March 2005

Cybersquatters Attempt to Profit from the Trademarks of Others

With the proliferation of online business and advertising in the 1990s, the demand for domain names (Internet addresses) that are in some way relevant to a website’s source or content increased dramatically. The pool of available domain names rapidly began to disappear as people scrambled to register popular names, resulting in legal disputes over the use of domain names.
For example, a business owning a federally registered trademark might want to use that trademark as the domain name for their website, or at least prevent another from using it. However, trademark holders sometimes discovered that their desired domain names (or a confusingly similar one) were already taken by someone else, sometimes in bad faith. “Cybersquatting” is a term which refers to registering, selling or using a domain name with the intent to profit from the goodwill of another’s trademark.

Trademark Law
A “trademark” (or a less common service mark) is a word, phrase, symbol or design, or combination thereof, that identifies and distinguishes the source of goods or services. Trademarks allow consumers to correctly identify the source of the product which offers them a guarantee of standardized quality. This in turn helps businesses profit by advertising and selling their product via the goodwill of their trademark. Trademark laws offer protection to trademark owners by awarding them exclusive rights in the use of their “marks.”

Domain Name Registration
Website owners must register their chosen domain name, or Internet address. Businesses often desire a domain name that describes their goods or services in a manner that will be accessible and memorable to as many consumers as possible. Generally, to register a domain name, the holder must select one of the numerous domain name registry services and pay a fee to register their selected domain name. The domain name holder then has the exclusive right to that particular name for a specified period of one year or more, and may elect to renew it after the initial period has expired.

Trademarks & Domain Name Disputes
A business which owns a trademark would naturally want to use that trademark as its domain name or at least to prevent others from using the mark (or a confusingly similar one) as, or within, their own domain names. However, due to the “first come, first served” basis on which domain names were given out, desired domain names began to disappear at a rapid pace.
Several disputes arose as trademark holders quickly discovered that their trademarks were being used as or within a domain name belonging to someone else. Such disputes have included suits for traditional trademark infringement and trademark dilution as well as a newer form of infringement known as “cybersquatting.”

Cybersquatting as a Means to Profit from the Trademarks of Others
As commercial activity over the Internet began to increase, the availability of valuable domain names began to shrink. This negative relationship spawned the potential to profit from acquiring and selling such valuable domain names to businesses willing to pay large sums for them. Recognizing this potential, individuals known as “cybersquatters,” quickly began to register domain names using existing trademarks and company names with the intent sell them back to the trademark holder or company for a profit. However, trademark owners who are victims of cybersquatting have at least two forms of legal recourse, including filing a court action or submitting the matter to arbitration.

Anticybersquatting Consumer Protection Act
In 1999, the Anticybersquatting Consumer Protection Act (ACPA) was signed into law. The ACPA allows U.S. victims of cybersquatting to litigate the matter in court. Under the ACPA, the trademark owner must prove the following elements:

  1. The domain name registrant had a bad faith intent to profit from the trademark;
  2. The trademark was distinctive at the time the domain name was first registered;
  3. The domain name is identical or confusingly similar to the trademark; and
  4. The trademark qualifies for protection under federal law.

If the plaintiff is successful, a judge may order the cybersquatter to forfeit or cancel the domain name, transfer the name to the plaintiff, and may also award monetary damages.
For example, in a 2000 case, a Pennsylvania judge ordered a cybersquatter to pay Electronics Boutique $100,000 per domain name which they were held to have registered in bad faith. The defendant registered five domain names using variations on the name “Electronics Boutique” in violation of the ACPA.
Uniform Domain Name Dispute Policy
Alternatively, victims of cybersquatting may submit their matter to an international arbitration panel created by the Internet Corporation of Assigned Names and Numbers (ICANN). ICANN assumed control of domain name registration in 1999 and has since implemented the Uniform Domain Name Dispute Policy (UDNDP). Under the ICANN procedure, the party complaining of cybersquatting must prove the following elements:

  1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;
  2. The domain name holder has no rights or legitimate interests in the name; and
  3. The domain name has been registered and is being used in bad faith.

