CenterPoint Blog - Intellectual Property

The PTO Says My Trademark is Descriptive; Can I Still Use It?

Paul Reidl — Sat, 10 Jul 2010 21:40:00 GMT

A client came to me with a classic trademark problem. She had looked at the PTO web site and had not found a mark identical to hers so she filed the application. But the Examining Attorney rejected it because he thought it was “merely descriptive” of the goods. She asked me what I thought and what it would cost to challenge it.

I took a deep breath and suggested that she save the money because the Examining Attorney was right and the likelihood of overturning the decision was remote. Here’s why:

A descriptive term is one that describes some characteristic of the goods. An example might be “Crunchy Biscuits” for dog food. “Crunchy” describes the texture and “Biscuits” describes the shape or type of the dog food. When you combine the two terms, you have a phrase that merely communicates characteristics about the product to consumers. In this case: “these are dog biscuits that are crunchy.”

Trademark law says that merely descriptive terms such as these do not function as trademarks because they do not signify a single source or origin of the goods. Why? Because any maker of dog biscuits can make crunchy ones. For this reason such terms cannot be registered as trademarks without evidence that the term has “acquired distinctiveness” through use. (We lawyers also call this “secondary meaning.”) The concept is easy to grasp. If the maker of the dog biscuits sells enough of them, does enough advertising over time, and no one else uses the term on these goods in this manner, eventually consumers will identify the dog biscuits called “Crunchy Biscuits” with a single source of goods. Those of you who are gardeners are certainly aware of the fertilizer called “Miracle Gro.” That is a very good example of a descriptive term that has acquired distinctiveness through use and promotion.

The client’s next question was the obvious one from a business standpoint: “Can I still use the ‘trademark’ as the name of my product even if the PTO won’t register it? My labels are printed, and the cartons are packed and ready to load on the truck.”

The answer is: “of course.” She would be taking a risk that a competitor could also start using the term before she acquired distinctiveness in it, in which case she could not stop the competitor from using it because her term has not matured into a distinctive and protectable trademark. But there is nothing in the law that prevents her from using the term and trying to make it distinctive for her goods.

The final question was: “so do I have to give up the application?” In the case of descriptive terms that might become distinctive it is possible to persuade the Examining Attorney to move the application to the Supplemental Register. Although this is called a “registration” and it is assigned a registration number, a registration on the Supplemental Register does not confer any of the rights and privileges of a real registration. It is simply notice to the rest of the world that you are claiming this as your trademark and that the PTO believes that it could acquire distinctiveness at some point.

There is one additional twist: if the client had been using the term for five consecutive years the application would have been entitled to a statutory presumption of acquired distinctiveness. In that event, the filing basis for that application could have been converted to take advantage of the statutory presumption and it might have been registered. And, in fact, trademark owners who have used descriptive terms (or who have them registered on the Supplemental Register) can file a new application after the five year use period and take advantage of the statutory presumption.

There is a catch, however: the statutory presumption applies only to the registration of the term as a trademark. If you were to sue in Federal Court on that registration you would be required to prove acquired distinctiveness (unless your registration got the advantage of another statutory presumption not relevant here.)

Many business people like descriptive terms because they communicate information about the product to the consumer. However, the price you pay for communicating that information is that you may not be able to stop third parties from doing the same thing, and you will not be able to register the term without a great deal of use.

Why Did My Trademark Application Get Rejected?

Paul Reidl — Sun, 04 Jul 2010 02:00:00 GMT

Clients ask me this question regularly. Sometimes it is for an application they filed themselves. Other times it is for an application that I filed for them (which can be somewhat embarrassing to explain.) The general answer is the subject this week’s blog.

A trademark application must clear two hurdles at the United States Patent and Trademark Office. First it must be approved by an attorney in the Trademark Office (called an “Examining Attorney”). If it clears that hurdle it must survive the thirty-day publication and opposition period without being opposed by someone. (And if it is opposed the Applicant must win or settle that proceeding).

The Examining Attorney checks the application against a long list of things. First there are the formalities. These are the technical things about the application: were the goods stated correctly; was the declaration signed; was the exemplar of use satisfactory; were the fees paid; etc.

Then the Examining Attorney looks at the substance of the trademark in the application. The first thing that is reviewed is the list of “absolute grounds” for refusal. These are things like genericness (“vino” for wine), descriptiveness (“red” for wine”), scandalous and immorality (“FCUK” for clothing) and other statutory bars to registration. Then the Examining Attorney looks at “relative grounds” for refusal, such as whether the mark is confusingly similar to another registered mark.

