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By Jere M. Webb Copyright 1996 Jere M. Webb

Cyberspace is an uncertain milieu for application of traditional legal principles. One must struggle to fit familiar intellectual property law concepts into the ethereal realm of electronic communications. This is particularly true for trademark law, which has been the source of some of the first concrete legal disputes to come out of the on-line world.

This situation reminds one somewhat of the widespread advent of computer software 15 years or so ago and the resulting struggle to apply traditional intellectual property law principles to software. Although the legal war is still raging about whether there should be a special form of copyright protection for software, whether software should be patentable, whether shrink wrap license agreements are enforceable, and whether copying software for purposes of reverse engineering or for support or modification is permissible, we now have a relatively predictable set of rules that govern the software world. It will be interesting to see if the same thing happens with the legal issues raised by the Information Superhighway.

II. EXPANSION OF THE INTERNET

One of the problems has been the simple fact of incredibly rapid expansion of on-line communications. As little as two years ago the word "Internet" was an unknown or vague concept to most Americans. Now everyone is clamoring to get on the Net. Law firms are putting up home pages, Fortune 500 companies are changing their marketing plans to allow for advertising and distribution on the Internet, and new businesses are springing up to serve the special needs of the cyberworld as Internet access companies, consultants, marketing companies, and a variety of other service providers.

In this climate it is not surprising that legal disputes are beginning to arise and are creating challenges for lawyers and courts.

III. THE WHITE PAPER ON THE NATIONAL INFORMATION INFRASTRUCTURE

In September 1995 the Clinton Administration published a lengthy report on the legal aspects of the Information Superhighway. Referred to as the White Paper, its official title is "Intellectual Property and The National Information Infrastructure: The Report of the Working Group on Intellectual Property Rights." This is a very good starting point and resource for identification and analysis of intellectual property issues raised by the Internet.

IV. TRADEMARKS IN CYBERSPACE

A trademark is a name, word, symbol, or device used by a manufacturer of goods or a supplier of services to designate products sold and to distinguish them from goods or services sold by others. In the case of goods, the mark must be affixed to the goods, or to packaging or point of sales displays. In the case of services, the mark must be used so as to designate the services, usually in advertising referring to the services. This is known as "trademark use."

A. TRADEMARK USE

The problem with trademarks on the Internet often is whether trademark use has occurred. In the "real" world, you can slap a label on a product or put a sign on a building, but in the on-line context, the use of the trademark may be as ephemeral as a momentary appearance on a computer screen.

Is this enough? The answer is probably it is, at least in many instances. The Trademark Trial and Appeal Board has, for instance, recently upheld registration of a mark for "data transmission services accessed by a computer terminal" and has accepted as evidence of the mark a printout of the mark as it appeared on the computer screen during transmission. See In re Multiplex, Inc., 23 USPQ2d (BNA) 1315 (TTAB 1995). The fact that a mark does not appear in more traditional forms should not necessarily affect protection.

B. INFRINGEMENT

A similar issue exists on the infringement front. If someone copies a trademark onto an electronic bulletin board, is this an act of infringement or unfair competition? Again, the answer is that this probably can constitute infringement, at least if there is a likelihood of customer confusion as to source or sponsorship.

In Playboy Enterprises v. Frena, 839 F Supp 1552 (MD Fla 1993), the court found trademark infringement when a subscription computer bulletin board owner distributed Playboy photographs owned by Playboy Enterprises, Inc., that contained the "PLAYBOY" and "PLAYMATE" trademarks. The court also found unfair competition and violation of section 43(a) of the Lanham Act based upon the bulletin board owner obliterating some Playboy trademarks and putting its advertisement on Playboy photographs. The court found that these acts made it appear that Playboy had authorized use of the photographs on the bulletin board.

Similarly, in Sega Enterprises, Ltd. v. Maphia, 857 F Supp 679 (ND Cal 1994), the court enjoined a computer bulletin board owner, based on copyright and trademark infringement, from uploading and downloading unauthorized copies of Sega's video games. Sega's trademarks appeared on the copied games and on file descriptions on the bulletin board.

V. THE DOMAIN NAMES DISPUTES

To exist on the Internet, you must have an address, called a "domain name" (such as "stoel.com" for the author's firm). The ".com" suffix denotes commercial entities. Other suffixes in use are ".org" for nonprofit organizations, ".edu" for educational institutions, ".mil" for the military, ".gov" for government agencies, and ".net" for associations. For instance, the U.S. Patent and Trademark Office's home page is found at "uspto.gov."

Domain names are issued on a first-come, first-serve basis by Network Solutions, Inc. of Hearndon, Virginia, under an agreement with the National Science Foundation, as part of the Internet National Information Center ("InterNic"). InterNic does not check to see if domain names are already registered as trademarks or are owned by other parties. If the exact name is not already in use as a domain name, you may register under that name.

This has led to a number of well-publicized disputes over domain names. For instance, Sprint Communications Corporation decided to rattle the cage of its arch competitor, MCI Telecommunications, by registering "mci.com." MCI now has the name back, but Sprint's gambit undoubtedly raised some eyebrows at MCI.

