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Exposing A Famous Secret: Well-known Trademarks Are Not Easily Diluted

Rod Dixon

Regarding a domain name dispute involving famous authors, the novelist, Louis Sachar, observed that "if some unrelated person is going to co-opt my name in cyberspace, and fails to use it to identify a web site related to my books or myself, that's going to endanger my career, as well as my reputation." Louis Sachar is one of nine famous authors for whom the Authors Guild, recently successfully snatched personal name domain names from a United Kingdom domain name registrant known as Old Barn Studios. Old Barn Studios has lost many domain name disputes, and the thrust of those losses has been the same; namely, that among ICANN arbitrators there has been a growing acceptance of the hyperbolic argument that a celebrity, well-known author, or any famous so-and-so may prevail in a domain name dispute resolution proceeding by simply asserting that their fame proves that they have been sufficiently harmed by a prior domain name registration. The fallacy of this argument when offered to ostensibly establish a viable claim for dilution of a trademark interest has been exposed by a recent decision of the United States Supreme Court. Most notably, if ICANN arbitrators faithfully follow the instructive guidance of Moseley v. Secret Catalogue, Inc, few claims, like those filed by celebrities or allegedly famous named persons, should prevail on the same thin-thread of evidence as has accompanied previous successful claims.

Under American Federal trademark law no one can obtain exclusive trademark rights to a personal name. Indeed, generally, since anyone may use his or her own name in trade in the United States, federal trademark law provides an equitable balance between freedom of expression and the interests of those who want to trade in their name. Applying this same common sense approach to the UDRP should result in the rejection of many of celebrity domain name complaints without resort to the analysis in Moseley v. Secret Catalogue, Inc.; that notwithstanding, there is a conspicuously unstable relationship between trademark law and the UDRP. The UDRP provides an online forum to resolve domain name disputes that involve cybersquatting (a cybersquatter is one who has registered a trademark owner's trademark as a domain name with the requisite bad-faith intent to profit from that registration). Cybersquatting is illegal in the United States, but, rather than go to court, a victim of cybersquatting may choose to use ICANN's expeditious, low cost, online forum. In this manner, cybersquatting claims and trademark claims are viewed as protecting similar interests, albeit imperfectly so.

Since the UDRP is not a perfect surrogate for trademark litigation, trademark owners do not prevail in a dispute under the UDRP simply on the basis of an allegation that a domain name registrant has a domain name that might infringe a trademark; instead, the complainant must show ownership of a distinctive trademark at the time the domain name was registered and, then, once meeting that requirement, must demonstrate that the registrant acquired and used the domain name for an illicit purpose. If the domain name registrant can show a "legitimate" interest in the domain name, the trademark owner's case has been rebutted, and the trademark owner loses the case. The factors that may support the registrant's position that he or she has a legitimate interest in the use of a domain name include: freedom of expression, his own common law or foreign trademark in the domain name, his use of a trade name, a legal name, a common name, a parody, a comparison (comparative advertising, for example), as well as a variety of additional fair use principles.

In Moseley v. Secret Catalogue, Inc, an army colonel sent a copy of an advertisement for the retail store, "Victor's Secret," to management personnel at Victoria's Secret to alert the trademark holder and retailer that he saw the advertisement as an attempt to use the Victoria's Secret trademark to promote "unwholesome, tawdry merchandise." Victoria's Secret asked Victor's Secret to discontinue using the name, but, instead of simply doing so, Victor's Secret changed their name to "Victor's Little Secret." Victoria's Secret then filed suit, alleging, inter alia, the dilution of its famous mark under the Federal Trademark Dilution Act (FTDA). The Supreme Court reversed the lower courts summary judgment decision in favor of Victoria's Secret.

The basis for the Court's reversal was its holding that objective proof of actual injury to the economic value of a famous mark (as opposed to a presumption of harm or a subjective "likelihood of dilution") is a requisite element of a claim alleging dilution to famous trademarks. Although this holding springs from a strict interpretation of a United States' trademark statute, the Federal Trademark Dilution Act (FTDA), the Court's rationale also relied on the different interests served by dilution claims as opposed to straightforward infringement claims (the FTDA defines "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or services" and it seems apparent that celebrity complainants are urging arbitrators to view their UDRP claims in a similar light). Applying the Court's reasoning to domain name disputes; it is difficult to escape noticing that the Court set out a compelling standard that at the very least ought to apply to UDRP cases involving parties subject to American courts.

First, the famous or celebrity domain name disputes filed under the UDRP often are, in fact, claims based on thinly disguised famous mark dilution cases. Many arbitration decisions even explicitly note that the famous personal name of a celebrity had been somehow "diluted" by preventing the celebrity from registering his or her personal name as a domain name merely because of a registrant's prior registration of the mark. As the Authors Guild alleged, the claims in that case arose because each of the nine authors maintained putative trademark rights in their personal name by "virtue of the authors' international reputation." In other words, in the Authors Guild case, like most celebrity name domain name disputes, the complainants argued that the complainant's registration lessened the capacity of the authors' famous mark to identify and distinguish their respective books in Cyberspace. To the extent that complainants seek to bases their claim on the legal theory that the famous mark was diluted by abusive registration, principles of fairness and equity as supported by Moseley v. Secret Catalogue, Inc would require complainants to meet the more rigorous standard established as appropriate for such cases (Notably, the Court did not require dilution claims to prove the result or economic effect of dilution, but, rather to establish dilution by evidence of a weakened capacity of the mark).

In Moseley v. Secret Catalogue, Inc., the Court explained that unlike traditional infringement law, the prohibitions against trademark dilution are motivated by an interest in protecting consumers. Instead, dilution refers to injury to business reputation — sometimes called tarnishment — and to the distinctive quality of a trademark — sometimes called blurring. More important, the mere fact that a consumer may mentally associate a domain name with a famous mark is not sufficient to establish actionable dilution. The Court instructs that a mere mental association will not necessarily reduce the famous mark's capacity to identify its owner's goods. Consequently, in cases where there is a complete absence of evidence of any lessening of the complainant's mark's capacity to identify and distinguish goods or services sold, the complainant should not prevail.

In reference to the arbitration panel decision in the Authors Guild case, the author, Louis Sachar, indicated that the decision was "a great decision for authors and others whose reputation is their most valued possession." The decision was certainly a good decision for the authors since they prevailed, but point this author misses is that a showing that a link between a famous mark and a registered domain name that is strong enough that consumers mentally associate the famous mark with the domain name is important evidence of dilution, but such evidence does not automatically or in every case establish that dilution is occurring or that an author's mark's capacity to distinguish his or her books from those authored and sold by others has been lessened. Regardless of the merits of the specific claims in the Authors Guild case, arbitrators who follow Moseley v. Secret Catalogue, Inc will help establish that far fewer celebrity or famous person UDRP decisions that reflect a rash and irresponsible failure to protect free expression in Cyberspace.

By Rod Dixon, Attorney
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