Cyveillance Brand Update

January 2008

Understanding the “Alphabet Soup”: ACPA & UDRP

In 1999, Congress passed the Anticybersquatting Consumer Protection Act (“ACPA”). The ACPA created a legal basis to sue to prevent “cyberpiracy” or “cybersquatting”. The explosion of cybersquatters is problematic for business in several ways. First, and most obvious, a cybersquatter's use of a trademark as a domain name prevents the actual mark owner from using the mark as its domain name. Second, cybersquatters' use of a trademark diverts potential customers of the mark owner's goods or services elsewhere, potentially causing a loss of business opportunities. Third, cybersquatters may use the website as an opportunity to display pornography, thus tarnishing the brand. Finally, it is often difficult for trademark owners to enforce their trademark rights because many cybersquatters register the domain names under aliases in order to avoid identification.

A cybersquatter is liable under the ACPA if he or she registered, trafficked in, or used domain names that are “identical or confusingly similar to trademarks with the bad-faith intent to profit from the goodwill of the trademarks.” Liability under the ACPA does not require use of the trademark “in commerce”. However, the ACPA does require a “bad faith intent to profit.”. The ACPA specifically provides that bad faith intent will not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful. Remedies allowed under the ACPA include cancellation or transfer of the domain name as well as statutory damages of not less than $1,000.00 and not more than $100,000.00.

In one famous ACPA domain name case, defendant John Zuccarini lost an ACPA case involving five domain names that the court determined were registered and used in bad faith and were confusingly similar to the plaintiff's trademark. The plaintiff was awarded statutory damages of $500,000.00 for each of the five domain names, and Zuccarini was ordered to pay attorney fees of more than $30,000.00.

As an alternative to litigation, companies may file complaints with the Internet domain name registrar and force arbitration under the terms of the Uniform Domain-Name Dispute Resolution Policy (UDRP). ICANN (the Internet governing authority) requires that all domain name registrants submit to mandatory UDRP arbitration proceedings when a markholder alleges that: (1) the registrant's domain name is identical or confusingly similar to the trademark of the complainant; (2) the registrant has no rights in the domain name; and (3) the “domain name has been registered in bad faith.” The bad faith element can be satisfied by showing that the respondent registered the domain name with the intent to (1) cybersquat; (2) prevent the mark holder from registering that domain name; (3) disrupt the business of a competitor; or (4) attract internet users to the website for commercial gain by creating a likelihood of confusion as to the source of the products or services found on the website.

Cyveillance Cyber Security Attorney Adam Palmer is available at 703-351-2459 for further questions.

Yourcompanystinks.com: The Law of “Gripe” sites

In a world of giant multi-national corporations, there is little a single customer can do to make concerns known to the corporate giant. Accordingly, consumers are increasingly using Internet web pages to voice their complaints about unsatisfactory conduct. For example, one citizen launched one of the first such sites, KBhomessucks.com, in January of 2003 after he purchased a house from building company “KB Homes”. This website and others like it are commonly referred to as “gripe sites.”

Generally, consumer gripe sites can be divided into two categories. The first category consists of websites with domain names that are comprised of the trademark of the target company followed by a top-level domain name (TLD). T rademark.com gripe sites specifically select the domain name to make the gripe site more easily found by Internet users who are interested in the target company's products or services. The second category of gripe sites is commonly known as sucks.com sites. This category consists of websites with domain names that are comprised of the trademark of the target company plus a negative term followed by a TLD. Finally, some gripe site operators register domain names that are puns of the target company's trademark. The most popular of these types of web pages is “starbucked.com”.

Gripe site operators open themselves up to various intellectual property causes of action. A business targeted by a gripse site might consider one or more of the following causes of action:

1. trademark infringement
2. trademark dilution
3. cybersquatting.
4. Companies may also file a complaint with the Internet domain name registrar and force arbitration under the Uniform Dispute Resolution Policy (“UDRP”).

In order to prevail on a trademark infringement claim in U.S. Courts, a plaintiff must show that:

1. it has a valid trademark;
2. defendant used the trademark in interstate commerce in connection with the sale, offering for sale, distribution, or advertising of any goods or services; and
3. the defendants use of such mark is likely to cause confusion.

The owner of a famous mark also has the right to an injunction against those whose commercial use of the mark causes dilution of the distinctive quality of the mark.. In order to support a claim for trademark dilution, the plaintiff markholder must establish the following five elements:

1. plaintiff's mark must be famous;
2. plaintiff's mark must be distinctive;
3. defendant's use must be a commercial use in commerce;
4. (the use must have occurred after the mark has become famous; and
5. the use must cause dilution of the distinctive quality of the plaintiff's mark..

Although their content may be similar, trademark.com gripe sites differ from sucks.com gripe sites in one important way. Operators of trademark.com gripe sites specifically select the domain name to make the gripe site more easily found by Internet users who are interested in the target company's products or services. This difference increases the likelihood that an Internet user would be confused as to the source or sponsorship of a website. Furthermore, the difference in the domain name strengthens the target company's argument for cybersquatting.

