This week Toyota lost an important intellectual property decision with regard to how trademarks are used, and in a way, we all lost some protection against the bad guys.
Recently, the U.S. Ninth Circuit Court of Appeals in San Francisco ruled in favor of an authorized Lexus dealer to use the word “Lexus” as part of its domain nameunder “fair use”.
Previously, this ability to use Lexus was prohibited in an earlier decision.
I have written previously about fair use, but mostly in favor of the trademark holder. This time the decision has benefitted the other side of the argument; not the TM holder, and not those of us in the enforcement industry.
In this case the judge upheld the idea that “Lexus” is being used to literally describe a product or service that is being sold or serviced at the location in question.
To the judge in this case, it was the very definition of fair use.
Lisa and Farzad Tabari, who own Fast Imports, initially lost their domain names; buy-a-lexus.com and buyorleaselexus.com in 2003 under the legal protection against customer confusion, on behalf of Toyota.
Companies have very strict usage policies with regard to how their trademark is used by entities other than the parent company; distributors, jobbers, affiliates and any other related entity must comply, and any variation is monitored and usually forbidden.
The rules must be handed down by the parent company and there needs to be no mistake where this policy is eminating from; the must be strict control of how the mark is used.
Toyota’s basic case centered around the idea that consumers could be confused by the use of the name “Lexus” in the domains in question.
They contend that the website(s) in question contained and used Lexus photos and the Lexus logo, which could only add to the confusion, not clarify.
As expected, Toyota was not sympathetic to the Fast Imports’ use of copyrighted Lexus photos and the Lexus logo, and to the use of Internet domain names buy-a-lexus.com and buyorleaselexus.com.
Initially, the federal court judge ruled in favor of Toyota and the term Lexus was ordered removed; this decision was recently appealed and the result was that domains like “we-are-definitely-not-lexus.com” and “independent-lexus-broker.com” would not confuse a reasonable person into thinking these are legitimate Toyota sites.
In fact, the idea that Lexus was used as a business descriptor was upheld by this judge.
The problem with this decision is that while the judge felt that the previous decision’s protections were too broad, the precedent that was set here could allow for too much protection for cybersquatter technicalities.
We have encountered the situation many times where a cyber-squatter is using a protected brand, and to add insult to injury, they will state “We are not affiliated with “protected brand” and we make no claims of this nature. However they are selling the “protected brand” and many times at a reduced price.
Sometimes, even gray market, stolen, or knock off items are being sold.
In light of this new decision, ridiculous attempts to use a technicality to avoid enforcement, might actually have a chance with another judge using this decision as a precedent.
Personally I disagree with the judgement, because in my mind a trademark requires great responsibility and vigilant effort to keep safe.
Fair use should be reserved for parody and non-money making ventures.
If you want to use a trademark, you should secure permission in advance to do so and pay a fair price for the additional credibility and business you will gain from this recognition.
Essentially, in my opinion, this decision has weakened our protection against cybersquatters, and has empowered both the cheap, and the lazy to forego the correct way to secure business and customers, and instead just encourages infringers to seek out profitable entities and leech off of their success, without paying for it.
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