Lecture 8:
Trademarks and
Consumer Protection
45-848 ECOMMERCE LEGAL ENVIRONMENT
SPRING 2004
COPYRIGHT © 2004 MICHAEL I. SHAMOS
Outline
• Trademarks and domain names
– Registration
– Cybersquatting
– Typopiracy
• FTC Internet regulation
• Spam (Robbin Steif)
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What Is a Trademark?
“any word, name, symbol or device
or any combination thereof, …
used by a person …
to identify and distinguish his or her goods, including a
unique product,
from those manufactured or sold by others and
to indicate the source of the goods, even if that source
is unknown.”
15 U.S.C. §1127
• Many products may use the same mark if no
confusion results, e.g. “Cadillac”
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Trademark Concepts
• Trademark rights relate only to commercial activity.
• Every company that interacts with the public has
trademarks.
• “Goodwill” in trademark law = tendency of the public
to associate a trademark with a particular business.
• “Distinctiveness” = tendency of a mark to be identified
with only ONE supplier in a “channel of trade”. More
distinctive is better.
• We see hundreds of trademarks each day
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Confusion
• Public must not be confused, misled or deceived as
to
– source of goods or services
– sponsorship
– association
– approval
• Trademark law is founded on preventing public
confusion
– Policing is done by trademark owners
• Tension: all merchants must be allowed to describe
their goods fairly
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Secondary Meaning
• Trademarks usually have more than one meaning
• First (primary) meaning
– The literal words of the mark, e.g. “Apple” is a kind
of fruit
• Second (secondary) meaning
– Source indicator, e.g. “Apple” is a source of
computers
• If a descriptive term has secondary meaning, it
functions as a trademark and can be protected.
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Spectrum of Distinctiveness
• Generic
– The name for a product. E.g. “screwdriver” for hand tools.
No trademark rights. Term available to everyone for that
purpose.
• Descriptive
– Describes a characteristic, property, quality or use of the
goods. E.g., “Crunchy Bites” for rice cakes. Need proof of
secondary meaning.
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Spectrum of Distinctiveness
• Suggestive
– Indicates but does not describe product, e.g. “Workmate” for
portable workbench; “Workmate” for tobacco. No secondary
meaning needed for protection.
• Arbitrary
– A real word, but no connection to product, e.g. “Apple” for
computers.
• Coined
– A made-up word, e.g. “Xerox”, “Kodak”, “Lycos”. Strongest
possible TM protection.
– “Kodak the Magician” case
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What is Trademark Infringement?
use in commerce of “any
reproduction, counterfeit, copy, or
colorable imitation of a … mark
in connection with the sale, offering for sale, distribution,
or advertising
of any goods or services on or in connection with which
such use is likely to cause confusion, or to cause
mistake, or to deceive”
15 U.S.C. §1114
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Forms of Trademark Infringement
• “Actual confusion”
– Significant incidents in which a potential purchaser
approached one source thinking it was another
• “Likelihood of confusion”
– Acts creating a substantial chance of actual confusion
– Likelihood is enough for a lawsuit
• “Palming off”, “passing off”
– A sells A’s product under B’s name
• “Reverse passing off”
– A sells B’s product under A’s name
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Some DuPont Factors
(for likelihood of confusion)
• Similarity of marks
– appearance, sound, connotation, “commercial impression”
• Similarity of established trade channels
• Conditions under which and buyers to whom sales
are made,
– impulse v. sophisticated purchasing
• Fame of the prior mark
• Similar marks for similar goods
• Actual confusion
– concurrent use without confusion?
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Trademarks in Cyberspace
“The terms of the Lanham Act do not limit themselves
in any way which would preclude application of federal
trademark law to the Internet.”
Cardservice International, Inc. v. McGee, 950 F.Supp. 737
(E.D. Va 1997)
(Case involved domain name cardservice.com)
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Domain Names as Trademarks
• Must function as a mark, not just a web address
– must identify source of goods or services
• Must be distinctive, or not protectible
– bank.com not protectible for banks
– soft.com for facial tissues is merely descriptive
– shamos.com is “primarily merely a surname”
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Internet Trademark Problems
• In the physical world: trademarks are seen in context,
often alleviates confusion
• On the Internet, domain names may have no context,
often creates confusion
• On the Internet, only ONE company can have
cadillac.com
• Solution: worldwide domain name index
• Note: can apply for trademarks on-line with JPEGs!
http://www.uspto.gov/teas/e-TEAS
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SPRING 2004
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Cadillac Domains
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cadillac.org
Cadillac, MI Chamber of Commerce
cadillac.net
MichWeb
cadillacs.com
Automobile search site (not Cadillac)
cadillaccar.com
Automobile search site (not Cadillac)
cadillac.co.kr
UsedCar.com
cadillac.dk
Danish car dealer
cadillac.de
Cadillac Filmstheaters, Munich
cadillac.us
For sale
cadillac.it
tarantino.biz
AND MANY MORE
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Assignment of Domain Names
• ICANN: Internet Corporation for Assigned Names and
Numbers
• Formed 1998: International coalition of Internet
interests
“global, consensus-driven, non-profit organization”
• No statutory or government authority!
