Resolving disputes between owners of similar domain names and trademarks (used here to also include service marks) is becoming increasingly complex. Some recent decisions punctuate that: Sallen v. Corinthians Licenciamentos LTDA, 273 F.3d 14 (1st Cir. 2001) and Playboy Enterprises v. Welles, ___ F.3d ___, 2002 WL 130443 (9th Cir., Feb. 1, 2002).
The obvious problem, which I've repeatedly addressed since before AVN Online was born, is the global nature of the Internet. In simpler times, brick-and-mortar businesses could simply choose a name and, in order to be sure that it did not infringe upon anyone's trademark, check the local Yellow Pages. If there was no other business in town that was in the same line of work using the same or a similar name, there was no problem. Remember, the classic function of a trademark is to distinguish your source of goods or services from others, so as to avoid consumer confusion.
As franchises, mail-order businesses, and national media increased over the last century, the problem of finding a distinctive name that did not tread on the rights of anyone else increased substantially. Also, in addition to the risk of trademark infringement, there was the emerging concept of trademark dilution. Infringing upon a trademark occurs only when there is a likelihood of confusion as to the origin of the relevant goods or services. Dilution of a trademark, on the other hand, occurs whenever the value of a famous trademark is tarnished or lessened. The distinction is important.
Dilution of a trademark is a profoundly broader concept. Although it only applies to famous trademarks - an unregistered trademark can be famous and a registered one might not be - the law of dilution broadly punishes any act of capitalizing on the success of another's famous mark, or damaging its reputation.
Then came domain names. Who gets Delta.com? Delta Air Lines? Delta Faucets? Delta Dental? In fact, the guy who got Delta.com in the first place headed up another Delta business, not flying planes, manufacturing plumbing fixtures, nor filling teeth. No problem. Delta Airlines ultimately bought him out, but that is just a matter of selling a product on the open market. The original owner of Delta.com wasn't a cybersquatter, so he was operating within his rights.
At this point, almost every word in the dictionary has been registered as a dot-com. And the Internet has expanded the turf for trademark battles to the entire world, as you will see.
When you registered your domain name with Network Solutions, Inc. (NSI), or any other registrant accredited by the Internet Corporation for Assigned Names and Numbers (ICANN), you agreed to be bound by the Internet's Uniform Domain-Name Dispute-Resolution Policy (UDRP). As the concept of three acronyms in one sentence is distasteful, we'll call them Network Solutions, ICANN, and the Dispute-Resolution Policy, okay? In any event, when you signed the contract to acquire your domain name, you agreed (granted, on a take-it-or-leave-it-basis) to be bound by the Dispute-Resolution Policy.
Arbitration provisions are common in business contracts - all kinds of business contracts, from union contracts (even professional athletes' players' association contracts), to purchase and sale agreements, to the terms and conditions for the use of a Website. Arbitration is a cheaper, quicker, and less cumbersome method of resolving disputes than court litigation, especially where the parties are separated by long distances. Recall that one of the growing bodies of litigation is the issue of "personal jurisdiction" - boiling down to whether someone must sue you in your home town, or may bring the action in some far-flung place where he is located.
The Dispute-Resolution Policy allows that complaints first be filed with one of four arbitration services which, as you might predict, produce more acronyms - CPR (CPR Institute for Dispute Resolution), eResolution, NAF (National Arbitration Forum) and WIPO (World Intellectual Property Organization).
The Sallen v. Corinthians Licenciamentos LTDA case presents a classic example of a struggle for a domain name run amok. Sallen had registered Corinthians.com, which bore substantial similarity to Corinthiao, a popular soccer team in Brazil. The soccer team's position was that Sallen was a cybersquatter, which Sallen denied. Sallen claimed that the soccer team's efforts to squeeze the domain name from Sallen constituted "reverse domain name hijacking," which occurs when a muscular trademark owner attempts to acquire rights to a domain name from its skinny owner by kicking litigation sand in the owner's face. However, what is important here is not whether Sallen was a cybersquatter but, rather, the mechanism by virtue of which the two parties - one in Brazil and the other in Massachusetts - would resolve the dispute.
The soccer team filed a complaint with WIPO, claiming that Sallen was a cybersquatter. Sallen was required to submit to WIPO's authority because the Dispute-Resolution Policy said so - a condition of his registration with Network Solutions.
WIPO found that Sallen was cybersquatting on Corinthians.com. Undaunted, Sallen went to nearby Boston and filed a complaint in United States District Court, seeking a declaratory judgment.
Those who already know about declaratory judgments can skip this paragraph. A suit for a declaratory judgment is permissible when two parties have an actual dispute over their respective rights, and one of them is concerned about being sued if he is wrong. For example, consider two neighbors who disagree over the boundary between their yards. One wants to build a new garage, but needs to avoid the risk of building the garage, only to be sued by the neighbor over the boundary and losing - and then being ordered to both pay damages for trespassing and tear down the garage. The idea is that, before he starts work on his garage, our hero can file an action in court requesting a judgment against the neighbor declaring where the boundary is located. With that judgment, he can commence excavation for the garage without worrying about his neighbor suing him later (it is a little more complex than that, and things vary from state to state, especially where real estate is involved; but if you knew that, you should have skipped this paragraph). State courts have the Uniform Declaratory Judgment Act, and there is a similar statute applicable to the federal courts.