Remedies under the UDNDP are limited to cancellation of the domain name by the cybersquatter or transfer of the domain name registration to the complainant. Monetary damages cannot be awarded through ICANN arbitration proceedings.

Trademark Infringement & Unfair Competition

Trademarks are important tools used to protect both consumers and sellers of goods or services. Trademarks identify the origin or source of a good or service, allowing consumers to make informed decisions regarding quality. Trademarks also establish goodwill of businesses that are able to associate the quality of their good or service with their mark. In addition, trademarks ease the marketing and advertising processes as consumers learn to recognize certain trademarks in connection with the related good or service. Validly established trademarks are strongly protected by laws against infringement.
Protection of Registered and Unregistered Trademarks

In general, registered trademarks receive the most protection and are more likely to receive monetary awards for infringement. However, trademarks do not have to be officially “registered” to be protected. The Lanham Act is the federal law on trademarks which offers protection to trademark owners against the false commercial exploitation of their trademarks by competitors.
Under the Lanham Act, federally registered trademark holders can take advantage of the traditional infringement action, while any valid trademark owner may have a federal claim for unfair competition. Regardless of whether the trademark is federally registered, a party claiming the infringement must be able to establish that they have developed a protected interest in a trademark.
Trademark Infringement of Federally Registered Trademarks

The owner of a trademark effectively has a property interest in that mark, and anyone who misuses that mark is “infringing” upon their protected trademark rights. Section 1114 of the Lanham Act provides registered owners of a trademark with an action against anyone, without consent of the registered owner, who:

  1. Uses a reproduction, counterfeit, copy or colorable imitation of a registered mark;
  2. In connection with the sale, offering for sale, distribution or advertising of goods or services;
  3. In interstate commerce;
  4. In such a way that is likely to cause confusion, mistake or to deceive (consumers).

False Designations of Origin, False Descriptions and Dilution of Trademarks

Similar to an action for federally registered trademark infringement, section 1125 of the Lanham Act provides valid trademark owners with a civil action against anyone who:

  1. Uses any word, term, name, symbol or device or any combination thereof, or any false designation of origin or false or misleading representation of fact;
  2. In connection with the commercial advertising and promotion of goods or services;
  3. In interstate commerce;
  4. In such a way that is likely to cause confusion, mistake or to deceive or which misrepresents the nature, characteristics, qualities, or geographic origin of goods or services.

However, a claim for goods which are marketed in violation of this section does not require the trademark to be federally registered. This section of the Lanham Act generally provides the broader federal claim against unfair business practices.

Likelihood of Confusion
Regardless of whether the trademark is federally registered, it is well established that a plaintiff claiming trademark infringement (or federal unfair competition) must demonstrate that the infringement caused a “likelihood of confusion.” In other words, trademark owners must show that the consuming public would be confused, misled or deceived as to the origin of the defendant’s goods or services caused by the use of their trademark (or a confusingly similar mark).
Factors that courts typically consider in determining whether there is a likelihood of confusion include:

  1. The degree of similarity between the marks and of the goods and services;
  2. The strength (or distinctiveness) of the plaintiff’s mark;
  3. Any evidence of actual confusion by consumers;
  4. The intent of the defendant in adopting its mark;
  5. The physical proximity of the goods or services in the retail marketplace;
  6. The degree of care likely to be exercised by the consumer; and
  7. The likelihood of expansion of the product lines.

Since the Lanham Act is primarily remedial in nature, the most frequent remedy awarded to a successful complainant is an injunction. An injunction is a court order which prevents the defendant from engaging in further infringement. Injunctions are the only available remedy in cases where the infringement is found to have been innocent.
In addition, successful plaintiffs may also be entitled to recover monetary damages in the form of profits made by the defendant on the infringement, actual damages sustained by the plaintiff and the plaintiff’s court costs. The court may also award treble damages (up to three times the amount of actual damages) and attorneys’ fees if the trademark was federally registered or the defendant intentionally used a counterfeit mark.

