Trademark Exploitation on the Internet: Don't Be Branded a Usurper

While the Anticybersquatting Consumer Protection Act, 15 U.S.C.S. '1051, adequately addresses the legal difficulties associated with bad-faith registration of trademarked names by nontrademark holders, e-exploitation of trademarks is still a problem for trademark holders.

Unlawful e-exploitation of trademarks arises from use of the Internet in a number of ways ' outside of cybersquatting ' to infringe and dilute traditional trademarks.

In the case of unlawful e-exploitation of trademarks, as it is in the case of traditional unlawful trademark exploitation, the threshold question is whether there is a likelihood of confusion and whether there is dilution. Unfortunately, these questions are difficult to answer simply by applying traditional trademark doctrines.

For example:

• Does an unlawful use of a trademark as part of a metatag yield sufficient confusion to satisfy a trademark-infringement finding?
• Does the fair-use defense apply to the unauthorized use of a trademark in a URL and, therefore, result in a noninfringing use?

What Courts Have Said

In Qualitex Co. v. Jacobson Prods. Co., Inc., 514 U.S. 159 (1995), the Supreme Court set forth basic objectives of trademark law that are helpful in applying traditional trademark law to unlawful trademark e-exploitation. It stated that trademark law should simply protect consumers and prevent competitors from unfairly taking advantage of a trademark.

The Court's conclusions are bolstered by a long history of judicial finding emphasizing that trademarks protect consumers and by legislative additions to the Lanham Act ' such as the Federal Dilution Act, 15 U.S.C.A. '1125(c), which is primarily concerned with free riding.

More precisely, the Lanham Act seeks to protect consumers by preventing the use of trademarks that are “likely to cause confusion” (see 5 U.S.C.A. '1114). This provision covers confusion as to source of the good or service in question, and also confusion as to sponsorship or endorsement ' or both ' by the trademark holder.

Also, the Lanham Act's so-called unfair competition provision provides a similar protection from the use of an unregistered mark that is likely to cause confusion. The application of the likely-to-cause-confusion test to Internet trademarks is the same as the test for traditional trademarks, and normally involves seven factors:

1. Strength of the mark;
2. Proximity of the goods;
3. Similarity of marks;
4. Evidence of actual confusion;
5. Possibility of bridging the gap;
6. Sophistication of the consumer; and
7. Good faith on the part of the alleged infringer.

Courts usually refer to these tests as either the Polaroid test or the Sleekcraft test. See Polaroid Corp. v. Polarad Elect. Corp., 287 F.2d 492 (2d Cir. 1961) and AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979).

In short, while the Internet may bring a novel fact into a case, traditional trademark-case law is sufficiently relevant to assess properly whether an unauthorized use of a trademark on the Internet is an infringement.

It should be noted that the Lanham Act also requires that, in order to find a violation of the act, the mark use must also be in commerce. Thus, the unauthorized use of the mark must normally be used in connection with a sale of goods or services.

Use and Dilution Concerns

Normally, a trademark holder is most interested in preventing a competitor from using a mark without authorization. But a trademark holder is also interested in preventing competitors and noncompetitors from diluting the effectiveness of his or her mark – on the Internet and in traditional commerce. The Federal Dilution Act applies where unauthorized trademark users cause actual “dilution of the distinctive quality of the mark.”

In Ringling Bros. Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449 (4th Cir. 1999), the court found that to establish dilution, a trademark holder must show that:

• An unauthorized use of a mark was made that was sufficiently similar to the famous mark to evoke, in a relevant universe of consumers, a mental association of the two;
• Such a use has caused economic harm; and
• Actual economic harm occurred to the famous mark's economic value by lessening its former selling power as an advertising agent for its goods and services.

To find dilution in an Internet case, however, a court need not even rely on the traditional definitions of “blurring” and “tarnishment.” See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998).

In the past, similar trademarks could exist in different geographic areas at the same time without infringement. But because of the Internet's virtual elimination of geographical limitations for the purpose of e-commerce, similar trademarks cannot coexist without a high likelihood of business, and consequential legal, difficulties.

Metatags and Deep Linking

One unique matter related to the unlawful e-exploitation of trademarks arises from the use of trademarks in software that may not be visible to an Internet user but that may result in consumer confusion. In particular, this problem arises from the use of trademarks in metatags.