The question before the federal court was whether Sallen was stuck with WIPO's decision. He wanted another shot at the domain name, and the soccer team. A more fundamental question was whether there was a real dispute, since the soccer team claimed that it had no intent to sue Sallen.
The outcome was interesting. First, the court found that there was a dispute. Under the Dispute-Resolution Policy, court intervention delays implementation of the WIPO decision. What happened in this case was that the trial court dismissed Sallen's action; incorrectly, it would turn out. Upon the dismissal, the WIPO decision kicked in, and the domain name thereby was transferred to the soccer team, all according to the rules of the Dispute-Resolution Policy. The Court of Appeals reversed, finding the dispute to be about as alive as it could be - the soccer team by that time was using the domain name in promotional efforts, yet Sallen still maintained that he had a right to it. Second, the Dispute-Resolution Policy contemplates that a decision by any of the four arbitration services (of which WIPO is the most popular) can be trumped by a court of competent jurisdiction. Accordingly, the Court of Appeals reinstated the complaint.
The whole problem with that result is that it defeated the advantage of arbitration. The bottom line is that this quick-and-easy dispute resolution process (WIPO, and the others) becomes nothing more than a dress rehearsal for litigation, so it makes the process even more expensive. The soccer team won fair and square at WIPO, yet Sallen was permitted to drag it through litigation mud and, all during the process, try to muscle a settlement - a realistic possibility given the dizzying cost of federal litigation in Boston for a Brazilian outfit (here, the soccer team apparently had more money than God, and therefore probably could stand toe-to-toe with Mr. Sallen in Boston). But the facts of this case certainly illustrate the need for a uniform method of streamlined resolution of international disputes over domain names.
Now for something a little bit more spicy - Playboy. Terri Welles was Playmate of the Year in 1981. She recently put up a nice Website featuring, as you might surmise, entertainment of the same genre as that for which Playboy is known - very well known.
Playboy has spent a half century developing its famous image. Because everyone knows about Playboy, "Playmate of the Year," and "Playmate of the Month" all are famous trademarks that Playboy goes to great extremes to protect, as it is entitled to do.
Welles, on the other hand, in fact was the Playmate of the Year, at least in 1981. She argues that there is nothing wrong with boasting about her success in connection with promoting herself, just as Joe Montana ought to be able to accurately promote himself as Most Valuable Player for the 49ers in Super Bowl XVI (both famous trademarks), and Lee Iacocca should be allowed to tout himself as former chief of both Ford and Chrysler (famous trademarks, as well).
Both positions sound reasonable. What Playboy complained about was Welles' use of "Playboy" and "Playmate" in META tags, use of "Playmate of the Year 1981" on the site's masthead, use of the phrases "Playmate of the Year 1981" and "Playboy's Playmate of the Year 1981" on banner ads and the repeated use of "PMOY '81" as a watermark background on various pages of the site.
Playboy lost on most counts. With respect to the META tags and the use of "Playmate of the Year 1981" and "Playboy's Playmate of the Year 1981," there was not a problem, because what Welles was doing was "reasonably necessary" in promotion, and nothing about the site inferred ownership or endorsement by Playboy (indeed, a disclaimer was included). It was "reasonably necessary" because, in essence, there is no way she could reasonably communicate that she was "Playmate of the Year" except by saying just that. Moreover, saying that she was "Playmate of the Year 1981" does not dilute the title, because it is the truth.
On the other hand, Playboy prevailed on the "PMOY81" wallpaper. That is not "nominative," the court found, unlike "Playmate of the Year 1981," and therefore it is subject to the dilution laws (if it is a famous trademark, which is yet to be decided). Hypothetically, if Welles had used Playboy's famous bunny on her site, that clearly would dilute Playboy's bunny trademark, because she can easily describe herself as "Playmate of the Year 1981" without using the bunny.
Welles, of course, is in a unique position. The reason she is allowed to promote her site with "Playmate of the Year 1981" and "Playboy's Playmate of the Year 1981" is because that is exactly what she is. Others using "Playboy," its bunny, "Penthouse," its key, "Playmate of the Month," or "Pet of the Month" stand to face the fury of the legal troops belonging to Messrs. Hefner and Guccione. They own famous trademarks for which they paid dearly, and they are entitled to prevent anyone from capitalizing on them or tarnishing them. They do so with remarkable success.
Clyde DeWitt is a partner in the Los Angeles-based national law firm of Weston, Garrou & DeWitt. He can be reached through AVN Online's offices, at his office at 12121 Wilshire Boulevard, Suite 900 Los Angeles, CA 90025, or via email at clyde [email protected].
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