Yourproductsucks.com: internet gripe sites at the crossroads of trademarks and free speech.(Instructor's Note)

Rymsza, Leonard ; Saunders, Kurt M.

CASE DESCRIPTION

The primary subject matter of this case concerns trademark law. Secondary issues examine trademark infringement, dilution, cybersquatting, commercial disparagement, and freedom of expression.

The case has a difficulty of level four, appropriate for senior level courses. The case is designed to be taught in three class hours and is expected to require a minimum of six hours of outside preparation. The case may be used as an in-class or take home assignment. Also, the case may be assigned as an individual student or student team project.

CASE SYNOPSIS

The Internet has made possible another forum by which dissatisfied consumers can vent their complaints about poor service or purchases of substandard products. In the typical scenario, a disgruntled consumer purchases a domain name and sets up a website, known as a "gripesite," on which to publicize their complaints and criticism about the merchant. In turn, merchants have responded with litigation to protect their trademark rights and silence the consumer. Recent cases arising from this strategy of creating gripesites have pitted the merchant's trademarks and protection of its goodwill against the dissemination of critical information about the merchant and the consumer's freedom of speech.

This case study presents a multifaceted factual setting that raises numerous issues relating to trademark infringement, dilution, cybersquatting, commercial disparagement, and freedom of expression. Consumer decided to have new carpet installed in her living and dining room. She telephoned a nationally recognized home improvement--home furnishing company. Consumer scheduled an appointment for a salesperson to come to her home to measure the floors and provide her with carpet samples. The salesperson did not keep the initial appointment and did not contact consumer to let her know that the appointment would not be kept. Consumer was unhappy with this behavior but she, nevertheless, scheduled another appointment. The salesperson kept this second appointment but was approximately one hour late. Consumer was frustrated with the appointment mishaps but decided that since the salesperson was at her home she may as well have the rooms measured and look at the carpet samples. Consumer found a sample that was the perfect color and nap. The cost estimate for the carpet was also comparable to estimates that consumer had received from other retailers. Consumer ordered the carpet and made arrangements to have the carpet installed the next day.

The installation of the carpet went smoothly except that a silver runner was installed instead of a gold runner as specified in the work order. Consumer paid for the carpet and installation with installers promise to return the next day and install the proper runner. The installer failed to return the next day as promised. Within a few days of the installation, consumer noticed several seams in the carpet had become visible and that un-even surfaces had begun to appear. Following several frustrating attempts to schedule the return of an installer and failed attempts to correct the problems, consumer sent a letter rescinding the carpet contract and requesting the return of the $3,000 she had paid for the carpet. Consumer's request was denied and attempts to settle the matter proved fruitless.

Consumer decided to take several courses of action. One strategy resulted in consumer registering seven different internet domain names. The domain names included the name of the home improvement company in varying forms. Consumer began using one of the internet sites. The site contained a statement summarizing consumer's entire dealings with the improvement company and her dissatisfaction with the company's actions. Consumer was contacted several times by legal representatives of the improvement company and was asked that she cease and desist from using the company's name in any domain names. Consumer refused to discuss the matter and the improvement company eventually brought suit against consumer alleging, trademark infringement, dilution, false designation, unfair competition, cybersquatting, various state law claims, and libel. Consumer countered that she was merely exercising her first amendment right of free speech.

This case study explores the intersection of electronic commerce, trademark law, and freedom of speech. As a pedagogical tool, the case can facilitate student appreciation and understanding of the complexity of arguments presented for the protection of trademarks and domain names while at the same time considering the right of consumers to freely express their opinions and views. Moreover, the case can serve as a means to promote awareness of legal risk in business decisions and to enhance the development of legal reasoning skills in business law students.

The first part of the case requires students to evaluate trademark infringement, trademark dilution, cybersquatting, and commercial disparagement claims. The second part of the case requires students to evaluate the improvement company's claims in light of consumer's freedom of speech rights.

INSTRUCTORS' NOTES

OVERVIEW OF THE APPLICABLE LAW

Trademark Law

According to the federal Lanham Act, a trademark is "any word, name, symbol, or device or any combination thereof" used in commerce (3) by a person "to identify and distinguish ... goods ... from those manufactured or sold by others and to indicate the source of the goods." (4) For example, the trademark "McDonald's" along with the its "golden arches" identify the fast food restaurant and distinguish it from competing fast food chains such as "Burger King" and "Wendy's." Similarly, color, shape, or product design and packaging can serve as a trademark. For example, the pink color of Owens-Corning fiberglass insulation or the unique shape of a Coca-Cola bottle has protectable identifying features.

While trademarks serve as indicators of source, they also aid consumers' purchasing decisions by providing visual cues that assist in brand recognition and connote product performance attributes. (5) In this way, trademarks lower consumer search costs by providing a reliable signal of product identity and quality in comparison with competing products. (6) Likewise, trademarks can signify sponsorship or authorization by the trademark owner. (7) So long as a mark is inherently distinctive, or has acquired distinctiveness through secondary meaning, (8) it may be protected as a trademark and federally registered. (9) Distinctiveness is the essence of trademark protection since lack of distinctiveness would make the mark incapable of identifying the good or service and signaling to a consumer the information needed to lower his or her search costs. The more distinctive the mark, the greater the likelihood it can be protected.

Trademark Infringement

The owner of a trademark has a cause of action for infringement against anyone who commercially uses a mark without permission that is identical or similar to a registered mark when such unauthorized use is "likely to cause confusion, or to cause mistake, or to deceive." (10) An action for trademark infringement is designed to protect the public from confusion as to the source or sponsorship of the defendant's product. The plaintiff must demonstrate that defendant's commercial use of a similar mark is likely to cause consumers to mistakenly believe that defendant's product or business is somehow associated with that of the plaintiff. (11) To determine whether likelihood of confusion exists, courts consider a number of key factors, including: (l) the strength of the mark; (2) the similarity between the marks; (3) the relatedness of the goods; (4) evidence of actual confusion; (5) sophistication of the buyers; (6) the defendant's intent in selecting the mark; and (7) the likelihood of expansion of the product lines. (12)

The use of an identical mark on the same product would clearly constitute infringement. If a moving company uses the mark "United," it will likely cause consumers to be confused into thinking that the moving services are provided by United Van Lines. Likewise, use of a similar though not identical mark may cause consumer confusion as well. On the other hand, using the same mark on a completely unrelated product will be unlikely lead to an infringement claim. Thus, United Van Lines and United Airlines can coexist since consumers are not likely to think that they are buying airfare on a plane owned by a moving business, and vice versa.