United States courts have been generally consistent in their application of laws in gripe site cases. Generally, as long as a gripe site operator does not profit from the website and does not include advertisements or links to commercial websites, the defendant's use of the trademark will fall outside the scope of trademark law. Furthermore, as long as the gripe site does not attempt to sell the domain name to the trademark owner or to a third party, or register multiple domain names, it is unlikely that the plaintiff will be able to sustain a claim for cybersquatting.

Cyveillance Cyber Security Attorney Adam Palmer is available at 703-351-2459 for further questions.

Paid Placement Ads: Protecting your name in the Digital Era

Increasingly, businesses rely on online advertising as a significant revenue source. Cyber Security Consultant Adam Palmer has received several inquiries from Cyveillance clients about Cyveillance reports that sites may be diverting client web traffic or placing misleading ads in search engines.

Recent litigation has been inconsistent in the application of trademark law in the keyword advertising context. In GEICO v. Google Inc.. the so-called “WhenU”, cases and Google Inc. v. American Blind & Wallpaper Factory, Inc., U.S. Federal Courts addressed Google's keyword advertising program and sent confusing signals to the business community.

As background, Google's search engine returns results in response to users' search terms using a complex algorithm. These results are called “organic listings.” Search terms, including trademarks, trigger the display of ads, or “sponsored links,” as well. Google's AdWords program allows advertisers to bid for the privilege of having their ads appear in response to particular search terms.

In the GEICO case, GEICO filed suit against Google, claiming direct, contributory, and vicarious trademark infringement. GEICO alleged that by selling the trademark “GEICO” and “GEICO DIRECT” as keywords to advertisers, Google directly violated U.S. trademark law creating a likelihood of confusion as to the source, affiliation or sponsorship of the sponsored links. Further, GEICO claimed Google contributed to infringement by third parties by knowingly encouraging advertisers to use GEICO's marks in the heading or text of their ads in a manner that is likely to confuse consumers. The GEICO court held that Google's AdWords program does “‘use’ GEICO's mark, although not necessarily improperly.” The court held that allowing advertisers to pay for their ads to appear next to organic listings that result when the marks are entered as search terms is a use under the Federal law. Further, the GEICO court rejected Google's contention that the use of marks as invisible “computer coding” is not a use of the mark, holding that such a use was “in commerce” and “in connection with the sale, offering for sale, distribution, or advertising of goods and services.”
The court, however, emphasized that this use, without more, does not establish trademark infringement. The plaintiff must further prove that the disputed use results in a likelihood of confusion. Where the marks were used only in coding and did not appear among the AdWord search results, the court held that there was no likelihood of confusion and no infringement of the trademark. The plaintiff, however, did establish a likelihood of confusion in those instances in which GEICO's trademark appeared in the heading or text of the AdWord results.

In contrast to the GEICO case, finding potential infringement in AdWords, the courts in the WhenU series of cases reached very different results. WhenU was a company that distributes a software program called SaveNow, typically bundled with other programs. SaveNow uses a directory of phrases, web addresses, and keyword algorithms to look for matches between the computer user's web browsing activity and its own database of terms, web addresses, or content. When SaveNow finds a match, it triggers a pop-up ad from an advertiser. This pop-up ad usually appears in a window in front of the other windows on the computer screen. Several businesses have objected to the inclusion of their web addresses or trademarks in SaveNow's directory and have brought suit. The WhenU courts found that, keying and selling trademarked terms for competitive advertising is not a use within the scope of trademark protection.

In Google Inc. v. American Blind & Wallpaper Factory, Inc., Google sought declaratory judgment that its AdWords program did not infringe American Blind's trademarks. In response, American Blind filed counter claims alleging that Google infringed its marks, including “American Blind,” “American Blinds,” and “Americanblinds.com,” by selling these marks as keywords to American Blind's competitors. American Blinds claimed that Google sold “the possibility of intercepting American Blind's potential customers” by causing confusion as to sponsorship, authorization, or source of the links, allowing Google and its advertisers to profit from harm caused to American Blind's sales, reputation, customer relationships, and marks. The court in the American Blind case refused to dismiss the case “in light of the uncertain state of the law”.

The issue of infringement in AdWords is likely to be reviewed by the U.S. Supreme Court in the near future. At present it is probably best to examine use as a distinct element of trademark infringement. Use of a mark should constitute infringement only if it causes a “likelihood of confusion” in the use of the protected mark in commerce.

Cyveillance Cyber Security Attorney Adam Palmer is available at 703-351-2459 for further questions.

Thank you for reading the First edition of the Cyveillance Legal Update Newsletter.
We hope you enjoyed reading this newsletter and found it helpful. A new Cyveillance Brand Update Newsletter will be issued every other month to all Cyveillance clients.

If you have additional questions about brand protection or cyber security issues, you may contact Cyveillance Cyber Security Attorney Adam Palmer at 703-351-2459.*

* Please note that this newsletter is not intended as and should not be relied upon as legal advice. Adam Palmer is licensed only to represent Cyveillance and cannot provide legal advice to any other company or individual. If you desire legal advice it is recommended that you contact individual licensed counsel in your place of business.

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