to be a costly and embarrassing lesson.

The Hells Angels Motorcycle Club has sued the Alexander McQueen fashion house for trademark infringement.  The suit was filed October 25, 2010 in U.S. District Court in Los Angeles.  The club also named the Saks retail chain and Internet retailer Zappos.com as defendants for their roles in selling the allegedly infringing products. 

In its complaint, the Hells Angels club requests findings that the defendants infringed its trademarks and committed unfair competition and trademark dilution.  The club seeks an injunction preventing additional sales of the alleged infringing products as well as a recall of the alleged infringing inventory.  The Hells Angels ask that the inventory be delivered to a third party for destruction.  Finally, the club seeks money damages which it asks be multiplied because of the blatant and “exemplary” nature of the infringement, along with the club’s attorney fees for the action.

The alleged infringing "Hell's Knuckle Duster" Clutch marketed by Alexander McQueen Trading Limited.

The motorcycle club claims that Alexander McQueen Trading Limited, the fashion house founded by designer Alexander McQueen (who committed suicide earlier this year), infringed its winged skull design mark by using it in a multi-finger “Hell’s Four Finger” ring and “Hell’s Knuckle Duster” clutch handbag (see pictures.)  The suit also claims that the defendants infringed by marketing a jacquard dress and a pashmina scarf using the word mark HELLS ANGELS, without authorization by the club.

The Hells Angels club registered a winged skull design (which the club calls the “HAMC Death Head design”) in 2009 as U.S. Trademark Registration No. 3666916 for goods including “jewelry, jewelry pins, clocks and watches, earrings, key rings made of precious metal, badges made of precious metal, and chains made of precious metal.”  An image of the registered design appears at right, below.  In its complaint, the club claims use of the design since 1948.

An image of the "HAMC Death Head design" mark registered for various goods, including jewelry, by the Hells Angels Motorcycle Club.

The same design is registered separately (U.S. Reg. No. 3311550, issued in 2007) for “clocks; pins being jewelry; rings being jewelry.” In that registration the Hells Angels claim use of the mark on those goods since 1966.

What Happened Here?

This is, by all appearances, a tremendous blunder by Alexander McQueen Trading Limited, as well as Saks and Zappos.com.  You’re welcome to judge for yourself, of course, but to this observer the designs used by the defendants unquestionably are confusingly similar with the design registered by the Hells Angels.  The use of the words “HELL’S” and “HELL’S ANGELS” merely completed the effect, making it a virtual certainty that consumers would perceive some connection with the infamous motorcycle club.

Here, boys and girls, we have a perfect example of why marketers should always consult an experienced trademark practitioner well in advance of introducing a new product line.  It frankly seems hard to believe that marketers as savvy as those at the House of McQueen, Saks and Zappos.com could have failed to recognize the potential trademark implications of their actions here.  Perhaps they did. 

In any event, it’s highly unlikely that these product ideas would have survived a review by an attorney experienced in trademark law.  Right about now, it probably seems to the good people at the House of McQueen, Saks and Zappos that a review by their trademark attorneys would have been money well spent.

RING AND HANDBAG IMAGES COURTESY OF STYLITE.COM.

Read Full Post »

Choosing and implementing a new brand name is not as simple as “Do I like it? Okay, let’s go with it!”  Whether it is to be your flagship brand or just a new product or service in your line, there are many factors to consider in choosing a new brand name.  In this post and the others in this series, I’ll walk you through the most important of those steps.

My earlier posts in this series discussed the importance of getting good legal advice, of understanding the function of trademarks, and of deciding whether your marketing plans require exclusivity on the name.   I also have discussed the strategic value of coming up with a list of potential name candidates and of having your name candidates consumer tested and searched for potential conflicts. 

My most recent posts discussed the value of filing trademark applications and registering appropriate domain names to reserve your narrowed list of name candidates.  The next steps are big ones, and they go hand-in-hand with one another. 

...And away we go!!! Brand rollout is an exciting event, no?

Step 9:  Rollout Your New Brand

The last thing you want is a last-minute snag related to your brand name that delays or prevents your scheduled roll out of the new product or service.  But if you have followed the steps recommended in the preceding posts in this series, and paid close attention to your attorney’s advice and recommendations, the way should now be clear for your rollout!

Brand rollout can be within the narrower confines of a test market, or as often occurs, an introduction of your brand to the consumer world at large.  Either way, rollout is a science in itself, and I am not an expert in the planning, preparations, tactical decisions, timing and related issues that form the process.   Those are the realm of the marketer.  There are resources and firms available, however, if you want to educate yourself or engage assistance.

