The decision, handed down yesterday by the U.S. Court of Appeals for the Ninth Circuit, means that Mailbank, a small email provider that allows customers to easily customize their email addresses, may hold onto the names "avery.net" and "dennison.net."
Office supply company Avery Dennison had sought to take possession of the addresses, arguing that they "diluted" its registered trademarks.
A three-judge appeals panel unanimously ruled that Avery had no right to take control of the domain names because the company's trademarks did not meet the requirements of the Federal Trademark Dilution Act, under which the suit was brought. The 1995 statute protects "famous" or "strong" marks--for example, Disney or Toyota--from being diluted though unauthorized use.
The statute has been invoked repeatedly in disputes over domain names, especially against so-called cybersquatters, who register well-known trademarks as domain names and then sell them back to the holder at an inflated price.
The ruling speaks to a common complaint about how disputes over domains have been resolved to date. Some have said that dominant registrar Network Solutions' policy of revoking an address when presented with an identical registered trademark too heavily favors big business and hurts smaller companies and individuals.
The issue is high on the agenda list at a series of meetings being held this week in Santiago, Chile, where the Internet Corporation for Assigned Names and Numbers--the nonprofit company assuming responsibility for the Internet's underpinnings--and others are attempting to hammer out a number of Internet address policies.
Stripping away a weapon
The decision subtly shifts the balance of power in many cases by removing a potent weapon many trademark holders have relied on frequently. Although McDonald's and other large companies with unique trademarks will still be able to bring dilution suits against sites that incorporate their names, companies with more common trademarks, such as United Airlines, may not.
Although a number of powerful groups have instituted or are considering domain dispute resolution policies, courts applying centuries-old trademark law remain the de facto mediators.
The panel ruled that even though Avery owned federally registered trademarks to "Avery" and "Dennison," the marks were not considered famous enough to qualify for protection under the dilution act. Unlike strong marks, the court noted, "Avery" and "Dennison" are used by companies in other lines of business.
"Dilution is a cause of action invented and reserved for a select class of marks--those marks with such powerful consumer associations that even noncompeting uses can impinge on their value," Circuit Judge Stephen Trott wrote. To provide dilution protection to every trademark "would upset the balance in favor of overprotecting trademarks, at the expense of potential noninfringing uses."
The appeals decision reverses a lower-court ruling that had branded Mailbank a cybersquatter and ordered it to turn over the names to Avery. The appeals court sent the case back and instructed the lower court to consider forcing Avery to pay Mailbank's legal fees.
Mailbank has registered thousands of names of all kinds to allow customers to personalize their email addresses. For example, the service would allow a customer named John Dennison to use the email address "firstname.lastname@example.org." In addition to offering customers' surnames, Mailbank also offers names based on hobbies, professions, and services.
Companies with more common names, such as United Airlines, will still be able to sue for trademark infringement--but that theory of law also comes with its limitations. For example, the site being sued must be actively selling goods or services in a market similar to the trademark holder's.
Lawmakers also have tried to deal with domain disputes. For example, a bill passed in the Senate would impose a $100,000 fine on cybersquatters and others who in "bad faith" register addresses either similar or identical to trademarked names.