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In recent months, the 5th, 6th and 9th circuits have made significant rulings regarding the “initial interest confusion” doctrine, Internet search practices and “cyber-griping.” Specifically, the 9th Circuit held that certain search engines’ “keying” practices may result in initial interest confusion and therefore constitute trademark infringement. The 6th Circuit found that an on-line directory for legal information did not infringe the nearly identical domain name of another online legal directory due to the descriptive nature of the latter’s mark which lacked secondary meaning. In two cyber-griping cases, the 6th and 5th circuits held that the creation of “gripe sites,” even if the sites used almost the exact mark of the trademark owner in their domain names, fell within neither the Anti-Cybersquatting Consumer Protection Act (ACPA) nor the Lanham Act’s infringement or anti-dilution provisions because the griping lacked the requisite profit motive. ‘PLAYBOY ENTERPRISES,’ SEARCH ENGINE KEYING In Playboy Enterprises, Inc. v. Netscape Communications Corp., [FOOTNOTE 1]the 9th Circuit reversed and remanded after finding that genuine issues of material fact existed as to plaintiff Playboy Enterprises Inc.’s (Playboy) trademark infringement and dilution claims. Specifically, the 9th Circuit held that the use of Playboy’s trademarks as advertising keywords in defendants Netscape’s and Excite’s search engines created an issue as to “initial interest confusion” — creating an initial interest in a competitor’s product. The defendants Netscape and Excite received a fee for “keying” or linking the advertisements, or “banner ads,” of companies in the adult entertainment business. Companies pay a fee to these Internet search engines in order to have their advertisements appear alongside a search results page. The defendants had a list of terms related to sex and adult entertainment to which they keyed advertisers’ banner ads. On the defendants’ list were two terms for which Playboy held trademarks: “playboy” and “playmate.” When an individual searched for either term, unlabeled banner ads would appear on the search results page. Playboy sued Netscape and Excite for using Playboy’s marks in a manner that infringed and diluted them. After both parties filed for summary judgment, the district court granted Netscape’s motion and Playboy appealed. On appeal, the 9th Circuit reversed and remanded the lower court’s decision. The sole issue with respect to the trademark infringement claim, was whether Playboy had shown a genuine issue of material fact regarding the likelihood of consumer confusion resulting from the defendants’ use of Playboy’s marks. Playboy argued that the defendants’ actions had resulted in initial interest confusion. “[I]nitial interest confusion is customer confusion that creates initial interest in a competitor’s product.” While the customer quickly becomes aware of his or her mistake and ceases to be confused before any sale occurs, the “initial interest confusion impermissibly capitalizes on the goodwill associated with a mark and is therefore actionable trademark infringement.” It was Playboy’s claim that, when the defendants keyed or linked Playboy’s trademarks to the unlabeled banner advertisements, the defendants were actively creating initial customer confusion as to the sponsorship of the banner ads. Internet users might be misled into believing the ads were connected to a Playboy site and, as a result, would click on the ads and access the competitor company’s site. Playboy argued that, although the users would immediately discover they had arrived at a site unrelated to Playboy, damage to Playboy’s marks would have already occurred. The users initial confusion would direct them to the competitor’s Web sites and would thereby allow the competitors to gain a (potential) customer “by appropriating the goodwill that [Playboy had] developed in its [] mark.” The 9th Circuit agreed with Playboy’s initial interest confusion argument. Noting that the initial interest confusion theory was the only means by which Playboy’s suit could escape summary judgment for the defendants under the given facts, the court first favorably compared Playboy’s argument to the prevailing plaintiff’s argument under the prior 9th Circuit case of Brookfield Communications Inc. v. West Coast Entertainment Corp. [FOOTNOTE 2]In Brookfield,the 9th Circuit first applied the theory of initial interest confusion to the Internet when it held that the defendant’s use of the plaintiff’s mark in its domain name and metatags created an actionable harm by temporarily diverting users seeking the plaintiff’s site to the defendant’s site. Closely adhering to this precedent, the court in Playboyreasoned that because, as in Brookfield,some inadvertently diverted Internet users might choose to stay at the competitor’s site, the use of Playboy’s marks in making possible the misdirection appeared to be an actionable harm. While the court found the Brookfieldprecedent to suggest a similarly favorable outcome for Playboy, it nevertheless further considered Playboy’s argument under the circuit’s eight-factor likelihood of confusion test established in AMF Inc. v. Sleekcraft Boats. [FOOTNOTE 3]The eight factors are: (1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant’s intent in selecting the mark; and (8) likelihood of expansion of the product lines. Considering the fourth factor to be one of the most important factors, the court first focused on Playboy’s evidence of actual confusion. Playboy had conducted a survey in which