One trademark-related point here:  if you have filed your trademark applications on an “intent-to-use” basis, you need not wait for the registrations to issue before rolling out your product.  In fact, you’ll need to demonstrate that you’ve begun actual use in real-life commerce before your registrations CAN issue.

 Brand rollout is an exhilarating moment.  You are unleashing your creation at last, upon a waiting world!  Of course, there are responsibilities that flow from this exciting prospect. 

Careful policing leaves your brand as sturdy as a brick.. uh, whatever.

Step 10:  Monitor the Marketplace and Police Against Infringements

Just getting your product or service to the marketplace is not the end of the road.  You’ll need to monitor the marketplace on an ongoing basis, watching for the use of confusingly similar names by your competitors.  Brand rollout is a particularly sensitive time in this regard, but the obligation extends throughout the life of your brand.

When an infringement appears, you must be diligent about taking action to enforce your rights and stop the infringing use.  If you fail to do so, you run the risk of losing your exclusive rights in the brand.

Here again is a place where your experienced trademark practitioner can be of great assistance.  If you would prefer to focus your time and efforts on actually doing business, your attorney can connect you with firms that will monitor the marketplace, the Internet and the U.S. Patent and Trademark Office on your behalf, watching for potentially infringing marks. 

It’s also been my experience that as a brand’s following grows, loyal purchasers can be a useful source of marketplace intelligence.  I’ve often learned about a previously-unknown infringement from an indignant brand loyalist.

Your attorney also can and should prepare any challenge or “cease and desist” letters you send out to infringers.  An ill-considered or badly written challenge letter can whip around on you and actually create legal issues for your own brand.  Such letters require careful investigation and preparation, in order to maximize their effect and minimize your own risk.

Read Full Post »

My previous two articles in this series have dealt with proceedings by trademark owners against cybersquatters under the Anticybersquatting Consumer Protection Act, or “ACPA.”  The ACPA has been inserted into the Lanham Act, the U.S. federal trademark statute.  As a result, successful plaintiffs under the ACPA can select from a range of remedies available under the Lanham Act. 

Lanham Act remedies, however, often are not the most efficient way to combat cybersquatting.  As a result, we now will discuss an alternate approach offered by the Internet Corporation for Assigned Names and Numbers, or “ICANN.”

Take advantage of the UDRP alternative and you'll be "master of your domain" again in no time. Wait, what?

UDRP Alternative

ICANN is the organization that governs the assignment of domain names by the individual registrars.  ICANN offers what often is a less expensive and more efficient – if narrower – remedy against cybersquatters.  This approach is called the Uniform Domain-Name Dispute-Resolution Policy, or “UDRP.” 

The current rules governing UDRP proceedings are published at the ICANN site.  A new set of rules have been approved and will take effect for UDRP proceedings filed on or after March 1, 2010. 

The UDRP currently applies to all .com, .net, .org, .biz, .info, .coop, .museum, .coop, .aero and .name top-level domains, and some country code top-level domains.  No one can register any domain name under one of these top-level domains, regardless of the registrar, without agreeing to be bound by the UDRP.

UDRP procedures provide disputants with a cheaper and quicker arbitration proceeding rather than a court proceeding.  Under the UDRP policy, the domain name registrar (not the cybersquatter) is required to transfer the domain name to the trademark owner, if the complaining trademark owner prevails.

UDRP Procedures

UDRP cases are heard by arbitration panels supplied by UDRP “providers,” organizations approved by ICANN for that purpose.  The complaining trademark owner selects the provider. 

The arbitration panel can include one or three members – unless one of the parties requests a three-member panel, the panel will comprise only one member.  A three-member panel is more expensive, but may be worth the cost as the parties get to have a say in the members of a three-member panel.

In order to prevail, the complaining trademark owner must demonstrate these facts:

1) The complainant has established trademark rights in the claimed mark;

2) The domain name is identical or so similar to the complainant’s trademark as to cause confusion;

3) The alleged cybersquatter has no legitimate interest in the domain name, and

4) The alleged cybersquatter registered the domain name in “bad faith.”

In a UDRP proceeding, a panel will consider several non-exclusive factors to assess bad faith, such as:

a)  Whether the domain name owner registered the domain primarily for the purpose of selling, renting, or otherwise transferring it to the complaining trademark owner;

b)  Whether the domain name owner registered the domain name to prevent the trademark owner from using the mark in a corresponding domain name, if the domain owner has engaged in a pattern of such conduct; and

c)  Whether the domain name owner registered the domain primarily for the purpose of disrupting the business of a competitor; or

d)  Whether by using the domain name, the domain owner has intentionally attempted to attract, for commercial gain, internet users to the registrant’s website, by creating a likelihood of confusion with the trademark owner’s mark.

