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Sales, U.S.A., Inc. v.
Tabari, 2010 U.S.
App. LEXIS 13930 (9th Cir. 2010)
In a lively opinion displaying unusual judicial sophistication
regarding the Internet, the Ninth Circuit rules that domain names buy-a-lexus.com and buyorleaselexus.com are non-infringing uses of the LEXUS mark. Toyota Motor
Sales, U.S.A., Inc. v.
Tabari, 2010 U.S.
App. LEXIS 13930 (9th Cir. 2010). The
opinion, by Judge Alex Kozinski, champions those seeking to use others'
trademarks in their domain names, so long as the use is not blatantly
misleading or deceptive. It also sets a
high standard for trademark owners seeking to show initial interest confusion
from domain names containing their marks.
Toyota Motor Sales, U.S.A.
is the exclusive domestic distributor of LEXUS luxury automobiles. Defendants Farzad and Lisa Tabari operate an
independent automobile brokerage business, specializing in LEXUS vehicles. When contacted by a customer, the Tabaris
seek bids from authorized automobile dealers and help broker a purchase.
use the domain names buyorleaselexus.com
and buy-a-lexus.com in connection
with their business, while Toyota's
official LEXUS site is at lexus.com. When defendants started their website, the
site displayed the LEXUS mark in the stylized form used by Toyota as well as the
official LEXUS L symbol design, but before this litigation began, defendants
removed these LEXUS indicia from their site.
Toyota sued to stop
defendants from using the domain names, claiming trademark infringement. After a bench trial, the United States
District Court for the Central District of California ruled in favor of Toyota,
finding that "[c]onsumers who encounter Defendants' domain names . .
. are likely to assume, at least
initially, that Defendants' business is sponsored, approved by, or somehow
affiliated with Plaintiff."
Findings of Fact and Conclusions of Law After Court Trial, CV03-8506
(C.D. Cal. 2006), p. 22 ¶ 37. It permanently
enjoined defendants from using the buyorleaselexus.com
and buy-a-lexus.com domain names, as
well as any other domain name that includes LEXUS.
appealed and the Ninth Circuit vacated the district court opinion.
Assumptions About Internet Users
case is a true high water mark in terms of judicial sophistication about the
Internet. Judge Kozinski details the
expectations and assumptions of the typical Internet shopper to support his
skepticism about claims that consumers are easily duped by an ambiguous domain
name. His pronouncements are bold and
perhaps even unsuitable for judicial notice.
Nevertheless, his candid description of Internet use may change the way
courts see the likelihood of consumer confusion in this context.
opinion takes as its starting point the assumption that the relevant consumer in
the case is "a reasonably prudent consumer accustomed to shopping
online." It goes on to state that,
when people shop online, "they don't start out by typing random URLs
containing trademarked words hoping to get a lucky hit. They may start out by typing trademark.com,
but then they'll rely on a search engine or word of mouth." The opinion is surely correct that an
Internet user looking for the official LEXUS site is not going to type into the
browser buy-a-lexus.com or buyorleaselexus.com.
to Toyota Motor Sales, after the typical
Internet consumer starts out on an online search, he does not expect each domain
name that contains a trademark to lead to an official web site for the mark
owner. Judge Kozinski goes on to opine:
[R]easonable, prudent and experienced internet
consumers are accustomed to . . . exploration by trial and error. They skip from site to site, ready to hit the
back button whenever they're not satisfied with a site's contents. They fully
expect to find some sites that aren't what they imagine based on a glance at
the domain name or search engine summary. Outside the special case of . . . domains
that actively claim affiliation with the trademark holder, consumers don't form
any firm expectations about the sponsorship of a website until they've seen the
landing page -- if then. This is sensible agnosticism, not consumer confusion.
This pragmatism about the
Internet and its users makes this case notable, and is a departure from cases
holding that the parties' simultaneous use of the Internet to sell their goods
would exacerbate the likelihood of confusion.
See, e.g., Perfumebay.com,
Inc. v. eBay, Inc., 506 F.3d 1165, 1173 (9th Cir. 2007); Brookfield Comm., Inc.
v. West Coast Entertainment Corp., 174 F.3d 1036, 1057 (9th Cir. 1999) ("Web
surfers are more likely to be confused as to the ownership of a web site than
traditional patrons of a brick-and-mortar store would be of a store's ownership.").