Trademark Dilution

In addition, the Lanham Act prohibits the dilution of "famous" trademarks. (13) A "famous mark" as one "widely recognized by the general consuming public of the United States as a designation of source of the goods or services." (14) In deciding whether a mark is famous, the courts will consider the following factors: (1) the amount of advertising and publicity; (2) the geographic extent of the market; (3) the channels of trade; (4) the degree of recognition in trading areas; (5) any use of similar marks by third parties; (6) whether the mark is registered. (15) For instance, Microsoft, Exxon, Heinz, and Disney are all considered to be famous trademarks.

Dilution protects the trademark itself from "blurring," which gradually undercuts the strength, prestige, and value of a trademark, (16) and "tarnishment," which involves use of the mark in a degrading manner or on inferior products that causes harm to its reputation. (17) A trademark can be diluted even in the absence of consumer confusion or competition between plaintiff's and defendant's products. Instead, the focus in a dilution claim is on the damage to the mark's inherent value as a symbol, (18) rather than on whether consumers are likely to have been confused as to origin or sponsorship of the product as with infringement. (19) For example, selling "Microsoft" brand microwave ovens or "Exxon" brand laundry detergent involves blurring since each dilutes the distinctive quality of the famous mark. Using the mark "Disney" to sell pornographic videos or the mark "Tiffany" to advertise poorly constructed furniture involves tarnishment since it associates the mark with an unseemly product.

Fair Use

The Lanham Act, however, provides for an affirmative fair use defense that protects one who uses a trademarked term in a descriptive sense and in good faith from liability for trademark infringement. According to the Lanham Act, it shall be a defense to an allegation of infringement "[t]hat the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark ... of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party...." (20) Thus, it is nominative fair use to advertise a used Honda brand automobile for resale since it does not mislead or confuse consumers.

Similarly, it is fair use to engage in a news report or in comparative advertising in which another's trademark is used. Thus, it would be fair use if Colgate referred to "Crest" brand toothpaste in an advertisement that accurately compared product features. Finally, certain parodies of trademarks are permissible if they are not directly tied to commercial use. The rationale for this is that artistic and editorial parodies or satires of trademarks serve a valuable critical function, which is entitled to First Amendment protection. For example, the use of a pig puppet character named "Spa'am" in a Muppet movie was held not to violate Hormel's exclusive rights in the trademark "Spam." (21)

The Anticybersquatting Consumer Protection Act

Domain names are the addresses of the Internet. Users send email and locate websites through the use of domain names. As use of the Internet became more accessible and popular, and as electronic commerce emerged as a new online marketplace, businesses quickly realized that registering a domain name was an important part of establishing an Internet presence and in marketing their products and services. However, when some businesses attempted to obtain their desired domain names, they sometimes discovered that their desired domain name had already been purchased. If so, the business had to either choose a different name or contest the other registrant's ability to use the desired domain name.

Some individuals registered domain names containing well-known trademarks even though they did not own the trademark rights to those names. In some cases, they held the domain names "hostage" until the trademark owner was willing to pay an outrageous price to ransom the domain name. (22) This extortionist practice became known as "cybersquatting" and since no law specifically addressed this problem, domain name cases were usually brought as trademark infringement or dilution claims. (23)

In 1999, Congress enacted the federal Anticybersquatting Consumer Protection Act (ACPA), (24) which is intended to give trademark and service mark owners legal remedies against defendants who obtain domain names "in bad faith" that are identical or confusingly similar to a trademark. If a mark is a famous mark, the same remedies are available if the domain name is identical to, confusingly similar to, or dilutive of the mark. In enacting the ACPA, Congress found that the unauthorized registration or use of another's trademark as a domain name results in consumer fraud and public confusion as to the true source or sponsorship of products and services; impairs electronic commerce, which is important to the economy of the United States; and deprives owners of trademarks of substantial revenues and consumer goodwill. (25)

In a claim under the ACPA, the plaintiff must prove that the defendant (1) has a bad faith intent to profit from that mark, including a defendant name which is protected as a mark; and (2) registers, traffics in, (26) or uses a domain name that

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar (27) to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark;.... (28)

The essential element in proving a violation of the ACPA is that the defendant has "bad faith intent to profit from the mark." (29) The ACPA provides some guidance in determining if the requisite bad faith exists. In determining if the defendant has bad faith, the court may consider the following nonexclusive factors:

I. the trademark or other intellectual property rights of the defendant, if any, in the domain name;

II. the extent to which the domain name consists of the legal name of the defendant or a name that is otherwise commonly used to identify the defendant;

III. the defendant's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;

IV. the defendant's bona fide noncommercial or fair use of the mark in a site accessible under the domain name;

V. the defendant's intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;

VI. the defendant's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the defendant's prior conduct indicating a pattern of such conduct;

VII. the defendant's provision of material and misleading false contact information when applying for the registration of the domain name, the defendant's intentional failure to maintain accurate contact information, or the defendant's prior conduct indicating a pattern of such conduct;

VIII. the defendant's registration or acquisition of multiple domain names which the defendant knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and

IX. the extent to which the mark incorporated in the defendant's domain name registration is or is not distinctive and famous within the meaning of Section 1125(c)(1) of the Lanham Act. (30)

Courts have found bad faith where the defendant has registered confusingly similar domain names for the purpose of diverting the plaintiff's customers to other websites, (31) where defendants have registered the plaintiff's business name and offered to sell it to the plaintiff, (32) and where the defendant registered a domain name for the purpose of preventing the plaintiff's use of that domain name. (33) Nevertheless, bad faith intent will not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use, a noncommercial use, or otherwise lawful. (34)

