Guest Post: the DN Attorney on copyright and trademark

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After last week’s guest post on Due Diligence with the Domaining Diva, we bring you a guest post by Zak Muscovitch, also known as the DN Attorney, on trademark and copyright.

Buying a website or online business can be an exciting time. It would be terrible if you spent a lot of money and time on purchasing a website only to find out that the domain name associated with the website was the target of a trademark infringement or cybersquatting claim, thereby possibly resulting in you losing the domain name.

Trademarks and domains

The first step in avoiding such a predicament would be to conduct a search of both registered and unregistered trademarks. Trademarks can be “words” or “logos”. Trademarks are generally registered in specific jurisdictions and only valid where so registered, so one may want to check out several national trademark registries, such as the USPTO, the CIPO, IP Australia and the UK Intellectual Property Office, for example.

It is not always simple to determine if a registered trademark is problematic for a buyer because it is identical or similar to the domain name associated with the website being purchased. For example, a registered trademark for ABC, in connection with clothing, may not be a problem if you are buying ABC.COM for a website dealing with electronics.

Of course there are plenty of exceptions to the general rules, such as in the case of famous trademarks. For example, COCACOLA.COM could probably not be used by anyone except the famous Coca-Cola Company, for anything even if its is not related to soft drinks, because their trademark is so well known that people would naturally assume that the domain name is related to the famous soft drink manufacturer. Accordingly, often a buyer should run the proposed domain name by a qualified domain name or trademark lawyer, prior to expending a significant amount of money on a website and associated domain name.

Registered trademarks are not the only kind of trademark to be aware of however. There are also “unregistered trademarks”, often referred to as “common law” trademarks. These are trademarks that have been used by a person or company without being formally registered, but are still distinctive enough and have been used long and wide enough, to qualify as a trademark for the purposes of stopping someone else from using an identical or similar mark in certain circumstances. They are however, more difficult to prove than a registered trademark. Accordingly, a simple Google search can often reveal third-party use of an unregistered trademark.

It is important to bear in mind that when it comes to trademark infringement, it does not usually matter whether a seller “intended to infringe” or was merely “unaware” of the existing registered or common law trademark rights. Likewise, for a buyer, it likely won’t be a defense to a trademark infringement claim, if you were not aware of the third-party’s trademark rights when you acquired and began using the domain name and/or trademarked logo. Accordingly, caution must be exercised depending on the value and importance of the transaction.

A buyer may also decide to check court and arbitration databases in order to determine whether a trademark owner has previously commenced legal proceedings regarding a particular trademark or something similar. This would give the buyer an idea of whether the domain name and/or logo are already the subject of legal proceedings, or alternatively, the degree of vigilance a trademark owner has shown in protecting their mark in the past. For example, one can check the PACER court database in the United States, the National Arbitration Forum’s Domain Name Dispute Database, and the World Intellectual Property Organization’s Domain Name Dispute Database.

Copyright: Ensuring Content and Software is Legally Owned

Copyright law generally protects the ownership of original content, such as a photograph, text, or song, whereas trademark rights protect brands. When considering buying a website that has content, such as images and text, it is important to ensure that the seller actually owns the content and thereby has the right to sell it to you.

Determining whether a seller validly owns content can often be difficult. Generally, the author of the particular text (the writer) or image (the photographer of graphic designer) is the party that holds the “copyright” over that particular content. Accordingly, the seller of a website with content should explain and certify that the seller created the content, or alternatively, has a valid license to use the content. A license to use the content could come from having paid for a license to use a stock photo, for example. Stock photo companies regularly troll the Internet looking for unlicensed use of their copyrighted images and then send out invoices or commence proceedings. Accordingly, care should be taken to ensure that all content was created by the seller or properly licensed by the seller and that the seller can properly transfer the license to the buyer. Additionally, if a seller used employees or contractors to help built out a website, those employees and/or contractors should have assigned all of their rights to the seller so that the seller becomes the sole and exclusive copyright holder in all respects.

