Recent Trends and Notable Cases in Online Trademark Infringement and Counterfeiting

The previous two parts in our series explained online trademark infringement and offered brand owners possible solutions. Our last piece will discuss recent trends and notable legal cases so that brand owners can understand how to effectively fight online trademark infringers. Brand owners will rejoice in knowing that the latest cases indicate that American courts have become increasingly comfortable with both extending the scope of the Anticybersquatting Consumer Protection Act (“ACPA”), and finding counterfeiters liable under secondary liability trademark infringement claims.

In Microsoft Corp. v. Shah, 2011 WL 108954, Microsoft sued defendants for contributory cybersquatting, inter alia, under an ACPA claim. The case was settled out of court in July 2011 after Shah’s motion for dismissal was denied. Here, the court noted that Shah clearly demonstrated the requisite bad faith because he sold training, videos, and a software system that taught purchasers how to falsely use Microsoft’s marks. If upheld, the case will extend courts’ reading of ACPA liability to include contributory cybersquatting. This case also notably expanded the ACPA to include contributory damages as well, basing its decision to do so on traditional principles of tort law.

This past year, iROKO, the largest online provider of African movies and music, won a Uniform Domain Name Dispute Resolution Policy (“UDRP”) action against Iroko TV Movies. The complaint was filed with the World Intellectual Property Organization Arbitration and Mediation Centre (“WIPO”) under the UDRP. The WIPO arbitration panel ruled in favor of iROKO, finding that the domain “www.irokotvmovies.com” was confusingly similar to iROKO, was used in bad faith, and that the Iroko TV Movies had no rights or legitimate interests in the disputed domain name. As a result, the panel removed the domain name from the defendant and is currently in the process of assigning it to iROKO.

However, brand owners should take note of the case, Petroliam Nasional Berhad v. GoDaddy.com, Inc., 2012 WL 10532. In this case, Petronas, the national oil company of Malaysia, brought an action against domain name registrar, Go Daddy. In its claim, Petronas alleged that Go Daddy was guilty of cybersquatting and contributory cybersquatting, inter alia, because Go Daddy allowed the use of Petronas’s mark in domain names that rerouted Internet users to a third party registrant’s website. Go Daddy moved for summary judgment on the claims. The court granted the motion, holding that Go Daddy did not “use” the domain names within the ACPA’s meaning of use, did not act with bad faith, and thus was not liable for contributory cybersquatting. In addition to the fact that the court did not find the requisite bad faith, the court also pointed out that Go Daddy’s service of domain forwarding was an automated process. It found that only the domain name registrant or an authorized licensee could actually “use” the domain name for the purposes described under the ACPA. As such, the court found that Go Daddy did not “use” the domain name as required by the ACPA.

Ultimately, what brand owners should take away from these cases is that the key to bringing a successful URDP or ACPA action is to first successfully meet the requirement of a showing of bad faith on the part of the infringer. Moreover, when bringing an action under the ACPA or URDP, mark owners should determine which to use based on what remedies it seeks and how fast relief is desired.

Fortunately, recent cases also demonstrate that courts are comfortable with expanding the reach of the ACPA in an effort to curb online trademark infringement. Similarly, brand owners should note that claims of contributory liability in online trademark infringement cases can be used to great effect. However, the mark owner should first analyze the reach and responsibility of the defendant in relation to the infringing material. As demonstrated by the Go Daddy case, if the defendant mostly operates through automatic means and is far removed from the website in question, courts are less likely to find in favor of the mark owner.

In conclusion, brand owners must understand and be vigilant against today’s forms of trademark infringement. While there are many solutions and legal procedures available to victims of online infringement, courts have routinely held that the overall burden of protecting the mark rests solely on the brand owner. As such, owners should routinely check online auction websites, Internet listings, and domain names related to their marks. Doing so can preempt online trademark infringers and protect their marks from being tarnished or diluted.

Sources: IROKO Partners Wins Online Trademark Infringement Case: http://www.itnewsafrica.com/2012/10/iroko-partners-wins-online-trademark-infringement-case/ Anticybersquatting Consumer Protection Act: http://www.gpo.gov/fdsys/pkg/BILLS-106s1255is/pdf/BILLS-106s1255is.pdf Uniform Domain-Name Dispute-Resolution Policy: http://www.icann.org/en/help/dndr/udrp Petroliam Nasional Berhad v. GoDaddy.com, Inc., 2012 WL 10532 (N.D. Cal. Jan. 3, 2012) Microsoft Corp. v. Shah, et al., No. C10-0653 (W.D. Wash. Jan. 12, 2011)

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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.  Additional information about the IP law firm and its IP law attorneys may be found at www.klemchuk.com.

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