If the Examining Attorney believes that that application is deficient or that registration must be refused, they will write an “Office Action” explaining the reasons for refusal and what must be done to fix the problem. You have six months to respond to the Office Action.

When you file the application yourself, you are in some sense “flying blind” because you do not know the list of things that the Examining Attorney will be looking for. You might have done a basic trademark search to see if someone else had registered your proposed mark for identical goods, but the Examining Attorney’s review is much broader. When you use a trademark attorney to “clear” your proposed trademark, you will get the benefit of their insights into how an Examining Attorney might view the application. But as Benjamin Franklin might say, nothing in life is certain except death and taxes, and even the best trademark attorney cannot predict with certainty how an Examining Attorney might view an application.

Although most of the Office Actions I have seen were predictable (if not predicted), some were just from left field. For example, I had one recently where an Examining Attorney was adamant that my client’s application for a mark that was for a pharmaceutical preparation for veterinary use was confusingly similar to a mark that was registered for skin lotions for human use. You look at those kinds of rejections and ask yourself: does she really believe that doctors of veterinary medicine, who are the only people who could purchase or prescribe a pharmaceutical for animal use, will mistakenly use a human skin lotion instead?

The good news is that if your attorney can make a good argument as to why the Examining Attorney is wrong, in many cases they will withdraw the objection and pass the application for publication. That’s what happened with my veterinary client and his mark eventually was registered. But sometimes Examining Attorneys dig in, in which case you will have to appeal to the Trademark Trial and Appeal Board or abandon the application.

The bottom line is that applications can be rejected even if you work with a trademark attorney before adopting your mark. You can always make arguments in response to the Examining Attorney and you have a right to appeal, but sometimes you must decide whether to fight or move on to another name.

Trademark Scams: Don’t Send Money to Strangers

Paul Reidl — Sun, 20 Jun 2010 02:00:00 GMT

By now, anyone with an e-mail address has received an e-mail from a “distinguished official” in Nigeria who has a sob story and millions of dollars to transfer to the United States if only he had a proper bank account. So he asks for your banking information and promises you a million dollar commission if you help him out. And by now everyone knows this is a scam. The scammer is looking for your personal information so that he can siphon money from your bank account and do nasty things with your identity. The proper response is to delete the e-mail without responding.

Unfortunately, there are also scammers in the trademark world. Here are several of the most common scams:

The Fake Chinese Registrar Scam

In this scam, someone in China sends the target a very official looking e-mail saying that they represent/are/work with/represent clients before a domain name or trademark registrar in China. With great seriousness they inform you that someone is attempting to register your domain names or trademarks, but thankfully they found out in the nick of time. If only you pay them several thousand dollars they will do what needs to be done to protect your rights.

Don’t do it.

These folks are simply looking to make easy money. Sometimes they go so far as to file for your domain names themselves (under a fake name, of course) but do not pay the filing fee until the end of the grace period (hoping to snare your money before they need to pay the registrar). Some have even been known to hit the same target several times. (“We regret to inform you that another Chinese company is trying to register your names ……”)

I have seen similar letters from people in other Asian countries and, of course, from Nigeria.

The Fake Registration Certificate Scam

This one is fairly common. The scammers send a letter from a fictitious “United States Trademark Agency” or some such thing, and they tell you that for a nominal fee they will send you a registration certificate. They hope that you will be duped into sending them the fee – preferably by credit card.

Don’t do it.

There is no fee to register a trademark in the United States or to receive the registration certificate from the United States Patent and Trademark Office. A “certificate” from someone other than the United States Patent and Trademark Office is worthless. This is a long-running scam.

The “You Have A Problem And We Can Help” Scam

This one takes many forms but it involves an e-mail or letter from someone who sounds like they know what they are doing. They might even have the word “Trademark” in their name. The e-mail informs you that you have a problem with your trademark application or your registration. If you need help with it, give them a call because they are experts at dealing with these kinds of problems.

Don’t do it.

They are hoping you will call so that they can get you to pay them to “solve” your problem, whether it is a legitimate problem or not. These folks are not “experts;" they are scammers who prey on people or businesses who file applications without the assistance of a lawyer.

