IP Legal Lounge

Summary Judgment Granted In Part And Denied In Part In Unusual Cybersquatting Case

The popular apparel and home products company, Lands' End, Inc., brought a case in the U.S. District Court for the Western District of Wisconsin concerning matters of typosquatting.  Lands' End's allegations against the defendants included violations of the Anticybersquatting Consumer Protection Act ("ACPA") and false advertising under Section 1125(a) of the Lanham Act.  The defendants brought a motion for summary judgment, which the court granted in part and denied in part.

Defendants participated in an affiliate program in which they were able to link to Lands' End's website, and when a consumer purchased products from Lands' End by connecting to www.landsend.com from the defendants' site, the defendants received a 5% commission on the purchase.  However, although they were required to disclose information regarding all of the sites they proposed to link to Lands' End's website, the defendants did not do so.  In fact, they devised an intricate scheme in which they registered numerous similar domains such as www.lnadsend.com, www.landsende.com, and www.landsennd.com.  When a customer attempted to access the official Lands' End website but accidentally typed the name of one of defendants' websites into a web browser, the browser would appear to take the customer directly to the Lands' End website.  In reality, the browser would link the customer "invisibly" to defendants' authorized affiliate websites.  Thus, the defendants would receive a 5% commission on any purchases made by the unsuspecting consumer.

ACPA Claim

In order to succeed on its ACPA claim, Lands' End must prove that (1) "Lands' End" is a distinctive or famous mark entitled to protection (this was easy as defendants conceded that "Lands' End" was a registered trademark); (2) defendants' domain names are "identical or confusingly similar to" Lands' End's mark (once again, this was easy to show since the defendants' domain names deviated from Lands' End's by only one letter in the majority of cases); and (3) defendants registered the domain names with the bad faith intent to profit from them.  15 U.S.C. 1125(d).

The court noted that this was not a typical cybersquatting situation in which someone registers a well-known mark as a domain name and then attempts to sell that domain name to the rightful owner - a kind of extortion scheme.  However, while the defendants argued that, because their typosquatting scheme directed traffic to Lands' End's website rather than away from it, they did not act with bad faith, the court determined that they, nonetheless, intended to profit from their ownership of illicit domain names.  The court analyzed each of the nine bad faith factors set forth in Section 1125(d)(1)(B)(i), and came to the conclusion that the defendants' conduct satisfied a number of them (e.g. defendants never used their infringing domain names as trademarks, and have no intellectual property rights in them).  Hence, the district court denied defendants' summary judgment motion with respect to the ACPA claim, and left the question of bad faith for determination by the finder of fact.

False Advertising Claim

To prove false advertising under Section 1125(a) of the Lanham Act, Lands' End must show that defendants

(1) made a false or misleading statement, (2) that deceived or was likely to deceive a substantial segment of the audience to whom defendants advertised, (3) on a subject material to the consumer's decision to purchase the advertised goods, (4) touting goods entering interstate commerce, (5) and that resulted in actual or probable injury to plaintiff.

On its face, this claim fails since the defendants never made any actual "statements" to the consumers who simply accessed their domain names by accident, and because they never "advertised" to anyone.  In fact, as the court aptly notes, "defendants profited from their typosquatting scheme . . . by not publicizing their venture."  Hence, the district court granted the defendants' summary judgment motion based on the false advertising claim.

Lands' End, Inc. v. Remy, et al., 2006 WL 2521321 (W.D. Wis., Sept. 1, 2006).

Marketing Guru Sues For Trademark Infringement And Cybersquatting Based On Defendant's Alleged Use Of His Name On The Internet

Many of you are probably familiar with Kevin Trudeau.  He is a widely-published author and has appeared in numerous infomercials.  Trudeau filed suit in the Northern District of Illinois against defendant, Lanoue, for trademark infringement, cybersquatting, and related claims stemming from Lanoue's alleged use of the domain names "trudeau.com" and "kevintrudeau.com" to sell various products without Trudeau's permission.  Defendant asserted various counterclaims.  Both parties filed summary judgment motions and Trudeau also filed a motion to strike a portion of Defendant's reply brief.

Plaintiff's Motion to Strike

The Court first took up a fairly technical matter relating to summary judgment motions.  A party may not introduce new arguments in a reply brief not previously mentioned in its memorandum in support of summary judgment.  Defendant did not contest the strength and protectability of Trudeau's trademark in his original summary judgment filing.  However, he sought to introduce this argument in a reply brief.  The Court concluded that this was improper since such an action would deny Trudeau an adequate opportunity to respond.  The Court thus granted Trudeau's motion to strike this section of defendant's reply brief.