A similar issue arises in the case of software. If any software is used in a website, then a buyer may want to confirm that the software is owned and can be sold by the seller to the buyer, or alternatively, that a valid license is held by the seller which can be validly transferred to the buyer. Otherwise, copyright infringement may occur and the buyer can be held responsible once they take over the website.

I, of course, have to remind you that there is no substitute for seeking the counsel of an experienced website attorney, and accordingly the information provided here is for general education purposes only, and should not be relied upon by you for any business purpose. 

Zak Muscovitch is respected and well-known domain name lawyer who has represented domain name and website owners since 1999. He has assisted buyers and sellers in website transactions worth millions of dollars, and has set numerous precedents in domain name dispute law. He represents clients from all over the world. His website is http://www.DNattorney.com.

Have something to say about this post? More questions for the DN Attorney? Let us know in the comments!

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Comments

  • Josh

    Excellent article, very informative.

  • Anthony

    Great article. I wonder what this means for multi-word domains such as PaypalTips.com ?

  • Mr. Potatohead

    I have a question for attorney. What a buyer can do when he gets scammed by a scammer like this:
    https://flippa.com/2701523

    The scammer sells sites without licensed WP Robot software. WP Robot prohibits selling sites with their software below $140. His customers say he does not have developers license so sites stops working soon after purchase.

    In USA it would be easy to sue the guy, but the scammer took some effort to hide his identity and location.
    What buyers can do to find the guy and recover their money?

  • https://flippa.com/users/412604 fena3000

    It’s very good article and the information in it is very usefull.

  • https://flippa.com/users/420764 king112233

    A great read, but regarding domains sold on flippa, their are many being sold suck as “facebook fans” or something similar, shouldn’t their be some kind of action against such people?

    This will be better for flippa too, i know that fb or twitter or any other trademark will rarely notice such domains but still these guys should get some kind of punishment..

  • https://ariyas.com silentg

    @Zak Muscovitch Will you advising Flippa to delete TM domain and website listings from the marketplace?

    I have reported so many TM domain and website listing and it got hopeless. Flippa employees respond by saying they would only remove listings if the TM owner contacts them. Some of the listings I reported were obvious TM infringement (Facebook, Apple, Microsoft).

    Flippa could at least partner with site like Trademarkia and use their online database to warn users if there’s any TM infringement on domains or websites. The warning could be shown like how valuate site does > Example: http://www.valuate.com/microsoft.com

  • http://omarandwill.com/ www.OmarAndWill.com

    Great article. Thanks for the detailed information when it comes to domain names and registering them and risking trademark infringement.

    This is something that I personally know since it actually happened to me! Personally I feel you shouldn’t even bother getting a brand name with a domain name. Get something general and build from there.

    Here is my blog post that documents my experience.

    http://omarandwill.com/cease-and-desist-choosing-brand-name-domain-names

    Thanks for the post!

    -Omar

  • https://flippa.com/users/363983 acroplex

    It’s ironic seeing a post like this, given the fact that numerous domains that are blatant trademark infringements have been traded and are being offered for sale on Flippa; some are violations of famous marks such as iPhone, Facebook, Microsoft etc. So the real question is, will Flippa “man up” and clear its marketplace, actively policing it for blatant tm violations? Or will Flippa continue to claim they aren’t responsible for sellers’ listings unless a lawyer from the tm holders notifies them? In other words, is it ok to turn a blind eye while such stolen intellectual property is being sold?

  • https://flippa.com/users/407812 chriswyattseo

    @acroplex. I 2nd your stance. Especially for the iphone niche. I mean seriously? How can these sites be sold when they are clearly trademarked?

  • https://flippa.com/users/461244 linda_p

    I see so many sites for sale here that abuse trademarks, in particular “companyxcoupons.com” domains.

