Trade Marks on the Internet copyright 1996-2003; last updated August 14, 2003

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Passing Off

Trade mark rights exist at common law as well as under statute. The elements of passing off are generally recognized to be: (a) a misrepresentation; (b) made by a trader in the course of trade; (c) to prospective customers; (d) which is calculated to injure the business or goodwill of another trader; and (e) which causes actual damage.29 In Ciba-Geigy Canada Ltd. v. Novopharm Ltd.30 the Federal Court found that the three necessary components of passing off were goodwill, deception of the public due to the misrepresentation and actual or potential damage. Passing off can therefore occur when trade marks are used as domain names or otherwise used to mislead Internet users.

In PEINET Inc. v. O'Brien31, the Prince Edward Island Supreme Court considered whether the use of Internet site name amounted to the common law tort of passing off. The plaintiff Internet service provider had obtained the site The plaintiff launched its lawsuit when one of its former employees went into the same business and obtained the site The Court rejected the plaintiff's motion for an interlocutory injunction preventing the defendant from using the site. The Court, using questionable reasoning, stated that there was little possibility of confusion since the defendant's site name used upper case letters and separated the "PEI" from "NET" with a period. The court also noted that the plaintiff did not provide detailed evidence and so failed to meet the burden of proving its case.

In Law Society of British Columbia v. Canada Domain Name Exchange Corporation32 the court granted an interlocutory injunction prohibiting the transfer of the domain names and the court found that the mere registration of a domain name is sufficient to establish passing off. It should be noted that the case was decided under the more favourable British Columbia jurisprudence relating to interlocutory injunctions and not on the application of the more stringent test that is currently being applied in the Federal Court.

It is difficult to imagine that any precedent can be set where default judgment is granted on an undefended claim, but the case of eGalaxy Multimedia Inc. v. Bailey et al.33 may be an exception. The defendant registered the domain names, and plaintiff claimed damages for intentional interference with economic interests, passing off, conspiracy to injure, intimidation and economic duress for unlawfully claiming domain names (perhaps a tort of cybersquatting). The plaintiff obtained default judgment and a transfer of the domain names. In addition, the Court awarded $5,000 in punitive damages and $10,000 as costs of the action.

Trade Mark Dilution

The United States extends special protection to famous trade marks under subsection 1125(c) of the Lanham Act (the U.S. Trade Marks Act). Dilution occurs where another person misuses a famous trade mark in such a way that it lessens the capacity of the mark to identify and distinguish the trade mark owners goods and services. A dilution action has three elements: (1) the mark must be famous; (2) the mark must be diluted by the defendant; and (3) the dilution must be caused by a commercial use of the mark. Whether or not a mark is famous is determined by reference to the eight criteria set out in the Lanham Act. It is important to note that the mark has to be used in commerce. To date, courts have been quick to find that cybersquatters, in trying to sell a trade marked domain name, are making commercial use of the trade mark.

One of the first decisions on cybersquatting came in the United States Court of Appeals' decision in Panavision International, L.P. v. Toeppen.34 The Court held that Dennis Toeppen's registration of the domain name "" was a scheme to extort $13,000 from Panavision by trading on the value of its famous mark. Interestingly, the Court found that Toeppen, who was showing pictures of Pana, Illinois on the web site, was making a "commercial use" of the mark, as required by the Federal Trade mark Dilution Act, 15 U.S.C. § 1125(c), by trading in the mark itself.

There are numerous other trade mark dilution cases. For example, in MTV Networks v. Curry35, a former employee of the rock music cable televisions service obtained the site name and offered reports on the rock music industry at the Internet site. In Kaplan Education Center Ltd. v. Princeton Review Management Corp.36 a test preparation service obtained a domain name that resembled that of a rival service and then placed disparaging material about its rival at the site. And in KnowledgeNet, Inc. v. D.L. Boone & Company,37 the defendant corporation obtained the domain name "" (allegedly) without knowledge of the prior trade mark registration for the name. All of these cases settled before a final court ruling.38

The case of The Comp Examiner Agency v. Juris, Inc.39 marked the first time a court ruled that traditional trade mark doctrine applies to domain names. The plaintiff, Juris, Inc., was successfully able to use its trade mark to enjoin the defendant from using the domain name

Avery Dennison was unsuccessful in preventing from retaining ownership of thousands of family names as domain names.’s business model was to register family domain names under the “.net” top-level domain and then charge individuals who want to use the name $20 per year. On August 23, 1999, the U.S. 9th Circuit Court of Appeals in California held that Mailbank’s activities did not constitute dilution of the Avery Dennison trade mark. The Court ruling suggests that different domain level have different functions and the use of the same name on another TLD may not be enjoined.

The Panavision decision has found counterparts in other jurisdictions. In British Telecommunications plc. v. One in a Million Ltd.40, the English Court of Appeal upheld an injunction granted against a cybersquatter who seemingly held domain names for half of Britain’s major companies. The Court found that cybersquatting not only constituted passing off, but also violated the U.K. Trade Marks Act, 1994.

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