Metatags are software codes that provide information about the content of Internet sites. The unlawful e-exploitation of trademarks arises when metatags are used to lure or deceive search engines by confusing Internet users into thinking that by visiting a particular Internet site, they will find information related to the trademark set forth in the metatag.

In Brookfield Communications v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999), the Ninth U.S. Circuit Court of Appeals found unauthorized use of another's trademark in a metatag to be unlawful.

However, in Playboy Enter., Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002), the court found that metatags were a nominative use, and not infringing. The court did not accept the argument that the use of “Playboy” diluted the Playboy trademark, and reasoned that the nominative use of a trademark causes no harm.

Jason Hoppin reported in a January Internet Law & Strategy article that a judge wrote: “The metatag holding in Brookfield would expand the reach of initial interest confusion from situations in which a party is initially confused to situations in which a party is never confused,” in support of his finding that the Brookfield ruling was wrong. However, it should be noted that Playboy Enters., Inc. v. Netscape Communications Corp., Nos. SACV 99-320, SACV 99-321, 2000 U.S. Dist. Lexis 13418 (C.D. Cal. 2000) (Excite search engine's practice of selling famous Playboy trademarks to Playboy competitors for use in connection with placing banner ads on Web sites did not infringe on or dilute Playboy's trademark rights), was reversed and remanded by Playboy Enters. v. Netscape Communs. Corp., 2004 U.S. App. LEXIS 442 (9th Cir. Cal. Jan. 14, 2004).

Ultimately, the analogy most likely to be applied in this instance is that of a deceitful placement of a billboard bearing false information. This case presents a scenario akin to a driver pulling off the freeway in response to a sign that reads “EXXON GAS” to find another gasoline seller's establishment, next to which stands a billboard that reads “EXXON GAS” farther down the highway. The driver, previously enticed by the prospect of EXXON gas, now decides to explore the non-EXXON gas seller. Assuming that the same entity has a financial interest in the non-EXXON gas seller and the billboard stand, that entity would be liable to EXXON for diverting the driver.

Another uniquely Internet-related unlawful e-exploitation of trademarks arises from Internet linking, a software connection from one part of the Internet to another. Thus, linking may fool Internet users about the source of content. This is particularly true of deep linking – linking from one Internet site into a page other than the home page of another's Internet site.

The case of Ticketmaster Corp. v. Tickets.com Inc., 2000 U.S. Dist. LEXIS 12987 (C.D. Cal. 2000), involved deep linking. Two companies were in the business of providing tickets (or information on how to obtain tickets), and one company used content from the other company's Web site to help sell its goods.

Regarding the relevant Lanham Act claims that arose from this matter, the court held that since no “pass off” occurred, the use of deep linking alone would not yield a successful claim associated with an unlawful trademark use.

It should be noted that trespassing tort claims and copyright claims would likely be sustained by a court. See eBay Inc. v. Bidder's Edge, Inc., 100 F. Supp. 2d 1058 (2000) (regarding applying trespass law to the Internet).

Trademarks and Search Engine Terms

Use of trademarks as Internet search terms for search engines may also constitute unlawful e-exploitation of trademarks. While an Internet search-engine provider may register with the U.S. Copyright Office as an ISP and receive limited copyright-liability protection under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. '512(d) (1998) ' and protection from defamation and other nonintellectual property state law claims arising from third-party content under the Communications Decency Act, 47 U.S.C. '230 (1996) ' no such immunity is given from trademark liability.

While a search engine is provided with a safe harbor from copyright liability under the DMCA and from defamation (and more) under Good Samaritan Immunity (Communications Decency Act) in Gucci America, Inc. v. Hall & Assoc., 135 F.Supp.2d 409 (S.D.N.Y. 2001), no statute has dealt with trademark infringement-related immunity. Consequently, no statutory bar exists for holding search engines liable for direct or contributory trademark infringement.

In particular, use of trademarks as Internet search terms by search-engine providers constitutes unlawful e-exploitation of trademarks when a search-engine provider receives consideration for placing a link to a site that has no connection with the trademark used by the search-engine user in a search. (For example, if Pepsi paid Yahoo! to return a Pepsi link when a Yahoo! search-engine user used Coke as a search term.)

