Lecture 8 Trademarks and Consumer Protection Outline

Lecture 8: Trademarks and Consumer Protection

Outline • Trademarks and domain names – Registration – Cybersquatting – Typopiracy • FTC Internet regulation • Spam (Robbin Steif)

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”

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

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

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.

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.

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

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

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

Some Du. Pont 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?

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. Mc. Gee, 950 F. Supp. 737 (E. D. Va 1997) (Case involved domain name cardservice. com)

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”

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

Cadillac Domains • • • cadillac. org Cadillac, MI Chamber of Commerce cadillac. net Mich. Web cadillacs. com Automobile search site (not Cadillac) cadillaccar. com Automobile search site (not Cadillac) cadillac. co. kr Used. Car. com cadillac. dk Danish car dealer cadillac. de Cadillac Filmstheaters, Munich cadillac. us For sale cadillac. it tarantino. biz AND MANY MORE

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

Uniform Dispute Resolution Policy (UDRP) • • Approved by ICANN Complex procedure equivalent to arbitration “Provider” (not ISP) = approved arbitrator Parties: “Complainant, ” “Respondent” (has the domain), • • • 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)

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.

Cybersquatting porschecar. com, porschagirls. com, 928 porsche. com, accessories 4 porsche. 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, parts 4 porsche. 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, porsche 356. com, porsche 4 me. com, porsche 4 sale. com, porsche 911. net, porsche 911. org, porsche 911 parts. com, porscheag. com, porscheaudiparts. com, porschebooks. com, porschecarsales. com porschecasino. com, porschechat. com, porschedealer. com

Anti. Cybersquatting 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

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. 2 d 1058 (N. D. Cal. 2000) – Bidder’s Edge site accumulates information about online auction – Requires numerous “hits” to e. Bay to assemble information and links to e. Bay – Successful theory: trespass to chattels – Preliminary injunction issued

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: – – – deceptive? likelihood of association? dilution? unfair? (using content of another to draw advertising viewers) First Amendment freedom to link? Trespass theory? • More links

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: – – – 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 98 -CV-0413 -K (JFS) (S. D. Cal. 1998)

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?

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

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

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: Brand. Scanner – Brand Awareness Service

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.

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 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

CAN-spam act of 2003 Controlling the Assault of Non-solicited Pornography and Marketing Act of 2003 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

What we’ll talk about • • • 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 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Monty Python makes spam famous Photo: copyright Monty Python productions.

Photo: Copyright Tech. Central. Station.

Crafted Poorly 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Opt-in vs. Opt-out From the Planet. Internet website 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

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%) SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

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1, 2&3 4&5

Pornography: May 2004 • Brown paper wrapper • “Sexually-Explicit” ASCII in subject • May not include porn in the email itself – – “Sexually Explicit” (again) Opt out Physical address Instructions on how to get the porn • Level of pornography unclear • Example 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

List requirements • • • 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 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

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 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

On the drawing board • • Federal Do Not Email list Awards to private citizens ADV labeling Brown paper wrapper for pornography (May 19, 2004) • Wireless commercial messaging rules 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 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 American. Digest. org 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Q&A 45 -848 ECOMMERCE LEGAL ENVIRONMENT SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS