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Trademark issues with brandables - grey shades

Labeled as discuss in Legal Discussion, started by belmar313, May 18, 2020

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  1. belmar313

    belmar313 Established Member

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    Hi! How are you doing?

    I know the trademark issue has been discussed several times before, but this thread intends to analyze it from a different viewpoint.
    The main problem I find with trademarks is in its grey areas.
    There's no big deal with trademarked dictionary words, since they existed long before they were trademarked, and it would be easy to assume that nobody really acquired the domain in bad faith. The domain would have been acquired/registered anyway.

    But let's imagine the following situation:

    A particular domain, which is not a dictionary word but is a common play on it, which has been registered for, say, 20 years. Someone files a trademark on it, let's assume the trademark is 10, 15 years younger than the domain itself.

    In Brandable marketplaces I've seen statements like:

    - as a seller, please make sure you're not infringing on someone else's intellectual property
    - as a buyer, it's your responsability to make sure the domain you're are acquiring does not infringe on someone else's intellectual property. Bare in mind that a trademarked term within a specific industry can still be used in a different niche.

    For attractive brandables, it might always be the case that you might be infringing on someone else's property, albeit within one specific industry, or for one country only. Many of the brandables you see in marketplaces have one or several trademarks.

    So, in the case of the previous example of a certain term that had been registered long before any trademark has been issued, and assuming this term is a play on a dictionary word (something like Chronox or Silvver, as an example). Suppose someone files a trademark for this term, only for a specific industry. Let's assume it's a trademark for manufacturing process software (International TM).

    So, if the domain is offered for sale in one of the brandable marketplaces (or any marketplace), they could be acquired by startups and companies for ANY other niche (fashion, retail, design, consulting, etc.) without infringing on anyone's intellectual property.

    However, what if the buyer is a startup within the same industry the trademark has been filed for? What if the buyer is building a manufacturing process management software, he liked the name, and wants to build his brand on it? He would be infringing on someone else's intellectual property...AND...he could even be sued for it....BUT....who's to blame then? Who might face legal consequences ? Brandable marketplaces usually walk away from responsabilities regarding this issue, so who is ultimately responsible for this infringement? The seller, for selling the name, or the buyer, for deciding to use the brand without checking TM issues?

    It should be obvious this would be the buyer's responsability. As a seller, one could sell the domain to millions of other industries and there would be no legal breach.

    But what seems obvious to me might not be so for the legal industry, or for the domaining industry.

    Whose responsability do you think it is in such a case?
     
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  2. jberryhill

    jberryhill Top Member John Berryhill, Ph.d., Esq. PRO VIP ★★★★★★★★★★

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    Well, there can be quite a big deal with trademarked dictionary words, depending on the facts of any particular situation. But, let's move on...

    As far as length of time is concerned, and limiting consideration solely to the UDRP, it doesn't matter how long a domain name has been registered. What matters is how long the current registrant has had it. I don't care if the domain name is 20 years older than the trademark claim. If the registrant of the domain name acquired it last week, as a domain purchase per se and not consequent to buying any associated business, then that purchase last week is what matters.

    And secondly, your hypothetical doesn't say anything about when the trademark rights arose. You mention "files a trademark on it", but that is also meaningless. What kind of filing? Are we talking about an intent-to-use application or a use-based application. If we are talking about an application based on use, then how long has the mark been used.

    Domainers would be well served by not conflating things like "files a registration application" or "obtains a registration" with "establishes trademark rights" - all of which can be three different things.

    But, okay, let's assume that the domain name, held by the current registrant, pre-dates the earliest claim of trademark rights, and move on...

    Well, no, that's not always true either.

    "Calvin Klein" is a well known trademark for clothing and accessories. But, that said, you aren't going to get away with using "Calvin Klein" for dishwasher detergent, automobile parts, or frozen pizzas. That's because "Calvin Klein" is a very famous and well-known mark. It doesn't matter what you use it on. It is so well-known that "Calvin Klein" on anything is going to be assumed to be associated with the same people from whom the clothing originates.

    In addition to fame, there is also inherent distinctiveness. Fanciful terms - things like Xerox or Viagra - are entirely made-up words which serve no other purpose and have no other connotation than the things for which they are a trademark. A popular brand of energy drink in some countries is LUCOZADE. Now, it's not very well known here in the United States, but it is sold in some places here. But, while it is not a famous mark in the United States, it is inherently distinctive as a made-up term, and thus has a wider scope.

    The things you tend to see used as marks in different industries are primarily the arbitrarily-used common words. That's why "Delta" can be a faucet or an airline, or "Monster" can be an energy drink, and employment website, or a brand of audio/video cable. But if you are talking about something like, "I'm going to make Viagra brand clothing, because it is only a trademark for a drug," then that's just not going to work out well for you. Pfizer made up the term "VIAGRA" specifically for that drug which has the otherwise kind of intentionally-very-not-catchy generic name "sildenafil".

    So, what happens with a domain name that is a fanciful, made-up term, is that its value goes to zero if someone decides to go ahead and use the term as a mark without obtaining the domain name first.

    Again, just considering the UDRP, the situation becomes a stalemate. The domain registrant can't start doing anything productive with the domain name, and anyone who buys it is going to get into trouble with it. The trademark owner can't take it in a UDRP, and so they either make a deal or they don't. I've seen several of these types of situations first-hand because, often, the trademark claimant simply huffs away after losing the UDRP or the domain registrant has some crazy unrealistic idea of what a reasonable value might be. I've seen some of these go on for a decade or more.


    Well, you aren't going to like the answers, because it really depends on the specific facts beyond the ones you stated here.

    Did the seller know what the buyer was going to do with it? Did the seller know about the mark? Did the seller disclose the mark to the buyer? Did the buyer know about the mark?

    At the end of the day, lots of people can theoretically be held liable for all kinds of things, but the trademark plaintiff is usually interested in getting their hands on the domain name. So, going after people who can't be ordered to give it to them is not something that many people are inclined to do simply as a hobby or spectator sport - unless there's a big pile of money sitting around somewhere.

    The trademark claimant might sue everybody. If that happens, the buyer might also claim against the seller for not telling him about the mark, the marketplace might claim against both the buyer and seller for violating the terms of service of the marketplace, and they can all have a great time until the money runs out. This is one of the reasons you want to make sure that your domain sale agreement makes clear who is responsible for what, at least as between the parties to the contract. An indemnification clause is, of course, only as good as the ability to pay. If I sell you some stinky domain name, you promise to indemnify me against all claims, the trademark owner comes along and sues the both of us, then what am I going to do if you don't cover my liability? Sue you? Well, duh...
     
  3. jberryhill

    jberryhill Top Member John Berryhill, Ph.d., Esq. PRO VIP ★★★★★★★★★★

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    The stalemate situation is, however, not frequently discussed.

    The next worst thing to losing your domain name is to have it rendered practically worthless by a junior trademark claim. There is little recourse for that situation on either side, and I've seen parties simply hold mutual grudges for years over them.
     
    Last edited: May 19, 2020

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