IP: Nominative Fair Use and Domain Names

Trademark owners considering domain name enforcement actions should be aware of the nominative fair use defense. Nominative fair use is implicated when an unauthorized party uses another company's trademark as a reference to that company's own products. For example, a reseller, a parts manufacturer or a repair service may defend its unauthorized use of another company's trademark as nominative fair use by claiming it sells, or provides services related to, the other company's products. If the use of another's trademark is determined to be a nominative fair use, then by definition it is not an infringing use.

Most recently, the Court of Appeals for the ninth circuit applied this defense to a trademark infringement claim in Toyota Motor Sales, U.S.A. v. Tabari. In Tabari, the defendants registered and used the domain names "buy-a-lexus.com" and "buyorleaselexus.com" without authorization from Toyota, the owner of the Lexus mark. Toyota sued and, not surprisingly, the district court found infringement in a bench trial. The ninth circuit, however, reversed and remanded because the district court failed to apply the concept of nominative fair use and failed to credit the defendants' status as an auto broker that brokers sales of Lexus cars. The customers that bought a Lexus through this broker ultimately "received a genuine Lexus sold by an authorized dealer." According to the ninth circuit, when the defendants "said Lexus" in their domain name they "meant Lexus," and this referential use of the trademark implicated nominative fair use.

Tabari provides trademark owners with rules of thumb relating to domain name enforcement. First, certain word combinations in domain names are considered much more likely to suggest sponsorship, and therefore infringe, than other combinations. For example, a third party domain name consisting only of the trademark owner's mark followed by .com, or one of the other familiar suffixes, is likely to infringe. In addition, words like "official" in combination with the trademark, such as "officialtoyotasite.com" obviously suggest sponsorship. Interestingly, Tabari categorized such domain name formulations as "special cases" and rather obvious infringements. Second, in many other contexts, domain name formulations containing a trademark are not likely to cause confusion. For example, when a domain name contains a trademark accompanied by a word such as "forum" it does not actively suggest sponsorship by the trademark owner. Tabari indicates that internet users are too sophisticated to mistakenly conclude that a site is sponsored or endorsed by a trademark owner simply because the trademark appears in a domain name. Instead, they are "accustomed to exploration by trial and error" and will simply move on to the next search result until they find what they are seeking. Moreover, they generally do not make conclusions about domain name sponsorship until they view the associated website. According to Tibari, this momentary uncertainty is "sensible agnosticism, not consumer confusion" and courts will look to context to determine the weight and effect of words accompanying trademarks in a domain name.

In Tibari, free speech concerns justified the defendants' use of the domain names at issue. Indeed, although defendants' use of the Lexus mark in their domain names was not strictly necessary to communicate that they specialized in brokering sales of Lexus vehicles, the court saw no compelling reason to restrict this truthful communication in their domain names since defendants may communicate this fact through other means, such as print advertisements.

While unauthorized use of another company's mark in a domain name may be nominative fair use in certain circumstances, use of the company's logos on the website itself is likely to infringe by taking "more of the mark than necessary" and suggesting sponsorship. Accordingly, trademark owners should carefully evaluate the content of websites associated with problematic domain names for the presence of their logos and other visual identifiers that are likely to deceive consumers. Additionally, Tabari noted that domain names containing trademarks may be enjoined when they dilute the value of a famous mark, but there was no such allegation before the court. Nominative fair use, however, is an exception to liability for the dilution of a famous mark pursuant to the Trademark Dilution Revision Act of 2006, so it is unclear whether a claim of dilution would have affected the outcome in Tabari.

The Tabari court grounded much of its decision on factual assumptions regarding consumer perception of the domain names at issue and consumer Web-browsing behavior. Therefore, trademark owners should consider consumer perception surveys and expert opinions regarding consumer behavior to help overcome any asserted nominative fair use defense. Moreover, trademark owners can proactively reserve multiple domain name variations containing their marks to reduce the options available to unauthorized third parties.

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