A couple of months ago InterNic assigned "homeimprovement.com" to a person in Minnesota who has nothing to do with the Emmy award-winning television program, "Home Improvement."

In a more widely publicized case, which resulted in a lawsuit, an MTV VJ registered "mtv.com" as his domain name, while still employed by MTV, and continued to use it following his on-the-air resignation. The resulting case, MTV v. Adam Curry, eventually settled, and MTV now has its domain name back.

Similarly, in Kaplan Educational Centers v. The Princeton Review, The Princeton Review, a provider of training for standardized tests, registered "kaplan.com," which resulted in a lawsuit by its competitor Kaplan Education Centers. According to Mark Radcliffe, the parties stipulated to arbitration, and the arbitrator awarded the domain name to Kaplan. See Radcliffe, The Law of Cyberspace for Nonlawyers, published on the World Wide Web at Gray, Cary, Ware & Freidenrich's home page, "gcwf.com."

Other reported domain name battles include those involving "cocacola.com," "nasdaq.com," and a case involving a writer for Wired magazine, who registered "mcdonalds.com" as part of an article he wrote for the magazine.

On February 5, 1996 Judge William Dwyer, a federal district court judge for the Western District of Washington, rendered what may be the first court ruling on domain names. The court issued a preliminary injunction in favor of Hasbro, Inc. against use of the domain name "candyland.com" by an Internet adult entertainment site operated by defendant Internet Entertainment Group, Ltd. Hasbro was protecting the name of its children's game "CANDY LAND." The court ordered IEG to remove all content from the "candyland.com" site and allowed the company to post a forwarding address for 90 days. See Hasbro, Inc. v. Internet Entertainment Group, Ltd., C96-0130.

If you are looking for entertainment, go to The 'Lectric Law Library's home page "lectlaw.com" and read the posted correspondence about the dispute between the owner of the domain name "inter-law.com" and a Seattle law firm representing Interlaw, Ltd., a law firm network. The exchange reveals that anyone who has humor to wield and nothing to lose can always get the best of sober lawyers.

Mark Radcliffe has described the legal issue raised by domain names as follows: "[t]he legal status of domain names is uncertain: are they like trademarks, a source of origin or identify and, thus, capable of being protected by trademark law, and owned, or are they more like street addresses and, thus, generally not capable of being protected by trademark law or owned." Radcliffe, The Law of Cyberspace for Nonlawyers, supra. In other words, does the use of the name as an Internet address constitute trademark or trade name use?

There are no published appellate opinions on this issue yet, but there are several cases pending. The probabilities are that domain names will be protected under traditional principles, at least in cases where the name is a famous one, such as "MTV" or "MCDONALD'S" or where the name or mark is used in connection with sale of products or operation of a business similar to that of the original owner. In other cases, the first-come, first-serve principle may operate, which is why so many companies are rushing to get on the Internet and to register their company names as domain names.

This rush is quite recent. As of a year ago, only about one-half of the Fortune 500 companies had registered their company names as domain names, and almost 15 percent of those names had already been registered to some unrelated third party.

VI. ADOPTION OF DOMAIN NAME POLICY

Faced with a rapidly increasing number of disputes over domain names, the official registrar, Network Solutions, Inc., has recently issued a policy regarding assignment of domain names. Under the policy applicants must agree to the terms of the policy, as it may be in effect from time to time, including the obligation to indemnify InterNic from any claims of trademark infringement or unfair competition. The applicant must also represent that "the use or registration of the Domain Name by Applicant does not interfere with or infringe the right of any third party in any jurisdiction with respect to trademark, service mark, tradename, company name or any other intellectual property right." The policy will apply in situations where a claim of ownership is made supported by proof of ownership of a registered trademark. In all other cases, a challenge will be settled by court proceedings.

In cases where the complaining party submits proof of a registered trademark, the domain name registrant will be allowed a reasonable period of time to transition to a new name before the disputed domain name is placed "on hold." Once placed on hold, the disputed name may not be used by anyone until legal rights to the name have been determined "by a United States court or arbitration panel of the American Arbitration Association."

The policy can be found at "fftp:\\rs.internic.net\policy\ internic.domainpolicy." Note that the key to taking advantage of the new policy is having a registered trademark. The U.S. Patent and Trademark Office has noted that since publication of the NSI policy statement, the number of applications filed to register domain names as service marks has greatly increased.

VII. TRADEMARK SEARCHES: CLEARANCE OF DOMAIN NAMES

The normal way to check on the availability of a trademark is to conduct a trademark search. The largest of the commercial trademark search firms, Thomson & Thomson in Boston, has recently commenced searching the Internet register, and it now includes in all search reports a section on usage of the mark, or something similar, as an Internet domain name.

InterNic will also tell you if a domain name is available, or you can search yourself. Just go to InterNic's home page, "http://rs.internic.net," click on "registration services," then on "whois query form," and then type in the proposed domain name.

