Online Use of Third Party Trademarks: Can Your Trademark Be Used without Your Permission?

The explosion of user-generated content on the Internet, not to mention the proliferation of domain name registration options and the competition among advertisers and other businesses to attract visitors to their websites, has increased the burden of trademark owners to police the online use of their trademarks by others. Consumers, competitors, and others are increasingly posting comments, ads, or other content on social media, in which they freely use trademarks owned by another party for their own purposes. These purposes are often at odds with the trademark owner’s interests, such as diverting internet traffic to the user’s website or disparaging the trademark owner or its products in blogs over which the trademark owner has no control.

However, simply because the use of another’s trademark is unauthorized by the trademark owner does not make it an infringing use. Trademark owners must not only be diligent in monitoring use of their trademarks online, but also recognize the differences among infringing uses to be challenged, questionable uses to be further monitored, harmless uses to be ignored, and uses that may be annoying, but do not infringe.

Likewise, anyone who chooses to use a trademark without the owner’s permission should be mindful not only of the potential liability for infringement, but also of other potential consequences, such as violation of laws other than trademark laws or violation of a social media platform’s terms of use, leading to loss of privileges. It is the responsibility of the user – whether a competitor of the trademark owner or a consumer – to respect the brand owner’s rights and to comply with applicable laws and terms of use. Yet, there are limits to a brand owner’s right to control use of its marks.

Online Use of Another’s Trademark Can Lead to Liability and Other Consequences

Trademark Law Prohibits Infringement, False Advertising, Cyberpiracy, and Dilution

State and federal trademark laws protect trademarks from use by others if the use is likely to lead to confusion. In addition, the trademark dilution doctrine, which applies only to famous marks under the federal trademark statute and under most state statutes that address dilution, protects eligible trademarks from “tarnishment” and “blurring” when another uses the protected trademark to identify his own business; the doctrine differs from infringement in that likelihood of dilution can be proven without any likelihood of confusion.

The federal trademark statute, the Lanham Act, also creates a cause of action of cyberpiracy, also called cybersquatting, that arises when a person uses (or “registers” or “traffics in”) a domain name that is identical or confusingly similar to a trademark owned by another, if done with a bad faith intent to profit from use of the mark. 1999 Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d).

Finally, using another party’s trademark in a misleading way can give rise to liability, regardless of whether it constitutes traditional infringement claim and regardless of whether the trademark enjoys a federal trademark registration. Section 43(a) of the Lanham Act provides a cause of action that extends beyond traditional infringement, and essentially affords a cause of action for false advertising. The claim is available to anyone likely to be damaged when:

1. Any person . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which
   1. is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or
   2. in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.

15 U.S.C. § 1125(a) (emphasis added).

Thus, a false advertising claim can arise when a person uses another company’s trademark in an ad in the course of disparaging the product or comparing the product unfavorably to the company’s competing product, if the ad makes false or misleading statements about the trademark owner or its product.

Trademark Law Permits “Fair Use” of Another’s Mark

However, use of another’s trademark is permissible if it qualifies as fair use. The fair use doctrine, consistent with the First Amendment, allows a person to use another’s trademark either in its non-trademark, descriptive sense to describe the user’s own products (classic, or descriptive, fair use) or in its trademark sense to refer to the trademark owner or its product (nominative fair use). The Lanham Act expressly protects fair use from liability for trademark infringement, dilution and cyberpiracy.

Descriptive Fair Use is a Defense to Infringement

The Lanham Act specifies that good faith, descriptive fair use is an affirmative defense to an infringement claim. Before the affirmative defense is ever reached, however, the plaintiff must first show, as part of its prima facie case, evidence of likelihood of confusion from the defendant’s allegedly descriptive use of the trademark.

The U.S. Supreme Court addressed the fair use defense in a 2004 decision that did not involve online trademark use, but which should be instructive to online use. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004). The owner of an “incontestable” federal registration of a trademark that included the words “Micro Colors” sued a competitor that used the term “micro color” in its ads marketing permanent cosmetic makeup. The court did not decide whether the ads’ use of “micro color” was a fair, non-trademark use of the words to describe the makeup. Rather, the court addressed the relationship of the fair use defense to the plaintiff’s burden to establish likelihood of confusion. As the court explained, the defendant claiming fair use does not have the burden to show that confusion is unlikely. If the plaintiff establishes evidence of likelihood of confusion, the defendant may then present evidence that its use was a fair use. Interestingly, the court stated that it “does not rule out” the possibility that some degree of consumer confusion is compatible with fair use.

