Battling the “CompanyNameSucks.com” Cyberactivists
Author: Julie A. Katz, J. Aron Carnahan
The explosive growth and popularity of the Internet has proven challenging to the traditional business model. The appearance of Web sites designed to negatively impact a company’s goodwill have increased with the popularity of the Internet and the ease with which information is disseminated worldwide. These “complaint” sites frequently appear at Internet addresses that couple a company name with a negative connotation, i.e., CompanyNameSucks.com. Examples of such CompanyNameSucks.com sites include www.walmartsucks.com, www.chasebanksucks.com, and www.aolsucks.com. Various remedies within the intellectual property arena have been pursued (with varying degrees of success) against CompanyNameSucks.com cyberactivists, including (1) trademark infringement; (2) trademark dilution; (3) the new NSI domain dispute resolution policy; and (4) the Anticybersquatting Consumer Protection Act.1 Finally, the federal courts’ position regarding CompanyNameSucks.com domain names may lead to creative business solutions that allow companies to avoid litigation altogether.
Trademark Infringement and Trademark Dilution
To prove a case of trademark infringement against a CompanyNameSucks.com defendant, a plaintiff must be able to demonstrate that it has protectable trademark rights in its company name and that the defendant’s use of the mark is “likely to cause confusion, or is likely to cause mistake, or to deceive” the public.2 The main difficulty in trademark infringement cases relating to a CompanyNameSucks.com Internet site is demonstrating the requisite consumer confusion. The federal courts that have examined trademark infringement causes of action in CompanyNameSucks.com cases have routinely denied relief to plaintiffs when there was no finding of a likelihood of confusion. That is, courts have concluded that consumers would not have believed that the CompanyNameSucks.com site at issue was affiliated with, connected with, or sponsored by the plaintiff.
To prevail on a trademark dilution claim, an aggrieved plaintiff must prove that:3
1. It owns a famous mark;
2. The defendant is making a commercial use of the famous mark in commerce;
3. The defendant’s use began after the mark became famous; and
4. The defendant’s use causes dilution of the distinctive value of the plaintiff’s mark.
The Lanham Act4 identifies eight nonexclusive factors that the courts should considered in determining whether a mark is famous:
1. The degree of inherent or acquired distinctiveness of the mark.
2. The duration and extent of use of the mark in connection with the goods or services with which the mark is used.
3. The duration and extent of advertising and publicity of the mark.
4. The geographical extent of the trading area in which the mark is used.
5. The channels of trade for the goods or services with which the mark is used.
6. The degree of recognition of the mark in the trading areas and channels of trade used by the mark’s owner and the person against whom the injunction is sought.
7. The nature and extent of use of the same or similar marks by third parties.
8. Whether the mark was registered under the federal Trademark Act.
Proscriptions against trademark dilution does not protect against the loss of goodwill resulting from criticism traditionally protected by the First Amendment (e.g., a critical movie review that results in decreased demand for a particular film). Rather, dilution concerns the commercial use of an entity’s mark that is likely to “blur the distinctiveness of [a famous] mark or tarnish or disparage it.”5 The Ninth Circuit has suggested that the Federal Dilution Act can properly apply to any activity that may tend to lessen the capacity of famous marks to identify and distinguish goods and services, even if these activities do not fall into the categories of either tarnishment or dilution.6 However, as will be discussed, some federal courts have not accepted claims of dilution brought by plaintiffs seeking to apply the cause of action against CompanyNameSucks.com defendants.
Application of Trademark Infringement and Dilution Causes of Action
In the arguably seminal decision Bally Total Fitness Holding Corp. v. Faber7 the federal court confronted allegations of trademark infringement and dilution in the context of a consumer complaint site. In Bally, the plaintiff owned a number of famous word and design marks. Defendant Faber, allegedly dissatisfied with various aspects of his experience with a particular Bally Total Fitness health club facility, designed an Internet Web site that complained of various perceived deficiencies with Bally’s operations. Of particular note, Faber’s “Ballysucks” Internet pages were identified in the record as a subset of Faber’s admittedly commercial “Images of Men” Web site, which displayed pornographic images and photographs of gay men, including photographs that could be purchased from the site. Faber also used a mutated Bally mark on other pages of his site that advertised his Web construction services site, which was also a subset of the photography site. As part of Faber’s complaint site, other allegedly aggrieved consumers were encouraged to post their negative experiences on the site. In designing his complaint site, Faber made frequent use of Bally’s registered design marks that had been altered by Faber to contain a large “SUCKS” printed across Bally’s marks.