  • Ted

    I’m not really clear on trademarks when there are multiple words in the domain. The guys at allfacebook.com don’t seem to have a problem – they’re incredibly well known and facebook is considered especially litigious. Does this mean there is not a trademark breach here?

  • https://flippa.com/users/489238 DNattorney

    @Mr. Potatohead,

    Thanks for the comment.

    I cannot comment upon a specific situation of course, but I can say that generally, “an ounce of prevention is worth a pound of cure”. In other words, a prudent buyer should check out a seller and check out the website BEFORE they buy it, in order to avoid a problem.

  • https://flippa.com/users/489238 DNattorney

    @silentg,

    Many thanks for the comment. I too take trademark issues very seriously and am disappointed and frustrated when somebody tries to take advantage of another person.

    I was only asked to provide a guest post on a topic of general interest that I know something about.

    Generally however, a smart buyer would review a potential purchase of a domain name for trademark issues before they buy it. As you know, people try to sell absolutely anything….That doesn’t mean that people should by absolutely anything….

    Its also interesting to note that sometimes an infringing domain name may be totally obvious, such as COCACOLA.COM. But there are many situations where trademark issues are much less clear. For example, does TROPICANA.TLD infringe upon the big orange juice company’s registered trademarks even if it is used for the Tropicana Nightclub’s website?

  • https://flippa.com/users/489238 DNattorney

    @Anthony,

    Many thanks for your comment.

    You raise an interesting issue. Can someone fairly use another person’s trademark in a domain name under any circumstances? You cited the example of PayPalTips.com…as illustrative of whether someone can use a well known tradmeark like PAYPAL in conjunction with another descriptive modifier, for example.

    Well, I cannot of course comment on a specific situation, but under some circumstances, there are indeed fair uses of someone else’s trademark. There is a concept called “Nominative Use”. Wikipedia describes this principle as follows:

    Nominative use, also “nominative fair use”, is a legal doctrine that provides an affirmative defense to trademark infringement as enunciated by the United States Ninth Circuit,[1] by which a person may use the trademark of another as a reference to describe the other product, or to compare it to their own. Nominative use may be considered to be either related to, or a type of “trademark fair use”.

    Accordingly, I might in some circumstances be able to use another person’s trademark in a lawful manner, but it is a complex area and the trademark owners obviously do not really like this principle all that often….

  • https://flippa.com/users/488126 Figmant

    I registered a domain name with the word “XXXXXX” in it, within 5 months I was notified that I was using a copy write name in the financial industry. The “XXXXXX” was a a very common name like ” John or Jones”. I looked up online and found 10 companies in the financial industry with online presence using “XXXXX” in the domain name for as many as 15 years. How can you copy write a very common word or phrase? I am just an individual not a large corporation. The company coming after me was a large company. I gave up the domain to them because I did not have the $$$$$ or resources to fight them. Can they force you to give up the domain like that? What recourse could I take in the future?

    • https://flippa.com/users/489238 DNattorney

      @Figmant,

      Many thanks for your comment. Copyright protects original works, and trademark protects brands.

      Every situation is very fact-specific when it comes to domain names and trademarks.

      You raise an issue that may involve “descriptive” or “generic” words. Often there are many different and unrelated companies that can all simultaneous have a legitimate interest in a given term or phrase as their brand, for example, ACME WIDGETS and ACME FOODS. Similarly, descriptive words, such as “hotels” or “good” are often not subject to any trademark rights by anyone since everyone has an equal right to use such words.

      “Cease and Desist” letters usually are well founded, but sometimes they make unsupportable or arguable claims and should be dealt with accordingly.

  • https://flippa.com/users/489238 DNattorney

    @acroplex

    Thank you for your comments and for raising an important and interesting issue.