Fair Use Avoids Liability for Dilution and Cyberpiracy

In addition to the statutory fair use defense to infringement, the Lanham Act addresses the fair use doctrine also in the antidilution and cyberpiracy causes of action. Section 43(c) of the Lanham Act, the dilution prohibition, expressly excludes fair use from the cause of action, rather than listing it as a defense. 15 U.S.C. § 1125(c)(3)(A).

Fair use appears again in Section 43(d), the cyberpiracy prohibition. The concept is referenced first in connection with determining the defendant’s bad faith in using the mark in its domain name, which is an element of the claim, and separately as a defense. The statute provides that the court may consider, in determining if the defendant’s use of the mark was in bad faith, whether the mark’s use is a “bona fide noncommercial use or fair use in a site accessible under the domain name.” An example would be a fan site that incorporates the other party’s mark in its domain name and uses the mark on the site to refer to the object of the fan site. Another example would be use of a mark in a domain for a website devoted to customer complaints or other criticism of the product or its seller, such as the domains being offered under the generic top-level domain (gTLD) .sucks.

The federal trademark statute separately provides a complete defense to cyberpiracy if the defendant “believed or had reasonable grounds to believe” that the use of the mark in the domain was a “fair use or otherwise lawful.” 15 U.S.C. § 1125(d)(1)(B)(ii).

Unauthorized Use of Another’s Mark Online May Infringe or Qualify As Fair Use

Case law has developed criteria for determining when nominative fair use – i.e, use of another’s mark to refer to the mark’s owner or its product, rather than to the defendant – is, in fact, “fair.”

An oft-cited nominative fair use case, New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302, 308 (9th Cir. 1992), held that a commercial user is entitled to a nominative fair use defense by satisfying three requirements:

• The product/service must not be “readily identifiable” without use of the trademark.
• “Only so much of the mark or marks may be used as is reasonably necessary to identify the product or service.”
• “The user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.”

This three-part test has been applied to evaluate trademark owners’ challenges when their trademarks are used in domain names, in metatags, and in other ways online. Some courts have focused more on whether the use is likely to cause confusion and whether any infringement can be based on a viewer’s initial confusion (referred to as “initial interest confusion”) if the initial confusion is dispelled once the viewer visits the site.

In 2002, in an early case of online use, the Ninth Circuit applied its New Kids test to find that the former Playmate of the Year 1981 could promote her title on her website and in the site’s metatags (see sidebar with cases that have considered whether fair use applies to various online uses of another’s mark). The defendant’s site did not present the “Playmate of the Year” title in the same font as the Playboy magazine title, nor did it display the Playboy bunny logo. By the time of trial, the site also posted a nonendorsement disclaimer. However, the repeated, stylized use of “PMOY #81” on the site’s wallpaper, or background, did not qualify as fair use.

Although the Ninth Circuit upheld the use of Playboy trademarks as metatags in the case of the former Playmate of the Year, other cases have reached a variety of conclusions based on the facts of the case, on whether the doctrine of initial interest confusion was recognized by the court, and whether the doctrine applied to the facts. If the trademark in question is actually used on the website itself, and in a legitimate way, as was the case with the Playmate of the Year 1981, then use of the trademark in metatags is likely to be defensible. On the other hand, if the website does not refer to the trademark that is hidden in metatags, or if the website does refer to the trademark but in a way that does not qualify as fair use, then use of the term in metatags is less likely to qualify as fair use.

Use of another’s mark in a domain name, like use as a metatag, may be an infringement or it may be non-infringing, depending on the likelihood of confusion. If the domain containing the other’s trademark is registered or used with a bad faith intent to profit from the mark, the use of the mark in the domain constitutes cybersquatting, even in the absence of likelihood of confusion. Fair use is not a defense to cybersquatting, but if the website accessible from the domain name uses the mark in a way deemed to be a fair use, then the bad faith element of the cybersquatting offense may not be met.

Trademark owners have challenged unauthorized use of their trademarks not only in domain names and metatags, but also in search engine advertising campaigns and keyword purchases. Typically, marketing advisors recommend these campaigns as a way to direct traffic to the advertiser’s website, to achieve a higher ranking in search results, and perhaps also to divert traffic from a competitor’s website. If the advertiser uses a trademark belonging to its competitor in a sponsored ad, it is likely to be infringing. However, the unauthorized use of another’s mark can be legitimate fair use, such as in comparative advertising that compares the advertiser’s product to the product of the trademark owner, or a gripe site that criticizes the products or services of the trademark owner.

