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 Chilling Effects Clearinghouse > Domain Names and Trademarks > Notices > Trademark Infringement by nopaypal.com and paypalsucks.com (NoticeID 309, http://chillingeffects.org/N/309) Printer-friendly version

May 28, 2002

 

Sender Information:
PayPal, Inc.
Sent by: [Private]
TOWNSEND and TOWNSEND and CREW LLP
Two Embarcadero C
San Francisco, CA, 94111-383, US

Recipient Information:
[Private]
PayPalSucks.com
Tucson, Arizona, 85705, USA


Sent via: email, confirmati
Re: Trademark Infringement by nopaypal.com and paypalsucks.com

Our File No.: 19701-002200

Dear [Private]:

We are intellectual property counsel to PayPal, Inc. of Palo Alto, California. As you are well aware, PayPal provides financial services under the PAYPAL name and service mark and owns and operates the website at www.paypal.com. Our client's name, service mark and website are among its most valuable assets.

We have recently been made aware of your operation of two websites, www.paypalsucks.com and www.nopaypal.com, that infringe our client's service mark rights in the PAYPAL mark. Printouts of your websites are attached to the confirmation copy of this letter. We further understand that these websites provide a forum to criticize PayPal, Inc. Our client respects your right to do so--provided your websites do not contain any false, disparaging or defamatory statements. We must remind you that any such statements contained on your websites are actionable and can subject you to liability.

Regardless of your purported mission, your use of our client's PAYPAL mark in connection with the operation of websites and in domain names constitutes trademark infringement. Quite simply, use of the PAYPAL mark in a commercial manner is not protected free speech. It is quite evident from your websites that you are profiting off of the PAYPAL mark by selling banner advertisements, offering competing financial services, and using your site to attract PayPal's customers for your own commercial gain. For such infringement, you can be held liable for monetary damages (tripled), an injunction and our client's attorneys' fees.

On behalf of our client, we must insist that you immediately cease all further use of the PAYPAL mark and transfer the domain names to our client. We further demand that you provide an accounting of the profits that you have received in connection with your operation of these websites.

Your swift and full cooperation would enable us to resolve this matter quickly and on an amicable basis. Please contact me as soon as possible, and no later than June 7, 2002, so that we may facilitate a prompt resolution of this matter.

Very truly yours,

[Private]
TOWNSEND and TOWNSEND and CREW LLP
[Address]
San Francisco, CA 94111-3834
Tel: xxx.xxx.xxxx
Fax: xxx.xxx.xxxx
Email: [email]

www.townsend.com

This message and any attachments thereto are intended only for the use of the individual or entity to which they are addressed and may contain information that is privileged, confidential, and/or exempt from disclosure by applicable law or court order. If the reader is not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any use, dissemination, distribution, or copying of this message and any attachments thereto are strictly prohibited. If you have received this communication and any attachments thereto (whether directly or indirectly as an embedded communication) in error, please notify us immediately by reply email at the above address Please also immediately delete the message and any attachments thereto from your computer system. Thank you.

 
FAQ: Questions and Answers

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Question: What is a trade name?

Answer: Answer: A trade name is the actual name of the company. It may or may not also be a trademark. Trademarks are used to label specific goods or services; trade names identify the organization itself. For example, "Ford Motor Company" is a trade name as well as a trademark. "Bronco" is a trademark only. In those cases, if the trade name is registered as a domain name, the name owner is protected against cyber-squatting under traditional trademark provisions and also under the newer Anti-Cybersquatting Consumer Protection Act (ACPA) and the Uniform Dispute Resolution Policy (UDRP) of ICANN.

If a trade name is not used as a trademark, it may still be protected under other kinds of laws (having different criteria and remedies), such as unfair competition. However, if the trade name is registered as domain name, the owner will not be protected against cyber-squatting under the Anti-Cybersquatting Consumer Protection Act (ACPA) or the Uniform Dispute Resolution Policy (UDRP) of ICANN since they both apply only to trademarks.


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Question: What is the difference between a trademark and a service mark?