Nominative Fair Use
is plainly true that trademark rights are not rights in gross, allowing a mark
owner to prevent all uses of its mark by others. A defendant may use a plaintiff's mark to
refer to the plaintiff's goods or services without liability for trademark
infringement, as long as its use is not misleading or likely to confuse
consumers. See, e.g., Tiffany, Inc. v. eBay, Inc., 600 F.3d 93, 102-03 (2d Cir.
2010) (holding that "a defendant may lawfully use a plaintiff's trademark
where doing so is necessary to describe the plaintiff's product and does not
imply a false affiliation or endorsement by the plaintiff of the
defendant"). For example, if true, a
software maker can advertise that its software is compatible with a certain
brand of computer or a pharmaceutical company can advertise that its headache
remedy takes effect more quickly than that of its named competitor. Courts draw the sometimes fine line in such
cases between an informational use of another party's mark and an infringing
use of that mark. For more on defendants
referring to plaintiffs' marks, see Gilson
on Trademarks § 11.08[k].
Ninth Circuit has developed its own likelihood of confusion test especially for
cases in which a defendant uses plaintiff's mark to refer to plaintiff's goods
and services. The test, known as the nominative
fair use test, was enunciated by Judge Kozinski himself in 1992. First, the defendant's product or service
"must be one not readily identifiable without use of the
trademark." Second, the defendant
may use "only so much of the mark . . . as is reasonably necessary to
identify the product or service."
Third, the defendant must "do nothing that would . . . suggest
sponsorship or endorsement by the trademark holder." New Kids on the Block v. News Am. Pub., Inc.,
971 F.2d 302, 308 (9th Cir. 1992). (The
nominative fair use test is unrelated to the statutory fair use defense, which
refers to a non-trademark use of
another party's use in its descriptive sense to describe the defendant's own
product. See 15 U.S.C. § 1115(b)(4); Gilson on Trademarks § 11.08[d].)
district court in this case held that the "mere use of 'lexus' . . . in a
domain name generally implies sponsorship or endorsement and is not nominative
fair use." Findings of Fact and
Conclusions of Law, p. 30 ¶ 28 (footnote omitted). The Ninth Circuit, however, found otherwise,
focusing on the defendants' web site itself as well as their domain names. First, it ruled that the defendants needed to
tell their potential customers that they specialize in LEXUS vehicles, so they
needed to use the LEXUS mark in their domain names. Second, it found that the site itself used
only as much of the mark as was necessary.
And third, it found that the existence of a disclaimer and the lack of
official LEXUS trademarks on the site itself
eliminated the possibility of confusion.
As the opinion puts it, "[r]easonable consumers would arrive at the
[defendants'] site agnostic as to what they would find. Once there, they would immediately see the
disclaimer and would promptly be disabused of any notion that the [defendants']
website is sponsored by [plaintiff]."
appellate court found that the defendants were not required to use a domain
name such as lexus-broker.com, which
the court acknowledged would have been "the most straightforward, obvious
and truthful way to describe [defendants'] business." Nor did they have to use domain names that
clearly disclaimed affiliation, such as independent-lexus-broker.com
Note that the
Toyota Motor Sales opinion explicitly
overturns prior case law that had held that the burden of proof of showing
nominative fair use is on the defendant.
It held that nominative fair use is not an affirmative defense to be
analyzed only after a plaintiff shows a likelihood of confusion under the
traditional confusion factors. Instead,
where the defendant simply shows that it has used the plaintiff's mark to refer
to plaintiff's goods or services, the burden shifts to the plaintiff to show
likelihood of confusion. This
pronouncement overrules the Ninth Circuit's statement in an earlier case that
"the nominative fair use defense shifts to the defendant the burden of
proving no likelihood of confusion."
See Brother Records, Inc. v. Jardine, 318 F.3d 900, 909 n.5 (9th Cir.
Initial Interest Confusion
can find actionable likelihood of confusion even if the confusion dissipates before
the consumer makes a purchase from the defendant. Known as initial interest confusion, this doctrine
is intended to prevent a bait and switch where a company uses another party's
trademark to get consumers' attention and lead customers to consider purchasing
its own goods or services. Even if the
consumer realizes that the product before it is not made by the mark owner, the
initial confusion may be actionable infringement. For more on initial interest confusion, see Gilson on Trademarks § 5.14.