The “You’ve Been Sued And We Can Help” Scam

There are law firms that monitor the Federal courthouse dockets and who will solicit business from people who have been sued. They will represent that they have expertise in the area and that they can help you out if you give them a call.

Don’t do it.

Trademark litigation is a very specialized area and many general litigation firms do not have that expertise. If you retained them in a case it could be like going to a general practitioner for a medical problem when you really need a cardiologist. The result could be a lower risk of a successful result and vastly greater attorneys’ fees than you would have spent if you’d only retained someone with experience in the area.

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It is easy for me to say “don’t do it” because I have seen these many times; however, the natural inclination of a conscientious executive will be to wonder whether they are legitimate. In that event, the prudent thing to do is to ask your lawyer. If you have a relationship with a trademark attorney, ask them. (It is a safe rule of thumb that if the letter pertains to something they are handling for you and it is not from them, it is a scam.) An experienced international trademark lawyer will be able to answer your questions and will have trusted contacts in just about every country in the world who can verify the international facts for you if necessary. If you do not have a relationship with a trademark lawyer, ask your general business lawyer. If they cannot answer the question they probably know a trademark lawyer who can.

Above all, don’t send money to strangers!

Someone Registered My Mark in a Foreign Country; How Do I Get It Back?

Paul Reidl — Sat, 12 Jun 2010 22:37:00 GMT

In the global economy, brand owners frequently sell their products in countries other than their own. That was the case with a client who was happily exporting to Europe until he received a demand letter from a company in France claiming that it owned his trademark in Europe and threatening him with legal action. He was understandably upset.

Unfortunately, our options were limited. Here’s why.

Trademark rights are “territorial.” This means that a brand owner must affirmatively create trademark rights in each country of interest. In 95% + of the countries in the world, the trademark rights go to the first person to file an application to register the mark. Once that application matures into a registration, the owner of the registration has the exclusive right to use the mark on those goods in that jurisdiction (subject to any prior registrations). Thus, for example, if you are happily doing business in the United States and decide to move into a country where someone else has the trademark rights, they can stop you. That’s what happened to my client.

There are very few exceptions to this principle. Some countries (but not the United States) allow the owner a truly “famous mark” to sue and get the mark back even if they do not have a registration in that country. McDonald’s did this in South Africa and Nike did this in Spain. In some countries, you may be able to wrest the rights away from a former distributor or importer who has registered the mark. Also, most countries have a “grace period” (3-5 years) during which the registered owner must use the mark, and if the mark has not been used during that period you can petition the court or trademark office to cancel the registration on abandonment grounds. But in most cases, the only way to deal with the problem is through reaching a business accommodation with the registered owner.

This means that there can be multiple users of the same mark for the same goods throughout the world. For example, Amazon.com is the defendant in a lawsuit brought by the owner of the United States trademark of SMARTIES for candy who claims that Amazon.com is selling SMARTIES candy made by Nestle, which owns the rights in Europe.

How do you prevent this? Good business planning. As you develop your brand name and product concept, you should make sure that the trademark is available in the countries of interest before you adopt the name. These countries might include the country in which the goods are made (in some countries it is infringement to label goods with a registered mark even if the goods are solely for export); if the goods would be easily counterfeited, the most likely counterfeiting countries (China comes to mind); and, of course the countries in which the goods are likely to be sold. And if you decide to expand your list of export countries in the future, you should make sure that you have cleared and applied to register your trademark before you start talking to potential importers or distributors. Trademark lawyers who handle international work have a network of associates across the globe who can search and clear the mark for you in the countries of interest.

Of course, a multi-country search and clearance can be costly so you need to budget for it. But I liken the process to purchasing insurance. Clearing and registering your marks gives you the freedom to sell your goods where you want to sell them without having to worry about dealing with demand letters. It will cost you much more in lost brand equity, credibility in the trade, attorneys fees, adverse publicity, and perhaps even damages to deal with these issues once your product is in the marketplace.

And as for my client’s problem, we worked out a co-existence agreement that was a win-win for both. The fact that we found the French company’s product in the United States and threatened them with litigation provided the leverage we needed to accomplish that.

Why Can't I Patent My Great Idea?

Paul Reidl — Mon, 07 Jun 2010 07:00:00 GMT

A client was very excited about an idea. He had seen a new kind of kind of soft-sided container that was being used in England for fruit juice. He thought it would be a fabulous packaging for wine and he wanted to patent it in the United States right away.