Bally had a number of concerns with Faber’s activity, including the fact that there were links and connections between Faber’s “Ballysucks” Web site and Faber’s gay male pornography site. Additionally, Faber made use of the mutated Bally logo as Faber’s own trademark, giving rise to the danger that Faber might somehow develop trademark rights to Bally’s logo in mutated form. Further, there was the concern that patrons of Bally might make an association between Bally and gay pornography because the “Ballysucks” site existed as a subset of Faber’s gay pornography site. Alleging trademark infringement and dilution, Bally sued Faber seeking an injunction to stop Faber’s use of the mutated Bally marks and the link between the gay pornography site and the complaint site.
In ruling against Bally’s claim of trademark infringement as a matter of law, the lower court found that, notwithstanding that Bally was likely to have valid and protectable famous marks, there was no likelihood of confusion. In particular, the court found that Faber’s mutated Bally mark and Bally’s “real” mark were not considered sufficiently similar. Although the court agreed that Faber’s mark was a copy of Bally’s design mark overlaid with the word “SUCKS,” the court concluded that the addition of the word “sucks” was a change sufficient to make the two marks different enough to avoid a likelihood of confusion.
Some federal courts have not accepted claims of dilution brought by plaintiffs seeking to apply the cause of action against CompanyNameSucks.com defendants.
The court also determined that the services of Bally and Faber were not proximately competitive. Noting that both parties use the Internet in the courses of their respective businesses, nonetheless, the court concluded:
1. Faber’s site did not compete with Bally’s site;
2. Faber did not try to pass-off his site as Bally’s site; and
3. Faber did not compete with Bally in the marketplace.
According to the court, there was no evidence of actual consumer confusion present in the record. Further, the court found that “the average user would not mistake Faber’s site for Bally’s official site.” The court observed that Faber and Bally did not use similar marketing channels. Notwithstanding that Bally and Faber both market over the Internet, the court noted that Faber did not use all of the various channels of marketing that Bally employs. Faber’s use of Bally’s mark was for purposes of consumer commentary and not for marketing.
The court found that the “degree of care likely to be exercised by the relevant consumers” favored Faber because Faber did not use Bally’s marks in the domain name of the Ballysucks site and Faber’s use did not add to the mountain of information that the average user will have to sift through in performing an average Internet search. The court also held that Faber should be allowed to use Bally’s marks in the machine code that search engines rely on.
Thus, the court concluded, although Faber intentionally selected Bally’s marks, Faber was exercising his right to publish critical commentary. The connection with his commercial site was found to have limited application (although the forward linking to his commercial site pages that was present when the complaint was filed was eliminated shortly thereafter). The court found that Bally was not likely to expand into Faber’s line of business and vice versa. The court ultimately determined that any use by Faber of Bally’s mark, although likely to meet the criteria of use of a famous mark, was not likely to cause confusion among the public.
The court also denied Bally’s trademark dilution claim as a matter of law. In so doing, the court concluded that neither Faber’s activities in using the “Ballysucks” site as an example of Faber’s Web construction services by linking back to that site, nor Faber’s actions in linking back to the “Ballysucks” site from Faber’s commercial photography site satisfied the Dilution Act’s “commercial use” requirement. Further, Faber’s use of the famous Bally marks was considered noncommercial protected speech under the First Amendment.
Although Bally appealed the lower court ruling, the appeal was dismissed with consent of both parties, and the Ninth Circuit never ruled on the merits of the appeal.
Application and Implication of the Bally Decision
After the Bally decision, at least in the US District Court for the Central District of California, a plaintiff seeking to stop the use of a CompanyNameSucks.com Internet site based on a dilution claim must prove that the defendant’s use of the plaintiff’s mark is directly commercial.8 In the Bally case, Bally claimed that Faber’s commercial interests were directly furthered by attracting curious persons to the “Ballysucks” site (by using Bally’s marks in the metatags and in the Ballysucks pages) and then luring these persons to Faber’s commercial “Images of Men” Web site through an advertising link. The court rejected this argument, although the forward linking had been eliminated, but the backward linking remained. In light of this holding, a company considering a dilution action is well advised to first examine whether sufficient evidence of the alleged infringer’s commercial use of the mark is present.
