Detours, Misdirections and False Starts on the Information Super Highway:  The Hidden Dangers in Marketing Your Website

By: Mitchell D. Kamarck

Periodical: E-Commerce Law Reports

Date: June 1999

I. Introduction

"The World Wide Web is the most important invention since Velcro."

                                                                                    Business Week (2/27/95)

In the United States alone, over 83 million adults, representing 40 percent of the population over the age of 16, have access to the Internet.1  In 1997, United States Internet shopping grossed three billion dollars in sales, a figured that almost tripled in 1998 with world-wide Internet sales at twenty-one billion dollars.  Internet shopping in the United States alone is expected to reach thirty billion dollars by the year 20002 and three hundred billion by 2002.3  Though Internet retail sales accounted for only 5% of all retail sales in 1998,4 its percentage is growing every year.  For instance, the County of Los Angeles spends $627 million every year on office supplies and equipment – in 1999, 80% of that purchasing will be done via the Internet.5  By the year 2000, United States companies are expected to make 7.9 percent of their supply purchases online with high tech companies expecting to purchase 10.2 percent of their supplies online.6

Because of the Internet boom, by the year 2000, it is estimated that 56 percent of the United States firms will be selling online.7  Though the Internet is essentially boundless, it is already becoming congested.  For instance, if you are searching for stereo speakers, Alta Vista will return 16,142 "matching" sites.  If you limit your search to "Bose speakers," you are down to 668 matching sites and if you limit your search to "Bose stereo speaker" you are down to fourteen matching sites – none of which sell Bose speakers.  Every day, as thousands of new websites enter the cyber-world, it becomes more and more difficult for your sites' voice to be heard over the growing din.  As recently noted, "it's no fun spending thousands – or hundreds of thousands – of dollars developing a super-cutting-edge Web creation if no one shows up to see it."8  Thus, creative technical and non-technical methods are used to drive people to your website.9

Unfortunately, if you are a small business concern (or even in some cases a large business concern), the strategy of driving users to your website may not be reviewed by lawyers or even marketing people but rather handed over to the webmaster running your site.  As anyone who has had close dealing with webmasters should understand, most webmasters not only have no appreciable knowledge regarding the applicable laws but also a large dose of disdain for the laws.10  These webmasters are handed one job: drive users to the corporate website.  Unhampered by any knowledge of or belief in intellectual property laws, these webmasters can be creative and triumphant in their abilities to draw users.

There are three principal ways to locate things on the Internet: domain names, search engines and links.  Webmasters have become proficient in using all three techniques to lure users to their sites.  As will be examined herein, all three methods are replete with hazards for the unwary and the court system is strewn with bodies of webmasters and companies who have manipulated the technical underpinnings of the web without any regard for intellectual property rights of others.

Moreover, most companies (and individuals) do not even realize that they are being victimized on the web as they have not developed any techniques for policing the web for trademark and copyright violations.  As way of an example, Cyveillance, Inc. analyzed 75,000 Web pages containing pornographic material and found 19,000 pages contained one or more of the world's 120 most popular brand names, including Disney and Nintendo.11  Companies that are victims to these technical ploys to lure people to websites suffer not only from possible tarnishment or blurring of one's marks but from actual financial losses: "[t]he International Trademark Association estimates that brand name abuse [on the Internet] reduces a company's annual sales by over 22%."12

II. The Domain Name

"Possessing the right name on the Internet, like a retail store occupying
the right location, is a key to generating more traffic"

                        Jerry Klein13

As the web culture becomes more ingrained into our consumer culture, the most important method for locating goods and services on the Internet will be through the use of domain names.  Though some companies have been able to create secondary meaning in their domain names, most notably etoys.com and amazon.com, increasingly it is more and more difficult to launch a site without an already recognizable domain name.14  Without a recognizable or memorable domain name15, a site will have a difficult launch.  Due to the increasing importance of the domain name, "[c]ompanies attempt to make the search for their web site as easy as possible.  They do so by using a corporate name, trademark or service mark as their web site address."16   "To entice the cyber visitor, everyone wants to have a short and easily remembered Internet address, preferably mnemonically related to an established company name, product or service."17