VIII. REGISTRATION OF INTERNET DOMAIN NAMES

The U.S. Patent and Trademark Office will register a domain name as a trademark, provided that the applicant provides evidence that the mark is used as a trademark and not merely as an on-line address. This usually means that the applicant must submit specimens showing use of the mark in advertising, such as use of the mark somewhere in the home page apart from the address.

A debate is going on within the Trademark Office as to whether on-line products, such as electronic magazines, constitute goods or services. The services view seems to be prevailing. However, if a company is advertising and selling its own goods over the Internet and if it applies to register for an "Internet site for conducting business and taking orders for widgets," the Trademark Office will reject the application because selling your own goods is not considered a service. It is only if the company is selling the goods of others that the Trademark Office would accept a description like "electronic retailing in the field of widgets via computer accessible by means of a global computer network," which would come under miscellaneous services in class 42.

For a discussion of registration of domain names as trademarks, see "Internet Domain Names and the U.S. PTO: An Interview," Client Times, Thomson & Thomson (Oct. 1995), available on the World Wide Web at "thomson.com."

IX. FEDERAL TRADEMARK DILUTION ACT

On January 16, 1996, President Clinton signed a new federal law, the Federal Trademark Dilution Act of 1995, which became effective on that date. The new law protects "famous" trademarks against "dilution of distinctiveness." "Dilution" is defined as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception." An example would be use of the mark "Rolls Royce" as a trademark for sale of refrigerators, or the use of "Kodak" to sell bicycles.

Traditional trademark principles have protected trademarks against other uses of the same or similar mark only under circumstances where there is a "likelihood of customer confusion." Normally this would exist only where the allegedly infringing mark was used on the same or similar goods or services. Use of one's trademark by another party on unrelated goods or services generally would not constitute trademark infringement. In fact, use of the identical mark on a wide variety of goods and services is relatively common, particularly for descriptive or suggestive marks.

The new federal law will have a big impact on domain name disputes. Up until now the biggest problem for claimants in these cases has been the difficulty of proving "likelihood of customer confusion," particularly where the domain name was used in connection with unrelated goods or services. This has been the situation in most domain name disputes. Now, such trademark owners, at least if their marks are "famous," can make a claim under the new dilution law. The new law was the basis for the preliminary injunction issued by Judge Dwyer in the Hasbro case, discussed above.

The law will be of great interest both to companies whose marks are arguably "famous" and to companies who are using a trademark that is also in use by other companies on unrelated goods or services. Trademark owners in either category may want to take immediate action to take advantage of the new law.

Owners of famous marks may want to take advantage of the provisions of the new law to halt use of their mark, or something similar, by others on noncompetitive products. Such an owner is entitled "to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark. Recovery of dilution damages is available in cases where the defendant 'willfully intended to trade on the owner's reputation or to cause dilution of the famous mark.'"

The new law may be of even more widespread interest to those trademark owners who have adopted a trademark which was at the time of adoption already in use by other parties on unrelated goods or services. This is a very common situation, particularly for marks which constitute a common English language word (as opposed to a coined or fanciful word such as "Kodak" or "Exxon"). For instance, marks like "Premier," "Advantage," and "Allied" are in use on dozens, if not hundreds, of products. Until now, owners of such marks have been at risk to have the use of their trademarks enjoined under state antidilution statutes adopted by about one-third of the states. Most of these state statutes do not limit protection against dilution to "famous" marks, thereby creating great uncertainty in those situations where more than one party is using the same or a similar mark, albeit on unrelated goods or services.

Congress has acted to eliminate this uncertainty through the new federal law. The new law preempts any state statutory or common law dilution claim. However, the preemption is only available if the trademark owner has registered its mark with the U.S. Patent and Trademark Office.

Note that under both the new dilution law and the new domain name policy discussed above having a registered trademark is the key to protection. These two developments will undoubtedly cause a significant increase in applications to register trademarks.

In domain name disputes where the new dilution law (or similar state "antidilution" statutes) does not apply, courts will have to apply traditional trademark principles in a new context. This will mean determining whether a domain name is more like a post office address or more like a brand name; that is, determining whether use of a domain name constitutes trademark use. If the answer is "yes," courts will need to determine whether the test for infringement, creation of "likelihood of customer confusion," is satisfied in the particular case. Until there are more precedents to rely upon, the outcome of these cases is likely to be subject to significant uncertainties.

X. CONCLUSION

Interesting times are ahead as lawyers and courts attempt to apply traditional trademark principles to the unique world of on-line distribution.
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Mr. Webb is a graduate of Stanford Univ and the Univ of Chicago Law School. He is a partner in Stoel Rives in its Portland office. His practice focuses on intellectual property and distribution law. Mr. Webb is a frequent CLE speaker, author, and program planner. He is editor of the Oregon State Bar's five-volume work Advising Oregon Businesses, is a former chair of the Oregon State Bar's CLE Committee, and a former member of the Bar's Board of Governors.

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