    I think a post like this could be helpful in terms of informing potential buyers of some of the issues. The case of “blatant” trademark infringements is certainly a difficult one, considering that I have successfully defended domain name owners in cases where many people would have claimed it was “blatant trademark infringement” until they actually read the defense. But in many other cases as you rightfully point out, it is nearly unimaginable that there would be any valid defense to the claim of “blatant trademark infringement”. I wonder though, if it is so blatant, why would someone be foolish enough to buy it?

    Anyway, I really appreciate your interest and involvement in this issue and hope that solutions can be discussed. Trademark and copyright infringement are serious issues that all Internet businesses and users have to deal with.

    • https://flippa.com/users/363983 acroplex

      Zak, thank you for responding. The issue with domains being sold on Flippa, which fall in the “tm infringing” category, is that in their description and listing they’re capitalizing on the function of the marks. To followup on your example, it’s not as if “Tropicana.TLD” would be listed ambiguously as a web site about tropical birds, but rather as a web site about discounted juice. The listings of domains capitalizing on the Facebook, Apple and Microsoft marks occur often. Flippa says: to remove those, their respective tm holders need to contact us. That’s akin to providing a marketplace for faux fashion brands and claiming no responsibility until Prada walks in. Since Flippa collects fees from the sale of such domains, what would stop e.g. Prada from seeking compensation retroactively?

      • Dave Slutzkin

        Tropicana isn’t a juice brand in Australia, or in most of the rest of the world.

        I can’t see how this could be considered a trademark violation in countries where the trademark doesn’t apply. It’s impossible for any one organisation to keep on top of every trademark in every country in the world, and no-one would attempt to do so.

        It’s only a trademark violation if the trademark holder considers it to be so, and if the court upholds that ruling. Flippa is neither the trademark holder of these trademarks, nor a court of law.

  • https://flippa.com/users/489238 DNattorney

    @Ted,

    Many thanks for your comments.

    I cannot comment on any specific situations, but there are circumstances where one can fairly use another person’s trademark, but in very limited circumstances and only without confusing people. Also, as you point out, some companies appear to have varying degrees of vigilance or policies when it comes to what is fair use of their trademark. Accordingly, I much rather have a domain name that doesn’t need to be defended, than a “great” argument to defend it once it is attacked by a trademark owner…

  • https://flippa.com/users/74016 dotcomdesigns

    http://flippa.com/auctions/2687378/site

    Has Microsoft in the domain name. Which is clearly a Trademark:
    http://www.microsoft.com/about/legal/en/us/IntellectualProperty/Trademarks/Usage/General.aspx
    “Web Sites
    You may use Microsoft product, service, and technology names on your Web site to indicate that your Web site runs on, or is compatible with, the referenced Microsoft product or technology, provided the reference complies with the guidelines herein. Do not use any Microsoft trademark in the title of your Web site or as a second-level domain name. You may not use any Microsoft logo without a license or written specifications from Microsoft.”

  • https://flippa.com/users/363983 acroplex

    Here’s an example of tm abuse listing:
    https://flippa.com/2703565-facebook-marketing-tips-niche-blog-big-bin-bonuses-with-complete-support

    This type of sale is representative of the majority of so-called “developed web sites” sales on Flippa.

    1. Newly registered domain (2/20/2012)
    2. Quick set up via a CMS (joomla, WP etc) using a duplicate database
    3. Low BIN

    This is the “rinse and repeat” process used (read: abused) on Flippa, particularly with such trademark violations.

    Zak, since you asked about “who would be foolish enough to buy” such blatant violations; the point is, such a violation is allowed to be listed in the first place. Being sold or not is irrelevant.

    • https://flippa.com/users/489238 DNattorney

      @acroplex,

      Many thanks again for following this issue so closely. Every online company that provides a marketplace such as Ebay, Sedo, and even Google Adwords, have to determine what policies are most appropriate for them in order to address concerns regarding intellectual property.

      Although I cannot comment on any particular situations, there are some very interesting domain name dispute decisions about “nominative use” that add another layer to the issue.

