By: Jeffrey Dicker

The Lanham Act provides that a trademark is infringed when it is used in commerce. 15 U.S.C. § 1125. With the rise of e-commerce and internet business, defining how something is used in commerce has become more difficult. This problem becomes even more difficult when dealing with a trademark used in a domain name. The question arises, is holding a domain without creating an accompanying website considered using the mark in commerce?

In Carey Licensing, Inc. v. Erlich, 2007 WL 3146559 (E.D.Mo. 2007), a recent case in Montana District Court, the court found that simply holding a domain name that includes a registered trademark does not constitute using the mark in commerce.
The plaintiff, Carey International (Carey), a limousine company, sued the defendant, International Chauffeured Services (ICS), for trademark infringement. The two parties entered into a consent judgment to be enforced by the court. As part of the consent judgment, ICS was prohibited from possessing any domain name containing the word “Carey”.

Two years after the consent judgment, Carey became aware that ICS possessed the domain “careylimousine.net”. Carey sued ICS to enforce the consent agreement and also sued for liquidated damages relating to trademark infringement. In its ruling, the court found ICS in contempt for violating the consent agreement. However, the court did not award Carey liquidated damages. The consent agreement provided that liquidated damages would only be awarded for any infringement of Carey’s trademark. The court reasoned that simply owning the domain “careylimousine.net”, without setting up a webpage, would not be considered trademark infringement. ICS’s use of the mark in the domain name was not considered use in commerce and was therefore not considered trademark infringement.

The Anti-Cybersquatting Consumer Protection Act provides an alternative to reclaiming one’s mark when it is wrongfully used. It allows an owner of a trademark to sue someone who has used that trademark in filing for a domain name registration. 15 U.S.C. § 1125(d). If the trademark owner can prove that the party who registered the domain name had a bad faith intent to profit from the trademark, then the remedy provided in these cases is transfer of the domain name to the rightful holder of the trademark. However, what would happen if the registering party doesn’t have a bad faith intent to profit, but only intends to prevent the rightful trademark holder from registering that domain by keeping a blank webpage?

The Carey ruling will have far reaching implications in just such a situation if it becomes accepted doctrine. Before this ruling, there were two legal methods of protecting one’s trademark in relation to domain names. One could bring an action against a party wrongfully using the trademark in a domain name either under traditional trademark infringement, or under the Anti-Cybetsquatting Consumer Protection Act to transfer control of the infringing domain to its rightful owner.

If this ruling is widely adopted, however, there may be no options for enforcing one’s trademark rights in certain situations. The Carey court held that ownership of a domain by itself is not considered use in commerce under the Lanham Act. Therefore, unless there is an element of bad faith intent to profit from the domain name, as required under the Anti-Cybersquatting Consumer Protection Act, the rightful owner of a trademark would have no recourse under United States Trademark law to prevent others from using his trademark in this context.