Trademark and Related Claims

Defendant raised three main arguments in his summary judgment motion relating to the trademark claims: (1) Trudeau authorized him to use the trademarks, (2) no likelihood of confusion exists, and (3) he is protected from liability by the first-sale doctrine.

Defendant argued that he was impliedly authorized to sell the products using Trudeau's name and image due to the fact that the two have known each other for ten years and had a business relationship for the same length of time.  Although Trudeau admitted knowing about defendant's use of the domain name trudeau.com for over five years prior to making any kind of complaint about such use, the Court decided that this was not sufficient to allow an inference of implied authorization (more on acquiescence below).  The Court concluded that such an inference must be left to the trier of fact. 

As for the likelihood of confusion argument, defendant claimed that no confusion existed since Trudeau relied on distributors to sell products to consumers and defendant was such a distributor.  The Court rejected that argument under an infringement analysis.  Even if defendant's allegations were true, he was still required not to confuse the public by implying an affiliation or association with Trudeau during a time in which defendant was not an authorized distributor.  Due to various factual allegations by Trudeau, the Court concluded that the likelihood of confusion issue would need to be decided by the trier of fact.

Finally, defendant argued protection based on the first-sale doctrine which confers protection from Lanham Act claims to a purchaser who does no more than stock, display, and resell a trademarked product.  However, since Trudeau denied that defendant was an authorized distributor of his products, the Court decided that it could not find as a matter of law that defendant was protected under the first-sale doctrine.  Hence, it denied defendant's summary judgment motion on the trademark claims.

As for defendant's related claims, the Court concluded that, in Illinois, claims under the Consumer Fraud and Deceptive Business Practices Act, the Uniform Deceptive Trade Practices Act, and common law unfair competition must be resolved according to Lanham Act principles.  Therefore, summary judgment as to these counts was also denied.

Cybersquatting Claim

Trudeau also filed a claim under the Anti-Cybersquatting Protection Act (ACPA), codified at 15 U.S.C. 1125(d), claiming that defendant had a bad faith intent to profit from the mark.  Defendant argued that he should prevail on this claim as a matter of law, but the Court put great weight on the commercial aspect of defendant's websites, and defendant's lack of evidence as to bona fide non-commercial uses of Trudeau's name.  The Court also mentioned the fact that defendant had previously attempted to register "trudeau.com" and "kevintrudeau.com" as federal trademarks and such applications were rejected.  The Court, thus, surmised that this should have provided some notice to defendant that he does not have legitimate rights to use such marks.  Since bad faith intent is a fact sensitive issue, the Court denied defendant's summary judgment motion as to the cybersquatting claim. [Note: I reviewed the USPTO records with respect to these two trademark applications.  They both received Office Actions for various reasons, but one requirement the Examining Attorney made in both was that defendant clarify whether the name in the mark identifies a living individual.  If so, that individual's consent would need to be obtained and entered as part of the examination record.  We can only surmise that defendant did not believe he could obtain Trudeau's consent since defendant never responded to these Office Actions and the marks were subsequently abandoned.]

Trudeau's Summary Judgment Motion

After analyzing and denying defendant's final two summary judgment arguments based on Trudeau's cyberpiracy and publicity claims, the Court next turned to Trudeau's motion for summary judgment.  The only point here worth mentioning pertains to defendant's counterclaim of acquiescence.  In granting summary judgment for Trudeau, the Court correctly held that acquiescence should be pled as an affirmative defense to a trademark claim, not as a counterclaim.  Does this mean that defendant will not be able to use this defense (assuming he did not plead acquiescence as an affirmative defense), or will the Court allow such an amendment to the pleadings at this point in the litigation?

All in all, this was a victory for Trudeau.  It will be interesting to see if this case ever makes it to trial, or, more likely, settles in the upcoming weeks/months.

Comment: In analyzing Trudeau's trademark infringement claim, the Court refers to 15 U.S.C. 1125.  This section of the Lanham Act, also known as Section 43, deals primarily with false advertising, unfair competition, dilution and, of course, cybersquatting.  However, straight trademark infringement claims based on a plaintiff's ownership of a federal registration should be analyzed under Section 32 of the Lanham Act.  Since, according to USPTO records, Trudeau did not possess any federal registrations for TRUDEAU-formative marks, is it a misnomer to label this claim as "trademark infringement"?

Trudeau v. Lanoue, (Slip. Op.) 2006 WL 516579 (N.D. Ill., March 2, 2006)