participants were shown the search results page for the terms “playboy” and “playmate.” Fifty-one percent of participants believed the banner ads which appeared for the term “playboy” to be associated with Playboy. Although the court agreed that the defendants might be justified in their critique of the study, the court found that the report generated “a genuine issue of material fact on the actual confusion issue.” In addition to its finding that the fourth factor fell in Playboy’s favor, the court found a balance of the other factors to point toward a preclusion of summary judgment. For the first factor, Playboy’s marks held strong secondary meanings and there was a viable issue as to whether Playboy created the secondary meanings. The defendants’ practice of keying created close proximity of the goods and thus the second factor also favored Playboy. Playboy met factor three’s similarity analysis since the defendants use Playboy’s marks. While the parties used the same marketing channel — the Internet — that is the subject of factor five, the court found this factor largely irrelevant given the wide use of the Internet. The court found that the sixth, and to a lesser degree the seventh, factors were also in Playboy’s favor. Because customers are likely to exercise less care when choosing among inexpensive products, there is a greater chance of consumer confusion. Moreover, the court presumed that searchers “seeking adult-oriented materials on the Internet [are] easily diverted from a specific product he or she is seeking if other options, particularly graphic ones, appear more quickly.” With respect to the seventh factor — the defendants’ intent in selecting the mark — the court noted that the evidence was uncertain as to the defendants’ intent. However, the evidence presented indicated that the defendants had taken no steps to prevent the possible confusion and, in fact, profited from the situation. The court did not evaluate the eighth factor as it found it to be irrelevant under the Playboy facts. Therefore, both the Brookfieldand the Sleekcraftfactors led the court to hold that there was a likelihood of consumer confusion. DESCRIPTIVE DOMAIN NAMES In DeGidio v. West Group Corp., [FOOTNOTE 4]the 6th Circuit affirmed a district court’s grant of summary judgment for the defendant West Group Corp. (West Group), holding that plaintiff DeGidio’s mark “LAWOFFICES” was descriptive and had not acquired a secondary meaning. DeGidio registered the domain name “lawoffices.net” for its Web site that provides a directory of attorneys, some legal information and a few other services. DeGidio owned neither a federal nor state registration for the LawOffices.net mark. West Group, the Thompson Corp. and West Licensing Corp. used the nearly identical designation “Lawoffice.com” and the domain name “lawoffice.com” to market the defendant’s West Legal Directory. The defendant’s directory was similar to DeGidio’s directory in that it also was an online resource for legal information; however, the information provided by West’s directory was much broader and more detailed. DeGidio brought suit alleging trademark infringement and dilution. After both parties moved for summary judgment the district court held that LAWOFFICES was descriptive and lacking a secondary meaning and therefore not a protectible trademark. Thereafter, DeGidio appealed the district court’s grant of defendants’ motion for summary judgment. The central issue confronting the 6th Circuit was whether DeGidio’s unregistered trademark was sufficiently distinctive so as to qualify for trademark protection. Under well-established trademark law, protectible marks are marks that are inherently distinctive or marks that are descriptive but have acquired “distinctiveness through secondary meaning.” Courts have found that suggestive marks are inherently distinctive whereas descriptive marks require evidence of secondary meaning in order to establish distinctiveness. The court held that LAWOFFICES was descriptive. The 6th Circuit found unavailing DeGidio’s argument that no law office currently provided an attorney database searchable by individuals throughout the world. The court was not persuaded by DeGidio’s argument that his mark was suggestive with respect to the other services DeGidio provided, i.e., providing e-mail services, a database of for-sale domain names and hosting Web sites. Without elaborating on its finding, the court found that DeGidio’s mark lay toward the descriptive end of the descriptive-suggestive spectrum. The court did, however, agree with the defendants that, insofar as DeGidio’s mark might be suggestive as to these other services, the defendants did not provide any of these other services and therefore did not infringe any potentially protectible element of DeGidio’s mark. After finding DeGidio’s mark to be descriptive, the 6th Circuit held that DeGidio had failed to show his mark had acquired a secondary meaning. In particular, the court deemed DeGidio’s advertising costs of $2,500 over a period of four years to be “woefully insufficient” and thought little of the “mere $200 in revenue” DeGidio received over the same period of time. NO LIABILITY FOR GRIPE SITES In Lucas Nursery & Landscaping, Inc. v. Grosse, [FOOTNOTE 5]the 6th Circuit ruled that the plaintiff’s unhappy former customer was not liable for creating a “gripe site” using the plaintiff lawn care company’s exact name in the defendant’s Web address. After a dissatisfactory experience with the landscaping work and customer service of Lucas Nursery, defendant Grosse registered the domain name “lucasnursery.com” and