Trademark Law and the Internet

One of the goals of business owners is to make their business and products easily recognizable to their customers and the public in general. If the business can protect its identity with consumers, it encourages production of better products and an emphasis on building goodwill. The United States Patent and Trademark Office offers protection for businesses through the exercise of trademark law.

Trademarks allow businesses to register a word, symbol, logo, or phrase used to identify a particular manufacturer. Service marks are used to identify services, and are treated in the same fashion as trademarks. Trademark law can also apply to a business' unique packaging or color; this is referred to as trade dress . A trademark can only be granted if the item is distinctive; the spectrum of distinctiveness is measured along five categories. The mark can be fanciful, arbitrary, suggestive, descriptive, or generic.

The fanciful mark is the strongest mark, it is a mark that has been invented for the sole purpose of acting as the trademark and has no other significance, for example EXXON. An arbitrary mark is one that uses a device that has common meaning but no relation to the goods or services, such as Apple used for computers. A suggestive mark is one that suggests quality or characteristic of the goods with use of some imagination. One example is Microsoft, which implies software for microcomputers. Descriptive marks are marks that merely describe the service or goods, which cannot be trademarked. If a descriptive mark builds a secondary meaning with the public and becomes distinctive, it can be trademarked. Marks that are primarily surnames are treated in the same respect as descriptive marks. Therefore if a person's surname is similar to a trademarked name, it cannot be used in a way confuses the product with the previously trademarked device. Generic marks are not able to function as a trademark because it is the name of the product. A valid trademark can become generic if the consuming public misuses the mark sufficiently for the mark to become the generic name for the product, this occurred with aspirin .

In recent years, trademark infringement has become a very serious issue for companies that have operated with little discrepancy about their mark for many years. Many trademarks have been jeopardized through a act called Cybersquatting. Cybersquatting is the act of registering a domain name with the intent of selling it for profit. In a 1994 case, the domain wallstreet.com was registered for a seventy-dollar fee and later sold for one million dollars in 1999 . In many of these cases, the registered domain was similar to a name or the name of a previously trademarked device. These cases tested existing trademark law and led to the drafting of the Anti-Cybersquatting Protection Act.

The Anti-Cybersquatting Consumer Protection Act of 1999 (ACPA) is a federal law that is intended to protect trademark owners from those who obtain domain names, in bad faith, that are identical or confusingly similar to a trademark . This case also deals with the Texas Antidilution Statute which is designed to protect trademarks from being "watered down." The Texas law covers a broader range of issues than federal statutes.

In the case of E & J Gallo Winery versus Spider Webs Ltd, the winery became aware of the fact that Spider Webs, Ltd registered the domain name "earnstandjuliogallo.com" and requested the transfer of the domain name. E & J Gallo Winery held a trademark under the name "Ernst & Julio Gallo " since October 20, 1964. Gallo is recognized as the world's largest wine producer. The company has spent over $500 million dollars promoting its brand name and has sold over four billion bottles of wine.

The defendants, Steve, Fred, and Pierce Thumman created Spider Webs Ltd, in 1999 with the intention of developing domain names. The limited partnership registered over 2000 domain names, of which approximately 300 contained names that were associated with existing businesses and landmarks. Spider Webs sold many of these domain names on the internet auction site eBay for no less than $10,000 each. However, Spider Webs did not contact Gallo, nor attempt to sell the domain name to them.

Approximately six months after the Gallo lawsuit was filed, Spider Webs published a website on the disputed domain name that discussed the lawsuit, the risks of alcohol consumption, and alleged misrepresentations by corporations. There is no evidence that the domain name contained a site prior to the lawsuit. The first page of the site contained a disclaimer that stated it was not affiliated with E & J Gallo Winery, however the linked pages on the site did not.

The court held that Gallo had established that the defendants had violated the Texas Antidilution Act. The value of the domain name is diluted when the domain name does not belong to the company sharing that name because potential customers could be discouraged if they can not find its website by typing the "trademarkedname.com."

The court also held that Spider Webs violated the ACPA. The ACPA requires that the defendants showed bad faith in the registration of the domain name as well as being confusingly similar in nature to the trademark. The court decided that there was evidence of bad faith intent by Spider Webs because there was no evidence that they had intellectual property interest in the domain name that is not similar to the Spider Webs name nor did it use the domain name for the offering of any goods or services. Furthermore,