Where the court finds a violation of the ACPA, it may order forfeiture or cancellation of the domain name, transfer to the trademark owner, and damages. (35) As an alternative to bringing an action under the ACPA, trademark owners may file a complaint under the Uniform Dispute Resolution Policy (UDRP) of the Internet Corporation for Assigned Names and Numbers (ICANN), a private-sector nonprofit organization responsible for the management of the Internet domain name system. The UDRP serves as a "fast-track" alternative dispute resolution procedure under which a prevailing trademark owner receives an order from an arbitration panel that the domain name be cancelled or transferred the trademark owner. (36)

Commercial Disparagement

Commercial disparagement occurs when one makes a false statement of fact that tends to denigrate the goods or services sold by another. (37) Although disparagement originally developed at common law as a tort cause of action, a claim may also be brought under the Lanham Act, which prohibits misrepresentations "in commercial advertising or promotion" as to "the nature, characteristics, qualities or geographic origin of his or her or another person's goods, services or commercial activities...." (38)

Establishing a prima facie case of disparagement requires proof that: (1) the defendant published a false and offensive statement of fact which disparaged the plaintiff's product or service; (2) the defendant acted with "malice"; and (3) the plaintiff sustained special damages due to the disparagement. (39) A false statement is offensive when it can be reasonably understood to cast doubt on quality of the plaintiff's goods or services. Malice is proved when the defendant knew that the statement was false or acted in reckless disregard as to whether it was untrue. (40) The plaintiff incurs special damages when he or she suffers actual, specific economic harm to his or her business, such as lost sales or customers. (41)

The truth of the statement made is an absolute defense to a claim of commercial disparagement. (42) Competitors can make truthful factual comparisons of their products or services without incurring liability. (43) Likewise, competitors are privileged to make unfavorable comparisons if no specific factual statements are made. Such statements constitute "puffing"--'sales talk' or general statements of opinion to the effect that the defendant's goods are superior or that the plaintiff's goods are inferior. (44) For instance, one might claim without liability that his or her service is "the best in the business" or that a competitor's product is "not very good." Puffing is permitted because courts assume that consumers expect this and do not rely on or take it seriously; moreover, it is difficult to prove if one product is 'better' than another since consumer preferences and opinions are highly subjective. (45)

The First Amendment and Freedom of Speech

The First Amendment to the United States Constitution prohibits Congress from "abridging the freedom of speech." (46) However, the right to free speech is not absolute. (47) There are categories of communication to which the protection of the First Amendment does not extend because their social value is outweighed by their harmful effect. Defamation and obscenity, for instance, are such types of speech. (48)

When considering a claimed violation of the Lanham Act, the courts are sensitive to concerns that trademark law should not become a means for unconstitutional censorship of ideas and opinions. (49) In resolving cases of government regulation of speech a distinction has been made between commercial and noncommercial speech. (50) The application of a regulation to noncommercial speech may impermissibly restrict expression whereas the application of that same regulation to commercial speech may result in a permissible restriction of expression of ideas or points of view. (51)

The trademark infringement and false designation of origin provisions of the Lanham Act do not use the term "noncommercial." However, the provisions state that they apply only to the use of a mark "in connection with the sale, offering for sale, distribution, or advertising of any goods or services," or "in connection with any goods or services." (52) The provisions, however, have not been given a narrow interpretation by the courts. The term "services" has been construed broadly to apply to certain instances of non-commercial public commentary. (53)

In contrast to the trademark infringement and false designation of origin provisions of the Lanham Act, recent amendments to the Lanham Act leave little doubt that Congress did not intend trademark laws to infringe the freedom of speech rights of the First Amendment. The Federal Trademark Dilution Act of 1995 (FTDA) states that the "[n]oncommercial use of a mark" is not actionable. (54) In determining if an individual has cybersquatted, the Anticybersquatting Consumer Protection Act of 1999 (ACPA) provides that courts may consider whether the use of the mark is a "bona fide noncommercial or fair use." (55)

In each of these instances, trademark owners have made several arguments to convince the courts that the trademark is being used "in connection with" the trademark and therefore is violation of the Lanham Act. One argument is based on the owner's using the website to promote, either directly or indirectly, the sale of goods or services. Another argument is based upon the view that the only purpose for registering the domain name is "commercial," i.e., to sell the domain name to the trademark holder. A third argument contends that the registration of the domain name prevents consumers from purchasing or using the goods or services of the trademark holder and therefore has an "effect on commerce."

Commercial vs. Noncommercial Speech: The "In Connection With" Determination

The Lanham Act regulates only commercial speech, which has lesser protections under the First Amendment. (56) In determining whether use of another's trademark is noncommercial, and therefore First Amendment protected speech, the inquiry generally comes down to a determination of whether one is using another's trademark "in connection with a sale of goods or services." (57) If the answer to this inquiry is no, then the use is deemed noncommercial and not a violation of the Lanham Act.

The issue of commercial versus noncommercial speech in cases involving a trademark arises out of various types of conduct. Alleged violations of trademark laws and the concern for recognizing First Amendment free speech rights are clearly evident in cases where one is using another trademark as a means to express dissatisfaction with the trademark owner's goods or services. Restrictions on noncommercial criticisms of a business can be considered a burden on free speech. (58) In recent years, cases involving the alleged unauthorized use of another's trademark have stemmed from registration of Internet domain names that contain the trademark. Following the registration of the domain name the site owner will then compose a web page for the site.

Websites Directly Promoting Sales of Goods or Services

Commercial use of a trademark is undisputed in settings where the core function of a website is to advertise one's business. In such a case the purpose for using the trademark is to draw attention to a website that is promoting the sale of goods or services other than those of the trademark holders.

