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Nominative Fair Use of Trademark

There are clearly circumstances under which a trademark can be incorporated into a domain name without permission from the trademark holder. Just as clearly there are domain names alleged to be used with fair intent that exploit the trademark’s value and infringe on the holder’s legal rights. The tension is palpable. A domain name containing a mark cannot be nominative fair use if it suggests sponsorship or endorsement by the trademark holder, Toyota Motor Sales USA Inc. v. Tabari, dated July 8, 2010. The 9th Circuit held, however, that an injunction issued by the district court “is clearly overbroad.” It noted that the “nominative fair use doctrine allows such truthful use of a mark, even if the speaker fails to expressly disavow association with the trademark holder, so long as it’s unlikely to cause confusion as to sponsorship or endorsement.” Thus, “[e]ven assuming some form of an injunction is required … the proper remedy for infringing use of a mark on a site generally falls short of entirely prohibiting use of the site’s domain name, as the district court did here.” Further,

the important principle to bear in mind on remand is that a trademark injunction should be tailored to prevent ongoing violations, not punish past conduct. Speakers do not lose the right to engage in permissible speech simply because they may have infringed a trademark in the past.

The Court reasoned

It is the wholesale prohibition of nominative use in domain names that would be unfair. It would be unfair to merchants seeking to communicate the nature of the service or product offered at their sites. And it would be unfair to consumers, who would be deprived of an increasingly important means of receiving such information. As noted, this would have serious First Amendment implications. The only winners would be companies like Toyota, which would acquire greater control over the markets for goods and services related to their trademarked brands, to the detriment of competition and consumers. The nominative fair use doctrine is designed to prevent this type of abuse of the rights granted by the Lanham Act.

“Forced relinquishment of a domain is … extraordinary.” In either proving cybersquatting (Interstellar Starship, 304 F.3d 936, 948 (9th Circ. 2002)) or infringement that warrants injunctive relief “Toyota must bear the burden of establishing that the Tabaris’ use of the Lexus mark [in <buyorleaselexus.com and buy-a-lexus.com>] was not nominative fair use.”

It is interesting to compare the 9th Circuit’s reasoning with that from a recent UDRP decision, Haas Automation, Inc. v. noKOutmma, FA1005001326071 (Nat. Arb.Forum July 14, 2010). The Panel granted the complaint and ordered <usedenchaas.com> transferred to the Complainant. On first pass, it appears that the “[f]orced relinquishment of [the] domain … is extraordinary.” Of course, the UDRP offers only two remedies, cancellation or transfer of the domain name. Toyota requested a permanent injunction.

Nevertheless, on the surface there are some similarities with Toyota. The Respondent alleged that it used HASS “only for nominal purposes .. To describe the products that the Respondent is legitimately selling.” Like Tabaris it placed a disclaimer on the web page. However, while the Tabaris’ disclaimer “stated, prominently and in large font, ‘We are not an authorized Lexus dealer or affiliated in any way with Lexus’,” the Respondent’s disclaimer in Haas Automation “is in small print at the very bottom of the page, after a display of Respondent’s products and services. It is quite possible that Internet users would not see the disclaimer. Under these circumstances, the disclaimer is insufficient to prevent a likelihood of confusion.”

The Respondent in Haas Automation offends the Policy in other ways. While recognizing that “reselling products may be a legitimate and bona fide offering of goods and services,” the Panel found that the “Respondent uses more than reasonably necessary of the HAAS trademark.” The “more” is that the Respondent “uses the same color scheme and font as the HAAS trademark and official website,” thus creating a likelihood of confusion [paragraph 4(b)(iv) of the Policy]. The Tabaris had a similar problem, but in their case they “submitted images of an entirely changed site at the time of trial: The stylized mark and ‘L’ logo were gone, and a disclaimer appeared in their place.” “This makeover of the Tabaris’ site is relevant because Toyota seeks only forward-looking relief.”

In Haas Automation, of course, the Panel is working with an undeveloped record, but the reasoning of the 9th Circuit suggests nominative fair use UDRP disputes are not quite as open and shut as the Panel makes it appear. The above quotation from Toyota that “the only winners would be companies like Toyota” is equally applicable to balancing rights under the Policy.

Levine Samuel, LLP. <researchtheworld.com>
Gerald M. Levine <udrpcommentaries.com>
E-Mail gmlevine@researchtheworld.com

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