When it comes to use of trademarks on the Internet, it's all about fairness – fairness to the trademark owner, to the consumer, to competitors, and to purveyors of Internet searching and other services.

Fairness has always played a role in determining whether use of a trademark has crossed the line and become unlawful. The test for trademark infringement typically mirrors the test for unfair competition, and the phrase "unfair competition" itself underscores the fact that only certain "unfair" types of competition are prohibited. Furthermore, there is a recognized "fair use" defense to trademark infringement.

But fairness is a subjective and fact-based concept, and the judicial system is currently confronting the question of what is "fair" in regard to trademarks in the dynamic Internet environment.

Internet trademark issues first hit the legal radar screen with the use of trademarks in domain names, and officials reacted by adopting new federal laws and administrative dispute procedures. More recently, with the explosion of new and evolving forms of Internet advertising, the focus has shifted to the use of trademarks by search engines and online advertisers, with only guidelines and principles – and no clear answers – available at this stage of the debate.

The Struggle With Domain Names

When the Internet gold rush was at its peak, companies and individuals rushed out to stake their claims to domain names. Companies who had been peacefully sharing the same name in different fields suddenly found themselves competing for exclusive rights to a particular domain name. Newcomers insisted they had a right to register domain names containing generic or descriptive terms, even if another company had developed brand recognition using those terms in a different industry. Of course, many opportunists – so-called "cybersquatters" – also seized upon the chance to register desirable names in hopes of selling them for profit.

Because a domain name often gives no indication of the products offered on the corresponding website, traditional trademark rules have been difficult to apply to domain name disputes. Trademarks are usually evaluated in the context of the goods or services for which they are used. If the goods or services are distinguishable (e.g., one company uses the trademark on computers and another uses the trademark on fishing poles), then identical trademarks generally are permitted to co?exist because consumers are unlikely to be confused about whether the sources of those products are related. The absence of a likelihood of confusion creates a situation that is generally deemed to be fair to consumers and to trademark owners.¹

On the Internet, on the other hand, consumers cannot see what goods or services are being offered until they have viewed the webpage associated with a domain name. This new technology presented new legal issues.

To address this new reality, some courts relied upon a concept called "initial interest confusion."² As applied to the Internet, the concept recognizes that consumers frequently rely on trademarks to find websites – for example, consumers often submit trademarks to an Internet search engine or use trademarks when guessing at a desired website address. Consequently, an opportunistic party can attract consumers to its website by using another party's trademark (e.g., in the opportunistic party's domain name, web address, metatags and other hidden source code, or even in the text of its website), thereby benefiting from the consumers' "initial interest" in locating the trademark owner's website.

Taking advantage of another's trademark has been deemed to be unfair, and to curb this new species of misappropriation, courts have cited initial interest confusion to find trademark infringement even in cases where consumers, upon reaching the infringer's website, quickly realize that the website is unrelated to the trademarkvisiting. For example, when some consumers visited the WeightWatchers.com website, they received a pop-up ad for DietWatch.com (a result which prompted WeightWatchers to obtain an injunction against DietWatch in June 2002).⁷

But in other instances, Gator's software displayed ads and trademarks that were not in direct competition with the goods or services offered on the underlying website. Such was the case in a lawsuit brought by The Washington Post and other publishers against Gator in 2002.⁸ The publishers argued that Gator was luring away their prospective advertisers by suggesting that it was more effective to advertise on a targeted website through Gator than to approach the owner of that website for advertising space.⁹

In a succinct one-and-a-half page order, the District Court in Virginia granted the publishers' request for a preliminary injunction against Gator. The injunction in part prohibited Gator from (1) causing its pop-up ads to be displayed on any website owned by or affiliated with the plaintiffs without the plaintiffs' express consent; (2) making any designations of origin, descriptions, representations or suggestions that the plaintiffs are the source, sponsor or in any way affiliated with Gator's advertisers or the advertisers' websites, services and products; and (3) infringing, or causing any other entity to infringe, the plaintiffs' trademarks and/or other service mark rights.¹⁰

In its brevity, this Gator order left some key questions unanswered. For example, it summarily enjoined Gator from "infringing" the plaintiffs' trademarks without clarifying what type of trademark use would constitute infringement in the online world. Similarly undefined was non-infringing "fair use" of a trademark.

Presumably, the Gator order reflected the court's attempt to balance the competing interests of the publishers and the online marketing company. In this case, the court concluded that the balance of fairness tilted in favor of the publishers, perhaps because of allegations that Gator was luring away prospective advertisers from the publishers, or perhaps because of the court's apparent belief that Gator's pop-up ads were altering the appearance of the publishers' websites.

To be continued

Footnotes:

1. Even if there is no likelihood of confusion, use of a famous trademark is sometimes deemed to be unfair to the owner of that trademark. To address the unfairness in such instances, the concept of "trademark dilution" was developed. See 15 U.S.C. § 1125(c).

2. See, e.g., Brookfield Communications Inc. v. West Coast Entm't Corp., 174 F.3d 1036 (9th Cir. 1999) (ordering preliminary injunction against West Coast Entertainment's use of MOVIEBUFF and MOVIEBUFF.COM on account of potential initial interest confusion with Brookfield Communications' MOVIEBUFF trademark).

3. See, e.g., OBH, Inc. and Columbia Ins. Co. v. Spotlight Magazine, Inc., 86 F. Supp. 2d 176 (W.D. N.Y. 2000) (enjoining use of THEBUFFALONEWS.COM by disparaging competitor on grounds of initial interest confusion for consumers expecting to arrive at The Buffalo News website); Interstellar Starship Servs. v. Epix, Inc., 184 F.3d 1107 (9th Cir. 1999) (reversing declaratory judgment that permitted Interstellar's use of EPIX.COM, and explaining that initial interest confusion could result because parties operate in similar markets and Interstellar might obtain consumers by capitalizing on Epix's goodwill); cf. Chatam Int'l Inc. v. Bodum, Inc., 157 F. Supp. 2d 549 (E.D. Pa. 2001) (dismissing complaint by producer of "Chambord Liqueur Royale" against Bodum's use of CHAMBORD.COM for "Cafetiere Chambord" coffeemakers, and finding no initial interest confusion because parties were not competitors and Internet users were not likely to be confused).

4. 15 U.S.C. § 1125(d).

5. Uniform Domain Name Dispute Resolution Policy (Oct. 24, 1999), available at http://www.icann.org/udrp/udrp-policy-oct99.htm.

6. Washingtonpost.Newsweek Interactive Co., LLC, et al. v. The Gator Corp., 2002 WL 32153438 (E.D. Va. 2002).

7. Weightwatchers.Com, Inc. v. Dietwatch.Com, Inc., 2002 WL 1797753 (S.D.N.Y. 2002).

8. Washingtonpost.Newsweek, 2002 WL 32153438.

9. Id.

10. Washingtonpost.Newsweek Interactive Co., LLC., et al. v. The Gator Corp., 2002 WL 31356645 (E.D. Va. 2002). Following the court’s granting of the preliminary injunction, Gator settled the publishers’ lawsuit. A number of businesses (e.g., L.L. Bean, UPS, Extended Stay America, Wells Fargo, Quicken Loans and Teleflora) filed subsequent lawsuits against Gator and Claria Corporation, but such suits were similarly settled.