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Legal Factoid

By G. Bradley Hargrave, Esq.
Domain Names and Trademarks

 

Most new businesses recognize that an Internet presence is critical to their success and will take appropriate planning measures before commencing operations to ensure that their proposed name and/or trademark is available in the states in which they will conduct business and as an Internet domain name. (These measures should include a state trade name search, a national trademark or service mark search and a domain name search of current Web sites). Established businesses that have delayed development of a Web site, however, may discover that their name, and its associated goodwill, is unavailable as an Internet domain name.

Fortunately, these latecomers to the Internet may be able to

obtain the use of their desired domain name or, at minimum, prevent its use by the current holder.

The first available option is simply to purchase the domain name from the current holder.

Or, alternatively, one may turn to the "Domain Dispute Resolution" policies in place at Network Solutions, Inc. ("NSI"), the company that issues domain names under contract with the federal government. Finally, a claimant may elect to bypass the NSI policies and pursue his interests in court. For those who do, potential causes of action include trademark infringement, unfair business practices, defamation, intentional interference with a prospective economic advantage and federal and state trademark dilution. Of these, an allegation of trademark dilution often stands the best chance of achieving a positive outcome.

The odds of establishing trademark dilution in a domain name dispute were improved considerably by the enactment of the "Federal Trademark Dilution Act" of 1995 (the "Act"). To establish trademark dilution under the Act, a claimant must prove the following:

1. that the claimant owns a "famous" mark which is being used by another as a domain name (with "famous" being established, in part, by an analysis of the mark's distinctiveness and the duration and extent of its use);
2. that the disputed domain name is being used for a commercial purpose (which can be established even against the cybersquatter who has done little more than simply register a famous trade name, since courts have found that the intent of such a person is to obtain a payoff from the established business, and thus the use is commercial in nature); and
3. that the use of the domain name will dilute the distinctive quality of the mark.

Dilution in turn is defined as the "lessening of the capacity of a famous mark to identify and distinguish goods or services," and may be established, unlike cases for trademark infringement, despite the absence of any likelihood of confusion on the part of the public regarding the source of the goods or services in question and without the existence of any competitive relationship between the parties.

Some businesses will undoubtedly decide to buy the desired domain name, particularly those with less than famous trademarks. Others stand a good chance of prevailing against the current domain name holder should they pursue a lawsuit for trademark dilution. And for those contemplating a new business, future "naming" problems should be avoidable through precautionary planning prior to the commencement of operations.

 

G. Bradley Hargrave practices business law in Sonoma County, California, with particular emphasis on business formation issues, contracts, and computer law. He was formerly House Counsel for CrossCheck, Inc., and is a graduate of Santa Clara University School of Law.

 

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