Category: Trademarks (page 1 of 8)

Cybersquatting case in federal court shows inefficiencies of ACPA

A recent case from a federal court in Kentucky shows why the Anticybersquatting Consumer Protection Act (15 U.S.C. 1125(d) – the “ACPA”) can be – when compared to the Uniform Domain Name Dispute Resolution Policy (“UDRP”) – a relatively inefficient way of resolving a domain name dispute.  

Defendant was an infringer

Here is a quick rundown of the facts. Defendant owned a business directly competitive to plaintiff ServPro. Plaintiff had used its mark and trade dress since the 1960’s. Defendant set up a website that used plaintiff’s color scheme, bought Google AdWords that triggered ads showing plaintiff’s mark, and registered a domain name identical to plaintiff’s mark – servpro.click. These facts supported the court’s entry of summary judgment in plaintiff’s favor on the question of trademark infringement. But the court got hung up on the ACPA claim because of some hard-to-believe facts the defendant put forward.  

What the ACPA requires

The ACPA requires a plaintiff to prove bad faith intent to profit from the disputed domain name. And it gives courts a list of nine things that a court can consider, if it wants to, in determining this bad faith. In other words, this list is not the be-all and end-all guide for determining ACPA bad faith. Here are the nine things: 

  • (I) the trademark or other intellectual property rights of the person, if any, in the domain name; 
  • (II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person; 
  • (III) the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; 
  • (IV) the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name; 
  • (V) the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; 
  • (VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct; 
  • (VII) the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct; 
  • (VIII) the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and 
  • (IX) the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous within the meaning of [the Lanham Act]. 

The court’s decision on cybersquatting

The court found that factors I through IV and IX weighed in plaintiff’s favor. But the court denied summary judgment because it found there to be a genuine dispute as to factor V, namely, that defendant had an intent to divert plaintiff’s customers.  

Defendant asserted that he did not purchase the servpro.click domain name with the intent to divert customers away from plaintiff for defendant’s own commercial gain. Instead, he alleged that he registered the disputed domain name to collect information and perform analytical research for running Google AdWords. He also alleges that the website the domain name pointed to did not advertise that it was ServPro, and the contact information on the website pointed to his personal cellphone. And he alleged that when answering calls made to that number, he identified himself as affiliated with his company and never identified himself as affiliated with plaintiff. 

It must have been difficult for the court to deny summary judgment in a situation where the facts alleged are so hard to believe. A court’s role at the summary judgment stage, however, is not to weigh the evidence, but merely to determine whether there is a factual issue for trial. The time for really ascertaining the truth of defendant’s assertions will come later.  

Was the ACPA too cumbersome for this case?

In any event, the fact that these flimsy arguments remained alive this far into expensive litigation underscores how federal litigation is often the more cumbersome alternative to resolving domain name disputes. The marshaling of evidence, briefing and argument in federal court can easily rack up six-figures in attorney’s fees and costs. And even after that effort, the summary judgment standard provides little assurance that a party arguing against thin facts will get relief at this stage. Had this domain name dispute been heard under the UDRP instead, one would guess plaintiff’s arguments might have had more success.  

ServPro Intellectual Property, Inc. v. Blanton, 2020 WL 1666121 (W.D. Ky. April 3, 2020) 

Video: 3 trademark essentials for your business

Here are three key ideas for selecting and protecting your company’s trademark:

(1) choose a distinctive mark that is not descriptive,

(2) conduct clearance so that you will not infringe, and

(3) seek registration with the United States Patent and Trademark Office.

How companies can use their trademarks to combat COVID-19-related phishing

Straightforward out-of-court domain name proceeding can provide efficient relief against fraudulent websites and email.

Google has seen a steep rise amid the Coronavirus pandemic in new websites set up to engage in phishing (i.e. fraudulent attempts to obtain sensitive information such as usernames, passwords and financial details). Companies in all industries – not just the financial sector – are at risk from this nefarious practice. But one relatively simple out-of-court proceeding may provide relief.