Consequences for Failure to Use a Trademark

Once a trademark is properly established the holder owns the mark and all associated exclusive rights therein. However, in order to maintain the rights in a trademark, the owner must “use” the mark in commerce. The “use” must be a genuine use of the trademark in the ordinary course of trade and not merely for the purpose of reserving the right in the mark.
Failure to use a trademark could result in losing ownership rights, or “abandonment” of the mark. Once a trademark is abandoned, anyone may seize it immediately and acquire a right in the trademark superior to the right of the original owner.

Definition of a Trademark under the Lanham Act
Trademarks are governed by several laws including common law, state statutes and federal law. However, the federal Lanham Act (enacted 1946, amended 1996), is the main body of law and source of nationwide protection for trademarks. The Lanham Act defines trademark (“mark”) as a word, phrase, symbol or design, or any combination thereof, which identifies and distinguishes the source of a good or service of a manufacturer or seller from those of others.

Exclusive Rights in Trademarks
In general, trademark rights are established by actual use of the mark or filing a proper application to register the mark with the U.S. Patent and Trademark Office (PTO). Although it is not required, federal registration offers more security in trademark rights. A trademark owner retains the exclusive right to use that distinct mark on the goods or services which it was intended to identify.
Trademarks for goods (“TM”) typically appear on the product label or packaging while less common “service marks” (“SM”) typically appear in ads for services. A trademark will last indefinitely, provided the owner continues to use the mark and follows proper procedures for renewing its registration.

Losing Trademark Rights
Once trademark ownership is properly established, the owner must continue to use the mark in commerce to avoid losing their rights in it. There are several common methods of losing a trademark which may include:

  • Abandonment;
  • Failing to prosecute infringements;
  • Improper licensing of the rights;
  • Improper assignment of the rights; and/or
  • Too significant of a change in quality or character of the goods or services.

Abandonment of Trademarks
A trademark owner will lose their rights to the mark if they abandon it. The Lanham Act defines “abandonment” as non-use of a mark with intent to not resume such use. A trademark shall be considered “abandoned” in the event of either of the following:

  1. Its use has been discontinued with intent not to resume such use; or
  2. An act or omission of the owner causes the mark to become a generic name for the goods or services for which it is used.

Discontinued Use of a Trademark
Where a trademark owner actually discontinues use of their mark in commerce, it is abandoned. However, the owner’s “intent not to resume” use also constitutes abandonment and such an intent may be inferred from circumstances. Non-use for three consecutive years is sufficient evidence to prove abandonment unless there is substantial contradictory evidence to the contrary.
For example, in 1993, a New York District Court ruled that the Los Angeles Dodgers had abandoned their rights to the “Brooklyn Dodgers” trademark since they had not used that name for a period of more than 20 years since they moved to L.A. in 1958. Despite an attempt to re-register the trademark in 1981, the court held that the Los Angeles Dodgers had already abandoned it, reasoning that they could not simply “warehouse” the trademark for over two decades.

Causing a Trademark to Become Generic
Another method of abandoning a trademark is through the acts or omissions of the owner which cause the mark to lose its distinctive character. Generic use of a word results when a substantial majority of the public associates that word with a broad type of good or service rather than a specific product or manufacturer. Once a trademark becomes generic, the owner loses protection of their rights in the trademark.
For example, the word “aspirin,” once trademarked to Bayer, Co., is now a generic word to consumers. To determine whether a trademarked word has been abandoned by becoming generic, courts may consider dictionary definitions, the use of the word in print media and/or any evidence that the owner affirmatively attempted to monitor its mark.

