Designer Skin LLC v. S & L Vitamins, Inc., et al.
Lands' End, Inc. v. Eric Remy, et al.
447 F. Supp. 2d 941 (W.D. Wis., September 1, 2006)
Affiliates' Use Of 'Typo-Domains' To Drive Traffic And Sales To Lands' End Gives Rise To Anticybersquatting Consumer Protection Act And Fraud Claims
Court denies summary judgment motion by Lands' End "affiliates," seeking dismissal of claims arising out of affiliates' undisclosed use of typo domains to redirect traffic to Lands' End's website, and to profit on the sales made to consumers delivered to Lands' End's site in this fashion. As affiliates, defendants received a percentage of sales made by Lands' End to consumers they brought to Lands' End's website. The Court accordingly allowed plaintiff to proceed with claims that defendants' conduct violated the Anticybersquatting Consumer Protection Act ("ACPA") and breached the parties' affiliate agreements. The Court also allowed plaintiff to pursue fraud claims arising out of defendants' concealment of this use of Lands' End typo domains. The Court did grant so much of the defendants' summary judgment motion which sought dismissal of false advertising claims plaintiff advanced under both the Lanham Act and Wisconsin state law, holding that defendants did not mislead consumers by their conduct. Consumers were unaware of the redirection, and received exactly what they expected to receive - Lands' End merchandise from Lands' End.
Affiliates Use Typo-Domains To Drive Traffic To Lands' End And Receive A Percentage Of The Resulting Sales Revenue
Plaintiff Lands' End is a direct marketer of apparel and home goods which it sells to the public from a website it operates at www.landsend.com. Plaintiff owns the federal trademark registration for the "Lands' End" mark, which it has used to support its business since 1964.
Seeking to expand its sales, Lands' End started an affiliate program. Approved third parties were invited to link their websites to Landsend.com. Under the program, the affiliate would receive five percent of all sales made to consumers who entered the Landsend.com web site via such links.
Defendants each became Lands' End affiliates. Defendants operated shopper oriented sites at the domains savingsfinder.com, poshshops.com and shopperseguide.com. Each was granted permission to place designated links on these sites to Landsend.com. These designated links contained unique identification numbers which permitted Lands' End to properly credit to the appropriate affiliate fees due for sales generated by consumers accessing the site via such links.
Unbeknownst to Lands' End, defendants were also the owners of various typo domains with names derived from common misspellings of Lands' End. Among the domains defendants owned were lnadsend.com, landsende.com and landwend.com.
Defendants used these typo domain sites to drive consumers to plaintiff's Landsend.com domain. Consumers who visited such typo domain sites opened an "invisible" HTML file which redirected the consumer to the URL of the designated link assigned to the affiliate who operated the typo domain for use on his legitimate affiliate site. This redirection made it appear to Lands' End that the consumer was sent by the affiliates' authorized site. As a result, the affiliate was paid commissions on qualifying purchases made by such consumers. Such redirection was invisible to the consumer. All he saw was a direct entry into LandsEnd.com.
Lands' End's Anticybersquatting Consumer Protection Act Claims Survive Defendants' Motion For Summary Judgment
When Lands' End discovered this activity, it commenced a suit, charging defendants both with violating the Anticybersquatting Consumer Protection Act ("ACPA") and breaching the parties' affiliate agreements. Lands' End also charged defendants with fraud and false advertising in violation of both the Lanham Act and Wisconsin state statutes.
Defendants moved for summary judgment, seeking dismissal of plaintiff's claims. This motion was denied in large part.
The Court denied so much of defendants' motion which sough to dismiss plaintiff's ACPA claim. The Court held that there was ample evidence that defendants had registered the typo domains with a bad faith intent to profit thereon, which typo domains were confusingly similar to Lands' End's registered, distinctive trademark. This conclusion was supported by the fact that defendants were not know by, and had no intellectual report rights in, the typo domain names. Nor had defendants used those domain names in connection with the bona fide offering of goods and services. Quite the contrary, said the Court:
In reaching this result, the Court rejected defendants' argument that they used plaintiff's mark in good faith because they used it to direct consumers to (and not away from) plaintiff's site, thus delivering consumers to plaintiff it otherwise would have lost.
Fraud Claims Proceed As Well
The Court also denied so much of defendants' motion which sought dismissal of plaintiff's breach of contract claim. Plaintiff's affiliate agreements prohibited affiliates from sending consumers to the Lands' End site except via approved links from approved websites. While the links to Lands' End found on defendants' approved sites qualified as such approved links, the typo domains were not approved websites. The Court nonetheless held issues of fact as to the exact manner in which defendants sent this redirected traffic to Lands' End prevented resolution of the breach of contract claim at this time.
The Court also refused to dismiss plaintiff's fraud claims. The Court held that the facts permitted a trier of fact to conclude that defendants intentionally misrepresented the source of their referrals. This was accomplished by the use of obfuscating codes that disguised the origin of users rerouted from defendants' typosquatting sites to plaintiff's website so as to improperly profit on sales derived from this redirection.
False Adversting Claims Dismissed
The Court did dismiss so much of plaintiff's complaint that advanced false advertising claims under the Lanham Act and Wisconsin state law. As explained by the Court, defendants made no statements at all to consumers, let alone statements that constituted false advertising. The redirection process was invisible to the consumer. Far from being misled, he received exactly what he sought - Lands' End merchandise from Lands' End. Any misrepresentation made to plaintiff in this process, held the Court, would not serve as the basis for a claim under applicable Wisconsin statutes, which required statements made "to the public relating to the purchase of merchandise." Wis. Stat. §100.18.