Panavision, domain names and trademarks

[Robert Frank <bobf@corsearch.com>]

On November 1, 1996 an opinion was issued on the case of Panavision International v. Dennis Toeppen.  I realize that these
comments will probably fall on deaf ears for Carl Oppedahl, myself and others have been trying for years to explain 
some of these principles to no avail.  (It sorta reminds me of a guy I used to work for who often used the statement, "Don't
confuse me with the facts.  I have already made up my mind.")  Nonetheless, here it goes. (case was at a Federal Court)

Toeppen registered Panavision and Panaflex, without authorization, as domain names (.com).  When Panavision decided it
wanted to get on the net it found out that Toeppen had registered panavision.com so they contacted him.  He told them he
would sell them the domain name for $13,000.  He also had registered, and was in law suits, over americanstandard.com
and intermatic.com.  He had also registered aircanada.com, anaheimstadium.com, arriflex.com (Arriflex is Panavision's
primary competitor), australiaopen.com, camdenyards.com, deltaairlines.com, eddiebauer.com, flydelta.com, frenchopen.com,
lufthansa.com, neiman-marcus.com, northwestairlines.com and yankeestadium.com.

[Sections with " " surrounding text are from the opinion.  Typos are mine only.]

"Because users may have difficulty accessing web sites or may not be able to access web sites at all when they do not know
(or cannot deduce) the proper domain name, businesses frequently register their names and trademarks as domain names. 
Therefore, having a known or deducible domain name is important to companies seeking to do business on the Internet, as well
as important to consumers who want to locate those businesses' web sites."

"Traditionally, trademark law has permitted multiple parties to use the same mark for different classes of goods or services.  
Trademark law only prohibited use of the same mark on competing goods or services (expanded by the Lanham Act in 1946
to prohibit uses on non-competing but "related" goods or services) where there was a likelihood of consumer confusion as to
the origin of the goods or services with which the user associated the mark."

"Trademark dilution laws, however, changed the traditional trademark analysis.  Trademark dilution laws protect "distinctive"
or "famous" trademarks from certain unauthorized uses of the marks regardless of a showing of competition or likelihood of
confusion.  Indeed, the very purpose of dilution statutes is to protect trademarks from damage caused by the use of the marks
in non-competing endeavors.  Whereas traditional trademark law sought primarily to protect consumers, dilution laws place
more emphasis on protecting the investment of the trademark owners. Still, dilution laws do promote consumer welfare: if
trademarks are valuable to consumers, protecting businesses' investments in trademarks will benefit consumers by
increasing the willingness of businesses to invest in the creation of recognized marks."

"Other internet trademark disputes, including the dispute in the current litigation, can be resolved under trademark dilution law."

"In applying the Dilution Act, the Court must be guided by the policies underlying trademark law.  The basic policy is to prevent
deception of the public.  Trademark law also protects the interests of trademark owners in not having the value of their marks
misappropriated.  Finally, trademark law encourages competition and economic efficiency from which the public benefits."

"Registration of a trade as a domain name, without more, is not a commercial use of the trademark and therefore is not within 
the prohibitions of the Act.  In the case before the Court, however, Toeppen has made a commercial use of the Panavision
marks"

"Toeppen's "business" is to register trademarks as domain names and then to sell the domain names to the trademarks' owners.
Toeppen's business is evident from his conduct with regard to Panavision and his conduct in registering the domain names of
many other companies.  His "business" is premised on the desire of the companies to use their trademarks as domain names and
the calculation that it will be cheaper to pay him than to sue him.  Panavision, however, chose to litigate rather than to accede to
Toeppen's $13,000 "fee"."

"Permissible, non-trademark uses stand in sharp contrast to Toeppen's use of the Panavision marks. Toeppen traded on the
value of the marks as marks by attempting to sell the domain names to Panavision.  This conduct injured Panavision by
preventing Panavision from exploiting its marks and it injured consumers because it would have been difficult to locate
Panavision's web site if Panavision had established a web site under a name other than its own."

"Toeppen's conduct varies from the two standard dilution theories.  As a result of the current state of internet technology,
Toeppen was able not merely "to lessen [ ] the capacity of a famous mark to identify and distinguish goods or services."
15 U.S.C. 1127, but to eliminate [italicized in the opinion] the capacity of the Panavision marks to identify and distinguish
Panavision's goods and services on the Internet.  The Court finds that Toeppen's conduct, which prevented Panavision
from using its marks in a new and important business medium, has diluted Panavision's marks within the meaning of
the statute."

"This decision merely holds that registering a famous mark as a domain name for the purpose of trading on the value of the
mark by selling the domain name to the trademark owner violates the federal and state dilution statutes.  This holding
successfully balances the principles of "fair competition and free competition.  In addition, the Dilution Act itself excepts
certain uses and thereby protects parties who "innocently" register a famous trademark as a domain name (e.g., a citizen of
Pana, Illinois who registers "panavision.com" in order to provide a community political forum would come under the exemption
for non-commercial use.)"

Conclusions:

"(1) Dennis Toeppen and his agents, servants (etc. deleted by me) who receive actual notice of this Order are hereby enjoined
and restrained immediately:

	(a) from using, attempting to use, or causing to be used, including but not limited to, registering, attempting to
register, or causing to be registered, either directly or through agents (etc., again), the "Panavision" and "Panaflex"
names and marks (the "Panavision names and marks") or any variations thereof, or any other mark confusingly similar 
thereto, likely to cause dilution of the Panavision names and marks or injury to Panavision's business reputation, in connection
with any commercial activity on the Internet or any other medium."

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If anyone is interested in putting the opinion and other court documents I have on this case online, please email back to
me and I will send you a copy.

Robert Frank, President
CORSEARCH, Inc.

(Speaking for myself as an interested party.)