Consequences of Abandoning a Trademark
An abandoned trademark is canceled and the owner loses their rights in the mark. The consequences of an abandoned trademark are as follows:

  • The mark becomes available for seizure by the first person or business (including the prior owner) to properly register it and use it in commerce; and/or
  • Any business already infringing upon the mark may be permitted to use it.

The PTO will likely require proof of abandonment by an adverse party and offer the prior owner a chance to show that the mark was never abandoned.

Copyright Law: Distinguishing Between Musical Works and Sound Recordings

In general terms, federal copyright protection extends to “original works of authorship fixed in any tangible medium of expression.” Pursuant to Section 102 of the federal Copyright Act (the Act), works of authorship include, among other categories:

  1. Musical works, including any accompanying words; and
  2. Sound recordings.

As these two categories often overlap, understanding the difference between “musical works” and “sound recordings” can be crucial to understanding the scope of copyright protection afforded to each.

Copyright Protection for Musical Works
First, federal copyright law provides for copyright protection in “musical works, including any accompanying words.” The U.S. Copyright Office has interpreted “musical works” to include “both original compositions and original arrangements or other new versions of earlier compositions to which new copyrightable authorship has been added.”
Although copyright protection is usually automatic from the moment a work is created, registering a work with the Copyright Office is a better method of providing others with notice, and can provide more remedies for the copyright owner in case of infringement. The copyright owners of musical works can register their work with the Copyright Office by completing the Performing Arts application form (Form PA), which must be accompanied by a “deposit” of the work to be registered. Depending on the type of work to be registered, the deposit requirement varies from either one or two copies of the “best edition” of the work.

“Best Edition” Requirement
The Act requires that deposits be of the “best edition” of the work. The “best edition” is usually the edition that the Library of Congress determines to be “most suitable for its purposes.” When two or more editions of the same work have been published, the “best edition” is typically the one of the highest quality. For example, the Library of Congress considers compact digital disks to be the “best edition” of a phonorecord, as compared to a vinyl disk or a tape.
Copyright Protection for Sound Recordings
The Act also provides copyright protection for “sound recordings,” which are defined as “works that result from the fixation of a series of musical, spoken, or other sounds.” Sound recordings are typically “fixed” in “phonorecords,” which are the material objects in which sounds are fixed, such as tapes and disks (among other formats). The author of a sound recording is the performer, or the record producer, or both.
The author of a sound recording can register the work with the Copyright Office by completing the Sound Recordings application form (Form SR). When the same person owns the copyrights in both a musical work and a sound recording fixed in a phonorecord, Form SR may be used to register both. There is also a deposit requirement to register a copyright claim in a sound recording, which varies from either one or two copies of the best edition, depending on several factors.

The Duration of Copyright for Pre-1972 Sound Recordings
Federal copyright protection generally does not apply to sound recordings first fixed prior to February 15, 1972. This means that pre-1972 sound recordings are usually protected by individual state statutes. Perhaps the most significant effect of this exception is on the extended duration of copyright protection for pre-1972 sound recordings.
Although the federal Copyright Act generally preempts state copyright laws, there is an exception for pre-1972 sound recordings. Specifically, state copyright laws offering protection for pre-1972 sound recordings will not be preempted by federal law until February 15, 2067. While the duration of federal copyright protection is generally 95 years from publication (depending on the nature of the work), a state’s copyright laws can provide an indefinite term of protection for certain works. Therefore, pre-1972 sound recordings will not be subject to the 95-year term of protection provided by federal law until 2067. Accordingly, pre-1972 sound recordings will not enter the public domain as soon as they would have had they been subject to federal law from the beginning.

Compulsory License for Making and Distributing Phonorecords
Although the Act provides copyright protection in sound recordings made by individuals other than the original author of the musical work, it is important to note that copyright in a “nondramatic” musical work (i.e., not including the sounds accompanying a motion picture or other audiovisual work) includes the right to make and distribute the first sound recording. This means that the original author of a musical work has the exclusive right to make the first sound recording, although others are permitted to make subsequent sound recordings with the original author’s permission.
In recognition of the original author’s exclusive right to make the first sound recording, Section 115 of the federal Copyright Act requires all others to “obtain a compulsory license to make and distribute phonorecords of the work.” In order to obtain a compulsory license in compliance with this provision, an individual must notify the copyright owner of their intention to do so within 30 days of making the sound recording, and before distributing any phonorecords of the work.

