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It’s a basic lesson of Trademarks 101 — every rookie trademark lawyer learns the continuum along which would-be trademarks are classified. Words and phrases that are arbitrary, suggestive or fanciful are immediately protected as marks. Descriptive terms are not protectable unless and until they have acquired a secondary meaning in consumers’ minds as trademarks. Generic terms can never be protected as anyone’s mark; they must remain in the public domain for eternity. Once they’ve learned this hierarchy, trademark lawyers must explain it to their clients, who not infrequently want to use descriptive or generic terms but nevertheless hope to exclude their competitors from using them. So what do trademark lawyers make of an Internet world in which some of the most highly valued names in online retailing consist of a generic term followed by “.com” — Pets.com, Drugstore.com, Garden.com and the like? Are the usual rules about trademark protection suddenly changed, or are Web capitalists building empires on would-be “marks” that can’t be protected? This question reflects just one of the ways in which the Internet seems to be turning traditional trademark law on its head. In fact, it’s reasonable to say that the conventional wisdom about Internet branding and the time-tested principles of trademark law are on a collision course. The stakes are sufficiently high that the months to come will likely bring significant new cases determining the extent of protection for the best-loved Internet branding conventions –”generic.coms,” “descriptive.coms” and marks that preface generics or descriptives with the prefix “E” or “I.” INTERNET IS TRANSFORMING TRADEMARK SELECTIONS This question of protectability is just the latest instance in which the Internet economy has transformed — and threatens to rewrite the rules — of trademark selection and clearance. For example: It’s become a clich� that things in the new economy happen in hyper-accelerated “Internet time,” and the U.S. Patent and Trademark Office (PTO) has been flooded with filings for new Web-related marks, making it that much more difficult for each newcomer to find available new marks (and more difficult for the PTO to keep up). This scarcity of Web-related marks is vastly exacerbated by the fact that many marketers now insist on having a “.com” domain name to match the mark being selected. With millions of domain names already registered, and a new one being registered every two seconds, the ability or inability to secure “.com” real estate has severely limited companies’ ability to clear new marks. Indeed, domains have become the tail wagging the dog of the trademark selection process. FILING PATTERNS AT THE PTO The difficulties of branding in the Internet age can be seen in the patterns of new filings for trademark registration. PTO records show that the Internet is celebrating its fifth anniversary as a significant commercial medium — 1995 was the first year the PTO saw a significant increase in the number of applications for marks containing Web-related buzzwords. In 1994, there were 89 applications filed in the PTO containing the word “Internet,” 60 containing “Web,” 203 containing “cyber” and 26 containing “com.” In 1995, the numbers jumped to 341 for “Internet,” 569 for “Web,” 631 for “cyber” and 302 for “com.” New applications containing Internet terminology increased significantly again in 1996, actually declined in the next two years and then exploded in 1999. Consider what these trends say about the marketplace realities for companies seeking to establish new marks for Web-based products and services: The number of U.S. trademark applications in which “.com” appears nearly doubled between 1997 and 1998, and then rose by an astonishing 660% last year, from more than 1,600 to more than 12,000. The fact that nearly 5% of all new trademark applications contained “.com” is an unmistakable statement about the importance of Web-based marketing at the turn of the century. Companies obviously want to signal to consumers that their products are Internet-related by incorporating terms such as “Web” and “cyber” in marks, but the sheer volume of new applications for such marks — hundreds and hundreds each year — suggests that a company’s first choice will often already be taken. E-I-E-I-O As the most obvious Web buzzwords have become increasingly scarce, what are marketers to do? To a large extent, they’ve resorted to marks with the prefix “E-” or “I-,” such as eBay, eToys, and iMac. From a branding standpoint, “E” and “I” are models of economy because they give a mark an Internet flavor while using the absolute minimum number of letters. Thus, the past two years have seen a boom in new filings for E-marks (quadrupling from 1998 to 1999, from approximately 1,500 to 6,000) and I-marks (doubling from more than 2,000 to more than 4,000). Such marks have now far outpaced and eclipsed filings containing previously favored Web words such as “Web” (considerably less than 2,000 applications last year) and “cyber” (about 650 filings in 1999). All of this comes with the backdrop of booming business at the PTO, as new filings skyrocketed in 1999. Filings rose from 112,783 in 1990 