01 Mar Thinking About Re-Directing Your Competitors’ Internet Traffic? Think Again…
A well-known presenter at a recent conference for small to mid-size businesses urged attendees to register their competitors’ (unused) internet domain names, and re-direct traffic to the attendees’ own business websites.
“The law allows it!” the presenter categorically proclaimed.
If taking and using your competitor’s domain name to increase your own profits sounds too good to be true, there is a sound reason for that: It is too good to be true.
For businesses, the short answer is yes, you can register your competitor’s domain name, provided that all you are doing is mere registration. However, if the question is whether or not a business can register a website in a competitor’s name to direct web traffic to its own website, the answer is almost invariably going to be no, since that would be done for a commercial purpose, in violation of the competitor’s intellectual property rights.
But as with most things in the law, nothing is entirely simple. While the act of registering a domain name alone may not have any adverse legal implications, doing anything more implicates a developing gray zone in the law, where businesses and individuals must tread carefully. As a general rule, given the current legal terrain of trademark law, businesses are well advised to stay away from registering a domain name and setting up a corresponding website which incorporates a competitor’s name. Exercising caution in this area will avoid potential exposure to a wide array of federal and state law claims — including trademark infringement, trademark dilution, unfair competition, false designation of origin, unfair trade practices, intentional interference with current and prospective economic advantage, and defamation.
Beware of Exposure to Trademark Infringement Claims.
The reason that registering a domain in your business competitor’s name is usually more trouble than it is worth turns on your competitor’s rights in the trademark or, if the business provides a service, a service mark which is typically captured into the domain name. A trademark is a type of intellectual property, typically associated with a brand, phrase, logo, design, image or combination of these elements. The trademark functions to exclusively identify the commercial source or origin of products or services, so that consumers can correctly identify whose products or services they are purchasing. Because trademark is a form of property, an owner of a trademark has certain proprietary rights which are enforceable against those who infringe on those rights.
In California, rights in a trademark can be established through registration — registered trademarks — or through the adoption and actual use of the trademark in the market place — common law trademarks. Once a trademark is registered, the mark becomes public information which can be readily ascertained, and a business can easily register — or avoid registering — a domain name which incorporates the registered trademarks of its competitors. But even if a competitor’s name or brand has not been registered, that does not mean registering a domain in a competitor’s name is advisable. This is because the competitor will likely have enforceable common law trademark rights, especially if that competitor does business within the same geographic region as the domain registrant.
For example, assume Best Widgets, Inc. is in the business of selling widgets. To outsell its competitor, Awesome Widgets, it registers a domain name incorporating the registered trade name “Awesome Widgets,” without consent. Suppose that Best Widgets then redirects all consumers who type in the website name ww.buyawesomewidgets.com to Best Widgets’ own website, www.bestwidgets.com. This conduct would expose Best Widgets to a variety of trademark infringement and dilution claims under both state and federal law due to the enforceable intellectual property rights of Awesome Widgets, Inc. in its trademark.
The act of registering a domain in the name of a competitor itself, however, does not mean that the domain name owner is liable for trademark infringement. This is because, under established law, trademark infringement only occurs with unauthorized use of another’s mark in commerce, in connection with the sale, offering for sale, distribution or advertising of goods or services, where such use of the mark is likely to cause confusion, mistake, or deception.
The “Use in Commerce” Requirement.
For an owner of a domain name which incorporates the trademark of a competitor to be held liable for trademark infringement, the domain name must meet the “use in commerce” requirement of federal and state laws. Mere registration of a domain name incorporating a trademark has been held not to constitute “use in commerce.” In cases involving facts beyond the mere act of registration, however, courts have looked to website content in a fact-intensive inquiry, and have arrived at differing results.
So, although Best Widgets, Inc. clearly met the “use in commerce” requirement in our earlier example, a more difficult case is presented by “cybergripe” websites — that is, websites that (for example) criticize consumer products, but are not otherwise engaged in commerce. Some reported court decisions have held that in these scenarios, there is no “use in commerce” and no actionable trademark infringement claim. The key facts courts consider in these cases are whether or not the website offered goods or services for sale, generated any advertising or other revenues, or contained links to commercial websites.