The Special Moral Rights of Visual Artists Under VARA

Under the Berne Convention for the Protection of Literary and Artistic Works, visual artists have “moral” rights in their copyrighted works. Implemented through the Visual Artists Rights Act of 1990 (VARA), these “moral” rights generally provide the visual artist with additional protection against the “distortion, mutilation, or other modification of the work which would be prejudicial to his or her honor or reputation.”
Defining Works of Visual Art
Copyright generally protects original works of authorship that are “fixed” in any tangible medium of expression, including works of visual art. The following categories of work are included in the definition of a “work of visual art” as provided by the federal Copyright Act (the Act):

  • Paintings
  • Drawings
  • Prints
  • Sculptures
  • Still photographic images (produced for exhibition purposes only)

The Act additionally requires that the aforementioned works of visual art exist in a “limited edition of 200 copies or fewer that are signed and consecutively numbered by the author” in order for copyright protection to attach. Sculptures must also bear the signature or other identifying mark of the author.
However, the Act excludes several types of work from the definition of visual art, in which case copyright protection does not apply. The types of work that are not protected by copyright as works of visual art include any poster, map, globe, chart, technical drawing or diagram, among others. Further, a work of visual art does not typically include any merchandising item or advertising, promotional or packaging material or container. A work of visual art does not include any work made for hire.

Rights of Visual Artists to Attribution and Integrity
Section 106 of the Act gives all copyright owners exclusive rights in copyrighted works (to make copies, prepare derivative works, etc.). However, as a result of VARA, Congress added Section 106A to the Act, which provides visual artists with the independent “moral” rights of “attribution and integrity.” In general terms, the right of attribution concerns the right of a visual artist to claim or deny authorship, while the right of integrity concerns the right to prevent or recover damages for the intentional modification of a work of visual art.
Section 106A specifically provides a visual artist with the right to:

  • Claim authorship of the work
  • Prevent the use of their name as the author of any work of visual art which they did not create
  • Prevent the use of their name as the author of the work of visual art in the event of a distortion, mutilation, or other modification of the work which would be prejudicial to their honor or reputation
  • Prevent any intentional distortion, mutilation, or other modification that would be prejudicial to their honor or reputation
  • Prevent any intentional or grossly negligent destruction of a work of recognized stature

These rights endure for the life of the visual artist.

Exception for Removing Works of Art Fixed to Buildings
Despite the independent “moral” rights of a visual artist, Section 113 of the Act carves out an exception for removing works of art fixed to buildings. Pursuant to Section 113, the owner of a building may destroy the building and any permanently attached works of art which are part of the building, without having to risk liability to the authors of the attached works.
Specifically, the exclusive “moral” rights in a work of visual art do not apply, and the owner of a building will not be liable for removing a work of visual art, when the following two elements are satisfied:

  1. A work of visual art has been incorporated in or made part of a building in such a way that removing the work from the building will cause the destruction, distortion or mutilation of the work; and
  2. The author consented to the installation of the work in the building either before the effective date of VARA, or in a written instrument that is signed by the building owner and the author.

Registration of a Work of Visual Art
Copyright protection is automatic once an original work is created, and federal copyright laws no longer require copyright notice to be affixed to a work as a condition for copyright protection. However, registering a copyrighted work with the U.S. Copyright Office is an affirmative way for a copyright owner to provide notice of ownership to others, and can prevent a wrongdoer from using the defense of “innocent infringement.”  The copyright owners of works of visual art can register their work with the Copyright Office by completing Form VA (for a work of the visual arts).