Fair Enough?
Since practically the dawn of the Internet, trademark holders have had to contend with third parties using their marks in domain names to draw traffic to nonaffiliated Web sites. Unfortunately for the mark holders, some of these third parties can wield the nominative fair use doctrine as a defense to infringement liability. The U.S. Court of Appeals for the Ninth Circuit recently reiterated how the doctrine can apply to domain names in Toyota Motor Sales v. Tabari.
Looking for Lexus lovers
The Tabaris are auto brokers who match customers wanting to buy Lexus vehicles with dealers. They offered their service online at buy-a-lexus.com and buyorleaselexus.com.
Toyota, the exclusive distributor of Lexus vehicles in the United States, sued the Tabaris for trademark infringement. After the district court ruled in Toyota’s favor, it ordered the Tabaris to cease using the domain names and granted an injunction barring them from using the Lexus mark in any other domain name. The Tabaris appealed.
Taking a spin
The district court applied the eight-factor Sleekcraft test for likelihood of confusion to find that the domain names infringed the Lexus mark. The Ninth Circuit, however, held that the Sleekcraft analysis isn’t appropriate when a defendant uses the mark to refer to the trademarked good itself — and the Tabaris used the mark to refer to actual Lexus vehicles. Such use of a trademark is called nominative fair use. The court explained that three factors must be considered when a nominative fair use defense is raised:
Whether the product was readily identifiable without use of the mark, Whether the defendant used more of the mark than necessary, and Whether the defendant falsely suggested that it was sponsored or endorsed by the trademark holder.
If the use satisfies all three factors, it doesn’t infringe the mark
Here, the court found the first factor was satisfied because the Tabaris needed to communicate that they specialized in Lexus vehicles, and it was almost impossible to do so without mentioning Lexus.
As to the other factors, Toyota argued that the use of the stylized Lexus mark and logo on the Tabaris’ Web site was more use than necessary and suggested sponsorship or endorsement by Toyota. The court agreed that the Tabaris could adequately communicate their message without using Lexus’ visual trappings.
The Tabaris, however, had removed the mark and logo from their Web site by the trial. They also added a disclaimer stating that they’re not affiliated in any way with Lexus. The court concluded that the disclaimer precluded the risk of confusion as to sponsorship or endorsement.
Backing it up
The Ninth Circuit vacated the injunction and remanded the case to the district court with the admonishment that, “at the very least, the injunction must be modified to allow some use of the Lexus mark in domain names by the Tabaris.” But it also held that, before an injunction could be granted, Toyota must establish that the Tabaris’ use of the mark wasn’t permissible nominative fair use.
About the firm:
Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX. The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights. The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.
Klemchuk LLP hosts Culture Counts, a blog devoted to the discussion of law firm culture and corporate core values with frequent topics about positive work environment, conscious capitalism, entrepreneurial management, positive workplace culture, workplace productivity, and corporate core values.