Answer: Trademarks refer to goods and products, that is, physical commodities which may be natural or manufactured or produced, and which are sold or otherwise transported or distributed.

Service marks refer to intangible activities which are performed by one person for the benefit of a person or persons other than himself, either for pay or otherwise.

Because the legal rights are essentially the same, the term "trademark" is frequently used to refer to both types of marks.

To learn about other types of marks, see Chapter 100 of the USPTO's Trademark Manual of Examining Procedure.

To tell whether something is a good or a service, see 37 C.F.R. ?6.1.


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Question: What is trademark infringement?

Answer: Although different courts have different tests, the central concept is confusion in the marketplace. The law protects against consumer confusion by ensuring that the marks on the same or similar products or services are sufficiently different. A plaintiff in a trademark infringement case generally must prove 1) it possesses a valid mark; 2) that the defendant used the mark; 3) that the defendant used the mark in commerce, "in connection with the sale, offering for sale, distribution or advertising "of goods and services; and 4) that the defendant used the mark in a manner likely to confuse consumers.


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Question: What is a trademark and why does it get special protection?

Answer: A trademark includes any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is a brand name.

Consumers reap the benefit when trademarks are protected. By preventing anyone but the actual mark owner from labeling goods with the mark, it helps prevent consumers getting cheated by shoddy knock-off imitators. It encourages mark owners to maintain quality goods so that customers will reward them by looking for their label as an indication of excellence. Consumers as well as mark owners benefit from trademark laws.

Trademark owners spend a lot of time, money, and effort to protect the distinctiveness of their trademark. Once trademarks have become diluted to the point where the general public no longer recognizes them as distinctly applying to a particular manufacturer, they lose their value to the trademark owner because they no longer attract customers to his particular goods. For example, ?aspirin? used to be the trademark of one particular manufacturer of synthesized acetylsalicylic acid, but is now used to generically describe that product regardless of who produces it. Trademarks owners must be vigilant to make sure that their trademarks rights are not being infringed and that their trademarks are not becoming diluted or generic.

The birth of the Internet and the use of character strings (domain names) to represent Internet addresses has presented trademark owners with a whole new set of problems. It is often too expensive to register every variation of a trademark in every top level domain. Therefore, trademark owners must make sure that the people who register domain names that are either the same as or confusingly similar to a trademark are not using the domain name in a way that infringes on the trademark. One way to ensure that the trademark owner will not lose its rights in the mark is to file a UDRP complaint so that the Panel can decide whether the domain was registered in order to take unfair advantage of the mark owner. The Panel may decide that the trademark owner was wrong and had nothing to worry about, but unless the trademark owner is vigilant and files the complaint, it may never know for sure whether its rights were being abused.


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Question: What is disparagement?

Answer: As defined in Black's Law Dictionary (7th ed. 1999), disparagement is "A false and injurious statement that discredits or detracts from the reputation of another's property, product, or business. To recover in tort for disparagement, the plaintiff must prove that the statement caused a third party to take some action resulting in specific pecuniary loss to the plaintiff."


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Question: What is defamation?

Answer: An attack by speech on the good reputation of a person or business entity. Speech that involves a public figure--such as a corporation--is only defamatory if it is false and said with actual malice. It also must be factual rather than an expression of an opinion. In the United States, because of our strong free speech protections, it is almost impossible to prove defamation of a public figure.


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Question: What is trademark dilution?

Answer: A type of infringement of a famous trademark in which the defendant's use, while not causing a likelihood of confusion, tarnishes the image or blurs the distintiveness of the plaintiff's mark. For example, if someone tries to sell "KODAK" pianos, KODAK could stop the person--even if consumers were not confused--because "KODAK" is a famous mark, and its use on products other than film and film-printing accessories (or other products on which Eastman Kodak places the mark) dilutes its uniqueness.

Many states have anti-dilution laws. The federal government only recently enacted anti-dilution legislation; see the Federal Trademark Dilution Act at 15 USC 1125(c).


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Question: What is the bare minimum of trademark law that I have to understand to decipher this C&D?