Varieties of Phish Species

Phishing schemes can take a variety of forms. A fraudster may register a domain name similar to the company’s legitimate domain name and use it to send email messages to the company’s customers, requesting payment and providing wire instructions. Distracted or untrained customers who receive the email may unwittingly wire funds as instructed in the fraudulent email to an account owned by the criminal. Or the phishing party may set up a legitimate looking but fake website at a domain name similar to the company’s legitimate domain name, and direct users there to purportedly log in, thereby disclosing their usernames, passwords, and perhaps additional sensitive information.

Taking Sites Down with the UDRP

Everyone who registers a domain has to agree, by contract, to have disputes over the domain name’s ownership resolved through an administrative proceeding (similar to arbitration). The Uniform Domain Name Dispute Resolution Policy (UDRP) governs disputes over .com, .net, .org and many other domain name registrations. The World Intellectual Property Organization (WIPO) provides administrative panels who decide disputes under the UDRP. These are decided “on the papers” with each party having the opportunity to submit arguments and supporting documentation. The time and expense of a UDRP proceeding is a small fraction of what one sees in typical litigation – UDRP cases usually conclude within weeks, and generally cost a few thousand dollars.

The UDRP Frowns Upon Phishing

To be successful in bringing a UDRP proceeding, a party has to prove (1) that it owns a trademark that is identical or confusingly similar to the disputed domain name, (2) that the party that registered the disputed domain name has no rights or legitimate interests in the disputed domain name, and (3) that the disputed domain name was registered and has been used in bad faith.

UDRP panels typically show little tolerance for blatant phishing efforts. Companies bringing UDRP actions against registrants of domain names registered for phishing purposes enjoy a high rate of success. A good phishing effort (that is, “good” in the sense that the fake domain name succeeds in deceiving) will require using words similar to the company’s mark. So the first element is usually a low hurdle. On the second and third elements, UDRP panels are readily persuaded that a party using a disputed domain name for phishing gains no rights or legitimate interests, and demonstrates clear bad faith. “Using the disputed domain name to send fraudulent email is a strong example of bad faith under the [UDRP].” Samaritan’s Purse v. Domains By Proxy, LLC / Christopher Orientale NA, WIPO Case No. D2019-2403 

Cost of domain name was relevant in establishing secondary meaning of trademark

In a trademark dispute between two companies in the real estate space, the court was called upon – at the summary judgment stage – to determine if there was a triable issue as to whether plaintiff’s STOCKDALE mark was not merely descriptive but instead had acquired distinctiveness.

Defendants had argued that plaintiff’s case failed because plaintiff did not have a protectable mark. Plaintiff countered that its STOCKDALE mark, which it had used for 30 years and which the court found was primarily merely a surname, had acquired distinctiveness. Guided by the principles in the case of Viacom Int’l v. IJR Capital Investments, LLC, 891 F.3d 178 (5th Cir. 2018) (the Krusty Krab case), the court examined, concerning plaintiff’s mark:

  • length and manner of use of the mark or trade dress,
  • volume of sales,
  • amount and manner of advertising,
  • nature of use of the mark or trade dress in newspapers and magazines,
  • consumer-survey evidence,
  • direct consumer testimony, and
  • the defendant’s intent in copying the [mark].

It determined that there was a genuine issue of material fact as to whether the mark was protectable as one that had acquired distinctiveness. Interestingly, the plaintiff had not kept track of its advertising expenditures, but did introduce evidence that it had paid more than $50,000 to acquire the domain name stockdale(.)com. The court found that information relevant to inquiry.

Stockdale Investment Group, Inc. v. Stockdale Capital Partners, LLC, No. 18-2949, 2019 WL 5191526 (S.D. Tex., October 15, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

Yahoo successor does not prevail in bid to obtain ymobile.com domain

Oath, Inc., the successor to Yahoo! Inc., filed an action under the Uniform Domain Name Dispute Resolution Policy (UDRP) against a domainer that acquired ymobile.com earlier in 2019. The split 3-member FORUM panel denied the complaint, finding that Oath failed to demonstrate that the respondent lacked rights or legitimate interests in the disputed domain name, and failed to show it registered and used the disputed domain name in bad faith. 

