Practical Ecommerce

Legal: Domain Names, Trade Names, and Trademarks

Editor’s Note: We welcome Jeffrey Jacobson, an attorney, as our newest contributor. Jacobson is an expert in Internet and ecommerce law with Parmenter O’Toole, a Michigan-based law firm. He will contribute monthly on legal topics important to ecommerce merchants. His first piece, “Legal: Domain Names, Trade Names, and Trademarks,” follows below.

When choosing a name for your business, product, or website, careful consideration is key. A basic search should be done to determine how the name is being used before you start building your brand. It is important to research a name before you start using it, not only to guard against infringement of another’s mark, but also to start your business with a name that will not be confused with your competitors’ brands.

Most businesses spend thousands, or even millions, of dollars every year to promote their products or services and create name recognition. They are creating a “brand,” which can be a very valuable company asset. For example, the brand name Apple® is probably worth more to the company than any patent it owns. If another company is using a similar name, a potential customer could mistake your advertising for that of your competitor’s products or services. Also, this confusion by customers can be the basis of a trademark infringement claim.

At a minimum, search the major Internet search engines and at the United States Patent and Trademark Office (USPTO). Perform an in-depth search of state registrations, phone directories, and county records to discover any registered marks that may be confusingly similar to the mark you have chosen.

USPTO.gov, home page screen capture.

USPTO.gov, home page screen capture.

Protecting Your Trade Name

Unregistered names are protected by common law. To enforce your rights to a name under common law, you must prove that another business is using a name that is confusingly similar to yours, and that the similarity is likely to result in confusion among consumers. In other words, the burden is on you to prove that you used the name first, and that customers will be confused by the use of the name by the other business.

There are several advantages to registering a mark with USPTO. First, registration gives notice to the world that you claim the mark in association with your product or service. Second, if your name is intentionally used to cause confusion, you may receive triple the amount of damages in a suit for infringement and you may be entitled to attorney fees. Third, and most important, registration creates several presumptions, including that the mark is valid, and that you (as the registered owner) have superior rights to use the mark.

Lastly, if you plan to use your mark outside the U.S. (e.g., Internet sales), a registered mark allows you to file applications for foreign registration based on your U.S. registration. So, if you compete against foreign companies in the U.S., registration with the USPTO allows you to prevent the importation of goods using a mark that is confusingly similar to your mark by registration with U.S. Customs.

Trademarking Your Domain Name

Domain names can also be trademarks, and may be registered with the USPTO. However, the domain name has to be used as a trademark. This means it needs to designate the source of a product or service, not just the address of your website. The company or product name needs to be the same or similar for you to claim trademark rights to the domain name.

For example, Amazon.com is a trademark because the company sells products under the name Amazon.com. Trademark registration for a domain name can be important because trademarks trump domain registrations. In other words, if you register a domain name that is the same or similar to another company’s trademark, the company that owns that trademark may be able to force you to transfer or stop using the domain name.

Of course, there are many “cyber squatters” who try to extort money from trademark owners. Therefore, it is advisable to register similar variations of your name as well. It can be much cheaper and less aggravating to secure several variations of your name now than to end up later fighting with an unscrupulous Internet scammer.

Ecommerce Makes Name Protection Even More Important

It is most important for ecommerce businesses to protect their trade names. A business that was once just local can now be national or global. Companies selling over the Internet are now invading local markets, taking business away from the mom-and-pop corner store.

If another company is using a name similar to yours, it can cause real confusion among Internet shoppers. But, with careful selection of a name and proper protection, you can guard against a competitor profiting from the hard work and money you spent to create your brand name.

Jeff Jacobson, Jd, Llm

Jeff Jacobson, Jd, Llm

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  1. 222web222 April 20, 2010 Reply

    You have used the wrong trademark example. Apple is a generic dictionary word. If Apple becomes exclusive to Apple computer and amazon is exclusive to Amazon.com and hamburger is exclusive to McDonalds, we will soon run out of English words for our businesses and we will have to invent new English words or maybe use some Chinese to name our businesses. I believe it is a bad example for trademarks. I can understand that Xerox or Exxon are exclusive trademarks for those companies. But if any company uses a generic word for its mark, it must accept sharing the same name with other companies.

  2. Jeff Jacobson, JD, LLM April 21, 2010 Reply

    222web222,

    Thank you for your comment. Trademark ownership is not as broad as you may think. Apple does own the exclusive rights to use that term, but only as it is used with the products it makes and products that would be confusingly similar to Apple’s products. The same with Amazon. No one could ever exclusively own the right to call an apple an "apple". It is descriptive of the fruit, but Apple can exclusively own the right to call a computer, mp3 player, or phone an Apple. Apple’s use does not merely describe the product they produce. Therefore, McDonalds could never have the exclusive right to use the word "hamburger".

    In fact, Xerox fights constantly to avoid their name from becoming descriptive or generic when describing a copy machine. They do not want you to use the phrase "I will xerox it." They want you to say "I will use my Xerox copy machine to make a copy." Trademark owners loose rights when terms become generic so they advertise to try to make the public correctly use their trademarks.

  3. Alex Mulin April 27, 2010 Reply

    re: xerox it
    That’s how Russians say.

    Xerox was the 1st copy machine imported in post-Soviet Russia and it became a name for all copying machines in Russia and many ex-Soviet republics.

  4. duttavr November 23, 2010 Reply

    Hi jef thanks for the good post. still I want to get some clarity on this.

    is following infringement?
    lets say microsoft is branded one.

    I want to create a blog with domain name prefix with Microsoft to post tutorials on microsoft products. will this be infringement.

    microsoftXXX.com

    here XXX can be some thing like MicrosoftDotNet.com

  5. duttavr November 23, 2010 Reply

    Hi Jeff, My second query is as follows

    what about another scenario which has microsoft, java as subdomains
    let’s think each subdomain contains articles and tutorials on technlogies developed microsoft and sun

    http://microsoft.example.com
    http://sun.example.com

    will it also be infringement?

    could anyone please provide your respsonse on these two scenarios?

  6. Jill Enriquez June 28, 2012 Reply

    The misunderstanding in the law between trademarks and tradenames in Canada is quite widespread and often costly. In Andrei Mincovs blogpost, he simplifes the difference between the two. You can read all about it here: http://mincovlaw.com/blog-post/trademarks_vs_trade_names

  7. Craig Fries January 20, 2013 Reply

    Thank you for this information. I have a company whose exact name wasn’t available as a domain 16 years ago when I started the company, so I used, and continue to use, a shortened version of it as my domain.
    Last year after letting an employee go, he found that the domain that matches my company exact name was now available and bought it. He then had the domain name point to his own, new company website. His new company is a direct, local competitor to mine and its name is nothing like mine.
    I looked last week to see if my company name was now available, learned that it has been last spring and that he had purchased it and directed to his site. I have asked for him to not renew this April so I can register it. He has refused, stating that he want compensation in return.

    Are his actions legal? Are they compensate to me? Can I win a legal argument to get it?

  8. Christian Matiazzo April 1, 2013 Reply

    I have a similar situation of Craig!
    I work for a company that was opened 14 years ago and the exactly company’s name.com was already been used from someone out of country, we waited all these years and the domain finally expired, but its wasn’t available, because was parked in Italy, the day of the expiration a company name Snap Names bought, giving us no chance to purchase, we contact the company and they said that their company is responsible to buy 98% of all domain that expires, anyway, they are not using the domain and ask us $50.000 for it!! I think this is ilegal!! What can we do? We can prove that the name of that domain is ours company’s name since 1997.