Unauthorized use of another’s mark in search engine keyword purchases, however, will survive an infringement challenge, despite the absence of fair use, if the trademark owner cannot persuade the court or jury of likelihood of confusion.

Unfair or Deceptive Online Trademark Use Also Violates the Federal Trade Commission Act

While Section 43(a) of the Lanham Act provides a private right of action for false or misleading advertising, the FTC regulates advertising by its rules and guidelines and by bringing enforcement actions under the Federal Trade Commission Act, which bars “unfair or deceptive acts or practices.” Use of another party’s trademark or reference to another company in advertising can result in unintended violation of Section 5 of the FTC Act, 15 U.S.C. § 45.

In 2000, the FTC issued the Dot Com Disclosures, addressing how Section 5 of the FTC Act applies to online advertising. The guidance addressed the requirement to make affirmative disclosures when an ad would be deceptive or unfair without the affirmative disclosure. In 2013, the FTC updated the Dot Com Disclosures in a 53-page guide that illustrates how and when to make the disclosures on digital devices and otherwise online. The guidelines reaffirm that disclosures that are required to avoid evoking deception law must be presented clearly and conspicuously. If a smartphone’s screen size prevents a disclosure from being clear and conspicuous, then the ad should not be run in that medium.

The FTC’s “Guide Concerning the Use of Endorsements and Testimonials in Advertising” is also relevant to advertising that refers to another company. An endorsement is defined as any advertising message, including the “name or seal of an organization . . . that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.”

As a general matter, the endorsement must reflect honest opinions of the endorser and may not convey express or implied representations that would be deceptive if made by the advertiser. If the advertisement states that the endorser uses the product, the endorser must have been a bona fide user of it. If there is a material connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement, such that the audience does not reasonably expect the connection, the guidelines advise that the connection should be disclosed. Endorsements by consumers are addressed separately from endorsements by experts and by organizations.

Social Media Sites’ Terms of Use Prohibit Trademark Misuse

Social media platforms’ terms of use typically prohibit content that violates rights of others and reserve the right to deny access to infringers. Sites typically also provide a takedown procedure for persons to request that site content, including user-generated material, be taken down. Due to enactment of the Digital Millenium Copyright Act in 1998, U.S. copyright law affords a safe harbor for online service providers who comply with the statute’s takedown procedure. 17 U.S.C. § 512. The Lanham Act does not have a comparable safe harbor provision for trademark infringement. Nonetheless, social media platforms and other service providers commonly post a notification procedure for takedown requests based on alleged trademark infringement, as well as based on copyright infringement.

YouTube, for example, states that, as a courtesy to trademark owners, it has created trademark complaint procedures with respect to use of trademarked terms in connection with YouTube Promoted Videos promotions, which enable trademark owners to submit complaints via a link. A separate link is available for complaints about use of trademarks in a Sponsored Video. YouTube encourages trademark owners to resolve complaints directly with the YouTuber, but YouTube offers to perform a limited investigation of reasonable complaints, and may remove content in cases of clear infringement.

Twitter’s trademark policy prohibits the use of business names or logos with intent to mislead. Twitter reserves the right to reclaim usernames on behalf of businesses whose trademarks are used in usernames. Users are allowed to create news feed, commentary, and fan accounts, but the username and profile name should not be the trademark of the subject or company and the biography should include a statement to distinguish it from the company.

Facebook also reserves the right to remove or reclaim a username when a trademark owner has complained that the username does not closely relate to the user’s actual name. The terms of use permit a user to create a page to express brand support, provided that it is unlikely to cause confusion with the brand’s official page or violate another party’s rights.

Instagram warns that, when appropriate, it will disable accounts of users who “repeatedly infringe other people’s intellectual property rights.”

Conclusion

If an online ad, post, domain name, or even hidden text is misleading, deceptive or likely to cause confusion, or if it threatens to dilute a famous trademark, it will and should be challenged. All organizations should monitor online unauthorized uses of their valued trademarks. In addition, if an organization hosts an interactive website that invites customers to post endorsements or other comments, the terms of use should prohibit inappropriate content and the organization should monitor postings for improper trademark uses.