On the question of rights or legitimate interests, the panel found that the respondent’s purchase and sale of the domain name comprised of the generic term “mobile” prefixed by “y” was legitimate, so long as the respondent did not intend to capitalize on Oath’s YMOBILE mark, which is registered in Japan. The panel accepted the respondent’s assertion that it had no notice of the YMOBILE mark prior to acquiring the disputed domain name. 

Regarding bad faith registration and use, the panel similarly found that the respondent was not targeting the Y! or YMOBILE mark, and that it had no knowledge of the YMOBILE mark’s existence prior to acquiring the disputed domain name. 

One of the panelists dissented, arguing that the disputed domain name should have been transferred. He emphasized how the respondent was using the disputed domain name – which the panel found was identical to a mark the complainant owns – to display pay-per-click ads for goods and services competitive with the complainant’s. Some of the ads, for example, were for online games and downloadable software. And on the issue of bad faith, this panel member observed that although the respondent claimed to not know of the complainant’s YMOBILE mark, a simple web search would have revealed it. 

Oath Inc. v. Mira Hold, No. FA 1909001858330 (Forum, October 8, 2019)

Seventh Circuit requires trademark defendants to pay plaintiff’s attorneys’ fees

Court held this was an “exceptional case” and that trial court judge should have awarded plaintiff its attorneys’ fees under the Lanham Act.

While it is fairly common for successful litigants in copyright cases to be awarded the attorneys’ fees they incur in bringing or defending the case, that fee-shifting is not as common in trademark cases. There is a higher standard that must be met in trademark cases – the prevailing party must show that it has won an “exceptional case”. That recently occurred in the Seventh Circuit Court of Appeals. 

Plaintiff home remodeling company and defendants – a manufacturer of storm shelters and one of its owners individually – found themselves in a trademark dispute over rights to use a mark plaintiff had developed to use as a distributor of defendants’ storm shelters.

Defendants disregarded on oral license agreement it had with plaintiff and used the mark for years outside the territorial scope of the license. The evidence showed that defendants intended to just buy the mark in the event plaintiff noticed defendants’ out-of-scope use.

Plaintiff indeed noticed and sued. The trademark infringement case went to trial. The trial court – though it found in plaintiff’s favor on the liability question and awarded more than $17 million in damages to plaintiff – declined to order defendants to pay plaintiff’s attorneys fees. Plaintiff sought review of the denial of attorney’s fees with the Seventh Circuit.

On appeal, the court reversed and remanded. It found that the trial court’s findings made this an “exceptional case” and thus appropriate for an award of attorneys’ fees.

Specifically, the court found that defendants’ conduct was willful, egregious and intentional. Likewise, defendants had acted in bad faith and maliciously, and refused to cease infringing activity, causing plaintiff unnecessary trouble and expense.

4SEMO.com Inc. v. Southern Illinois Storm Shelters, Inc., Nos. 18-1998 & 18-2095 (7th Cir., October 7, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

Restraining order entered against website that encouraged contacting children of plaintiff’s employees

Plaintiff sued defendant (who was an unhappy customer of plaintiff) under the Lanham Act (for trademark infringement) and for defamation. Defendant had registered a domain name using plaintiff’s company name and had set up a website that, among other things, he used to impersonate plaintiff’s employees and provide information about employees’ family members, some of whom were minors.

Plaintiff moved for a temporary restraining order and the court granted the motion.

The Website

The website was structured and designed in a way that made it appear as though it was affiliated with plaintiff. For example, it included a copyright notice identifying plaintiff as the owner. It also included allegedly false statements about plaintiff. For example, it included the following quotation, which was attributed to plaintiff’s CEO:

Well of course we engage in bad faith tactics like delaying and denying our policy holders [sic] valid claims. How do you think me [sic], my key executive officers, and my board members stay so damn rich. [sic]

The court found that plaintiff had shown a likelihood of success on the merits of its claims.