I asked him: “you saw the package on the market?”

“Yes,” he replied, “when I was in London.”

“Well, then you can’t patent it,” I said.

He was very agitated. He argued that it was not being used on wine and it was not being sold at all in USA, so why couldn’t he patent it?

Obviously, the client was assuming that the territoriality principle in trademark law also applied to patent law – and it does up to a point. The territoriality principle means that rights must be established on a country-by-country basis. If you do not affirmatively establish your rights in the country of interest, someone else can do so by filing an application. Patent law has a similar concept in that an inventor’s rights only extend to those countries in which he has affirmatively established them, but with one big difference.

In order to qualify for patent protection, an invention must be useful, novel, and non-obvious over the prior art. These scientific criteria transcend national boundaries and are measured by the totality of the scientific knowledge base. Thus, for example, once a specific type of packaging enters the global knowledge base – either through use or through the filing of a patent application – it becomes “prior art” to all future “inventions.” Therefore, in this case, the fact that the packaging was already in the market made it part of the prior art and foreclosed patentability even though it may have been unknown in the USA. (Assuming, or course, that the container itself would have met these criteria.)

“But,” replied the client, “I invented it for wine.” Again, not from a patent standpoint. The purpose of a container is to hold liquids. Wine is a liquid. It would be “obvious” from a patent standpoint to put wine in a container for holding liquids. Using the packaging might be a great marketing idea, but it is not a patentable one.

“But,” he said, “this wasn’t made to hold wine. Wine is acidic so you would need to put a liner inside the package or make it with special materials.” I conceded his point, but this did not really help him because putting an acid-resistant lining in the package would be deemed “obvious” from a patent standpoint. What he would need to do is to use a liner that had chemical properties that at first blush would not work with an acidic liquid. If he could show that he had figured out how to make it work, even though the prior art was to the contrary, then he’d have a shot at patent claims – but only for the specific type of liner. He would not be able to protect the package itself under patent law.

The bottom line is that the standards for obtaining patent claims are very stringent. If you see something on the market already, you cannot “patent” it even though you would apply it to a different use unless you modified it in some unexpected, non-obvious way. Of course, if the owner of that container had filed a patent application in the United States and claims were allowed, you could not use the claimed portion of the container without the owner’s permission.

Having said that if he had a bona fide intent to use the packaging in the USA, its shape was inherently distinctive, the shape was not functional, and the person using it in London had not applied to register it as a trademark in the United States, he might have been able to protect it under trademark law. In this case, though, the non-functional elements of the packaging were not inherently distinctive. So the client could use the packaging and perhaps get a “first to market” advantage, but if a competitor adopted it he would have a hard time stopping them.

Why Does My Lawyer Want to Do a “Trademark Search?”

Paul Reidl — Sun, 30 May 2010 03:28:00 GMT

Brand names, or trademarks, are an integral part of a business plan. People spend many hours thinking about the “right” name for their product, the “product story,” and the marketing pitch. After investing so much time and energy into the creative process, it is natural for entrepreneurs and marketing people to want to “get going” and get the product onto the market.

But doing so without having your lawyer research the name can have debilitating consequences. If someone else owns an identical or similar name for identical or similar goods or services, and you use it anyway, you could be sued for “trademark infringement.” A successful plaintiff is entitled to damages (which can be based on your profits) and an injunction. So after investing all of your time, energy, marketing and sales dollars, and emotion into a name, you could be ordered to stop using it and turn over your profits to someone else. All of the work you spent getting the product on the shelves and building a brand identity would have been wasted.

The way to minimize the risk of these dire consequences is to do a “trademark search.” This is the process by which your lawyer researches the name and advises you whether there are any third party uses or registrations that could pose a risk.

There are two types of trademark searches: the “preliminary” search (also called a “knock-out” or “screening search) and the “full” search. In the first, your lawyer will query publicly available databases to see whether someone else is using or has registered the name. This is only a directional search because it only takes into account “identical” marks on identical or closely similar goods. If your name clears this hurdle, then your lawyer may recommend a “full” search. This is a comprehensive look at multiple databases for identical or similar marks that is conducted by a vendor who specializes in such searches. These searches can cost between $500 – 600. Your lawyer will also charge a fee for reviewing the results of this search.