Notwithstanding the Bally court’s decision, other federal courts have held that advertising-type activities alone can support a finding of commercial use under the Federal Trademark Dilution Statute. In Planned Parenthood Federation of America, Inc. v. Bucci,9 the defendant used the Internet Web address www.plannedparenthood.com for a Web page that contained information designed to help an author sell a book. The plaintiffs, owners of the federally registered mark PLANNED PARENTHOOD, complained that this use diluted the value of the plaintiff’s famous trademark. In contemplating the “commercial use” requirement of the Federal Dilution Act, the Planned Parenthood court recognized that the information placed on the defendant’s Web site was the equivalent of advertising. The court found that the commercial use requirement of the Federal Dilution Act was satisfied by the defendant’s activity that related to advertising of a book, regardless of the fact that the defendant received no money from the sale of the book nor was he the author of the book.10 Although the domain name at issue in Planned Parenthood was not a CompanyNameSucks.com case per se, the defendant’s site was politically opposed to the positions supported by the plaintiff. Hence, there is jurisprudence suggesting that commercial use of a trademark on the Internet need not be as distinct as the Bally court’s opinion might suggest.
A recent decision from another federal court also concerns the application of trademark law to an Internet Web site devoted to critical commentary about a particular company. In Northland Insurance Companies v. Blaylock,11 the court considered a defendant who operated a complaint Web site located at a domain comprising the exact trademark of the plaintiff: www.Northlandinsurance.com. Defendant Blaylock apparently became incensed with Northland Insurance over an insurance policy dispute relating to Blaylock’s yacht, and claimed to have created the complaint site for the purpose of publicizing perceived problems with Northland Insurance. Northland Insurance filed suit for trademark infringement, trademark dilution, violation of the Anticybersquatting Act (discussed infra), and related unfair competition claims. The court denied plaintiff’s motion for a preliminary injunction, holding that there were serious questions as to whether the plaintiff was likely to succeed on the merits of its claims. However, and notwithstanding the adverse disposition of plaintiff’s preliminary injunction motion, the court also denied the defendant’s motion to dismiss the complaint for failure to state a cause of action upon which relief could be granted, finding that the complaint did state a cause of action against Blaylock. Cases such as Northland demonstrate that courts will closely scrutinize claims against CompanyNameSucks.com defendants, but will not necessarily dispose of the complicated questions posed by these situations as a matter of law.
Although the Bally court refused to enjoin Faber’s mutation of Bally’s design marks, there is support in case law for the legal theory that a party ought not be allowed to mutate another’s mark. In particular, one court has stated that dilution through tarnishment can occur through the alteration of a mark holder’s design mark that results in a negative connotation being ascribed to the altered logo. In Deere & Co. v. MTD Products,12 the Second Circuit considered the alteration of the famous John Deere “leaping deer” design mark in the context of comparative advertising. Defendant MTD Products created an advertisement in which an animated John Deere “leaping deer” logo was chased around by the competitor’s product. In upholding a preliminary injunction granted to stop dilution of the John Deere mark under New York law, the court concluded:
Significantly, the District Court did not enjoin accurate reproductions of the Deere logo to identify Deere products in comparative advertisements. [Defendant] remains free to deliver its message of alleged product superiority without altering and thereby diluting Deere’s trademark.13
Accordingly, the notion that alteration of a logo mark can dilute and tarnish the mark has been judicially embraced.14 This line of cases suggests that a plaintiff may be successful in enjoining particular uses of the cornpany’s design marks within a CompanyNameSucks.com site, given an appropriately compelling set of facts.
ICANN Uniform Domain Name Dispute Resolution Policy and the Anticybersquatting Consumer Protection Act15
Two additional legal options are available that may impact the operation of a CompanyNameSucks.com site: (1) the Internet Corporation for Assigned Names and Numbers (ICANN) Uniform Domain Name Dispute Resolution Policy and (2) the Anticybersquatting Consumer Protection Act.
ICANN’s Uniform Domain Name Dispute Resolution Policy
Under the Uniform Domain Name Dispute Resolution Policy, which became effective on December 1, 1999, domain name disputes can be submitted for arbitration. By registering a domain name with a domain name registrar, the registering party (domain name registrant) automatically becomes subject to the dispute resolution policy. To succeed in divesting an allegedly infringing domain name from an entity under the ICANN policy, a trademark holder bears the burden of proving that the domain name is identical or confusingly similar to the complainant’s trademark or service; the domain name registrant has no rights or legitimate interests in respect of the domain name; and the domain name has been registered and is being used in bad faith.