In such an instance, a court would most likely find that if the practice of misleading paid placement is likely to confuse consumers into thinking there is a relationship or affiliation between the trademark searched for and the sponsored link, it should be unlawful. But many search-engine companies are aware of the legal difficulties that may arise from the potentially unlawful e-exploitation of trademarks, and have used their Internet terms-of-use agreements to diffuse potential legal difficulties.

A Recent Example, and a Company's Response

Recently, Graftobian Makeup Co. of Madison, WI, paid the search-engine firm Overture to display its link when an Overture search-engine user requested the name MEHRON, a name that is the trademark of a competitor. A representative of Mehron wrote to Overture saying he learned that a “Graftobian Makeup Co. of Madison, WI, has registered our trademark ' Mehron ' as a search term for directing Internet inquiries to their Web site.” He stated that his attorney advised him that Overture Services and Graftobian Makeup Co. are most likely in violation of the Lanham Act (unfair trade practices), and of trademark infringement. Finally, the Mehron representative demanded that Overture confirm in writing, within 72 hours, that the company had ceased allowing Graftobian Makeup Co. to use the Mehron trademark. Overture removed the misleading search-engine results and wrote back, in part, as follows:

Overture does not approve of or condone Web sites that infringe trademarks. However, Overture generally has no control over the content presented by the advertisers who list their Web sites on our search engine. Overture does require that the Web site be relevant under our guidelines. For example, an advertiser who refers to another company's trademark in a search term must be using that trademark fairly on its Web site.

While we are not in a position to arbitrate trademark or other intellectual property disputes between third parties, if a trademark owner brings a Web site to our attention that it believes does not contain relevant content, we will review the Web site for compliance with our guidelines.

After careful review, we have determined that one or more listings under the referenced search term were not in compliance with our internal relevance guidelines. Those listings have therefore been removed. Please note that the listings may be resubmitted by the advertiser, and included in our search results, if changes are made to the title or description of the listings, or the content of the website, to bring the listings into compliance with our relevance guidelines.

If you have further concerns about any remaining listings, we suggest you contact the advertiser with whom you have a dispute directly.

While the Anticybersquatting Consumer Protection Act, 15 U.S.C.S. '1051, adequately addresses the legal difficulties associated with bad-faith registration of trademarked names by nontrademark holders, e-exploitation of trademarks is still a problem for trademark holders.

Unlawful e-exploitation of trademarks arises from use of the Internet in a number of ways ' outside of cybersquatting ' to infringe and dilute traditional trademarks.

In the case of unlawful e-exploitation of trademarks, as it is in the case of traditional unlawful trademark exploitation, the threshold question is whether there is a likelihood of confusion and whether there is dilution. Unfortunately, these questions are difficult to answer simply by applying traditional trademark doctrines.

For example:

• Does an unlawful use of a trademark as part of a metatag yield sufficient confusion to satisfy a trademark-infringement finding?
• Does the fair-use defense apply to the unauthorized use of a trademark in a URL and, therefore, result in a noninfringing use?

What Courts Have Said

In Qualitex Co. v. Jacobson Prods. Co., Inc. , 514 U.S. 159 (1995), the Supreme Court set forth basic objectives of trademark law that are helpful in applying traditional trademark law to unlawful trademark e-exploitation. It stated that trademark law should simply protect consumers and prevent competitors from unfairly taking advantage of a trademark.

The Court's conclusions are bolstered by a long history of judicial finding emphasizing that trademarks protect consumers and by legislative additions to the Lanham Act ' such as the Federal Dilution Act, 15 U.S.C.A. '1125(c), which is primarily concerned with free riding.

More precisely, the Lanham Act seeks to protect consumers by preventing the use of trademarks that are “likely to cause confusion” (see 5 U.S.C.A. '1114). This provision covers confusion as to source of the good or service in question, and also confusion as to sponsorship or endorsement ' or both ' by the trademark holder.

Also, the Lanham Act's so-called unfair competition provision provides a similar protection from the use of an unregistered mark that is likely to cause confusion. The application of the likely-to-cause-confusion test to Internet trademarks is the same as the test for traditional trademarks, and normally involves seven factors:

1. Strength of the mark;
2. Proximity of the goods;
3. Similarity of marks;
4. Evidence of actual confusion;
5. Possibility of bridging the gap;
6. Sophistication of the consumer; and
7. Good faith on the part of the alleged infringer.