      For example, in each one of the following cases, the domain name registrant was found to not be a cybersquatter on the basis of fair use (aka “nominative use”) of another person’s trademark:

      KBRLITIGATION.COM
      http://domains.adrforum.com/domains/decisions/1413439.htm
      (Complainant, KBR Inc. unsuccessful in forcing transfer from attorneys who registered the domain name to assist with their communication of information related to their litigation against the Complainant)

      volvo-auto-body-parts-online.com
      http://www.wipo.int/amc/en/domains/decisions/html/2005/d2005-0447.html
      (An unauthorized seller of Volvo auto parts was not found to be a cybersquatter since it was fairly describing what it was selling)

      okidataparts.com
      http://www.wipo.int/amc/en/domains/decisions/html/2001/d2001-0903.html
      (Respondent was an authorized seller and repair center, and therefore had a legitimate interest in the domain name)

      These kinds of cases however, are by far the exception to the rule, and in the vast majority of cases, a trademark owner easily forces the transfer of a domain name. Every case is however, fact specific and turns on those facts. Furthermore, without legal counsel, it is not usually prudent to rely upon a defence of “nominative use”. Lastly, trademark infringement court cases are possible even after successfully defending a UDRP (cybersquatting) proceeding.

  • https://flippa.com/users/410643 bgravel

    @Zak Muscovitc,

    Thanks for the excellent article. This one of the best articles I have seen posted to the Flippa blog in a long time.

    Basically, I have pretty much the same question as linda_p.

    What’s your take on “company”coupons.TLD domains, where company is a well known brand such as Subway, Gatorade, RedBull, etc…

    I have been tempted so many times in the past to buy developed sites and register domains such as these, but I have always wondered about the legality of doing so.

    Many similar sites have been sold here in Flippa for as high as $40-50K.

    Your feedback would be highly appreciated.

    Thanks,

    Bob.

  • Josh

    It is extremely cool of Zak to take the time here and answer questions. Not a lot of others would do this. Many thanks Zak!

  • http://www.minecraftvideotips.com Otensilnoel

    Very interesting. I bought a site on flippa with the name facebook on it and they took the domain from me. Very good points.

  • http://www.tattoosdesigns.net Michael

    Good article! Will think twice about bidding on something w/ a company name.

  • http://alansreview.com Alan Seletkovic

    A fascinating topic.

    Commonsense tells us that we should not register something that starts with well known company names like apple, google, coca-cola, etc.

    But what of some names that look quite innocent and are part of everyday life but someone decided to trademark it. Eg, let’s assume that there is a reasonably common animal called Zeelspior.

    For the sake of exercise let’s assume that company Zeelspior Inc did trademark “Zeelspior” name and they also registered domain “Zeelspior.Com”.

    Here comes another company that is registered as “Zeelspior Life Inc” and they obtain trademark for “Zeelspior Life” words. They also register a domain name “ZeelspiorLife.com”.
    An internet marketer want to market kangaroo related products and does some basic traffic analysis. Since “Zeelspior.com” and “ZeelspiorLife.com” are unavailable, he registers domain “ZeelspiorLifeProducts.com”.
    Six months passes and our internet marketer still has not done anything with the website as he is chasing next shining thing. Then he receives a sharp “Cease & Desist” letter from “Zeelspior Life Inc” accusing him of cyber squatting with demand to give up the domain.

    The reason cited is that “as “ZeelspiorLifeProducts” can be confused for “Zeelspior Life” and that could do a lot of commercial damage to “Zeelspior Life Inc”.

    Our Internet Marketer, who was previously blissfully unaware of Trademarks issues, looks up Trademark databases and finds that “Zeelspior” and “Zeelspior Life” terms are indeed trademarked, but “Zeelspior Life Products” is not.

    So he wonders how come that “Zeelspior Life” company is chasing him when they registered a their name company and domain names based on the root of an existing trademarked name.