In Nissan Motor Co. v. Nissan Computer Corp., (59) the Nissan Motor Company sued Nissan Computer Corporation because of the use of the Internet websites www.Nissan.com and www.Nissan.net. (60) The apparent purpose of defendant's domain name was to use the recognized name of Nissan to advertise his computer business. Unsuspecting users of the Internet, believing they would be directed to the Nissan Motor Company website, were instead directed to defendant's site. Moreover, the defendant received a payment for each time a user clicked on a link to the website of an advertiser, and its website contained links to both automobile-related goods and services. The District Court granted a preliminary injunction ordering Nissan Computer to refrain from displaying automobile-related information, advertisements, and links. (61)

Linking to Another Website

Use of a trademark in a domain name of a website that is otherwise noncommercial or the use of a trademark in a website that is otherwise noncommercial may nevertheless be held to be used in connection with the sale of goods or services when the site contains a link to a commercial site. (62) However, linking to another noncommercial website which in turn contains advertising is viewed as an indirect path to the advertisers and thus "too attenuated" to render a site commercial. (63) Also, identifying the representing law firm and providing a link to the firm's website does not convert a noncommercial site into a commercial site. (64)

Attempt to Arbitrage a Domain Name

Merely using another's trademark in one's domain name is not automatically a commercial use under the Lanham Act. (65) However, an attempt to sell a domain name containing the trademark may be considered a commercial use of the trademark. In this instance the registration of a domain name is not as benign as it appears. To register a trademark as a domain name for the purpose of selling the domain name to the trademark owner has been held to be a commercial use of the trademark. (66)

Preventing User's From Obtaining Goods or Services of the Trademark Holder: The "Effect on Commerce" Test

Another approach to the "in connection with" requirement is based upon a conclusion that, although a website might not have a commercial purpose and is not selling any goods or services in connection with the site, the site nevertheless violates the Lanham Act because it prevents users from obtaining or using the trademark holder's goods or services. (67) The proposition here is that the commercial use requirement is satisfied because the unauthorized use of the trademark as the domain name deters customers from reaching the actual site of the trademark holder. This conclusion, however, has not been reached by all courts. This contrary view concludes that such an approach would place all consumer commentary under the restrictions of the Lanham Act. (68)

RECOMMENDATIONS FOR TEACHING APPROACHES

Teaching Objectives

This case study is intended to lead students to appreciate the legal issues that arise between businesses and consumers that implicate business trademarks and goodwill and consumer freedom of speech. The main objectives for teaching the case are as follows:

1. Recognize the importance of trademarks in business;

2. Acquire an understanding of trademark law, unfair competition law, and First Amendment protection of commercial speech;

3. Identify legal issues involving the intersection of trademarks and free speech;

4. Apply the legal principles of applicable law to a fact situation to reach a conclusion as to the scope of liability.

Potential Uses of the Case

The main pedagogical use of case studies is a means to promote awareness of legal risk in business decisions and to enhance the development of legal reasoning skills in business law students. This case study can be used in courses that may include treatment of trademarks, business torts, electronic commerce, consumer protection, marketing, and freedom of speech.

Case A Questions--Trademark Infringement--Trademark Dilution--Cybersquatting Commercial Disparagement

1. Can Wahl assert prima facie claims for trademark infringement and dilution against Flora on the basis of the domain names she registered or her "gripesite"?

Trademark Infringement.

As the owner of two federally registered trademarks, "Wahl to Wahl Today" and "Wahl to Wahl," Wahl might consider bringing an action for trademark infringement against Flora. To prove its claim Wahl will need to prove that Flora used its marks in commerce without permission and that such use was likely to cause confusion among consumers. (69) Based on the original facts, Wahl may have a difficult time proving that Flora is using its mark for commercial purposes. (70) Use of a mark in commerce involves use or display of the mark in connection with the sale or advertisement of goods or services. Flora does not appear to be selling anything on her website or holding the domain names that incorporate the Wahl trademarks for resale or for ransom. On the other hand, selling t-shirts, charging fees, earning revenue from advertising on the sites, or accepting "donations" that result in a profit to her may amount to commercial use. (71)

Assuming that Wahl can prove commercial use, it will next have to demonstrate that Flora's use of its marks in the domain names and on her site is confusingly similar. One argument that Wahl may assert is that of initial interest confusion. That is, consumers might type in a domain name using "wahltowahl" or some version of this in a search engine or in the address line of their browsers expecting to find the Wahl homepage. When they are instead diverted to Flora's gripesite, they may be confused into thinking that they are connecting to or have arrived at Wahl's website. This may also be true even with a misspelled domain name.

In response, Flora might argue that consumers will immediately realize that they are not at Wahl's site due to the content of the webpage they are viewing. She might also argue that she is protected by fair use in that the use of Wahl's trademark is necessary in describing and commenting upon the quality of their services. (72)

Trademark Dilution.

A second claim that Wahl might consider bringing is that of trademark dilution. (73) To prove dilution, Wahl will first have to demonstrate commercial use of its "famous" mark. The problems with proving the commercial use element have been discussed earlier. (74) According to the facts, Wahl is a "nationally recognized home improvement and home furnishing company" that "has been in business for over fifty years." It is likely that this will be sufficient to establish the requisite degree of general fame to constitute a famous mark for purposes of this analysis. (75)

Next, Wahl will have to prove that Flora's use of its famous mark is likely to diminish its distinctiveness or degrade its standing as a source identifier. (76) Here, the most likely argument will be that Flora's use of the mark leads to tarnishment of the reputation and goodwill associated with the mark. (77) Wahl may have difficulty in demonstrating a causal link between the alleged tarnishment of its marks and the likelihood of harm. It is possible that customer complaints may increase and sales may decrease after Flora's gripesite is available online, but will the complaints increase or sales decrease as a result of the gripesite or because of Wahl's poor service?