The following considerations are relevant with regard to demonstrating the requisite “bad faith” of a domain name registrant:
1. Circumstances indicating that the domain name holder has registered or has acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of domain name holder’s documented out-of-pocket costs directly related to the domain name;
2. The domain name holder has registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the domain name holder has engaged in a pattern of such conduct;
3. The domain name holder has registered the domain name primarily for the purpose of disrupting the business of a competitor; or that
4. By using the domain name, domain name holder has intentionally attempted to attract, for commercial gain, Internet users to the domain name holder’s Web site or other online location, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of the domain name holder’s Web site or location or of a product or service on the domain name holder’s Web site or location.
A domain name registrant, however, can potentially demonstrate that it has rights to or a legitimate interest in the domain name by showing the following:
1. Before any notice of the dispute, the domain name holder’s use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services;
2. The domain name holder (as an individual, business, or other organization) has been commonly known by the domain name, even if the domain name holder has acquired no trademark or service mark rights; or
3. The domain name holder is making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.
The Domain Name Dispute Resolution Policy has created a new avenue of relief for some trademark owners. In this regard, there are a number of reported administrative decisions under the ICANN policy that divested the registrant of a CompanyNameSucks.com domain name from the domain name and ordered that it be transferred to the complainant (owner of the Company Name). Some domain names that have been ordered transferred from the original registrant include www.guiness-beer-sucks.com, www.directlinesucks.com, and www.natwestsucks.com. The administrative decisions that awarded these domains to the trademark owners turned on evidence that the registrant obtained the domain names in bad faith that was imputed through activities such as registering numerous CompanyNameSucks.com domain names with the admitted intent of selling the domains to the respective trademark holders and offering to sell CompanyNameSucks.com domains to the legitimate trademark holder for a profit.
However, various administrative decisions rendered under the ICANN dispute resolution policy have permitted CompanyNameSucks.com registrants to conduct legitimate complaint sites directing critical commentary to a given company.16
The showing required for a trademark owner to be successful under the ICANN Uniform Domain Name Dispute Resolution Policy may prove to be particularly difficult. Additionally, if the arbitrator decides in favor of the domain name registrant, there is a risk that the arbitrator might conclude that the “complaint was brought in bad faith … or was brought primarily to harass the domain name holder,” which could be held to be “an abuse of the administrative proceeding.”17 Therefore, the success of a company trying to stop a CompanyNameSucks.com domain is not assured.
The Anticybersquatting Consumer Protection Act
The Anticybersquatting Consumer Protection Act was enacted in November 1999 and creates a cause of action under the Lanham Act. The Anticybersquatting law allows for a civil action to be brought by an owner of a mark against a domain name registrant if the domain name registrant has a bad faith intent to profit from the mark and registers, traffics in, or uses a domain name that is identical or confusingly similar or dilutive (for famous marks) of the mark owned by the complainant. In demonstrating that a person has the requisite “bad faith intent to profit,” numerous factors can be taken into account by the tribunal, including:
1. The trademark or other intellectual property rights of the person, if any, in the domain name
2. The extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person
3. The person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services
4. The person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name
5. The person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site
6. The person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct
7. The person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct
8. The person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties
9. The extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of Section 43.
Under certain circumstances, a finding of bad faith is precluded by statute. Instances when the court determines that the domain name registrant “believed and had reasonable grounds to believe” that the use of the mark in the domain name was “fair use or otherwise lawful” preclude the court from making a finding of bad faith.18
Given the uncertain nature of a court’s balancing of the factors mentioned, along with the “reasonable belief ” exception to a finding of bad faith, it is difficult to ascertain whether a lawsuit brought by a trademark owner under the Anticybersquatting law would necessarily be successful in the context of noncommercial use of a CompanyNameSucks.com domain name.
Creative Business Solutions
Even if a company is successful at divesting a domain name registrant from the CompanyNameSucks.com domain name, the risk is that the registrant will resume activity with some other variation of “CompanyNameSucks.com.” Therefore, there is serious business risk associated with a company policy of pursuing all CompanyNameSucks.com registrants in that the company objective of preventing this type of activity is likely in the end to fail when the domain name registrants are held to be engaged in noncommercial criticism. This action can become costly at a rapid pace, as can buying out the CompanyNameSucks.com operator and contractually purchasing the operator’s silence. Moreover, the company may acquire unwelcome notoriety by such a course of conduct. Consideration should be given to various state causes of action that may arise from the facts in a particular case.