Properly understood, the search and clearance process is simply a form of due diligence that will minimize the risk of an infringement action. It is not a guarantee that the name is available for registration and use. To use a rough analogy, when you decide to buy a house you do so because you like it, but once the decision is made (and before the closing) the prudent buyer will do a home inspection to make sure that there are not problems with it. A home inspection does not guarantee the absence of problems, but it sure helps you sleep at night. The trademark search is the home inspection for your brand name.

Of course, it can be very challenging to find a name that is “clear.” Quite often the name that you or your marketing people love is already being used by someone else. In that event you may still be able to use the name if you get a consent or license from the owner of the “blocking” mark, or you buy it. It may also be possible under some circumstances to file a petition with the USPTO to cancel it. But if none of these work, you may have to use an alternate name and adapt your marketing strategy to the new name. The worst thing you can do, however, is to hit the gas pedal with knowledge that there is a serious issue with your name. In that event, a plaintiff in an infringement case is entitled to have you pay for their attorneys’ fees and to have a judge multiply the damages award by up to 200% as a penalty. Ouch!

To be sure, no one likes to pay lawyers to “bless” their great business ideas. And, conversely, no lawyer likes to be the bearer of bad new about great business ideas. But in the trademark area the consequences of failing to go through this due diligence process can be serious. That is why your lawyer will want you to do a trademark search.

I Registered My Corporate Name, So Why Do I Have To Get a Trademark Registration?

Paul Reidl — Sun, 23 May 2010 03:57:00 GMT

A commonly asked question is: I registered my corporate name with the State so why do I have to register it as a trademark? The answer is: because one is apples and the other is oranges. Let me explain.

A corporation is a legal entity, a "person", that is created by State law. Each State has its own laws and regulations governing its corporations. Each State also has its own government agency that administers these laws. When you create a corporation in a State, you must apply to that agency, pay the fees, and submit the required paperwork such as Articles of Incorporation.

As part of the corporate creation process, the State agency may review the names of all other corporations it has registered and make sure that yours has a name that no one else is using. Why? Because it is convenient to the State not to have more than one corporation with the same name. The State wants to make sure that it can identify you when tax time rolls around and when it is dealing with other business-related issues. In short, it is a matter of administrative convenience.

Of course, theoretically there could be 50 corporations in the United States with your name.

A trademark registration is different. A trademark registration confirms a national right to use a brand name on goods or services. It is a Federal registration system for trademarks, not corporate names. When you get a trademark registration for your mark, you have the exclusive right to use that mark throughout the country in connection with the goods and services, subject to any preexisting common law rights.

A trademark reflects your specific brands that you use on goods and services. Many corporations own several brands/trademarks depending on their business. Of course,
a corporate name could also be a trademark. The trademarks Exxon, IBM, Apple and the like are all shortened forms of corporate names, but the brand name/trademark rarely uses the "Company," or "Inc." that is part of the official corporate name.

This means that if you want to use some part of your corporate name as a trademark you should have your attorney take appropriate steps during your incorporation process to verify that the name is available for use and registration as a trademark. This is called the "trademark search and clearance" process. It will be discussed in a future blog posting.

I Registered My Trademark, So Why Do I Have to Stop Using It?

Paul Reidl — Sun, 16 May 2010 00:36:00 GMT

A client sent me a demand letter from a lawyer. The letter said that his client owned a registered trademark for wine that was very similar to my client’s trademark that was also used on wine. My client had registered his trademark on his own about a year ago. He thought the letter was ridiculous because he had registered his mark first.

Although this may sound counterintuitive, the letter was no laughing matter. Here’s why:

In the United States, trademark rights are based on use of the mark on the goods or services. Your rights are created the moment you begin using the mark. The geographic scope of your rights extends to the geographic area in which you use the mark. If you sell only in one city, your rights may be limited to that city. If you sell nationally, you may have national rights. In other words, you do not need a Federal registration in order to have trademark rights. These use-based rights are called “common law” rights.

So why spend the money on a Federal registration? Because registrations are very, very useful and highly recommended. A registration gives you national rights even if you only sell in a limited geographic area. It also allows you to use the ® symbol. This is “statutory notice” that your mark is registered; it forecloses an “I didn’t know” defense. A registration gives you easy access to Federal court if you ever need to enforce your rights and it allows you to recover damages. Most importantly, you can file an application based on your “intent to use” the mark, and if the mark ultimately registers your rights relate back to the date you filed your application – not the date of first use.

