Designer Skin LLC v. S & L Vitamins, Inc., et al.
Avery Dennison Corporation v. Jerry Sumpton, et al.
189 F.3d 868 (9th Cir., August 23, 1999)
Overturning a decision by the District Court, the Ninth Circuit Court of Appeals held that defendants' registration of domain names containing plaintiff's trademarks "avery" and "dennison" for the purpose of licensing those domain names to third parties for use as "vanity" e-mail addresses did not dilute plaintiff's marks under either Federal or California law.
Defendant Sumpton is the President of Defendant Freeview. Freeview has registered thousands of domain name combinations, most of which are common surnames. A number of the domain names registered by Freeview contain common trademarks or "lewd" language. According to the Court, these domain names were registered for the purpose of offering "vanity e-mail addresses to users for [a] ...fee." Among the domain names defendant registered were "avery.net" and "dennison.net." The court noted that Avery and Dennison were, respectively, the 775th and 1768th most common surnames in the United States.
Plaintiff Avery Dennison sells office products and industrial fasteners under its registered trademarks "Avery" and "Dennison" respectively. These marks have each been registered and in continuous use for over 60 years. Plaintiff spends more than $5 million per year advertising its products, and boasts annual sales of approximately $3 billion. Plaintiff also markets its products on the Internet at the domains "avery.com" and "dennison.com."
Claiming that defendants' acts violated both the Federal Trademark Dilution Act and California Business and Professional Code Section 14330, plaintiff commenced suit. The lower court agreed, and, on plaintiff's motion for summary judgment, awarded plaintiff injunctive relief directing defendants to transfer the "avery.net" and "dennison.net" domain names to plaintiff for $600.
On appeal the Ninth Circuit reversed. To prevail on a claim under the Federal Trademark Dilution Act, the plaintiff must "establish that (1) its mark is famous; (2) the defendant is making commercial use of the mark in commerce; (3) the defendant's use began after the plaintiff's mark became famous and (4) the defendant's use presents a likelihood of dilution of the distinctive value of the mark." The Ninth Circuit held that plaintiff failed to establish either that its marks were famous, or that defendant was making commercial use thereof. The Court further held that issues of fact existed as to whether defendants' use presents a likelihood of dilution. Accordingly, the court held that plaintiff was not entitled to the requested relief, and awarded defendants summary judgment.
Notwithstanding the extensive continuous use by plaintiff of trademarks that had been registered for decades, the substantial expenditures by plaintiff in advertising these marks, plaintiff's significant annual product sales and the fact that plaintiff markets its products internationally, the Ninth Circuit held that plaintiff had failed to establish that its marks were famous. In reaching this conclusion, the court pointed to the fact that plaintiff and defendants did not market their products to the same customers (plaintiff sold its products to those who purchase office products and industrial fasteners, while defendants marketed to those who sought vanity e-mail addresses), that others used plaintiff's marks, both in registered trademarks and in business names, and that plaintiff failed to submit appropriate survey evidence establishing that its marks were famous in the minds of the consuming public.
The court further held that plaintiff's claim failed because plaintiff did not establish that defendants used plaintiff's trademarks in commerce, another prerequisite for a dilution claim. Said the court: Commercial use under the Federal Trademark Dilution Act requires the defendant to be using the trademark as a trademark, capitalizing on its trademark status. ... All evidence in the record indicates that [defendants] register common surnames in domain-name combinations and license e-mail addresses using those surnames, with the consequent intent to capitalize on the surname status of "Avery" and "Dennison." [Defendants] do not use trademarks qua trademarks as required by the caselaw to establish commercial use. Rather, [defendants] use words that happen to be trademarks for their non-trademark value.
Of note, the court held that "cybersquatting dilution", caused by the registration of a famous trademark as a domain name, can occur. "Cybersquatting dilution ... can occur if potential customers cannot find a web page at "trademark.com." However, because the defendants registered their domain names at the top level domain "net" instead of "com" an issue of fact was created as to whether this registration sufficed to constitute dilution of a famous mark.
The full text of this decision can be found on a web site maintained by the Ninth Circuit Court of Appeals.