In addition, Wahl's dilution by tarnishment argument may be problematic as to some of the domain names since Flora's gripesites clearly signal the critical nature of the site by including "sucks" in the name. The reference to the mark is meant to indicate that she believes Wahl's services to be shoddy or of low quality, which is much different than using the mark in an unwholesome, unsavory context in which no criticism is apparent. Once again, this also suggests that Flora may have a fair use defense to a dilution claim. (78)

2. Has Flora violated the provisions of the Anticybersquatting Consumer Protection Act by registering the domain names?

To prove a violation of the ACPA, Wahl must show that Flora, in registering domain names incorporating its mark, harbored a bad faith intent to profit from using the Wahl mark in a manner that was confusingly similar or dilutive of that mark. (79) The analyses of infringement and dilution discussed above are pertinent here as well. Whether Flora possessed a bad faith intent is a highly relevant issue. Courts have denied relief where a trademark owner has failed to prove defendant's bad faith intent to profit from use of the mark because the primary motivation for creating the gripesite was criticism and commentary. (80)

Here, Flora registered multiple domain names using variations of the mark and can claim no rights or prior legitimate use of the mark. It is possible that she may want to divert potential Wahl customers to her site in order to "warn" them and lessen Wahl's goodwill. On the other hand, the facts do not suggest that she has done this before or that she supplied false information in securing the domain names. Moreover, if she can successfully argue noncommercial fair use of Wahl's mark, she will also have a defense against liability under the ACPA. (81) As one court explained, consumers are free to shout that a merchant sucks from the rooftops and "[t]he rooftops of our past have evolved into the internet domain names of our present." (82)

3. Does Wahl have a tort claim for commercial disparagement against Flora?

Wahl might consider asserting a claim for commercial disparagement against Flora. A prima facie case of disparagement involves proof that: (1) the defendant published a false and offensive statement which disparaged the plaintiff's product or service; (2) the defendant acted with "malice"; and (3) the plaintiff sustained special damages due to the disparagement. (83) The key for Wahl to proving such a claim will be to show that the statements made by Flora were false, and that these false statements were offensive in that they could be reasonably understood to cast doubt on quality of Wahl's services. Wahl must also prove that Flora knew that the statements she made on her site were false or that she acted in reckless disregard as to whether the statements were false. Furthermore, Wahl will need to prove that Flora's has made false statements of fact, since statements of opinion are not actionable. In this case, depending on what statements are posted on her site, Wahl's greatest challenge may be in proving that those false statements were the cause of actual economic harm to its business.

4. For each of the claims discussed above, what defenses or counterarguments might be available to Flora?

The defenses or counterarguments that might be available to Flora are discussed in the above answers to Questions 1, 2 and 3.

Case B Questions--First Amendment Free Speech

5. If Flora claims that her site is merely a vehicle by which she is exercising her First Amendment free speech rights, how will a court rule?

Irrespective of whether a trademark is used to facilitate a commercial transaction or to communicate ideas or beliefs, restrictions on the ability to use another's trademark are subject to intermediate constitutional scrutiny to ensure that trademark laws do not abridge the right of free speech. Accordingly, Flora may have a viable counterargument that her site is protected by the First Amendment in response to Wahl's trademark and ACPA claims. She can assert that even if economic loss results to Wahl, the First Amendment protects criticism where there is no consumer confusion as to source and where the speech is not misleading. This in fact was the holding in Taubman Co. v. Webfeats, (84) where the Sixth Circuit held that the defendant's registration of gripesites incorporating the plaintiff's trademarks into domain names such as shopsatwillowbendsucks.com and willowbendmallsucks.com was protected speech. (85)

Likewise, the court in Northland Insurance Co. v. Blaylock (86) rejected trademark dilution and infringement claims against a defendant who had registered the domain name northlandinsurance.com for a site that redirected the user to a gripesite where he criticized the plaintiff's business practices. Critical to the court's determination was the noncommercial nature of defendant's gripesite. (87) The holdings in Taubman and Northland support the position that Flora's website and domain name constitutes a noncommercial use of Wahl's trademark, (88) and underscore the longstanding concern that courts burden speech no more than is necessary to serve a significant governmental interest. (89)

6. Assume that Flora's free speech argument is successful. Would any of the following additions to her website lead a court to reach a different conclusion?

a. A warning statement that the site is not the official site of Wahl with a link to Wahl's website.

b. A link to a Wahl competitor or other commercial website.

c. A link to commercial websites from which Flora receives a fee each time the link is clicked on by a user.

d. A link to www.complaints.com a website where consumers can post complaints about goods or services they have received.

e. A link to www.wahltowahltodaysucks.com or to the www.wahl-to-wahl. sucks.com website.

f. A solicitation on Flora's website seeking donations for the "fight" against Wahl.

g. An offer to sell an anti-Wahl t-shirt featuring an anti-Wahl slogan, or an offer to provide a "free" anti-Wahl t-shirt with a charge for shipping and handling.

If Flora's free speech argument is upheld, we must then consider the variations on the facts posed for consideration and the effects those changed facts would have on her free speech argument. Once again, we assume that the noncommercial free speech protection available to Flora will be diminished or lost if the website is deemed to be "commercial" in nature. Including a warning statement (as in a.) that the site is not the official site of Wahl with a link to Wahl's website will not convert Flora's site to commercial status. The courts view this addition as merely informing the user that he or she is not at the official site of the trademark holder thus avoiding any confusion on the part of the user. Moreover, assuming that the www.wahltowahltodaysucks.com or the www.wahl-to-wahl-sucks.com websites are noncommercial, linking to these sites (as in d.) will not convert Flora's site to a commercial site. Similarly, providing a link to a noncommercial consumer complaint website (as in e.) does not convert a noncommercial site into a commercial site.

A direct link to any commercial website (as in b. and c.), on the other hand, will result in an otherwise noncommercial site being converted into a commercial site based upon the site being used in connection with the sale of goods or services. An illustration of this point can be found in Lamparello v. Falwell, (90) where the court held that the defendant infringed plaintiff's trademarks and violated the ACPA as a result of his operation of a typosquatting site, www.fallwell.com, at which he criticized the Rev. Jerry Falwell's views on homosexuality and expressed his own contrary views on that subject. The court reached this decision even though the defendant's site featured a prominent disclaimer advising users that it was not Falwell's official site. However, the gripesite also informed interested visitors of a book plaintiff considered relevant to this discussion, and provided a link to Amazon.com at which they could purchase it. (91)

Accordingly, the sale of an anti-Wahl t-shirt either for a set price or given for free as long as the purchaser pays shipping and handling charges (as in g.) will convert Flora's noncommercial site into a commercial site. Likewise, providing a free t-shirt in return for a donation (as in f.) will also likely result in converting Flora's noncommercial site into a commercial site since the t-shirt can be seen as a promotional item commonly used to draw customer attention.