Toyota Motor Sales, the possibility of
initial interest confusion on the Internet is essentially eliminated except for
the most obvious cases of domain name infringement. The opinion declared that when a domain name
is not plainly indicative of sponsorship or endorsement, "the worst that
can happen is that some consumers may arrive at the site uncertain as to what
they will find." The district court
had found that, even if consumers' initial confusion were dispelled upon seeing
defendants' site, "it nonetheless is actionable because it drives business
to Defendants' website by trading on the exceptionally strong public
recognition of the LEXUS brand." Findings
of Fact and Conclusions of Law, p. 22 ¶ 37.
However, according to the appellate court, nothing about the defendants'
domain names themselves would give rise to confusion because the domain names
did not include words like authorized or
official, nor were they lexus.com.
courts have similarly found little chance for proving trademark infringement
through a domain name alone where the domain name is not noticeably confusing
and where the web site itself does not contribute to a likelihood of
confusion. The Fourth Circuit has ruled
that there is generally no actionable
confusion where the web site itself is clearly not sponsored by or affiliated
with the plaintiff mark owner.
Lamparello v. Falwell, 420 F.3d 309, 316 (4th Cir. 2005) ("[A] court
must evaluate an allegedly infringing domain name in conjunction with the
content of the website identified by the domain name."). The Second Circuit has ruled that there must
have been intentional deception by a defendant in a domain-name-infringement
case "[b]ecause consumers diverted on the Internet can more readily get
back on track than those in actual space, thus minimizing the harm to the owner
of the searched-for site from consumers becoming trapped in a competing site." Savin Corp. v. Savin Group, 391 F.3d 439, 462
n.13 (2d Cir. 2004).
Ninth Circuit opinion in Toyota Motor
Sales does conflict with a Sixth Circuit case finding defendant's use of domain
names like peterbilttrucks.com
and kenworthnewtrucks.com to infringe
plaintiff's trademark rights in the marks PETERBILT and KENWORTH. PACCAR, Inc. v. Telescan Techs., L.L.C., 319
F.3d 243, 252 (6th Cir. 2003), overruled
in part on other grounds, KP Permanent Make-Up, Inc. v. Lasting Impression
I, Inc., 543 U.S. 111 (2004). There, the
court found initial interest confusion, stating: "An infringing domain name
has the potential to misdirect consumers as they search for web sites
associated with the owner of a trademark. A disclaimer disavowing affiliation
with the trademark owner read by a consumer after reaching the web site comes
too late." Id. at 253.
The Bottom Line in the Ninth
Toyota Motor Sales opinion sharply
limits findings of infringement from domain names alone, as opposed to infringement
resulting from the appearance of a web site.
It identifies specific situations in which use of another's mark in a
domain name will typically be infringing:
Apart from these obvious cases, the
Ninth Circuit opinion strongly suggests that all other domain names that
mention another party's trademark are protected by nominative fair use. The court concluded that consumers who locate
web sites through search engines or on the basis of recommendations will simply
not pay attention to the web address.
Even if they do notice the web address, their confusion should be
measured by their reaction to the content of the web site they find when they
get there. Thus, for domain names that
contain another party's trademark, if they are ambiguous about their
association with the mark
owner, they are not infringing, according to the Ninth Circuit. The content of the web site is what
opinion may well dismay trademark owners.
However, all is not lost for mark owners attempting to challenge domain
names that use their marks.
Toyota Motor Sales opinion forecloses
Internet-based infringement claims where (1) the domain names do not blatantly
suggest affiliation with the mark owners and (2) the content of the web site is
not confusing or misleading. Nevertheless,
if a mark owner cannot file in the more favorable Sixth Circuit, it could still
bring a claim in federal court under the Anticybersquatting Consumer Protection
Act (ACPA) where a domain name is confusingly similar to its mark. See Gilson
on Trademarks § 7A.06 for more on actions under the ACPA. It could also bring an administrative
proceeding under the Uniform Domain Name Dispute Policy (UDRP) to obtain
cancellation or transfer of such a domain name.
See Gilson on Trademarks §
7A.06 for more on UDRP proceedings. To
prevail in each of these, the mark owner must show that the defendant had a bad
faith intent to profit from the use of the plaintiff's mark. A mark owner that believes another party is unfairly
benefiting from the good will of its mark can pursue these claims instead of
relying on the doubtful success of an infringement claim.
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