Some companies have employed nonlegal options. For example, certain companies have addressed customer complaints found at the CompanyNameSucks.com Internet site and engaged in positive public relations campaigns to address the issues raised by disgruntled patrons. Finally, many companies have preemptively registered multiple variations of the CompanyNameSucks (.com, .net, .org, etc.) domains. This course of action can also be somewhat expensive, particularly in view of the fact that an enterprising complaint site operator likely will register any additional variations of the CompanyNameSucks.com domain that were not previously reserved.
An understanding of the courses of action available to companies seeking to stop CompanyNameSucks.com domain names is essential in today’s global market. Even more critical, however, is an awareness of the risks associated with any action the company chooses to take.
Notes
1. There also are potential state-law causes of action (e.g., libel and/or business torts) that may turn on the truth or falsity of the information related by the offending Internet site.
2. 15 U.S.C. § 1114(1)(a). “The confusion that is remedied by trademark and unfair competition law is confusion not only as to source, but also as to affiliation, connection, or sponsorship.” J. Thomas McCarthy, 3 McCarthy on Trademarks and Unfair Competition, § 23:8 at 23-25 (Rel. #9, 1999).
3. 15 U.S.C. § 1125(c); Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 873-874 (9th Cir. 1999).
4. § 43(c)(1) (15 U.S.C.A. § 1125(c)(1)).
5. See H.R. Rep. No. 104-374, at 2 (1995), U.S. Code Cong. & Admin. News at 1029.
6. Panavision Intern., L.P. v. Toeppen, 141 F.3d 1316, 1326 (9th Cir. 1998).
7. Bally Total Fitness Holding Corp. v. Faber, 29 F.Supp. 2d 1161 (C.D. Cal. 1998). The authors’ firm represented Bally Total Fitness Holding Corporation in this case.
8. The court’s holding in the Bally case is narrower than many courts and commentators have suggested. First, corporate practitioners should be aware that the Bally court did not hold that defendant Faber could use the domain name www.ballysucks.com. One court erroneously summarized the Bally case as so holding, characterizing the Bally court as “granting summary judgment to defendant website designer on claims brought pursuant to the Trademark Act, where defendant registered the domain name ballysucks.com.” Lucent Technologies, Inc. v. Lucentsucks.com, 95 F.Supp. 2d 528, 535 (E.D. Va. 2000). Instead, the facts of the Bally case indicate that Faber’s complaint site was located within the domain www.compupix.com. Accordingly, and even though is no question that the Bally case will continue to influence the shape of this emerging area of law, the Bally decision should not be read overbroadly as stating that one can use a CompanyNameSucks.com domain with impunity.
9. 42 U.S.P.Q. 2d 1430 (S.D.N.Y. 1997).
10. Id. at 1435.
11. Northland Ins. Cos. v. Blaylock, 115 F.Supp. 2d 1108 (D. Minn. 2000).
12. Deere & Co. v. MTD Prods., 41 F.3d 39 (2d Cir. 1994).
13. Id. at 45.
14. See also Mutual of Omaha Ins. Co. v. Novak, 648 F.Supp. 905, 910 (D. Neb. 1986), aff’d, 836 F.2d 397 (8th Cir. 1987) (enjoining “Mutant of Omaha” as a violation of the Mutual of Omaha mark); Coca-Cola Co. v. Gemini Rising, Inc., 346 F.Supp. 1183 (E.D.N.Y. 1972) (“Enjoy Cocaine” held to violate the Coca Cola trademark when used in same style as Coca Cola logo); American Exp. Co. v. Vibra Approved Labs. Corp., 1989 WL 39679, 10 U.S.P.Q. 2d 2006 (S.D.N.Y., Apr. 19, 1989) (image of American Express card and phrase “don’t leave home without it” on condoms held to dilute distinctiveness of American Express marks).
15. 15 U.S.C. § 1125(d).
16. See, e.g., Wal-Mart Stores, Inc. v. Wallmartcanadasucks.com, WIPO Arbitration and Mediation Administrative Panel Decision Case No. D2000-1104 (Nov. 23, 2000) (permitting the domain name registrant to retain the domain www.wallmartcanadasucks.com).
17. See Rules for Uniform Domain Name Dispute Resolution Policy at paragraph 15.
18. 15 U.S.C. § 1125(d)(B)(ii).