Answer: Your opponent should say that your mark is causing consumer confusion or is likely to cause consumer confusion. Or it should mention it's famousness and complain of dilution or tarnishment. (If the C&D does not say this, then no trademark claim may actually exist, and you can rest assured that your opponent is engaging in scare tactics or has hired a highly incompetent attorney). A mark protects more than identical copying, it extends to anything that is confusingly similar, even if it isn't exactly the same.

Functioning in a quasi-magical talisman-like capacity, trademarks designate the source or quality of goods or services. For this reason, the law protects against confusion in the market place by ensuring that marks on the same or similar products or services are sufficiently different. The law also protects famous marks against dilution of value and tarnishment of the reputation of the goods or services on which it appears or the source of those products, regardless of any confusion.

You can roughly assess the validity of your opponent?s claim of confusion by classifying the marks involved. A trademark can fall into one of 5 categories. It can be: (1) fanciful; (2) arbitrary; (3) suggestive; (4) descriptive; or (5) generic. Not all of these varieties of marks are entitled to the same level, or indeed any level, of trademark protection.

A fanciful mark is a mark someone made up; examples include KODAK or H?AGEN-DAZS. An arbitrary mark is a known term applied to a completely unrelated product or service; for instance, AMAZON.com for an online book-store cum one-stop shopping site or APPLE for computers. Fanciful and arbitrary marks are considered strong marks and garner substantial trademark protection.

A suggestive mark is one that hints at the product, but which requires an act of imagination to make the connection: COPPERTONE for sun tan lotion or PENGUIN for coolers or refrigerators are examples. Suggestive marks are also strong marks and receive protection.

A descriptive mark, predictably, describes the product: HOLIDAY INN describes a vacation hotel and FISH-FRI describes batter for frying fish. Descriptive marks do not receive any trademark protection unless their user has used them in commerce and has built up secondary meaning. "Secondary meaning" occurs when consumers identify the goods or services on which the descriptive term appears with a single source. In other words, if consumers know that HOLIDAY INN hotels are all affiliated with a single source, then the mark has secondary meaning and receives trademark protection.

Finally, generic marks simply designate the variety of goods involved: for example, "cola" used on soft drinks and "perfume" on perfume are both generic terms. Generic marks never receive any trademark protection; they are free for everybody to use. (Keep in mind, though, that "Cola" on a nightclub is arbitrary, and therefore receives protection).

If your opponent is complaining that you have used the word "bakery" for a bake shop or "car" for a car repair shop, then you can safely guess that the c & d is baseless. On the other hand, if your opponent is concerned about the fact that both of you use of the term "Sweet Pickles" on alpaca sweaters, then the c & d may have some merit.

There are a few more wrinkles as well. Some marks are word marks (text only) and others are design marks (images which may or may not include text). Design marks do not provide independent protectin for the text incorporated in the design. So if the mark is only a design mark, it doesn't prevent others from using the text so long as they don't copy the design elements.


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Question: What about noncommercial uses?

Answer: According to the Fourth Circuit Court of Appeals, "the Federal Trademark Dilution Act of 1995 ("FTDA") and the Anticybersquatting Consumer Protection Act of 1999 ("ACPA"), Congress left little doubt that it did not intend for trademark laws to impinge the First Amendment rights of critics and commentators. The dilution statute applies to only a 'commercial use in commerce of a mark,' 15 U.S.C.


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Question: What are the limits of trademark rights?

Answer: There are many limits, including:

  • Fair Use
    There are two situations where the doctrine of fair use prevents infringement:
    1. The term is a way to describe another good or service, using its descriptive term and not its secondary meaning. The idea behind this fair use is that a trademark holder does not have the exclusive right to use a word that is merely descriptive, since this decreases the words available to describe. If the term is not used to label any particular goods or services at all, but is perhaps used in a literary fashion as part of a narrative, then this is a non-commercial use even if the narrative is commercially sold.
    2. Nominative fair use
      This is when a potential infringer (or defendant) uses the registered trademark to identify the trademark holder's product or service in conjunction with his or her own. To invoke this defense, the defendant must prove the following elements:
      • the product or service cannot be readily identified without the mark
      • he/she only uses as much of the mark as is necessary to identify the goods or services
      • he/she does nothing with the mark to suggest that the trademark holder has given his approval to the defendant
  • Parody Use
    Parodies of trademarked products have traditionally been permitted in print and other media publications. A parody must convey two simultaneous -- and contradictory -- messages: that it is the original, but also that it is not the original and is instead a parody.
  • Non-commercial Use
    If no income is solicited or earned by using someone else's mark, this use is not normally infringement. Trademark rights protect consumers from purchasing inferior goods because of false labeling. If no goods or services are being offered, or the goods would not be confused with those of the mark owner, or if the term is being used in a literary sense, but not to label or otherwise identify the origin of other goods or services, then the term is not being used commercially.
  • Product Comparison and News Reporting
    Even in a commercial use, you can refer to someone else?s goods by their trademarked name when comparing them to other products. News reporting is also exempt.
  • Geographic Limitations
    A trademark is protected only within the geographic area where the mark is used and its reputation is established. For federally registered marks, protection is nationwide. For other marks, geographical use must be considered. For example, if John Doe owns the mark Timothy's Bakery in Boston, there is not likely to be any infringement if Jane Roe uses Timothy's Bakery to describe a bakery in Los Angeles. They don't sell to the same customers, so those customers aren't confused.
  • Non-competing or Non-confusing Use
    Trademark rights only protect the particular type of goods and services that the mark owner is selling under the trademark. Some rights to expansion into related product lines have been recognized, but generally, if you are selling goods or services that do not remotely compete with those of the mark owner, this is generally strong evidence that consumers would not be confused and that no infringement exists. This defense may not exist if the mark is a famous one, however. In dilution cases, confusion is not the standard, so use on any type of good or service might cause infringement by dilution of a famous mark.


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Question: What is a preliminary injunction?

Answer: An order by the court requiring the defendant to do or refrain from doing some action pending a full trial on the merits of the lawsuit. Sometimes in intellectual property litigation, the property owner, soon after filing the complaint, will make a motion for a preliminary injunction requiring the defendant to stop doing those things the plaintiff alleges are infringing the plaintiff's intellectual property rights.


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Question: What is this laundry list of things the C&D says will happen if I don't obey?

Answer: Your opponent may describe a parade of horribles to demonstrate with exquisite detail what it will do to you unless you capitulate. This list generally includes, but is not limited to:
(1) ceasing use of the allegedly infringing mark or surrendering the domain name;
(2) rendering an accounting;
(3) posting corrective advertising;
(4) obtaining an injunction;
(5) recovering costs and fees.

Though these things sound awful, they are not medieval tortures (although that may be a function of the fact that Torquemada never thought of them).

Ceasing use of the mark is self-explanatory: your opponent wants you to stop using the mark. Your opponent might also ask you to surrender your domain name if they believe the domain name causes (or is likely to cause) confusion with their trademark. For example, under ICANN rules (the UDRP), you may have to surrender your domain name if the following three conditions are satisfied:
(1) your domain name is identical or confusingly similar to your opponent?s;
(2) you have no legitimate right or interest in the name (in other words, you are not using the name to conduct a bona fide business or for non-commercial fair use purposes); and
(3) your name is registered and used in bad faith.

An accounting basically means that you disclose the following information to your opponent:
(1) the date you began using the allegedly infringing mark;
(2) the names of individuals who knew of the use when it began;
(3) the amount of traffic at your web site or business at your store; and
(4) your profits and revenues during the time you used the allegedly infringing mark.

Corrective advertising means you give notice to the public that you were using a mark confusingly similar to your opponent?s, and that you are not affiliated with your opponent.

An injunction is a judicial order to do something. An injunction can prevent you from using the allegedly infringing trademark.

Some provisions of the Lanham Act permit a trademark holder to recover attorney?s fees and court costs from an infringer.

That your opponent has listed these various remedies does not mean that it is entitled to them; do not confuse the smorgasbord of legal options with your opponent?s right to inflict any of them on you.


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