    He reasons, if “Zeelspior Life Products” is not trademarked, and a Zeelspior is a common animal, and he never attempted to sell the domain name to anybody, he has no case to answer as far as cyber squatting goes.
    Furthermore, if he did not set up a website yet, how could he possibly done any damage to either “Zeelspior Inc” or “Zeelspior Life Inc” or to any other damned “Zeelspior Something Inc”.

    So he decides to stand up to the bully and tells them that they have no case and if they persist bullying him, he will launch a countersuit against them.

    “Zeelspior Life Inc” responds that they would take him to court.

    Questions.
    1. Is this a clear cut case of a big company bullying small internet marketers
    2. What are the chances of internet marketer winning a countersuit?

    Best regards
    Alan

    P.S. By The way, should I copyright the name Zeelspior now :)

  • https://flippa.com/users/489238 DNattorney

    I am afraid you lost me at Zeelspior… ;)

  • http://www.alansreview.com Alan Seletkovic

    Okay, a mythical Zeelspior animal is obviously confusing.
    I was trying to avoid using an animal name that has a domain already allocated.
    Let’s replace “Zeelspior” with say “Kangaroo” it should be easier to understand. I’ll try to summarize it here:

    1. A company registers name “Kangaroo Inc”, trademarks name “Kangaroo” and registers domain “Kangaroo.Com”.

    2. Another company registers name “Kangaroo Life Inc”, trademarks name “Kangaroo Life” and registers domain “KangarooLife.com”.

    3. An internet marketer wants to market kangaroo related products and does some basic traffic analysis. Since “Kangaroo.com” and “KangarooLife.com” are unavailable, he registers domain “KangarooLifeProducts.com”.

    4. Six months passes and our internet marketer still has not done anything with the website.
    Then he receives a sharp “Cease & Desist” letter from “Kangaroo Life Inc” accusing him of:
    A) Cyber squatting
    B) “Kangaro Life Products” could be confused for “Kangaroo Life” and that could do a lot of commercial damage to “Kangaroo Life Inc”.
    C) The lawyer demands to give up the domain.

    5. Our Internet Marketer finds that “Kangaroo” and “Kangaroo Life” terms are indeed trademarked, but “Kangaroo Life Products” is not.

    6. So he wonders :

    A) Why “Kangaroo Life Inc” company is chasing him, when they themselves registered their company name and domain names based on the root of an existing trademarked name belonging to somebody else.

    B) If “Kangaroo Life Products” is not trademarked, and “Kangaroo” is a common animal,
    and he never attempted to sell the domain name to anybody,
    how could he be accused of cyber squatting.

    C) Since he did not set up a website yet, how could he possibly done any damage to “Kangaroo Life Inc”

    7. He decides to stand up to the bully and tells them if they persist bullying him, he would launch a countersuit against them.

    8. “Kangaroo Life Inc” responds that they would take him to court.

    Questions.
    1. Is this a clear cut case of a big company bullying small internet marketers?

    2. What are internet marketer’s chances of winning the countersuit?

    Best regards
    Alan

    P.S. Apologies to companies if they have above names and/or domains – being from Down Under I thought it was appropriate to use Aussie’s most common animal (not to mention an interesting inference to Kangaroo Court).

    • http://davezan.com Dave Zan

      @Alan – unfortunately that’s something a lawyer isn’t going to answer without more details. That may seem like an easy question, but hypotheticals and reality are two different things.

      That’s why Zak said from the start that these things are fact-intensive, meaning it depends on any and available facts. Even if Zak gives a possible answer, a monkey wrench thrown in soon after might change everything.

  • https://flippa.com/users/378142 jayveedee

    If you are looking at buying a website on Flippa, and there is a recognizable company name in the domain, simply keep looking for another site to buy. There are thousands of sites for sale on Flippa (hundreds of new sites every day), you don’t need to waste time digging deeply into trademark/copyright infringement law. If you have to pause and question whether a site may be breaking the law, assume that is and keep looking.