created a Web page that detailed her negative history with Lucas Nursery. When Lucas Nursery contacted Grosse to demand that she stop operating her Web site, Grosse temporarily removed the site’s contents only to re-activate the site after research led her to discover Lucas Nursery held no registered trademark for its name. Lucas Nursery filed suit against Grosse claiming that she had violated the ACPA (15 USC �1125(d)) and both parties moved for summary judgment. The district court found that defendant Grosse had not acted in bad faith and granted the defendant’s motion. Lucas Nursery appealed. CYBERSQUATTING The issue on appeal was whether the defendant acted in bad faith. Under the ACPA, cybersquatters may be liable to the owner of a protected mark if the cybersquatter “‘has a bad faith intent to profit’” from use of the protected mark. [FOOTNOTE 6]In determining whether the defendant acted in bad faith, the 6th Circuit considered the nine nonexclusive factors listed in the ACPA. After weighing the factors, the court found no evidence that Grosse had any profit motive in registering the domain name. To the contrary, the court noted that Grosse’s actions appeared to be in harmony with the objective behind the ACPA of protecting consumers. Therefore, the 6th Circuit ruled that she had not acted in bad faith as required by the ACPA and she was entitled to a favorable grant of summary judgment. Similarly, in TMI Inc. v. Maxwell, [FOOTNOTE 7]the 5th Circuit held that the defendant former customer of a house building company violated neither the Lanham Act nor state dilution laws when he created a Web site having nearly the identical domain name as the company’s Web site because the defendant’s use was only as a non-commercial “gripe site.” Joseph Maxwell (Maxwell) was disgruntled with his experience in attempting to buy a house from TMI Inc. (TMI) and created a Web site to inform others of his negative experience. Maxwell registered the domain name www.trendmakerhome.com as the address for his gripe site, a domain name that was almost identical to TMI’s already existing Web address of www.trendmakerhomes.com. When the registration for Maxwell’s site expired, TMI acquired the domain name for the former gripe site. In response, Maxwell registered the new domain name of www.trendmakerhome.info, and TMI filed suit. The district court found in favor of TMI under the ACPA and dilution claims, issued an injunction forbidding Maxwell from using certain marks and/or names similar to TMI’s marks, ordered Maxwell to transfer his new Web site to TMI and awarded TMI statutory and attorney fees in the amount of $80,000. Maxwell appealed. At issue was whether the anti-dilution provision and the ACPA provision of the Lanham Act required commercial use in order to result in liability and, if so, whether Maxwell’s use constituted commercial use as defined by the relevant provisions. TMI argued that commercial use was not a prerequisite for liability under the anti-dilution provision. The 5th Circuit strongly disagreed, concluding instead that the statute’s explicit language and corresponding case law required commercial use. While finding that the ACPA had a less explicit requirement of commercial use, the court agreed with the 6th Circuit’s decision in Lucas Nurserythat the relevant inquiry was also one of commerciality: whether the cybersquatter had “a bad faith intent to profit from [another owner's] mark.” The 5th Circuit next considered the nature of Maxwell’s use. Regarding the dilution claim, TMI argued that Maxwell had a “mixed-use” site. In rejecting that Maxwell’s site was anything other than noncommercial, the court noted that he had not accepted payment for visitors to access any other portion of his site. Further, there was no advertising on the gripe site and Maxwell had not attempted to sell his gripe site’s Web address or any other Web address. As a result, the court found there was no evidence whatsoever that Maxwell’s gripe site was a commercial use of TMI’s mark. Turning to the ACPA claim, the 5th Circuit also held that Maxwell had no bad faith intent to profit. Agreeing with the Lucas Nurserycourt’s application of the ACPA nine factors and that court’s refusal to find bad faith in the creation of a gripe site when such a site was entirely outside the realm of harm the ACPA was designed to eradicate, the court found that Maxwell’s use was nearly identical to the defendant in Lucas Nurseryand therefore similarly lacking in bad faith. In reversing the lower court judgment and rendering judgment in favor of Maxwell on all counts, the 5th Circuit joined the 6th Circuit in protecting the ability of dissatisfied customers to use the Internet as their podium and use the marks of those who are the subject of the customers’ ire, to air their grievances. Robert C. Scheinfeld is the head of the intellectual property group in the New York office of Baker Botts ( www.bakerbotts.com ). Parker H. Bagley is a partner in the intellectual property group of Milbank Tweed, Hadley & McCloy ( click here ). Amina Matlon, an associate in Milbank’s New York office, assisted in the preparation of this article. If you are interested in submitting an article to law.com, please click here for our submission guidelines. ::::FOOTNOTES:::: FN1354 F3d 1020 (9th Cir. 2004). FN2174 F3d 1036 (9th Cir. 1999). FN3599 F2d 341, 348-49 (9th Cir. 1979). FN4355 F3d 506 (6th Cir. 2004), cert. denied, 124 SCt 2842 (2004). FN5359 F3d 806 (6th Cir. 2004). FN6359 F3d at 809 (citing 15 USC �1125 (d)(1)(A)). FN7368 F3d 433 (5th Cir. 2004).

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