Trademark Infringement on the Internet

Oscar L. Alcantara, Frederick H. Cohen and William C. Meyers

Originally published in "Market Focus: Toys"
May 30, 1997

Trademarks are symbols used by businesses to identify the source of a product, and typically, to create a distinct identity for that product. Businesses spend enormous amounts of time and money in an attempt to place these symbols, and the characteristics associated with them, firmly in the minds of consumers. The trademark laws give the owners of these symbols the right to prevent others from using symbols which infringe the owner's rights, both in the "real" world and on the Internet.

Courts look at two main issues in determining whether or not a trademark owner can prevent another business from using a trademark. As we discussed last month, the first issue is whether the trademark owner has a superior right in the trademark. A business with a superior right in a trademark is typically referred to as the "senior user." Other users, who do not have superior right, are typically referred to as the "junior user." The second issue is whether, in fact, an infringement has occurred. Infringement generally occurs when there is a likelihood that consumers will be confused by the junior user's use of the trademark.

Likelihood of confusion

A senior user can prevent a junior use of a trademark on the Internet if the junior use will cause a likelihood of confusion among consumers. The most obvious case of confusion is counterfeiting, where the infringer relies upon a likelihood of confusion to pass off his goods as those of the trademark owner. It is possible that the Internet will entice counterfeiters because it is relatively easy to conceal one's identity on the Internet. Accordingly, depending upon the value of a trademark, trademark owners may find it worthwhile to monitor the Web for counterfeiters.

A trademark owner can also prevent infringement on the Internet that is unintentional and less extreme than counterfeiting, provided that the junior use presents a likelihood of confusion. In order to decide whether any specific use creates a likelihood of confusion, courts rely on a variety of factors, including the seven discussed below. Although courts usually rely on these seven factors (among others), there is no uniform method of determining which factor is the most important. Instead, judges review these factors and apply their notions of fairness to determine whether one trademark infringes another.

Similarity of the trademarks

In determining a likelihood of confusion, a court will compare the trademarks based upon sight, sound and meaning. This is obviously a very subjective test which focuses on how consumers perceive the two trademarks. Some cases are easy. It is highly likely that consumers will confuse Exxon with Exxon. Other cases are more difficult and courts are not always consistent in their decisions. For example, one court determined that "Tornado" could be confused with "Cyclone" as trademarks for fences, but another court concluded that "Tornado" would not be confused with "Typhoon" as trademarks for fences.

Similarity of the products on which the trademarks are used

The more similar two products are, the more likely consumers are to be confused by even dissimilar trademarks on those products. For example, consumers are not confused by the fact that "Universal" is an identical trademark used by a movie studio and by a manufacturer of exercise equipment because the services and products are completely unrelated. By contrast, a court found that consumers could be confused by trademarks "Alpine Emperor" and "Mountain King" on artificial Christmas trees. Even though the trademarks are dissimilar in sight and sound, the court relied on the fact that the products were virtually identical. Between these two extremes are cases involving a junior use on products that are related to, or which are natural extensions of, the goods sold by the senior trademark owner. For example, the owner of the "Tinkertoy" mark for use on construction set toys was able to prevent registration of the mark "L'il Tinker" for use in connection with children's books because consumers were likely to be confused as to source or sponsorship, even though the goods were not identical.

The degree of care that consumers will use in choosing the product

Studies have demonstrated that consumers will use more care when buying an expensive product. Courts generally believe that more care reduces the likelihood of confusion. Therefore, courts have allowed greater similarity in trademarks used, for example, on cars than on soap.

The geographical area and manner of concurrent use

This factor focuses on whether the junior trademark would be used in the same marketing channels, in the same geographical area, or directed towards the same consumers. Again, the more similar these factors, the greater the chance that consumers will be confused and the greater the likelihood that a court will find a trademark infringement. When competitors advertise goods on the Web, the advertisements are accessible throughout the United States (and around the world) and through at least one similar distribution channel. Accordingly, a senior user may more easily satisfy this factor when both the senior and junior users advertise on the Web.

The strength of the plaintiff's trademark

In determining whether a junior user's Internet trademark is infringing, courts apply varying amounts of protection depending upon the strength of the trademarks. The strongest trademarks are those that are "arbitrary" or "fanciful." Arbitrary trademarks are usually words that have no obvious connection to the product. "Monogram" for plastic hobby kits is an example. Fanciful trademarks are made up and include trademarks such as "Frisbee." On the Internet, as in other media, courts will provide arbitrary and fanciful trademarks with the greatest degree of protection because the only reason for a competitor to choose a similar name is to take advantage of the senior user's reputation. Courts describe these strong trademarks as "inherently distinctive."