Lanham Act Claim

It found that defendant used plaintiff’s marks for the purpose of confusing the public by creating a website that looked as though it was a part of plaintiff’s business operations. This was evidenced by, for example, the inclusion of a copyright notice on the website.

Defamation

On the defamation claim, the court found that the nature of the statements about plaintiff, plaintiff’s assertion that they were false, and the allegation that the statements were posted on the internet sufficed to satisfy the first two elements of a defamation claim, namely, that they were false and defamatory statements pertaining to the plaintiff and were unprivileged publications to a third party. The allegations in the complaint were also sufficient to indicate that defendant “negligently disregarded the falsity of the statements.”

Furthermore, the statements on the website concerned the way that plaintiff processed its insurance claims, which related to the business of the company and the profession of plaintiff’s employees who handled the processing of claims. Therefore, the final element was also satisfied.

First Amendment Limitations

The court’s limitation in the TRO is interesting to note. To the extent that plaintiff sought injunctive relief directed at defendant’s speech encouraging others to contact the company and its employees with complaints about the business, whether at the workplace or at home, or at public “ad hominem” comments, the court would not grant the emergency relief that was sought.

The court also would not prohibit defendant from publishing allegations that plaintiff had engaged in fraudulent or improper business practices, or from publishing the personally identifying information of plaintiff’s employees, officers, agents, and directors. Plaintiff’s submission failed to demonstrate to the court’s satisfaction how such injunctive relief would not unlawfully impair defendant’s First Amendment rights.

The did, however, enjoin defendant from encouraging others to contact the children and other family members of employees about plaintiff’s business practices because contact of that nature had the potential to cause irreparable emotional harm to those family members, who have no employment or professional relationship with defendant.

Symetra Life Ins. Co. v. Emerson, 2018 WL 6338723(D. Maine, Dec. 4, 2018)

UDRP Panel found no bad faith, but gave the Complainant additional opportunity to prove its case

[This post originally appeared on UDRP Tracker.]

The Complainant established its business beginning in March 2018 and sought to acquire the disputed domain name <zoyo.com> through communications with the Respondent facilitated by the registrar. After the Respondent demanded $10,000 for the disputed domain name – which was the same amount the Respondent claimed to have paid for the disputed domain name “a few years ago” – the Complainant sought relief from a single-member WIPO Panel under the UDRP.

The Panel denied the Complaint, finding that the Complainant failed to show bad faith use and registration under the UDRP.

The evidence on this point was controverted. The Respondent claimed (not in a formal response but through the above-noted negotiations) that he acquired the disputed domain name years ago, and the WhoIs data showed it was first registered in 2002. But the Complainant – looking to the “last updated” field in the WhoIs data, claimed that the Respondent acquired it in April 2018.

The Panel found that “failed to establish that the Respondent’s statement in response to the Complainant’s enquiry that it acquired the disputed domain name ‘some years ago’ [was] false.”

It further noted that the Complainant stated that it required the disputed domain name for use as part of the expansion and development of its business. The Panel surmised that this could indicate that the Complaint was filed as a part of the Complainant’s business expansion plan and perhaps indicated that the Complainant did not fully understand the nature and purpose of the UDRP.

So the Panel’s decision left open the possibility of further action if the facts would support them. The Panel determined that if the Complainant could prove that the Respondent did not acquire the disputed domain name until April 2018, at a time when there was considerable activity and perhaps publicity in relation to the establishment of the Complainant’s group, that might paint a different picture. Accordingly, on the basis of the evidence before the Panel on the present record, the Panel denied the Complaint but without prejudice to the filing of a new Complaint should evidence become available to support the Complainant’s contentions concerning the Respondent’s identity and acquisition of the disputed domain name.