to 159,981 in 1995, and from there increased to 182,277 in 1996, 193,140 in 1997, 201,258 in 1998 and then to 265,146 in 1999. Interestingly, the number of new trademark applications has been an accurate economic barometer during this decade, sagging during the 1991-92 recession, then moving steadily upward thereafter. Still, it took nearly 10 years (from 1990 to 1998) for the number of new U.S. trademark applications to double from 100,000 to 200,000. Then, astonishingly, in just one year (1999), applications leapt by another 65,000, fueled by a booming economy, the Internet land rush and the fact that the Internet makes it easier for individuals and small businesses to file applications. Needless to say, the PTO faces a challenge in keeping up with an unprecedented number of new applications. More significant from a substantive standpoint, the PTO is making applicants unhappy by taking the position that the Web’s fundamental branding strategies do not necessarily create protectable trademarks. CLASH WITH CLASSIC PRINCIPLES Indeed, the brave new world of Internet branding is clearly at odds with the classic principles of trademark law. Included in the flood of new filings are countless applications for marks that combine a generic or descriptive term with “.com”. At first, the PTO dealt inconsistently with these applications — some were refused, some obtained supplemental registration and a few managed to obtain full-fledged registration. Last year, however, the PTO established a policy that the “.com” portion of a mark will be considered as though it were a corporate descriptor such as “Inc.” — i.e., it will be ignored. Thus, if a mark consists of a generic followed by “.com,” it will be completely ineligible for registration, and if it combines “.com” with a word describing the applicant’s product or service, it will not be registered without proof that it has become distinctive. The inability to obtain trademark registration is a serious problem for a company that has spent hundreds of thousands of dollars acquiring such a domain name and millions more in marketing the name — or is it? Trademark protection has always been important because it grants marketplace exclusivity in a word or phrase. But in the Internet world, there is already exclusivity, in the sense that only one entity can own and use a given “.com” domain. The Internet has freed marketers from being totally dependent on trademark protection to obtain a measure of exclusivity, and the ability to obtain that exclusivity creates something of a disconnect between trademark law theory and reality. While the public-policy rationale remains strong that no one seller of pet supplies should ever be able to monopolize the term “pets,” there is a de facto monopoly of sorts. Internet companies receive plenty of attention, and the press treats Pets.com, for example, as though it were a mark or trade name identifying a particular seller of goods, even though traditional legal principles and PTO policy dictate that it cannot have any such significance. Web marketers cannot be sanguine, however, because the more important long-term question is whether such generic domains should enjoy any protection against others who use very similar domains. For example, there are pending applications in the Trademark Office for “Drugstore.com,” “The-Drugstore.com,” “Drugstoredepot.com” and “Womansdrugstore.com,” all from different applicants. In such situations, the traditional principles of trademark law are likely to hold sway, and unless the newcomer makes some deliberate effort to mislead, the original “.com” holder is unlikely to be able to stop near-lookalike generic domains in that category. As the case law develops in this area, it will be interesting to see whether the online marketplace continues to value these generic “.com” domains as highly as it does now. LATEST WEB GOLD RUSH IS FOR USE OF PREFIX ‘E’ OR ‘I’ The online world’s newfound preference for marks with the prefix “E-” or “I-” is also running up against PTO resistance. The office is taking the position with many applications that the prefix “E-” combined with another word creates not a brand name, but a generic or descriptive phrase, along the lines of “e-mail” or “e-commerce.” For example, even though the PTO had previously granted a full-fledged registration of eToys, it is now refusing an additional registration of the mark on the grounds that prefacing a category of goods with the letter “E” does not create a protectable mark. Do consumers perceive new “E-” and “I-” formatives as ready-made brand names or as new public-domain terms? The answer is likely to depend on the specific words and context, even if the PTO seems to be initially taking a more dogmatic, one-size-fits-all approach to the question. With more than 4,000 “E-” marks filed just last year, this will be an issue to watch in the months to come. Mr. Gundersen is a partner at Philadelphia’s Dechert Price & Rhoads and vice chair of its intellectual property practice group. The second edition of his book Trademark Searching, an expert guide for practitioners, is being published this year by the International Trademark Association.

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