Somewhat weaker are those trademarks that are "suggestive" of the characteristics of the trademarked product, such as "Slinky" for a spring toy. Courts will protect these trademarks because suggestive trademarks are also inherently distinctive and can, therefore, function in the market to differentiate one company's products from another's. that protection, however, will not be as strong as the protection provided to arbitrary or fanciful trademarks because courts have found that all businesses have a legitimate right to "suggest" the characteristics of their products.

Trademarks that describe a product's characteristics more directly, such as "My Little Pony," are the weakest of all trademarks. These "descriptive" trademarks are not inherently distinctive and, therefore, are not entitled to protection unless the trademark has acquired what is known as "secondary meaning." Secondary meaning requires that consumers of that product have begun to associate the trademark with the product or manufacturer. Proving secondary meaning is often accomplished by conducting surveys of consumers. In many instances a Web-site owner will maintain records of the visitors to its Web-site. This database may provide a useful source of information for finding the names of consumers who can provide evidence that the descriptive trademark has obtained secondary meaning. Nonetheless, even when a court determines that a descriptive trademark is entitled to protection, the court will generally treat that trademark as weak and will protect it on a narrow basis because all businesses have a legitimate right to "describe" the characteristics of their product.

Finally, purely generic terms, which are the name of the product itself (e.g., baseball glove) are entitled to no trademark protection at all, on the Internet or otherwise, because again, every competitor must be allowed adequately to describe its goods.

Actual confusion among consumers

Courts will protect trademarks on the Internet even if the trademark owner has not demonstrated any instances of actual consumer confusion. However, evidence that consumers have been confused is, of course, persuasive in proving that a challenged trademark is likely to cause confusion. Databases of Web-site visitors that are maintained by a junior user may provide a useful source of information for finding the names of consumers who were actually confused by the junior user.

Intent on the part of the junior user to take advantage of consumer confusion to increase its business

In order for a senior user to prove trademark infringement on the Internet, the senior user does not have to demonstrate that the junior user intended to cause confusion in the minds of consumers. Nonetheless, courts discourage one business from deliberately trading on the goodwill of another in this way. Accordingly, courts are more likely to conclude that a trademark will cause a likelihood of confusion on the Internet if the challenged trademark was adopted because it was similar to an established trademark.

Examples of trademark infringement on the Internet

A variety of businesses have obtained court rulings protecting their trademarks on the Internet. For example, Sega Enterprises, Ltd. successfully sued the operator of a computer bulletin board that allowed customers to download Sega's video games bearing Sega's trademarks. The court found that there was evidence that by doing so the bulletin board owner had violated Sega's trademark rights, and the Court entered a preliminary injunction against further infringement.

Similarly, Playboy Enterprises sued an individual who operated a computer bulletin board that made available for download digitized versions of Playboy's photographs. The photographs were described to bulletin board customers with Playboy's registered trademarks. The Court issued an injunction against the bulletin board operator finding that he had infringed Playboy's trademark rights by describing the photographs using those trademarks. (The operator also violated Playboy's copyrights, a topic we will address in a later column.)

In another case, a corporation began using the trademark "Wireless NOW," on the Internet, to promote its wireless access to on-line information services. A trade association in the telecommunications field subsequently began using the trademark "Go Wireless Now!," also on the Internet, to promote a similar on-line information service. The court concluded that the trade association's use of "Go Wireless Now!" would cause a likelihood of confusion and, therefore, issued a preliminary injunction prohibiting the trade association from using that trademark.

Conclusion

When a business identifies a trademark use that it believes conflicts with its own trademarks, it should analyze the factors discussed above to consider whether there is a likelihood of confusion between the two trademarks. When a likelihood of confusion exists, the senior user may file a lawsuit and seek a wide range of remedies from the court. For example, the senior user can, depending on the circumstances, ask for (i) a court order prohibiting the infringer from continuing to use the trademark in any way, (ii) up to three times its money damages, (iii) seizure by federal marshals of any infringing goods and any items used to make those goods, (iv) court costs, and/or (v) attorneys' fees. In the coming months, we will discuss strategies for enforcing trademark rights, including whether these remedies in a given case justify the costs of a lawsuit. We will also discuss the pitfalls of failing to enforce trademark rights, which can including losing those rights entirely.

Oscar L. Alcantara, Frederick H. Cohen and William C. Meyers are lawyers at Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd. in Chicago representing clients regarding disputes on intellectual property issues, including the use of trademarks on the Internet. They can be reached at (312) 201-3929.