• “Shared Registration System” (SRS)
• Authorizes “registrars” to issue domain names
– 200 accredited registrars
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Uniform Dispute Resolution Policy (UDRP)
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Approved by ICANN
Complex procedure equivalent to arbitration
“Provider” (not ISP) = approved arbitrator
Parties: “Complainant,” “Respondent” (has the domain),
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Complaint, then Response
Three-member panel is appointed
Language used = language of registration agreement
Usually no hearing
No administrative appeal
Does not remove jurisdiction of courts
“Registrar” (organization that registered the domain)
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Cybersquatting
• Cybersquatting = registering, trafficking in, or using a
domain name confusingly similar to a registered mark
• Anticybersquatting Consumer Protection Act,
15 U.S.C. §1125(d) (Nov. 29, 1999)
– Prohibits bad faith intent to profit from cybersquatting
– in rem jurisdiction against a foreign cybersquatter or a
cybersquatter who has provided fictitious contact information
– action may be brought where the registrar or the registry is located.
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SPRING 2004
COPYRIGHT © 2004 MICHAEL I. SHAMOS
Cybersquatting
porschecar.com, porschagirls.com, 928porsche.com,
accessories4porsche.com, allporsche.com, beverlyhillsporsche.com,
buyaporsche.com, calporsche.com, e-porsche.com,
everythingporschie.com, formulaporsche.com, ianporsche.com,
idoporsche.com, laporsche.com, myporsche.com, newporsche.com,
parts4porsche.com, passion-porsche.com, porsche.net,
porsche-911.com, porsche-944.com, porsche-autos.com,
porsche-books.com, porsche-carrera.com, porsche-cars.com,
porsche-classic.com, porsche-net.com, porsche-nl.com,
porsche-online.com, porsche-rs.com, porsche-sales.com,
porsche-service.com, porsche-supercup.com, porsche-web.com,
porsche356.com, porsche4me.com, porsche4sale.com,
porsche911.com, porsche911.net, porsche911.org,
porsche911parts.com, porscheag.com, porscheaudiparts.com,
porschebooks.com, porschecars.com, porschecarsales.com
porschecasino.com, porschechat.com, porschedealer.com
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SPRING 2004
COPYRIGHT © 2004 MICHAEL I. SHAMOS
AntiCybersquatting Consumer Protection Act
• “A person shall be liable in a civil action by the owner of a mark
... if, without regard to the goods or services of the parties, that
person-(i) has a bad faith intent to profit from that mark … ; and
(ii) registers, traffics in, or uses a domain name that -- in the
case of a mark that is distinctive at the time of registration of the
domain name, is identical or confusingly similar to that mark.”
• “In any civil action involving the registration, trafficking, or use of
a domain name under this paragraph, a court may order the
forfeiture or cancellation of the domain name or the transfer of
the domain name to the owner of the mark.”
15 U.S.C. §1125(d) (1999)
• In rem action authorized in district where registrar is located
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Deep Linking
• Linking to web page of another beneath the home page
– user does not necessarily know that the link is to a different
website
• Is it copyright infringement?
• Is it trademark infringement? Dilution?
• Ebay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058
(N.D. Cal. 2000)
– Bidder’s Edge site accumulates information about online auction
– Requires numerous “hits” to eBay to assemble information and links to
eBay
– Successful theory: trespass to chattels
– Preliminary injunction issued
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SPRING 2004
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Framing
• Showing the web page of another framed with one’s own border
(usually with logo and banner advertising)
• Washington Post Co. v. Total News, Inc., No. 97 Civ. 1190 (PKL)
(S.D.N.Y., filed Feb. 20, 1997). Settled.
• Issues:
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deceptive?
likelihood of association?
dilution?
unfair? (using content of another to draw advertising viewers)
First Amendment freedom to link?
Trespass theory?
• More links
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SPRING 2004
COPYRIGHT © 2004 MICHAEL I. SHAMOS
Metatagging
• Placing hidden text in a web page (usually another party’s
trademark) so that one’s own page will be retrieved when a
search is done for the other party’s mark (cyberstuffing)
• Issues:
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deceptive?
likelihood of association?
dilution?
unfair? (using content of another to draw advertising viewers)
First Amendment freedom to link?
Trespass theory?
