Prior to January 1996, only 25 US States had dilution laws, defining dilution as "the blurring of a marks product identification or the tarnishment of the affirmative associations a mark has come to convey" . Dilution protection was extended to federal marks on 16 January 1996 by virtue of the Federal Trademark Dilution Act of 1995. This Act created a federal cause of action for the owners of well known or famous marks, and did away with the requirement that a likelihood of confusion be established. There are a number of different scenarios in which dilution of trade marks by domain names has been considered by the courts.
There is the use of a domain name which impacts on the underlying goods. In Hasbro Inc. v Internet Entertainment Group Inc. the court granted a preliminary injunction preventing Internet Entertainment Group from using the domain "candyland.com" for its Web site which featured sexually explicit materials. Hasbro produces a game Candy Land for young children, and the court was persuaded that 94% of mothers were aware of this game. The court found that the name "Candy Land" was being diluted by use by the Internet Entertainment Group. The court may well have been influenced in this case by the sexually explicit nature of the materials. Other cases on dilution have dealt with names of companies which serve as trade marks indicating the origin of the goods or services offered under the mark.
If the notion of dilution is raised in an action concerning the hi-jacking of a company name by a third party seeking to make a profit from selling it on, then those carrying out such activities may find that a court has very little sympathy for them. In Direct Line Group Ltd v Direct Line Estate Agency, a trademark infringement action was brought against the directors of a number of companies with names such as YSL Limited; Virgin Jeans Limited; and the Nike Clothing Company Limited. Direct Line Group Limited objected to the registration of the names Direct Line Estate Agency Limited and Direct Line Estates Limited. Laddie J took a robust approach to the defendants' line of business remarking: "[the directors] have a track record of taking or being associated with the taking of famous trademarks belonging to third parties, either for the purpose of carrying on business which siphons off the goodwill belonging to other traders, or for the purpose of offering those marks back to their rightful proprietors, no doubt as a profit". He went on to say "I think it only right to say that this court will view with extreme displeasure any attempt by traders to embark upon a scam designed to make illegitimate use of other companies trademarks".
Such a robust approach would dispose of a number of complaints of the type that have reached courts in the USA. This would then leave open the door for a proper examination of the more difficult issues in relation to trademark and domain name disputes, such as where a number of businesses are entitled to use the same mark, whether within one country or world wide. How should those problems be resolved?
However, in Prince plc v Prince Sportswear Group Inc. (Prince) a UK registered company, Prince plc, had operated a web site under the domain name "prince.com" for the past two years. Prince Sportswear Group Inc., a company registered in the US, notified InterNic that it was the owner of the Federal trademark "Prince" and that the use of the domain name "prince.com" by Prince plc was a dilution of its famous mark. As with Nominet, InterNic operates a domain name allocation policy on a first come, first served basis. However, if a second person is able to come forward and show that they are the owner of a registered trademark pertaining to that name, then the first person who has registered the domain name loses that registration. Such a loss of registration can be put on hold if the first party can either prove that they have a trademark registration, or have commenced proceedings in a US court to protect that domain name. When InterNic wrote to Prince plc intimating that that they were about to re-allocate the domain name, Prince plc could neither show they owned a trademark, nor confirm that they had commenced proceedings in a US Court, and so were in danger of losing the domain name in favour of Prince Sportswear Group Inc. However, at the last minute, Prince plc filed suit in the High Court in London, alleging that the statements made by Prince Sportswear Group Inc., that Prince plc were "infringing and diluting their trademark rights" constituted groundless threats in terms of section 21 of the UK Trade Marks Act 1994. Although InterNic domain name policy refers to an action being raised in a US court, they have applied this flexibly, and have said, at least for the time being, that an action before any court will suffice. How long this policy will be operated in this way remains to be seen. When heard, the court found that the allegations of groundless threats were proved and issued a permanent injunction requiring Prince Sportswear Group Inc. to cease making such threats. Prince Sportswear Inc. then raised an action in the States against Prince requiring the domain name to be assigned to them. This was refused on the basis that InterNic operated a first come first served policy. The domain name thus remains with Prince plc. What is particularly interesting in this case is the international flavour it is bringing to this area. US cases have dealt mainly with litigants in the US. The two UK cases have involved litigants in the UK. This one had litigants on either side of the Atlantic each equally entitled to use the same mark, albeit, in this instance, in different spheres of business.
However, it is interesting to note that in the UK, there are two difficulties with taking action based on trademark infringement. One is that, as provided by s 11(2)(a) of the UK Trade Marks Act 1994, a registered trademark is not infringed "by the use of a person of his own name and address". It is presumed that this refers to Internet addresses as well as postal ones. However, this law is subject to the proviso that the trademark must be used "in accordance with honest practice in industrial or commercial matters". The other difficulty with a case of trademark infringement is seen in s 11(3), where a registered trademark will not be infringed "by the use in the course of trade in particular locality of an earlier right which applies only in that locality". The Internet would probably not be accepted as being a locality of its own, so there would be a problem with any dispute involving the use of a domain name in a specific locality.
There is also a difficulty with taking action based on a tort of passing off if two parties can make a valid claim on the same domain name. In Pitman Training Ltd v Nominet UK , the plaintiff claimed that the second defendant had been engaged in "passing off", but in actual fact the second defendant had been using the name for nearly a hundred and fifty years, so the claim was dismissed as "a strange proposition" by Sir Scott VC. However, the law of passing off, like the law of trademarks, is not easily applied in this respect.
Conclusion
As trade marks are territorial and domain names are global, it is unsurprising therefore that there is uncertainty in the law as the trade mark law cannot cover the scope of domain names.
Hopes are held for future trade mark remedies to develop in a way that is fair to all parties. This should happen as the courts encounter new and different fact patterns. It is important to remember at every stage that the remedies must promote the stability of the URLs and domain names, as well as being useful to owners of well-known marks and names.
WIPO has recently recommended some practices designed to minimise conflicts arising out of domain names and I hope I will be able to discuss the WIPO recommendations in the next issue of this journal.