Results and Remedies

The UDRP need not be the final stop for the complaining trademark owner.  If he is unsuccessful in his UDRP arbitration, he is not precluded from bringing a federal law suit against the alleged cybersquatter under the ACPA. 

On the other hand, if the alleged cybersquatter loses in the UDRP proceeding, she has ten days to bring suit if she wants to prevent the domain name registrar from transferring the domain name.  Upon receiving notice that the losing domain name holder has filed suit, the registrar will take no further action until it receives notice that the suit was settled or decided.

The UDRP provides a quick and effective remedy against cybersquatters, with decisions generally rendered within about two months.  One limitation of the UDRP approach is that it does not provide for monetary damages, attorneys fees or costs – only the transfer or cancellation of the domain name registration.  In many cases, however, that may be the most important remedy for the trademark owner. 

In any event, many trademark owners prefer to invoke the UDRP procedure, which usually is significantly less expensive than a federal law suit under the ACPA.

PHOTO COURTESY OF FLICKR USER LANUIOP, UNDER THIS CREATIVE COMMONS LICENSE.

Read Full Post »

My last article discussed cybersquatting, and the remedies available in U.S. federal court under the Anticybersquatting Consumer Protection Act, or ACPA.  Here, we will consider what you must be able to demonstrate in order to win a case brought under the ACPA. 

Be ready to make these points when you get to court. And don't wear that blouse.

In the previous article I pointed out that the ACPA defines cybersquatting (which the statute, a part of the Lanham Act, refers to as “cyberpiracy”) as “registering, trafficking in, or using” a domain name that is identical or confusingly similar to another party’s distinctive trademark, “with a bad faith intent to profit from that mark.”  If the complaining party’s trademark is deemed a “famous” mark under the law, cybersquatting also occurs where the domain name would “dilute” the famous mark by tarnishing or blurring the public’s perception it. 

So if you believe your trademark is being cybersquatted, this definition sets up several hurdles for you to clear in order to show an ACPA violation.  Let’s think through them, in order of importance.

Bad Faith Intent

 Most importantly, you must be able show that the defendant acted with “a bad faith intent to profit” from your mark.  But how do you demonstrate that the defendant had such a bad faith intent?  As you might guess, cybersquatters rarely cooperate by admitting that fact.  

The ACPA, anticipating this, provides a number of circumstances that will be taken as evidence of a bad faith intent: 

Ÿ  Where the domain has not been used for a bona fide offering of goods or services, and the defendant offers to sell it to the trademark owner for a profit.  (Many cybersquatters try to avoid this by setting up a site under the domain that features some relatively generic content or links.) 

Ÿ  Where the defendant provided false contact information when registering the domain, or thereafter has failed to maintain correct contact information with the registrar. 

Ÿ  Where the defendant has registered a number of domain names that are identical or confusingly similar to the marks of other parties.  Or, 

Ÿ  Where the defendant intended to divert consumers from the trademark owner’s website to a site that harms the good will represented by the mark (whether for commercial gain, or in order to tarnish or disparage the mark.) 

This demonstration that the defendant operated under a bad faith intent to profit from your trademark is critical.  You won’t win an ACPA case unless you can make that showing.

 Distinctive Trademark

 The next important showing you must make as an ACPA plaintiff (admittedly, some might say it is most important) is that your trademark is distinctive.  The ACPA says that your mark must be “distinctive at the time of registration of the [offending] domain name.”  It specifically includes personal names, provided they are distinctive of your goods. 

Distinctiveness, in trademark terms, means that the mark is capable of identifying your goods or services, and enables consumers to distinguish them from those of your competitors.  If your mark is highly descriptive of your products, or if it is a surname, or if it is used by others in your field, then it probably will not pass the distinctiveness test. 

Bear in mind that your mark need not necessarily be registered to be protected under the ACPA.  Unregistered marks will be protected, as long as they are distinctive.

In addition to being an important threshold requirement in and of itself, the distinctiveness of your mark also is a factor in the “bad faith intent” determination.  The ACPA also provides some factors, all of which bear upon the distinctiveness of the plaintiff’s mark, that tend to show an absence of bad faith intent: 

Ÿ  Where the defendant has trademark rights of her own in the mark; and 

Ÿ  Where the trademark is the personal name of the defendant, or a name commonly used to identify him. 