Courts usually refer to these tests as either the Polaroid test or the Sleekcraft test. See Polaroid Corp. v. Polarad Elect. Corp. , 287 F.2d 492 (2d Cir. 1961) and AMF Inc. v. Sleekcraft Boats , 599 F.2d 341 (9th Cir. 1979).

In short, while the Internet may bring a novel fact into a case, traditional trademark-case law is sufficiently relevant to assess properly whether an unauthorized use of a trademark on the Internet is an infringement.

It should be noted that the Lanham Act also requires that, in order to find a violation of the act, the mark use must also be in commerce. Thus, the unauthorized use of the mark must normally be used in connection with a sale of goods or services.

Use and Dilution Concerns

Normally, a trademark holder is most interested in preventing a competitor from using a mark without authorization. But a trademark holder is also interested in preventing competitors and noncompetitors from diluting the effectiveness of his or her mark – on the Internet and in traditional commerce. The Federal Dilution Act applies where unauthorized trademark users cause actual “dilution of the distinctive quality of the mark.”

In Ringling Bros. Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev. , 170 F.3d 449 (4th Cir. 1999), the court found that to establish dilution, a trademark holder must show that:

• An unauthorized use of a mark was made that was sufficiently similar to the famous mark to evoke, in a relevant universe of consumers, a mental association of the two;
• Such a use has caused economic harm; and
• Actual economic harm occurred to the famous mark's economic value by lessening its former selling power as an advertising agent for its goods and services.

To find dilution in an Internet case, however, a court need not even rely on the traditional definitions of “blurring” and “tarnishment.” See Panavision Int'l, L.P. v. Toeppen , 141 F.3d 1316 (9th Cir. 1998).

In the past, similar trademarks could exist in different geographic areas at the same time without infringement. But because of the Internet's virtual elimination of geographical limitations for the purpose of e-commerce, similar trademarks cannot coexist without a high likelihood of business, and consequential legal, difficulties.

Metatags and Deep Linking

One unique matter related to the unlawful e-exploitation of trademarks arises from the use of trademarks in software that may not be visible to an Internet user but that may result in consumer confusion. In particular, this problem arises from the use of trademarks in metatags.

Metatags are software codes that provide information about the content of Internet sites. The unlawful e-exploitation of trademarks arises when metatags are used to lure or deceive search engines by confusing Internet users into thinking that by visiting a particular Internet site, they will find information related to the trademark set forth in the metatag.

In Brookfield Communications v. West Coast Entertainment Corp. , 174 F.3d 1036 (9th Cir. 1999), the Ninth U.S. Circuit Court of Appeals found unauthorized use of another's trademark in a metatag to be unlawful.

However, in Playboy Enter., Inc. v. Welles , 279 F.3d 796 (9th Cir. 2002), the court found that metatags were a nominative use, and not infringing. The court did not accept the argument that the use of “Playboy” diluted the Playboy trademark, and reasoned that the nominative use of a trademark causes no harm.

Jason Hoppin reported in a January Internet Law & Strategy article that a judge wrote: “The metatag holding in Brookfield would expand the reach of initial interest confusion from situations in which a party is initially confused to situations in which a party is never confused,” in support of his finding that the Brookfield ruling was wrong. However, it should be noted that Playboy Enters., Inc. v. Netscape Communications Corp., Nos. SACV 99-320, SACV 99-321, 2000 U.S. Dist. Lexis 13418 (C.D. Cal. 2000) (Excite search engine's practice of selling famous Playboy trademarks to Playboy competitors for use in connection with placing banner ads on Web sites did not infringe on or dilute Playboy's trademark rights), was reversed and remanded by Playboy Enters. v. Netscape Communs. Corp., 2004 U.S. App. LEXIS 442 (9th Cir. Cal. Jan. 14, 2004).

Ultimately, the analogy most likely to be applied in this instance is that of a deceitful placement of a billboard bearing false information. This case presents a scenario akin to a driver pulling off the freeway in response to a sign that reads “EXXON GAS” to find another gasoline seller's establishment, next to which stands a billboard that reads “EXXON GAS” farther down the highway. The driver, previously enticed by the prospect of EXXON gas, now decides to explore the non-EXXON gas seller. Assuming that the same entity has a financial interest in the non-EXXON gas seller and the billboard stand, that entity would be liable to EXXON for diverting the driver.