• Only one defendant has ever won a metatagging case (on
special facts): Playboy Enterprises, Inc. v. Terri Welles, Case 98CV-0413-K (JFS) (S.D. Cal. 1998)
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Typopiracy
• Registering misspellings of domain names in the
hope of tricking users who make typing errors
• www.chrysler.com www.chrsyler.com www.chrylser.com
• www.procterandgamble.com www.proctorandgamble.com
• Is it trademark infringement? False advertising?
Deceptive trade practice?
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Regulatory Status of the Internet
• The Internet per se is unregulated
– Some laws apply to the Internet as well as other media
• Contrast: TV content is regulated by the FCC
– Tobacco and alcohol advertising is banned on TV
– Tobacco and alcohol advertising are not banned on the
Internet
• The FTC’s authority extends to “unfair or deceptive acts or
practices,” not to dangerous or undesirable products
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California Prompt Delivery Rule
• California Business and Professions Code §17538
• “It is unlawful … for any person conducting sales or leases by …
the Internet or other electronic means …, whether payment to
the vendor is made directly, through the mail, by means of a
transfer of funds from an account … or by any other means, and
then permit 30 days, unless otherwise conspicuously stated in
the offering or advertisement … to elapse without doing any one
of the following things:
– (1) Shipping, mailing, or providing the goods or services ordered
– (2) Mailing a full refund
– (3) [P]roposing the substitution of goods or services of equivalent or
superior quality, and … offering to make a full refund … within one
week if the buyer so requests …”
• Penalty: 6 months and $1000
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Banner Ads
• User searches for “Estée Lauder.” Search engine
displays a banner ad for “The Fragrance Counter”
• Is it trademark infringement? False advertising?
Deceptive trade practice?
• Brand scanning services: BrandScanner
– Brand Awareness Service
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Major Ideas
• Trademarks protect the consumer from confusion
• Trademarks also protect the supplier
• Domain names can function as trademarks, but are
rarely seen in context
• The FTC regulates consumer advertising on the
Internet in the U.S.
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Robin Steif
• B.A. (Harvard) Economics
• M.B.A. (Harvard)
• Various positions at IBM, American Express and
Carnegie Group, Inc.
• Founder, Send Me No Flowers, a gift business
• Chief Financial Officer, MAYA Design, Inc. and MAYA
Viz, local design and software companies
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CAN-spam act of 2003
Controlling the Assault of Non-solicited
Pornography and Marketing Act of 2003
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What we’ll talk about
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Why this law is crafted so poorly
Opt-in vs. Opt-out
Who is involved?
Content requirements (easy)
List management requirements (hard)
On the drawing board
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Monty Python makes spam famous
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SPRING
2004
COPYRIGHT © 2004 MICHAEL I. SHAMOS
copyright
Monty
Python productions.
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Photo: Copyright TechCentralStation.
COPYRIGHT © 2004 MICHAEL I. SHAMOS
Crafted Poorly
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Opt-in vs. Opt-out
From the PlanetInternet website
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Who is involved?
• On the sender side:
• Anyone sending UCE
• Non-profit, for-profit,
pornography
• Address harvesters,
generators, dictionary
attackers
• Transactions/relations
carve-out with “good
guy” headers
45-848 ECOMMERCE LEGAL ENVIRONMENT
• On the enforcement
side:
• FTC, State AG’s
• ISP’s
• No private cause of
action but…
• … they are looking at
some kind of reward
system (20%)
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3.
1.
3.
2.
4.
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ENVIRONMENT
5.
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5.
1,2&3
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4&5
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Pornography: May 2004
• Brown paper wrapper
• “Sexually-Explicit” ASCII in subject
• May not include porn in the email itself
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“Sexually Explicit” (again)
Opt out
Physical address
Instructions on how to get the porn
• Level of pornography unclear
• Example
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List requirements
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10 days to comply
Un-subscribe must work for 30 days
Size of email box must be appropriate
Applies to: everyone in the organization
Carve-out for a link to your website
No minimum number of emails
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More list requirements
• Forward-to-a-friend?
• Privacy of opt-outs, except for compliance
• May resell opt-ins only with appropriate
privacy notification (always)
• Affiliates and resellers?
• Multi-companies with one brand?
• Knowledge of third-party non-compliance
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On the drawing board
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Federal Do Not Email list
Awards to private citizens
ADV labeling
Brown paper wrapper for pornography (May
19, 2004)
• Wireless commercial messaging rules
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COPYRIGHT © 2004 MICHAEL I. SHAMOS
Major ideas
• CAN-spam law is not
great
• 5 content requirements
are easy
• Get a professional list
manager
• Run everything through
your DNE list
• Civil & criminal
penalties
Copyright AmericanDigest.org
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Q&A
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Trademarks and Consumer Protection 2004