(The ACPA also makes special provisions to prevent the dilution of so-called “famous” trademarks by cybersquatters.  For the sake of brevity here, I will leave consideration of that aspect for a later article on the topic of trademark dilution.) 

Registering, Trafficking In, or Using

 It should be a fairly straightforward matter to demonstrate that the defendant has registered, trafficked in, or used the domain name in question.  The important thing to remember here is that the bad faith intent mentioned above needn’t have been present at the time the defendant registered the domain name.  It can arise later, at any point when he is using the domain in connection with a website, or when she is “trafficking in” (i.e., offering to sell) the domain. 

So even if you originally registered the domain in good faith, you can become a cybersquatter if your later use or your attempt to sell the domain crosses the boundary into bad faith intent to profit.  The same is true if your use of the domain later crosses that boundary. 

The ACPA also carefully defines “trafficking in” as including (without limitation) transactions such as “sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.” 

As discussed in the previous article, the ACPA provides a wide range of remedies.  Unless you can satisfy these three requirements, however – bad faith intent, distinctiveness of your mark, and registering/trafficking/using – your defendant will not satisfy the ACPA definition of a cybersquatter, and your law suit will fail.  The proofs necessary to elicit actual or statutory damages are a separate aspect of the suit, not considered here but good fodder for another article if anyone expresses interest.

My next article will cover a popular alternative to the ACPA approach: proceeding through arbitration under what are called the Uniform Domain-Name Dispute-Resolution Policy, commonly referred to as the “UDRP” approach.  Stay tuned!

PHOTO COURTESY OF FLICKR USER LANUIOP, UNDER THIS CREATIVE COMMONS LICENSE.

Read Full Post »

So, you’re ready to take your business onto the Internet, and the most sensible way to do that is to register your well-known trademark as a domain name.  You try to do so, but learn that another party already has registered your trademark as a domain name.  Your brand may have been cybersquatted.  What are your options?

Jolly Roger

By the time you see the flags, it may be too late - cyberpirates have already made off with your valuable trademark.

“Cybersquatting” is a term that was coined to describe the bad faith registration and use of another party’s trademark as a domain name, with the intent to profit somehow from the good will of that trademark.  The term harkens back to the practice of illegal tenants “squatting” in derelict or condemned buildings.

A party injured by cybersquatting can sue under the Anticybersquatting Consumer Protection Act, or ACPA.  The ACPA became a part of the U.S. trademark statute, also known as the Lanham Act.

(I should point out here that trademark owners injured by cybersquatting also can proceed through arbitration under what are called the Uniform Domain-Name Dispute-Resolution Policy, commonly referred to as the “UDRP” approach.  I will be discussing the UDRP approach in an upcoming related article.  This approach can be quicker and significantly less expensive than proceeding under the ACPA, though it also offers a narrower range of remedies.)

The ACPA defines cybersquatting (which the statute refers to as “cyberpiracy”) as “registering, trafficking in, or using” a domain name that is identical or confusingly similar to another party’s distinctive trademark, “with a bad faith intent to profit from that mark.”  If the complaining party’s trademark is deemed a “famous” mark under the law, cybersquatting also occurs where the domain name would “dilute” the famous mark by tarnishing or blurring the public’s perception it.

Bear in mind that the domain name used by the cybersquatter need not be (and in fact, often is not) identical to the trademark at issue.  One practice that domain pirates quickly adopted is “typosquatting,” which involves registering common misspellings of a trademark as domain names.  When an unwary web-user accidentally types the misspelled trademark, he or she is taken to the pirate’s site.  The ACPA is broad enough to cover this practice, provided it can be shown that the misspelled domain name is confusingly similar to the plaintiff’s trademark.

The ACPA’s definition of cybersquatting creates several issues of proof for the would-be plaintiff, which I will discuss in an upcoming article.  For now, let’s examine the remedies that the ACPA provides for those injured by cybersquatting.

If a violation of the ACPA is found, the court can order the forfeiture or cancellation of the offending domain name, or its transfer to the trademark owner. The trademark owner also can recover up to three times his or her actual damages.  Actual damages include any profits the cybersquatter made through his use of the domain, along with any losses sustained by the trademark owner through the cybersquatters activities (such as lost sales or harm to the mark’s reputation.)

The trademark owner also has the option of foregoing actual damages and instead taking statutory damages (similar in nature to the copyright statutory damages I discussed in an earlier post) in the amount of $1,000 to $100,000 per domain name.  The statutory damages amount is left to the court’s discretion – presumably, the more odious the cybersquatter’s actions, the higher the award.