Due to the importance of a domain name to attract potential customers, at the inception of the Internet as a commercial medium, web promoters found ways to use famous marks to attract users.18  "[T]he list of 'pirated' names read like a Who's Who of Corporate America: McDonald's, Coke, Hertz, Nasdaq, Viacom, MTV and others."19  Cyber-promoters have found at least three separate ways to use domain names to their advantage: (a) direct use of a competitor's or famous trademarks; (b) augmentation of a competitor's or famous trademark and (c) the misspelling of a competitor's or famous trademark.20

Direct Use:  A few years ago it was not uncommon for a competitor or someone else to register another's famous mark as a domain name.  For instance, the Princeton Review registered the domain name "kaplan.com" prior to its major competitor, Kaplan Educational Center.  This practice has largely stopped courtesy of cases in which the registrant of another's trademark as a domain name has been ordered to turn over the domain names and, in some cases, to pay attorney's fees.  See Toepen v. Panavision International L.P., 141 F.3d 1316 (9th Cir. 1998).21  Even if the registrant's website is for the legitimate exercise of the First Amendment right to comment on the activities of the owner, the courts have enjoined usage of another's trademark as a domain name due to the likelihood of confusion caused by the use of the trademark as a domain name.22

The most recent domain name case, Brookfield Communications, Inc. v. West Coast Entertainment Corporation23,  involved West Coast's use of Brookfield's trademark Moviebuff as its domain name: moviebuff.com.  Though the case largely depends upon a determination of the first use of the "moviebuff" trademark, the court did establish that the "initial interest confusion" caused by a user simply accessing the site under a mistaken impression is sufficient for a finding of trademark confusion.24      

Indirect Use: On January 6, 1999, Porsche Cars of North America, Inc., brought a lawsuit seeking the transfer and/or forfeiture of 128 separate domain names including winaporsche.com, porschesucks.com and porschenut.com.25  Again, there is strong precedence to prevent such use of a trademark within a domain name.  In Cerruti 1881 S.A. v. Cerruti Inc.26,  the court enjoined Leo Cerruti from using "cerrutiusa.com" because of the likelihood of confusion with the trademark "Cerruti."27

However, the more difficult cases involving indirect or augmentation involve the non-commercial use of a trademark.  In Bally Total Fitness Holding Corp. v. Faber28,  though the website was not ballysucks.com, the site itself was entitled "BALLYSUCKS.COM."  In refusing to enjoin this usage of the "Bally" trademark, the court noted that this was a non-commercial use and protected by the First Amendment.  One commentator has stated that the same reasoning would apply to a domain name dispute involving an augmented trademark used in a pure First Amendment application.29

Misspellings:  Because people often misspell the names of trademarks, another common technique is to register domain names of misspelled trademarks.  For instance, the following sites, at one time, were pornographic websites registered by Global Net 2000, Inc.: usaday.com, abcnewss.com, busnessweek.com, playboyy.com and windos95.com.30  Courts uniformly have enjoined such use of misspelled trademarks as domain names, even characterizing such use as a "misuse of the Internet."31

III. Manipulating Search Engines

"What's a Web site owner to do?

Stuff the ballot box, of course!"

                                                        CIO Magazine, December 1997

In the broadest sense, a search engine32 is merely a gigantic database created by computer programs called "spiders" that literally crawl among the various sites cataloging what they find.  Each search engine uses different programs to catalog pages in an attempt to accurately record what content is offered on the site.  How a search engine catalogs your particular site is important because you want your page to appear high in the rankings for any search involving your particular product.  It is likely that if your site is not listed within the first ten or twenty sites listed in response to a given search, your site will go unseen by anyone who relies on search engines to locate material on the Web.33

"[M]eta tags are an invaluable technique for getting your site to the top of the search engine,"34 as they work by telling the spiders in the source code what your site is about.  Many search engines rely heavily upon the metatags in determining ranking.35  As a result, webmasters have learned to use the metatags to "trick" the spiders by placing competitors' names36 or other key words within the metatags and often repeating37 the desired words for added effect.38