CONCLUSION

This case study has offered a means to investigate the intersection of electronic commerce, trademark law, and freedom of speech. Trademark law serves the purposes of protecting product identification, preserving the merchant's goodwill, and reducing consumer search costs. At the same time, there is an ostensible free speech interest in criticizing trademark owners. Gripesites serves this purpose and also function as a means of exchanging information online about merchants that protects consumer interests. (92) As a pedagogical tool, the case can facilitate student understanding of the rational for protecting trademarks and domain names while at the same time considering the right of consumers to freely express their opinions and criticism of merchants' goods and services. (93) If the gripesite is noncommercial, then it is unlikely that the trademark owner will be able to enjoin the use of its mark since allowing it to do so could shield it from criticism by forbidding the use of its mark in a context critical of its business practices. Finally, this case study can serve as a means promote awareness of legal risk in business decisions and to enhance the development of legal reasoning skills in students.

ENDNOTES

(1) A gripesite has been described as a "website at the domain criticizing the mark owner and airing his dissatisfaction with the mark owner's business practices. In contrast to the squatter, the cybergriper's aim is to disparage the mark owner's business, rather than to profit from the domain name or website." Ryan J. Gilfoil, Note, A Judicial Safe Harbor Under the Anti-Cybersquatting Consumer Protection Act, 20 BERKELEY TECH. L.J. 185, 185 (2005). We believe that this term was initially used in Kelly Hearn, "Gripe Sites": Consumers Complain in Chorus, Online, CHRISTIAN SCI. MONITOR, July 17, 2000, at 15 (referring to gripesites as "consumer advocacy for the digital age").

(2) See Bally Total Fitness Holding Corp. v. Faber, 29 F. Supp.2d 1161, 1168 (C.D. Cal. 1998).

(3) "Use in commerce" must be a bona fide use of the trademark in the ordinary course of trade or sales, and not use simply made to reserve rights in the mark. See Zazu Designs, Inc v. L'Oreal, S.A., 979 F.2d 499 (7th Cir. 1992).

(4) 15 U.S.C. [section] 1127.

(5) See Itamar Simonson, Trademark Infringement from the Buyer Perspective: Conceptual Analysis and Measured Implications, 13 J PUB. POL'Y & MARKETING 181 (1994).

(6) For an economic analysis of trademark protection, see William M. Landes & Richard A. Posner, Trademark Law: An Economic Perspective, 30 J. L. & ECON. 265 (1987).

(7) See 1 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION [section] 3:4 (4th ed. 2001).

(8) A "merely descriptive" mark may be registered if the applicant shows that it "has become distinctive of the applicant's goods in commerce," i.e., that it has acquired secondary meaning. 15 U.S.C. [section] 1052(f); see also Park N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 196 (1985). See also Two Pesos v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992) (stating that descriptive marks may acquire the distinctiveness which affords them protection under the Lanham Act).

(9) See 2 McCarthy, supra note 5, [section] 11:2-28; see also Restatement (Third) of Unfair Competition [section][section] 13-17 (1995).

(10) 15 U.S.C. [section] 1125(a)(1)(A)

(11) The defendant's use of the plaintiff's trademark must be in connection the sale or advertising of the product. See id. [section][section] 1125((1)(a) & 1125(a)(1).

(12) See Polaroid Corp. v. Polaraid Elec. Corp., 287 F.2d 492, 495 (2d Cir.).

(13) The Lanham Act provides: The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. 15 U.S.C. [section]1125(c).

(14) Id. [section] 1125(c)(2).

(15) Id. [section] 1125(c).

(16) Id. [section] 1125(c)(2)(B). This section articulates six factors a court may consider in determining whether dilution by blurring is likely: (i) the degree of similarity between the diluting mark and the famous mark; (ii) the degree of distinctiveness of the famous mark; (iii) the extent to which the owner of the famous mark is engaged in "substantially exclusive use of the mark; (iv) the degree of recognition of the famous mark; (v) whether the defendant intended to create an association between it and the famous mark; and (vi) any actual association between the diluting mark and the famous mark. Id.

(17) Id. [section] 1125(c)(2)(C).

(18) 15 U.S.C. [section]1125(c)(1)(proscribing use of a mark "that is likely to cause dilution" of the famous mark "regardless of the presence or absence of ... actual economic injury").

(19) See Toho Co., Ltd. v. Sears, Roebuck & Co., 645 F.2d 788, 793 (9th Cir. 1981).

(20) 15 U.S.C. [section] 1115(b)(4).

(21) See Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497 (2d Cir. 1996); see also Jordache Enters., Inc. v. Hogg Wyld, Ltd., 828 F.2d 1482 (10th Cir. 1987).

(22) See Daimler-Chrysler v. The Net, Inc., 388 F.3d 201, 204 (6th Cir. 2004); see also Elizabeth Robinson Martin, Note, "Too Famous to Live Long!": The Anticybersquatting Consumer Protection Act Sets its Sights to Eliminate Cybersquatter Opportunistic Claims on Domain Names, 31 ST. MARY'S L.J. 797, 808-810 (2000).

(23) E.g., Panavision Int'l v. Toeppen, 141 F.3d 1316 (9th Cir. 1998)

(24) 15 U.S.C. [section] 1115(d).

(25) See H.R. Rep. No. 106-412, 106th Cong., 1st Sess. 6 (1999).

(26) "Traffics in" refers to transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration. 15 U.S.C. [section] 1125(d)(1)(E).

(27) In making this determination, the sole focus is on the senior user's trademark and the registrant's domain name. See Northern Light Tech., Inc. v. Northern Lights Club, 236 F.3d 57, 66 (1st Cir. 2001).

