Fay Sharpe LLP: When URLs and trademarks collide, and when it pays to seek damages

An infringement on your trademark by another entity through its domain name can affect the strength of your brand. In some instances, a company may benefit from stopping an infringer and seeking damages.

“Ultimately, it all comes down to dollars and cents, and whether a business wants to truly invest and strengthen its brand to prevent others from capitalizing on its goodwill,” says Mark J. Masterson, an associate at Fay Sharpe LLP.

Smart Business spoke with Masterson about the intersection of trademarks and URLs, and what protections are available to help prevent costly trademark infringements.

How might a domain name or URL infringe on a trademark?

A trademark owner can enforce trademark rights against a domain name that is likely to create source confusion with the trademark owner’s brand or if a domain name dilutes that trademark. However, in some instances, a domain name registrant would not be prevented from exercising its First Amendment rights by registering a domain name that is similar to the trademark. As such, third parties have a right of fair use as well as the right to parody and satirize others’ trademarks. Regardless, domain name registration does not provide a right to violate trademark law or to engage in cybersquatting.

The U.S. Patent and Trademark office (USPTO) and domain registrars operate separately from one another. Generally, registering a domain name is done on a first-come, first-served basis, with the idea that the registrant has a good faith and a legitimate interest to use the name. On the other hand, the USPTO must examine a trademark application for conformity with federal law and trademark rules prior to formally granting a registration.

What’s the recourse against cybersquatters?

The Anti-cybersquatting Consumer Protection Act provides a private right of action for trademark owners to bring suit in federal court against the holder of a confusingly similar domain name. Additionally, trademark owners may initiate arbitration procedures under the authority of the Internet Corporation of Assigned Names and Numbers (ICANN) to transfer control of a confusingly similar domain name to the trademark owner without having to go to court.

A trademark owner can avoid federal court by filing a grievance through ICANN, following the Uniform Domain Name Dispute Resolution Policy’s procedure for filing complaints. The arbitration process can take as little as three months and is less costly than litigation. However, filing suit in federal court is usually recommended when market share is affected by the infringing use.

How has Internet commerce affected common-law trademark rights?

A URL or domain name registration does not in itself constitute ‘use’ for purposes of acquiring trademark priority. Common law trademark rights are geographic in nature and have caused a bit of judicial confusion with the broad geographic reach of the Internet.

Although some common law trademark rights may exist due to the creation of a website, the strength of these rights is generally dependent upon market penetration, the nature of the business, and the actual geographic reach of the business’s products and services. However, even in situations that appear to be a strong case for granting broad protections to a common law trademark, the courts have raised various questions and developed fact-based tests that can be expensive to prove and tend to favor a registered trademark holder.

Therefore, it is in the best interest of a common law trademark user to register his or her trademark with the USPTO to take advantage of the strongest commercial protection afforded by law.

How can companies ensure their marks are protected in the market and online?

Fundamentally, companies should select a name or logo for their products and services by keeping such variables as domain name and trademark registration in mind. The key is selecting a mark that can become a federally registered trademark with the USPTO and is marketable to a desired consumer. The trademark prosecution process can take up to a year or more, but it is the best way to ensure that trademark rights are protected, online or otherwise.

When selecting a mark, the company should conduct an informal trademark search online or hire a trademark attorney to conduct an in-depth trademark search. Usually, in-depth trademark searches cover USPTO files, state trademark listings and domain name registries, as well as online and other common law uses.

Selecting a domain name should become a priority only after selecting a trademark that can be validly enforceable. Once granted, it is the responsibility of the trademark owner to actively police his or her mark in commerce to prevent unauthorized uses that would otherwise reduce its strength and value.

Mark J. Masterson is an associate at Fay Sharpe LLP. Reach him at (216) 363-9000 or [email protected].

Insights Legal Affairs is brought to you by Fay Sharpe LLP