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A recent decision by the Ninth Circuit confirms that "commercial use" by the defendant is required for a Lanham Act trademark or dilution claim, but is not required in a cybersquatting claim under the Anticybersquatting Consumer Protection Act (ACPA).

Michael Kremer, a dissatisfied hair transplant patient, used the domain name www.BosleyMedical.com as a site critical to the Bosley Medical Institute, a hair transplant clinic. Bosley sued. The district court entered summary judgment for Kremer on the grounds that his conduct was not commercial.  See Bosley Medical Institute, Inc. v. Bosley Medical Group, 2005 U.S. App. LEXIS 5329 (9th Cir., April 4, 2005).

Kremer's website contains public documents and other information critical of Bosley. Kremer earns no revenue from the site and no goods or services are sold on the website. There were no links to Bosley's competitors, but there was a link to a newsgroup chat room which in turn contained links to Bosley's competitors and to Public Citizen, the organization representing Kremer in the case.

On the trademark claim, the district court found that Kremer's conduct was not "use in commerce" as required by the Lanham Act. The Ninth Circuit found that "this approach is erroneous." That clause of the Lanham Act is merely a jurisdiction predicate to a law passed under the Commerce Clause of the Constitution. Nevertheless, the Ninth Circuit affirmed the ruling on the ground that the Lanham Act only applies to use "in connection with a sale of goods or services," that is, "commercial use." Kremer's use was "noncommercial" and did not violate the Lanham Act.

Bosley argued that the site was actionable for three reasons. First, it argued that the site was actionable because it contained links to a newsgroup with ads for competitive sites. The Court ruled however that "this roundabout path" was "too attenuated" to render the site commercial.

Second, Bosley argued that Kremer was engaged in an extortion scheme to profit from the domain name. Bosley, however, had no evidence to support the allegation that Kremer was trying to sell the domain name.

Finally, Bosley argued that the conduct was actionable because Kremer used the domain name in connection with Bosley's goods and services. The Ninth Circuit disagreed with this rationale, found in the Fourth Circuit's decision People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359 (4th Cir. 2001), because it would encompass a mark merely used as the object of criticism. In Kremer's case, no consumer would mistakenly try to buy goods or services from Kremer based on the use of Bosley's mark and Bosley was doing nothing to trade on Bosley's goodwill.

As stated by the Court, "Bosley cannot use the Lanham Act either as a shield from Kremer's criticism, or as a sword to shut Kremer up."

The Court has a different view on the cybersquatting claim. The district court also dismissed this claim because Kremer's use was "noncommercial." The ACPA, however, applies to anyone who "registers, traffics in, or uses" a domain name with a bad faith intent to profit. "Commercial use," that is, "use in connection with the sale of goods or services," is not required.

Allowing a cybersquatter to register a domain name in bad faith but get around the statute by making noncommercial use of the mark would defeat the purpose of the Act. Put another way, noncommercial use does not necessarily equate with a lack of bad faith registration. Accordingly, the Court concluded that Bosley was entitled to discovery on whether Kremer had a bad faith intent to profit from the use of Bosley's mark.

Put more generally, use of another's mark as a domain name for a noncommercial website may constitute cybersquatting if the domain name is registered with the bad faith intent to profit.

Written by Mark Partridge, Attorney & Author. Visit the blog maintained by Mark Partridge here.

Related topics: Cybercrime, Cybersquatting, DNS, Domain Names