Zoyo Capital Limited v. A. Zoyo, WIPO Case No. D2018-2234

Anonymous online trademark infringer can be identified through subpoena to domain registrar

Plaintiff trademark owner noticed that an unknown party was using plaintiff’s mark to sell email templates online without plaintiff’s authorization. After the unknown infringer’s domain name registrar (the case does not say whether it was also the web host) refused to take down the allegedly infringing content, plaintiff filed suit against the “John Doe” defendant. Since it needed to learn the identity of the defendant to move the case forward, plaintiff asked the court for early discovery that would permit plaintiff to send a subpoena to the registrar that would compel the registrar to identify its customer.

The court granted the motion for leave to take early discovery. It applied the standard set out in OpenMind Solutions, Inc. v. Does 1-39, 2011 WL 4715200 (N.D. Cal. Oct. 7, 2011) (citing Columbia Ins. Co. v. seescandy.com, 185 F.R.D. 578-80 (N.D. Cal. 1999)), which requires that prior to early discovery being permitted, a plaintiff must show:

  • Plaintiff can identify the missing party with sufficient specificity such that the court can determine that defendant is a real person or entity who could be sued in federal court;
  • Plaintiff has identified all previous steps taken to locate the elusive defendant;
  • Plaintiff’s suit against defendant could withstand a motion to dismiss; and
  • Plaintiff has demonstrated that there is a reasonable likelihood of being able to identify defendant through discovery such that service of process would be possible.

On the first factor, plaintiff had alleged that the Doe defendant owned or was using the specified domain name associated with the offending website to sell email templates using plaintiff’s trademark.

As for the second factor, plaintiff had contacted the domain name registrar, and asked that the information be taken down, but the registrar refused to do so. The domain name alone was not sufficient for plaintiff to identify the Doe defendant, and plaintiff had no other means to identify the Doe defendant besides the registrar’s record which it refused to provide without a subpoena.

Regarding the third factor, plaintiff made the required showing by alleging that it holds a valid trademark for its mark that the Doe defendant used to sell products on the offending website.

And concerning the fourth factor, the plaintiff had alleged that the registrar was the registrar for the domain name associated with the offending website and that it had stated it would pass the complaint information on to the website owner. The court found that plaintiff had thus demonstrated that a subpoena to the registrar should reveal the identity of the Doe defendant.

One should note this court’s willingness to permit early discovery as being in contrast to another court’s recent apparent disdain for a copyright troll plaintiff seeking the identity of an anonymous online infringer.

Marketo, Inc. v. Doe, 2018 WL 6046464 (N.D.Cal. Nov. 19, 2018)

Court orders transfer of domain name at preliminary injunction stage of trademark case

Plaintiff sued a competitor under the Anticybersquatting Consumer Protection Act (15 U.S.C. 1125(d) (“ACPA”)) and brought other trademark-related claims concerning the competitor’s alleged online scam of selling infringing nutritional supplement products. Plaintiff also sued the domain name privacy protection service Namecheap, which the competitor had used to register the domain name. As part of the order granting plaintiff’s motion for preliminary injunction, the court ordered Namecheap to transfer the domain name to plaintiff.

The court noted that a preliminary injunction “is an extraordinary remedy never awarded as of right,” and that the “traditional purpose of a preliminary injunction is to protect the status quo and to prevent irreparable harm during the pendency of the lawsuit.” Given these parameters, one may be reasonably surprised that the court went so far as to transfer the domain name before the case could be taken all the way through trial. Usually the transfer of the domain name is part of the final remedy awarded in a cybersquatting case, whether under the ACPA or the Uniform Domain Name Dispute Resolution Policy.

The opinion did not address the issue of whether the domain name transfer prior to trial might go further than to “protect the status quo”. It would seem the court could have just as easily protected the status quo by ordering the domain name not be used. The court apparently found the evidence to be drastically in favor of plaintiff. And since the defendant-competitor did not show up for the hearing, plaintiff’s evidence went unrebutted.

Nutramax Laboratories, Inc. v. Nutra Max Labs, Inc., 2017 WL 4707447 (D.S.C. October 20, 2017)

See also:

Evan_BrownAbout the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

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