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.