Another uniquely Internet-related unlawful e-exploitation of trademarks arises from Internet linking, a software connection from one part of the Internet to another. Thus, linking may fool Internet users about the source of content. This is particularly true of deep linking – linking from one Internet site into a page other than the home page of another's Internet site.

The case of Ticketmaster Corp. v. Tickets.com Inc., 2000 U.S. Dist. LEXIS 12987 (C.D. Cal. 2000), involved deep linking. Two companies were in the business of providing tickets (or information on how to obtain tickets), and one company used content from the other company's Web site to help sell its goods.

Regarding the relevant Lanham Act claims that arose from this matter, the court held that since no “pass off” occurred, the use of deep linking alone would not yield a successful claim associated with an unlawful trademark use.

It should be noted that trespassing tort claims and copyright claims would likely be sustained by a court. See eBay Inc. v. Bidder's Edge, Inc. , 100 F. Supp. 2d 1058 (2000) (regarding applying trespass law to the Internet).

Trademarks and Search Engine Terms

Use of trademarks as Internet search terms for search engines may also constitute unlawful e-exploitation of trademarks. While an Internet search-engine provider may register with the U.S. Copyright Office as an ISP and receive limited copyright-liability protection under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. '512(d) (1998) ' and protection from defamation and other nonintellectual property state law claims arising from third-party content under the Communications Decency Act, 47 U.S.C. '230 (1996) ' no such immunity is given from trademark liability.

While a search engine is provided with a safe harbor from copyright liability under the DMCA and from defamation (and more) under Good Samaritan Immunity (Communications Decency Act) in Gucci America, Inc. v. Hall & Assoc. , 135 F.Supp.2d 409 (S.D.N.Y. 2001), no statute has dealt with trademark infringement-related immunity. Consequently, no statutory bar exists for holding search engines liable for direct or contributory trademark infringement.

In particular, use of trademarks as Internet search terms by search-engine providers constitutes unlawful e-exploitation of trademarks when a search-engine provider receives consideration for placing a link to a site that has no connection with the trademark used by the search-engine user in a search. (For example, if Pepsi paid Yahoo! to return a Pepsi link when a Yahoo! search-engine user used Coke as a search term.)

In such an instance, a court would most likely find that if the practice of misleading paid placement is likely to confuse consumers into thinking there is a relationship or affiliation between the trademark searched for and the sponsored link, it should be unlawful. But many search-engine companies are aware of the legal difficulties that may arise from the potentially unlawful e-exploitation of trademarks, and have used their Internet terms-of-use agreements to diffuse potential legal difficulties.

A Recent Example, and a Company's Response

Recently, Graftobian Makeup Co. of Madison, WI, paid the search-engine firm Overture to display its link when an Overture search-engine user requested the name MEHRON, a name that is the trademark of a competitor. A representative of Mehron wrote to Overture saying he learned that a “Graftobian Makeup Co. of Madison, WI, has registered our trademark ' Mehron ' as a search term for directing Internet inquiries to their Web site.” He stated that his attorney advised him that Overture Services and Graftobian Makeup Co. are most likely in violation of the Lanham Act (unfair trade practices), and of trademark infringement. Finally, the Mehron representative demanded that Overture confirm in writing, within 72 hours, that the company had ceased allowing Graftobian Makeup Co. to use the Mehron trademark. Overture removed the misleading search-engine results and wrote back, in part, as follows:

Overture does not approve of or condone Web sites that infringe trademarks. However, Overture generally has no control over the content presented by the advertisers who list their Web sites on our search engine. Overture does require that the Web site be relevant under our guidelines. For example, an advertiser who refers to another company's trademark in a search term must be using that trademark fairly on its Web site.

While we are not in a position to arbitrate trademark or other intellectual property disputes between third parties, if a trademark owner brings a Web site to our attention that it believes does not contain relevant content, we will review the Web site for compliance with our guidelines.

After careful review, we have determined that one or more listings under the referenced search term were not in compliance with our internal relevance guidelines. Those listings have therefore been removed. Please note that the listings may be resubmitted by the advertiser, and included in our search results, if changes are made to the title or description of the listings, or the content of the website, to bring the listings into compliance with our relevance guidelines.

If you have further concerns about any remaining listings, we suggest you contact the advertiser with whom you have a dispute directly.