Finally, in suitable cases a successful plaintiff can get an injunction prohibiting further cybersquatting by the defendant, and in “exceptional cases,” can also recover attorney’s fees from the cybersquatter.

Where the cybersquatter is offshore and therefore not subject to the jurisdiction of U.S. courts, a provision of the ACPA allows the injured party to proceed “in rem,” or directly against the domain name itself.  In these cases the only remedy is that the domain will be awarded to the plaintiff.

If your trademark has been cybersquatted, the ACPA provides a range of legal options you can use against against the pirate.  My next article will discuss what your law suit must show, in order to get an award of the remedies provided by the ACPA.  Another related upcoming article will discuss the UDRP approach and evaluate the respective benefits of ACPA vs. UDRP.  Stay tuned for more discussion!

PHOTO COURTESY OF FLICKR USER REITVELD, UNDER THIS CREATIVE COMMONS LICENSE.

Read Full Post »

 My last post discussed the issue of brand proximity, by which I mean the co-existence of other identical or similar brand names for other goods or services.  I mentioned that it is not necessary that there be no other users of your name whatsoever.  Rather, there should be no other users of the mark for goods or services so similar to your own that consumers will believe there is a connection between the two products – either that they are made by the same company, or that there is some other connection such as licensing or approval of one use by the other user.

Figure of Justice

Don't be misled - in real life, she takes off the blindfold and examines your mark and your motives.

This (mistaken) belief that some connection exists between two trademarks is the key to a court’s determination of the issue of trademark infringement.  If the two trademark uses at issue are similar enough that it is reasonably likely that consumers will make such a mistake (a circumstance that is called “a likelihood of consumer confusion” in trademark jargon), then the court will find trademark infringement.  In that case, the court almost always will issue an injunction, ordering the later (or “junior”) trademark user to stop using its mark.  In some cases, the court also will order the infringing later user to pay damages to the earlier (or “senior”) user.

How does the court make this determination?  Does it try to project itself into the minds of the public?  Of course, judges cannot read the minds of the purchasing public and formulate a collective viewpoint.   Instead, the judge considers a list of factors formulated by courts in prior decisions.  The list of factors may vary slightly depending on which U.S. Circuit Court of Appeals rendered the decision applicable in your area, but the similarities greatly outnumber the minor differences.

Generally, the court will consider these factors:

Ÿ  the strength of the senior user’s mark (if the plaintiff’s mark is generic, highly descriptive, or widely used by unrelated parties, the law suit will fail);

Ÿ  the similarity of the marks themselves (often the uses are not identical – so how similar are they?);

Ÿ  the similarity of the respective goods and the trade channels through which they are advertised and sold (e.g., are both products sold through sporting goods stores?);

Ÿ  whether consumers have evidenced any actual confusion between the two uses (“Dear Sony – I bought your SONNY brand HDTV and it’s a piece of junk!  I’ll never buy anything from you again!”); and

Ÿ  what level of care the public is likely to use in buying such goods (generally speaking, cheap goods = little care, while expensive goods = greater care.) 

For obvious reasons, the court will first satisfy itself that the plaintiff’s mark is strong.  The next thing the judge will assess is the degree of similarity of the marks and the goods or services.  If they are not reasonably similar, the court will not look any further. 

Beyond these initial considerations, the most decisive of these factors probably is that of whether any actual consumer confusion has occurred.  Since the test for infringement is whether a likelihood of consumer confusion exists, a court obviously will not need to see much actual confusion before deciding that such a likelihood exists.

Another “super factor” that the court may consider is the defendant/junior user’s intention in selecting the mark.  If the evidence suggests that the defendant chose the mark with the intention that confusion occur (to provide a competitive boost, for instance, by riding on the plaintiff’s brand good will), then in some jurisdictions the court will go as far as to assume that the junior user succeeded in that effort, and find infringement.

Of course, other factors may come into play, and these factors are all indirect ways for the judge to assess the likely consumer reaction to the two brands at issue.  Usually, attorneys on both sides of the law suit will also conduct consumer surveys to try to get a direct read on purchaser understanding.  If properly conducted to avoid leading those surveyed, these surveys can be a potent tool in proving or disproving infringement.

PHOTO COURTESY OF FLICKR USER MIRA66, UNDER THIS CREATIVE COMMONS LICENSE.

Read Full Post »

Older Posts »

Follow

Get every new post delivered to your Inbox.