(28) Id. [section] 1125(d)(1)(A).

(29) Id. [section] 1125(d)(1)(A)(i).

(30) Id. [section] 1125(d)(1)(B)(i).

(31) Coca-Cola Co. v. Purdy, 382 F.3d 774 (8th Cir. 2004).

(32) People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359 (4th Cir. 2001).

(33) Sporty's Farm LLC v. Sportsman's Market, Inc., 202 F.3d 489 (2d Cir. 2000).

(34) See, e.g., TMI, Inc. v. Maxwell, 368 F.3d 433 (5th Cir. 2004)(noncommercial gripesite set up by defendant to complain about how he was treated during a home purchase demonstrated no bad faith intent to profit did not violate the anti-dilution or the ACPA or result in trademark dilution); Lucas Nursery & Landscaping v. Grosse, 2004 WL 403213 (6th Cir. 2004)(defendant not liable for ACPA violation due to noncommercial gripesite incorporating plaintiff's trademark in the domain name used for criticizing a landscaping company for inferior lawn care services).

(35) 15 U.S.C. [section] 1125(d)(1)(C).

(36) See Uniform Domain Name Dispute Resolution Policy of the Internet Corporation for the Assigned Names and Numbers, available at: http://www.icann.org/udrp/udrp-policy-24oct99.htm (last visited May 15, 2007).

(37) Restatement of Torts [section] 629. The tort is closely related to, though distinct from, the torts of defamation and unfair competition. See Aetna Cas. & Sur. Co v. Centennial Ins. Co, 838 F.2d 346 (9th Cir. 1988); Dairy Stores, Inc. v. Sentinel Pub. Co., 516 A2d 220 (N.J. 1986).

(38) 15 U.S.C. [section] 1125(a).

(39) See, e.g., Gucci Am., Inc. v. Duty Free Apparel, Ltd., 277 F. Supp.2d 269 (S.D.N.Y. 2003); Flotech, Inc. v. E.I. Du Pont de Nemours Co., 627 F.Supp. 358 (D. Mass. 1985); Hurlbut v. Gulf Atlantic Life Ins. Co., 749 S.W.2d 762 (Tex. 1987).

(40) See, e.g., Bose Corp. v. Consumers Union of the U.S. Inc, 692 F.2d 189 (1st Cir. 1982); Collier County Pub. Co. v. Chapman, 318 So.2d 492 (Fla. Ct. App. 1975).

(41) E.g., Satellite Financial Planning Corp v. First National Bank, 633 F.Supp. 386 (D. Del. 1986); see also Restatement (Second) of Torts [section][section] 632, 633.

(42) See, e.g., Redco Corp. v. CBS, Inc, 758 F.2d 970 (3d Cir. 1985); Direct Import Buyer's Ass'n v. KSL, Inc., 572 P.2d 692 (Utah 1977).

(43) See U.S. Healthcare, Inc. v. Blue Cross of Greater Philadelphia, 898 F.2d 914 (3d Cir. 1990).

(44) See Groden v. Random House, 61 F.3d 1045 (2d Cir. 1995).

(45) E.g., Hofmann Co. v. E.I. Du Pont de Nemours & Co, 248 Cal. Rptr. 384 (Cal. Ct. App. 1988).

(46) U.S. CONST. amend. 1. See Lovell v. Griffin, 303 U.S. 444, 450 (1938)(the right to free speech is "among the fundamental personal rights and liberties which are protected by the Fourteenth Amendment from invasion by state action").

(47) Near v. Minnesota, 283 U.S. 697, 708 (1931)("Liberty of speech ... is ... not an absolute right, and the State may punish its abuse.").

(48) See Chaplinsky v. New Hampshire, 315 U.S. 568 (1942)(defamation); Roth v. United States, 354 U.S. 476 (1957)(obscenity).

(49) See Taubman Co. v. Webfeats, 319 F.3d 770,774 (6th Cir. 2003); Boslely Med. Inst., Inc. v. Kremer, 403 F.3d 672, 674 (9th Cir. 2005).

(50) See Thornhill v. Alabama, 310 U.S. 88 (1940), where the Court struck down an Alabama state statute prohibiting picketing businesses. Although not directly addressing "commercial speech," the case supports the position that speech about issues of public interest or controversy are to be considered noncommercial speech. See also Valentine v. Chrestensen, 316 U.S. 52 (1942), holding that the addition of statements in protest of government action did not remove a "handbill" from the status of "commercial advertising."

(51) See Florida Bar v. Went For It, Inc., 515 U.S. 618, 623 (1995). See also Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 900 (9th Cir. 2002).

(52) 15 U.S.C. [section][section] 1114(1)(a) & 1125(a)(1).

(53) See United We Stand Am., Inc. v. United We Stand Am., N.Y., Inc., 128 F.3d 86, 89-90 (2d Cir. 1997). See also People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 365 (4th Cir. 2001) concluding that although Doughney did not actually sell or advertise goods or services on his website, he needed to "only have prevented users from obtaining or using PETA's goods or services, or need only have connected the website to other's goods or services" to result in a violation of the Lanham Act. See also Taubman Co. v. Webfeats, 319 F.3d 770,775 (6th Cir. 2003) concluding that a website with links to for profit websites violated the Lanham Act.

(54) 15 U.S.C. [section]1125(c)(4).

(55) 15 U.S. C. [section]1125(d)(1)(B)(i)(IV).

(56) See Central Hudson Gas & Elec. Corp v. Public Serv. Comm'n of N.Y., 447 U.S. 557, 563 (1980), where the Court stated that regulation of commercial speech is subject only to intermediate scrutiny.

(57) See Bosley Med. Inst. v. Kremer, 403 F.3d 672, 677 (9th Cir. 2005)

(58) In CPC Int'l, Inc. v. Skippy Inc., 214 F.3d 456 (4th Cir. 2000), the Fourth Circuit Court of Appeals vacated an injunction directing the defendants to remove content from their website that was critical of the plaintiff. Explained the court: "[J]ust because speech is critical of a corporation and its business practices is not a sufficient reason to enjoin the speech." Id. at 458.