A series of cases have found such usage to be impermissible under trademark and unfair competition theories unless the use constituted "fair use."  For example, in Playboy Enterprises v. Calvin Designer Label,39 the court held that the repeated use of the terms "Playboy" and "Playmate" in the metatags was likely to cause consumer confusion and dilute Playboy's famous marks.40  In the most recent metatags case, Brookfield, the court concluded that "[u]sing another's trademark in one's metatags is much like posting a sign with another's trademark in front of one's store."41

However, there is huge hole in protecting one's trademark from being used in a competitor's metatags: fair use.  In Brookfield, the court stated that West Coast could use Brookfield's mark on West Coast's site for comparative advertising purposes.42  Once West Coast has a legitimate reason to use Brookfield's mark on its website, it arguably has the right to mention Brookfield's mark within its metatags in order to accurately describe the contents of its page.43

Cyber-promoters have also discovered that search engines can be exploited through the manner search engines sell banner advertising.  Many search engines will "sell" the banner advertising that occurs during a search related to a particular word.  For instance, if you search the word "automobile," a banner advertisement might pop up for Ford.  Recently, both Playboy and Estee Lauder filed lawsuits against Excite, among others, for selling their trademarks as "keywords."  Thus, in the case of Estee Lauder, a banner advertisement for the Fragrance Counter would pop up whenever someone searched for the term "estee lauder" on Excite.44  Thus, again, trademark law is being used to test the permissibility of certain advertising practices on the Web.

Finally, the most ingenious and technologically proficient manner to manipulate a search engine is through the "pilfering" of another site: literally copying the html code of another site near the top of the list for a desired search term and placing your site on top of the pilfered site.45  Again, the only court that has examined such use of a pilfered site immediately enjoined such search engine manipulation.46

IV. Links

"The whole point of the Internet is to be able to link to other sites."

                                                                            Roman Godzich47

Though there are many issues relating to links48, one would think that there are few problems related to marketing your site through linking relationships.  You may ask, how could a company impermissibly drive users to its site via links from other sites since such links, by their very nature, require the consent of the linking site?  Again, the creativity of the web-promoters is boundless. 

In an admittedly bold stroke of "guerrilla warfare" tactics in the battle for web customers, Chapters Internet, an online bookseller, had a link to Chapters' website, chaptersglobe.com, placed on the unrelated website of Indigo Instrument (indigo.com), a seller of medical equipment.  The link on the indigo.com site simply said, "Looking for Books, Come Here!"  The legal problem?  Chapter's principal rival is Indigo Books and Music; its website is located at indigo.ca.  After the threat of a lawsuit, Chapters agreed to remove the link.49

Clearly, having sites link to yours is a sound and proven technique to attract people to your website.  However, just like the source code, metatags and domain names, it can be abused if one is simply trying to increase hits.50     

V. Conclusion

"A corporate presence on the Internet is now a necessity."

                                                         Jim Sterne51

Intellectual property is the currency of the new millenium and the Internet is its pipeline.  The company's website, once the plaything of only a few company employees, now must be integrated into the entire company's legal and marketing strategies.  Moreover, just as companies need to police the marketplace for counterfeit goods, companies need to examine how their intellectual property is being used by others on the Web.  Within your computer sitting on your desktop is access to both the greatest threat to most companies' intellectual property and its salvation.  Without an integrated strategy for how to create value in your company's intellectual property on the web and to prevent the tarnishment or wholesale appropriation of that same intellectual property by others, your company will not succeed in the new millenium.

Mitchell D. Kamarck, of counsel to Rosenfeld, Meyer & Susman, LLP, in Beverly Hills, California, specializing in intellectual property and entertainment-related litigation. Mitchell also teaches a course entitled Television Law & Practice and Policy at California State University - Los Angeles. He can be reached by email at mkamarck@rmslaw. com.

Our Litigation Department specializes in civil litigation at all levels of the judiciary, and has wide-ranging experience in litigating business, commercial and entertainment-industry related matters. We have extensive experience in accounting and partnership, antitrust, and securities and corporate litigation. Additional areas of emphasis include copyright and intellectual property, real estate and products liability litigation as well as in the appellate practice.

Rosenfeld, Meyer & Susman was founded in 1957.  The Firm’s areas of expertise include: Labor and Employment Law, Litigation, Corporate, Entertainment, Trusts and Estates, Taxation, Family Law, Insurance Coverage and Defense, Real Estate and Employee Benefits.

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