Still, other courts have adopted a more expansive view of the “use in commerce” requirement, finding that as long as the corresponding website content affects commerce, the “use in commerce” requirement is met. Thus, under this more expansive view, where website content affects commerce downstream (for example, by plugs or links to other commercial websites which affect the commercial value of another’s trademark), courts have found the “use in commerce” requirement to have been satisfied. Under this approach, where a domain name incorporates the trademark of another and the corresponding website is a “cybergripe” site containing hyperlinks to commercial websites, the “cybergripe” site will lose its non-commercial status, and a trademark infringement claim will be viable.
So, if a dissatisfied customer creates a website called www.awesomewidgetsarefaulty.com, but does not advertise other widgets, does not mention other sellers of widgets, and does not contain links to any widget advertisements or to other widgets sellers’ websites, such a site will likely be found not to have met the “use in commerce” requirement. But if the website www.awesomewidgetsarefaulty.com advertises widgets sold by Best Widgets, or discusses how Best Widgets are better than Awesome Widgets, or contains links to the Best Widgets website, such conduct would greatly increase the likelihood of a court finding that the domain name use constitutes “use in commerce.”
The Likelihood of Confusion to Consumers.
Likelihood of confusion to consumers is a key concept in trademark law. Going back to our original scenario, in which www.buyawesomewidgets.com is being used to redirect web traffic back to www.bestwidgets.com, it is easy to see how a consumer may confuse www.buyawesomewidgets.com (which is owned by Best Widgets), with Awesome Widgets, because the consumer is redirected to www.bestwidgets.com. Even when the consumer is redirected to the website of Best Widgets and recognizes that it is not Awesome Widgets’ website, he or she may still be confused, and may (erroneously) conclude that Best Widgets is somehow affiliated with Awesome Widgets. Courts have even held that including a disclaimer that the website and domain name are not affiliated with a competitor will not save the domain name owner from trademark infringement/dilution claims, because the consumer may not take the time to read such a disclaimer.
Trademark law is designed to protect the consumer public from confusion, and courts will examine whether the use of a mark will cause confusion on a case-by-case basis. When it comes to the likelihood of confusion, the best practice, frankly, is to exercise the smell test. If the competing mark or use does not pass the smell test, it probably means there will be significant exposure to trademark infringement or related claims.
Flip Side of the Coin: What Defensive Measures Can You Take?
So what can a business do to protect its trademark from being infringed upon? First, although you may well have existing common law trademark rights to your business’s name, brand, logo, design, etc., it is always better to register your business trademark or service mark. By registering your mark, you have placed the world on notice of your trademark, and will be better protected against trademark infringement by others.
Moreover, if your business advertises through clickable advertisements on search engines such as Google, you may also want to bid on your own name, brand, and other words associated with the goods or services your business provides to ensure that your website will appear at the top of the list when consumers plug in words that would trigger your ad. You might consider expanding your reach to register domain names of common misspellings of your brand name or website name, so that the lazy or fast-typing websurfer is more likely to happen upon your website by chance. You should note that Google currently allows bidding of trademarked names in a number of countries, including the United States. To ensure greater protection, your business may file an exception request with Google, which would allow a competitor to only bid on the trademarked name in AdWords, which are the search terms that trigger ads, but not in the text of your competitor’s AdCopy, which is the main text on each ad. Conversely, some businesses may choose to take an aggressive approach with clickable advertisements, and bid on competitors’ names. Beware, however, that this too is a developing area of law. In other words, Google’s policy to allow bidding on trademarked names may change.
In short, businesses need to exercise a great degree of caution when bidding on or using the names of their competitors in e-commerce, and they should recognize that this is an ever-developing area of the law. Seeking the advice of legal counsel when putting together your online marketing campaign is a sound business strategy.