When you apply for a registration, an attorney in the United States Patent and Trademark Office (“USPTO”) reviews your application to see whether there are any prior registrations for similar or identical marks for similar or identical goods. If so, it will be rejected unless you can convince the USPTO that the similarities are not so great as to make consumer confusion likely. Once the application is approved, the USPTO will publish it for opposition. This means that for a period of thirty days anyone can file a “Notice of Opposition” against it. This would be adjudicated before the USPTO.

My client had filed his application shortly before he began using the mark. The application was not rejected by the USPTO attorney nor was it opposed. He had also filed first, so he quite understandably thought he was in the clear. But the owner of the other mark had been using it for many years before it had filed its application -- and long before my client started using his mark. This meant that the owner had prior common law rights – and that was a problem.

But shouldn’t the USPTO attorney have rejected the second application because of my client’s mark? Maybe so, but the failure to do so is of no legal consequence. Shouldn’t the owner of the second application have opposed my client’s application? Again, maybe so, but the failure to do so does not extinguish prior common law rights (although it may form the basis for an argument that the claim should be barred because they waited too long to raise it.)

These kinds of disputes are called “priority” disputes. They are fairly common in trademark practice. When you have a dispute between two registered marks you first look at the priority filing dates. The first to file usually wins. In most countries of the world that is the end of the story because they do not recognize common law rights. But in the United States it is possible for the second registrant to have prior common law rights which would give it priority. That is what happened here.

This is one of the risks of the “do it yourself” approach to clearing and registering trademarks. For a fairly modest sum you can minimize the risk by having your trademark lawyer do a full search and clearance opinion of your proposed mark. In this case the problem with the prior user would have shown up in the search and the client could have adopted another mark. But instead the client had to change his label after-the-fact.

How Do I Get “My” Domain Name Back?

Paul Reidl — Sun, 09 May 2010 01:05:00 GMT

Last week I wrote about cybersquatting and how you can fend off a demand letter. This week I am looking at the flip side of the coin, namely, how can you get “your” domain name back.

It is more difficult than you may think.

I put quotation marks around the terms “my” and “your” because there is no “right” or entitlement to a particular domain name except to the extent that you have registered it with a domain name Registrar. That’s because domain names are typically not trademarks per se; rather, they are web addresses at which businesses can be found.

But many domain names incorporate trademarks, so why should someone else be allowed to use your trademark in a domain name? There are at least two reasons. The first arises from the principle of “territoriality.” In trademark law, rights are established on a country-by-country basis. You may own the trademark rights for your goods in the United States, but someone else might own the rights in Argentina, Brazil, Iceland or Canada. Second, because trademark rights are linked to specific goods or services, different people may own the same trademark in the same country for unrelated goods or services. A good example is the trademark UNITED which is owned by one company for airline services and another for moving services.

Because the internet is a global medium encompassing every country, the territoriality principle of trademark law does not apply. Instead it has been replaced by a “first come, first served” principle for the registration of domain names. If the company in Brazil who owned “your” mark registered it as a domain name first in the .com domain, they would own that domain name. You may have to settle for .net, .biz, or some other domain. Or you may need to add some additional words to the domain name. To use the previous example, instead of united.com you may have to use unitedvanlines.com

Accordingly, cybersquatting requires proof of something more than use of your trademark. In general, it requires you to show use of your trademark plus the absence of a bona fide reason for the registrant to own the domain name and a bad faith attempt to profit from it. There are many ways to show “bad faith:” registration of multiple marks unrelated to the owner’s business, click-through sites with ads for competitive products, excessive demands for payment, prior findings of cybersquatting, etc. So the first step in any potential cybersquatting action is to investigate the owner of the domain name and gather as much information as possible. On many occasions that might be followed up with a demand letter if you think you have a case.

In the United States there are two common ways to go after a cybersquatter. The first is by filing a Federal Court action under the Anti-Cybersquatting Consumer Protection Act (“ACCPA”). This can be an expensive route, although the cost of the case may be offset by the recovery of “statutory damages.” However, because the general principles of Federal Court jurisdiction and venue apply, you may have to sue the cybersquatter where they live which could be thousands of miles from you. If they live in a foreign country it is almost impossible to get them into Federal Court.