(59) 378 F.3d 1002 (9th Cir. 2004).

(60) Id. at 1006.

(61) Id.

(62) See also Taubman Co. v. Webfeats, 319 F.3d 770 (6th Cir. 2003)(finding no commercial use due to linking).

(63) See Bosley Medical Institute v. Kremer, 403 F.3d 672, 678 (9th Cir. 2005) where defendant's website contained no commercial links but instead contained links to a discussion group, which in turn contained advertising.

(64) See id.

(65) See Panavision Int'l, L.P. v. Toeppen, 945 F. Supp. 1296, 1303 (C.D. Cal. 1996)(stating that "[r]egistration of a trade[mark] as a domain name, without more, is not a commercial use of the trademark...." See also Lockheed Martin Corp. v. Network Solutions, Inc., 985 F. Supp. 949 (C.D. Cal. 1997) stating that "NSI's acceptance of a domain name for registration is not a commercial use within the meaning of the Trademark Dilution Act."

(66) See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1325 (9th Cir. 1998) the court holding that the defendant's "commercial use was his attempt to sell the trademarks themselves." Similarly, in Intermatic Inc, v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996) the district court held that defendant's "intention to arbitrage the 'intermatic.com' domain name constitute[d] a commercial use." See also Harrison v. Microfinancial, Inc., 74 U.S.P.Q.2d (BNA) 1848, 1851 (D. Mass. 2005).

(67) See People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 365 (4th Cir. 2001) concluding that although Doughney did not actually sell or advertise goods or services on his website, he needed to only have prevented users from obtaining or using PETA's goods or services. Id.

(68) See id. at 679. See also L.L. Bean, Inc. v. Drake Publishers, Inc. 811 F.2d 26, 33 (1st Cir. 1987); Ford Motor Co. v. 2600 Enters., 177 F. Supp 2d 661, 664 (E.D. Mich. 2001).

(69) See supra notes 11-13 and accompanying text.

(70) See Taubman v. Webfeats, 319 F.3d 770 (6th Cir. 2003)(discussing whether a gripesite is commercial use in commerce).

(71) See supra note 12 and accompanying text.

(72) See supra notes 21-22 and accompanying text.

(73) See supra note 14-20 and accompanying text.

(74) See supra note 72 and accompanying text.

(75) See supra note 16 and accompanying text.

(76) Once again, whether Flora's use of the trademarks amounts to commercial use is at issue. For sake of further consideration of the dilution claim, we will assume that it constitutes use in commerce.

(77) See Board of Directors of Sapphire Bay Condominium West v. Simpson, 129 Fed.Appx. 711 (3d Cir. 2005)(gripesite enjoined due to dilution as defendant intended to cause financial harm by disparaging plaintiff). Although Wahl might also argue that Flora's use of its mark is likely to cause dilution by blurring, such a claim depends on demonstrating a likelihood that the gripesite weakens the connection in consumers' minds between the mark and Wahl's service. Here, where the target is Wahl itself, the probable effect is just the opposite.

(78) See supra notes 21-22 and accompanying text.

(79) See supra notes 23-37 and accompanying text.

(80) See, e.g., Fairbanks Capital Corp. v. Kenney, 303 F. Supp.2d 583, 595 (D. Md. 2003); Crown Pontiac, Inc. v. Ballock, 287 F. Supp.2d 1256, 1258 (N.D. Ala. 2003); Rohr-Gurnee Motors, Inc. v. Patterson, 71 U.S.P.Q.2d (BNA) 1216, 1220 (N.D. Ill. 2004).

(81) See supra note 35 and accompanying text.

(82) Taubman Co. v. Webfeats, 319 F.3d at 773.

(83) See supra notes 38-46 and accompanying text.

(84) 319 F.3d 770 (6th Cir. 2003).

(85) Accord Mayflower Transit, LLC v. Prince, 314 F. Supp.2d 362 (D.N.J. 2004)(rejecting claims for violation of the ACPA and for commercial disparagement due to defendant's use of plaintiff's mark in domain names of noncommercial gripesites critical of plaintiff).

(86) 115 F. Supp.2d 1108 (D. Minn. 2000).

(87) See id. at 1119-20.

(88) See Coca-Cola Co. v. Purdy, 382 F.3d 774 (8th Cir. 2004)(holding that an anti-abortion website that linked to other sites that solicited funds through donations or sale of goods was not protected by the First Amendment).

(89) See CPC Int'l, Inc. v. Skippy Inc., 214 F.3d 456 (4th Cir. 2000)(overturning an injunction ordering defendant to remove critical content from a website).

(90) 360 F. Supp.2d 768 (E.D. Va. 2004).

(91) Id.; see also Toronto-Dominion Bank v. Karpachev, 188 F. Supp.2d 110 (D. Mass. 2002)(finding that defendant violated the ACPA by registering domain names containing misspellings of plaintiff's trademark for use on gripesites).

(92) For a website featuring a compilation of links to various gripesites criticizing just about any product or service one can imagine, see Webgripesites.com at http://www.webgripesites.com (last visited May 14, 2007).

(93) For additional analyses of the trademark law aspects of consumer gripesites and domain names, see W. Scott Creasman, Free Speech and "Sucking"--When is the Use of a Trademark in a Domain Name Fair?, 95 TRADEMARK REP. 1034 (2005); Jonathan L. Schwartz, Making the Consumer Watchdog's Bark as Strong as its Gripe: Complaint Sites and the Changing Dynamic of the Fair Use Defense, 16 ALB. L.J. SCI. & TECH. 59 (2006); Yas Raouf, Note, Lamparello v. Falwell & Bosley Medical v. Kremer: Undercutting the Applicability of Initial Interest Confusion to Trademark-In-Domain-Name Gripe Sites, 21 BERKELEY TECH. L.J. 445 (2006); Tresa Baldas, Trademark Lawsuits: The Price of Online Griping, NAT'L L.J. (Dec. 2, 2004).

Leonard Rymsza, California State University, Northridge

Kurt M. Saunders, California State University, Northridge