Featured Article

July 2001

Which Came First, the Chicken or the Egg, or the Trademark or the Domain Name?

One of the hottest legal issues today is the interplay between trademarks and website domain names. The competition for domain name rights is fierce, and the right domain name can be worth thousands or even millions of dollars. But some companies are trying to preempt the domain name field by claiming that their trademark rights preclude the ownership or registration of various domain names; how is the law dealing with this?

As a general matter, the state and federal laws governing trademarks are designed to prevent unfair competition, by which a competitor might try to get a "free ride" by marketing its copycat products under a well-established trade name. Similarly, many of the early domain name cases dealt with the situation of an individual essentially hijacking a well-known trademark, by registering it as a domain name and then trying to sell it back to the trademark owner for an artificially high price. The courts were quick to punish such abuses, and Congress has itself stepped into the fray by passing the Anti-Cybersquatting Act, which is specifically designed to detect and punish those who try to use the internet to steal another's trademark.

But what happens if you want to register a domain name which is not the subject of a famous trademark, or if you want to use a domain name for a different market than someone else's registered trademark? The law is pretty clear that under the right circumstances, different people can generally use similar trademarks, especially within different markets, and if the public is not confused. However, many courts have almost automatically assumed that a different rule should apply to domain name rights, and that if there is a pre-existing trademark registration of some type, even within a different industry or market, the domain name is somehow a "Cyber-Squatting" violation.

Such rulings misunderstand a basic concept of intellectual property, namely that different laws are designed to protect different types of rights. For example, trademark laws generally protect product-identifier items such as trademarks, while the copyright law generally protects the specific expression of ideas (such as in a book or a movie), and patent laws generally protect particular product ideas or manufacturing processes. Thus, the intellectual property rights created by these various laws grant property owners specific rights only in certain fields, and with certain restrictions. For example, the rights granted by a federal trademark registration are limited, in both subject matter and geographical location, and the trademark remains in the public domain for free use by the public for other than the registered purpose and geographic locations.

Failure to uphold such limits on intellectual property rights, such as the content-based and geography-based limits for trademarks or the time limits for patent rights, would wipe out the entire structure of federal laws governing intellectual property rights. It would also allow large companies to prevent others from entering any other marketplace using the same or similar trademark for eternity.

But recent court rulings permitting trademark holders to prevent others from registering domain names on the internet which are the same as or similar to their trademarks have begun to blur the boundaries of intellectual property rights. For example, a federal trademark registration can be based on the intent to use a mark in commerce. This can permit the registrant to reserve the mark for use in the subject industry and geographic area for six years or even ten years, even though the trademark is not even being used. Despite this law, some courts may not allow somebody else to register a similar domain name under these circumstances, even if the registered trademark owner has registered its trademark for a different industry or geographic area, and even if it is not even using the trademark in the marketplace.

Some commentators watching this trend suggest that the only way to resolve the conflict between potential registrants with non-conflicting rights to the same or similar trademarks under the Lanham Act, but only one of whom can own the domain name, is a "first use rule". E.g., Russell, "Whose legal right?", cited in Rony and Rony, The Domain Name Handbook (1998). Under such a rule, the first person to register the domain name who also has some legitimate claim to the mark, whether a common law right to the mark based on use, an "intent to use" registration, or an uncontestable registration, would have a right to the domain name. Id.

Ervin, Cohen & Jessup LLP is currently testing the waters on this question in several cases, and it will be interesting to see how the courts eventually come out on this issue.

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Ervin, Cohen & Jessup LLP advises Internet and other technology businesses and entrepreneurs on trademark, copyright, licensing, contract, litigation and other matters affecting web sites, e-commerce and other aspects of their businesses.

For further information regarding what ECJ can do to help you, please contact either Ken Luer at kluer@ecjlaw.com (or 310.281.6329) or Howard Berman at hberman@ecjlaw.com (or 310.281.6369).

This article is published by the law firm of Ervin, Cohen & Jessup LLP. The topics discussed are intended to present an overview of current legal trends and should not be construed as representing advice on specific, individual matters, but rather as general commentary on the subject discussed. Articles are not a substitute for the sound advice of compentent legal counsel. Your questions and comments are always welcome. Articles may be reprinted with permission. Copyright © 2000 Ervin, Cohen & Jessup LLP.