The second, and more common, approach is to file an action under the Uniform Dispute Resolution Procedure (“UDRP”). This is an arbitration procedure created by the governing body of the internet, ICANN. The procedure is initiated by filing a complaint with one of the designated arbitration organizations. The complaint must set forth your rights, must show that the owner of the domain name has no legitimate right to the domain name, and that it has been registered and used in bad faith. Unlike a Federal Court case, however, you get one shot to make your case and all of your evidence must be attached to the complaint. The domain name owner has an opportunity to respond to the complaint and you are allowed a brief reply. The case is decided by a single arbitrator or, on request, a panel of three arbitrators. A decision is rendered fairly quickly. If you win, the domain name is assigned to you.

The UDRP procedure is faster and far less expensive than Federal Court litigation and you do not have to worry about jurisdiction and venue issues. But you cannot get damages, and without discovery the defendant can be “creative” in their response and you will be unable to prove through their own documents or deposition testimony that they are making it up. In addition, some foreign Registrars have scammed the system by encouraging registrants who lose UDRP actions to file appeals in the home country of the Registrar – typically a far flung jurisdiction where the wheels of justice turn very slowly. But for the most part the UDRP procedure works well.

So if you think you have a cybersquatting situation on your hands you should reach out to your trademark lawyer. They can investigate the facts and advise you on whether you have a shot at getting the domain name back and, if so, whether the ACCPA or the UDRP route is the better one for your particular facts and budget.

Cybersquatting? Typosquatting? What the Heck is That All About?

Paul Reidl — Sun, 02 May 2010 02:41:00 GMT

A client forwarded a ferocious demand letter from Big Law: “you are using our client’s domain name, you are a cybersquatter and a typosquatter, give us the domain name or die a horrible death.” The client was upset because he had been using that domain name for some time without any problem, it contained his trademark/brand name, and he could not understand why he had to give it up.

As it turned out, he didn’t need to give it up. Here’s why.

Domain names are addresses for web sites, just like your business address: 546 River Road in Anytown, California. That’s where people can find you, send invoices, and hopefully checks. Similarly, a domain name is where you can be found on the web: www. [insert name]. com. In some cases these domain names can function as trademarks if they are used as such (think Amazon.com) but generally they do not. But domain names frequently incorporate trademarks or business names so that consumers who are looking for branded products can jump on line and find them. And that’s where the conflicts occur.

“Cybersquatting” occurs where the person who registered the domain name has no reason to own it except to divert traffic from the true owner or to profit off the true owner’s name. “Typosquatting” is a form of cybersquatting that occurs when the domain name reflects a typographical error in the true owner’s trademark.

For example, if someone registered the domain name apples.com and it resolved onto a click through site with ads for various computers made by computer manufacturers, including Apple, Inc., such that the owner of the domain name got paid advertising revenues every time someone visited the site and clicked through, they might have a legal problem. The odds would increase if there was a link on the page with a banner: "This domain name might be for sale.” If someone from the Apple computer company clicked on that link and the owner said “give me $500,000”, then they would almost certainly have a legal problem because that would be further evidence of a bad faith attempt to profit from the domain name. If the domain name was just a typo of the true owner’s name (in this hypothetical case, www. aple.com) the result would be the same.

But if the domain name is truly your trademark or it reflects the products you sell in your business, and it resolves onto your legitimate web site, there is nothing inherently wrong with having a domain name that is similar to someone else’s trademark. Using my hypothetical, if one trademark is for computers and yours is for shoes, it is hard to conclude that you are using the domain name in bad faith, provided that your web site is about shoes and not computers. Similarly, if your business is growing apples there would not be any issue – assuming that your web page was about selling Granny Smiths and not computers. (Of course, disputes can and do arise between trademark owners and these can involve the corresponding domain names; however, these are trademark infringement or dilution issues, not cybersquatting issues. The standard in those cases is likelihood of confusion/dilution.)

Now back to my client: he was not a cybersquatter. He was using his registered trademark as his domain name for very different goods than the client behind the demand letter. The Big Law client wanted the domain name because it was one letter off from their client’s trademark. But both were registered trademarks for very different goods, my client had a perfectly legitimate reason to use the domain name, and the web site was 100% legitimate. There was no bad faith at all. Once I explained this to the sender of the letter, they went away – grumpy -- but there was nothing they could do about it.

So the lesson learned is that while cybersquatting/typosquatting can get you into legal trouble, there may be a legitimate reason for having similar domain names owned by different owners. If you have such a reason, you may be able to keep your domain name even though you get a nasty-gram from a lawyer.