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Posts Tagged ‘litigation tactics’

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.

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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.

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 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.

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Suppose you are an as-yet-unknown songwriter or author.  Or perhaps you are an artist or creator of any kind.  You have submitted your work to various parties, hoping (unsuccessfully, so far) that someone will pay you to publish or reproduce it.  Suddenly you happen across a blatant copy of your work being sold by someone else, perhaps a large and powerful company.  How can a small copyright owner, who perhaps has not even marketed his creation yet, stop such parties from infringing the copyright in the work? 

David and Goliath

The Copyright Act provides some nice stones for your sling, David.

In the past, small copyright owners in this position had major problems.  First, litigation is expensive – there’s no changing that.  To make things worse, if a small party could not prove actual damages (such as lost sales) and/or the defendant’s profits, even a winning case could yield no money award after all the expense of the law suit. 

So, what happened when a large infringer was caught openly ripping-off copyrighted material?  The bad guy could sit back, fold his arms, and dare the copyright owner to sue – secure in the knowledge that it would not be worth the trouble and expense to bring the suit.

In 1976, Congress changed the U.S. Copyright Act to “beef up” an existing but previously insufficient remedy for copyright owners in these circumstances.  That remedy, called “statutory damages,” allows a winning copyright plaintiff to recover an amount of compensation per work infringed, as opposed to compensation for actual damages or an account of profits or damages based on the number of infringing copies. 

The statutory damages provision allows the winning plaintiff to recover “a sum of not less than $750 or more than $30,000,” per infringed work, according to what the court views as fair and just.  If the copyright owner can prove that the infringement was intentional or “willful,” the court has the discretion to increase the award to as much as $150,000 per work.

In addition, the Copyright Act now includes a provision allowing a winning plaintiff to recover from the copyright infringer its full cost to bring the law suit, including attorney’s fees.  Again, this remedy is awarded in the court’s discretion

Taken together, these provisions allow a small “David” to take on a large and powerful copyright-infringing “Goliath.”  These remedies discourage blatant infringers from “rolling the dice” on defending an infringement suit.  In effect, they encourage even large parties to take seriously any legitimate copyright claim asserted by a copyright owner of any size.

There is, however, one very important point to bear in mind regarding these provisions.  The Copyright Act does not allow an award of statutory damages, nor of attorney’s fees, unless the copyright in the work was registered before the infringement began.  There is an exception if the infringement begins less than 3 months after the first publication of the work – as long as the registration also occurs within that 3-month period, statutory damages and attorney’s fees can be awarded.

Obviously, you don’t have to be a small player to take advantage of the statutory damages and costs-of-suit provisions, of course.  But they sure can come in handy if you are a small party, trying to assert your rights against a major player.

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No, this isn't Saturday afternoon at the monster matinee.

No, this isn't Saturday afternoon at the monster matinee.

A look behind the headlines for today’s topic.  Some trademark-sensitive readers may have seen in the headlines a report that large-scale energy drink marketer Hansen Beverage Co. has sent a cease and desist letter alleging trademark infringement to a small craft brewer named Rock Art Brewery.  

Rock Art, which is located in Vermont, markets its beer under the name THE VERMONSTER. Hansen Beverage, it has been reported, markets energy drinks under the trademark MONSTER. Or does it?  In fact, the mark Hansen uses and has registered (U.S. Reg. No. 3,134,841, among others) is M MONSTER ENERGY, featuring a rather distinctive stylized “M” that resembles three claw marks, as shown above.  Rock Art’s use looks like this:

THE VERMONSTER Beer, marketed by Rock Art Brewery

THE VERMONSTER Beer, marketed by Rock Art Brewery

Rock Art’s owner Matt Nadeau reportedly has lamented that five trademark attorneys have told him that “the law is probably on his side, but that proving it through lengthy litigation could bankrupt him.”  Nadeau’s response is that “Corporate America can’t be allowed to do this, in this day and age. It’s just not right.”  Nadeau also reports that Hansen’s attorneys rebuffed his offer to surrender any rights to THE VERMONSTER in the energy drink category, because Hansen wants to enter the alcoholic beverage market.

So, is Rock Art’s use of THE VERMONSTER for craft beers confusingly similar to Hansen’s use of MONSTER ENERGY for energy drinks? 

Considered in a vacuum with only that information, my own assessment would be that a reasonable court or jury could find either way.  On the one hand, the respective marks and goods are different enough that I believe consumers would not mistake one for the other.  On the other hand, infringement does not require that consumers be likely to actually confuse the marks – it is enough if consumers believe there is some connection between or approval of the two uses, where none exists.

Looking behind those bare facts, however, I would predict an outcome in favor of Rock Art.  The fact is, Hansen is far from the first to use or register a MONSTER-formative mark for beverages. 

There are prior registrations of B MONSTER and C MONSTER for nonalcoholic fruit juice based beverages, owned by national marketer Odwalla, Inc.  BIG HOPPY MONSTER also registered for beer, ales and lagers, prior to Hansen’s mark.  Finally, FLATHEAD LAKE MONSTER registered after Hansen’s M MONSTER ENERGY mark for soft drinks and beer, but based on use that long predated Hansen’s use.

Taking into account these prior uses and registrations, it appears that Hansen’s rights in “MONSTER” actually are rather limited, despite the company’s energetic attempts to appropriate the term.  In the face of so many MONSTER-formative beverage marks, the law tends to assume consumers will distinguish them based on other components of the marks.  In my opinion, the “other components” of THE VERMONTER are at least as distinctive as those in B MONSTER and C MONSTER, when compared to M MONSTER ENERGY.  Hansen’s ability to enter the alcoholic beverage market also is highly questionable, in light of the prior beer registrations.

Setting aside the merits of the case, there remains the chance that Hansen may be able to “bully” its way to victory by using its greater resources to litigate Rock Art to death.  Obviously that possibility lurks between the lines here.

In that regard, however, Hansen may not be the biggest bully on the block.  The Coca-Cola Company has filed an application for MONSTER REFRESHMENT for “non-alcoholic beverages, namely soft drinks and sports drinks,” which is currently pending.  Hansen has opposed, but the opposition has stretched on for more than three years.  Proceedings currently are suspended to allow for settlement discussions.

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