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Merchandising; Cybersquatting. Intro to IP – Prof Merges 3.30.2010. Merchandising: “Extension by Contract”. Merchandising and basic trademark theory What consumer associations are protected by a “merchandising right”? What other benefits follow from such a right?. How does franchising work?.

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Merchandising; Cybersquatting

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Merchandising cybersquatting

Merchandising; Cybersquatting

Intro to IP – Prof Merges


Merchandising extension by contract

Merchandising: “Extension by Contract”

  • Merchandising and basic trademark theory

  • What consumer associations are protected by a “merchandising right”?

  • What other benefits follow from such a right?

How does franchising work

How does franchising work?

  • National headquarters: centralized assets

    • Recipes, standard procedures, logos, other resources

  • Local franchise locations

    • Owners of real estate, contractual share of revenue



  • Two different legal regimes deal with this

  • Domestic US law: ACPA, 15 USC 1125(d)

    • “bad faith”; “legitimate interest”

  • International arbitration: ICANN/UDRP – WIPO-administered arbitration system

Domain name registration basics

Domain name registration - basics

  • IPNTA 5th ed at 791

  • Internet Corporation for Assigned Names and Numbers (ICANN), non-profit. Coordinates assignment of domain names by various entities, which generally allocate domain names on a first-come, first-served basis for a modest fee.



  • Reserving names that are “naturally” associated with a particular company

  • Then, selling these domain names to the relevant company

  • Examples: P&,,,, P&, etc.

Cybersquatting and speculation

Cybersquatting and speculation

  • Markets and legitimacy

  • Crucial role for law in determining and policing what are legitimate markets

Society determines which transactions are legitimate and which are not

Society determines which transactions are legitimate, and which are not

  • The existence of a market does not, by itself, confer legitimacy

Peta v doughney

Peta v. Doughney

  • Initial interest confusion on the web

  • Parody?

Peta arguments

PETA arguments

Doughney (I) had no intellectual property right in; (II) is not Doughney’s name or a name otherwise used to identify Doughney; (III) Doughney had no prior use of in connection with the bona fide offering of any goods or services; (IV) Doughney used the PETA Mark in a commercial manner;

Merchandising cybersquatting

(V) Doughney ‘‘clearly intended to confuse, mislead and divert internet users into accessing his web site which contained information antithetical and therefore harmful to the goodwill represented by the PETA Mark’’;

Merchandising cybersquatting

(VI) Doughney made statements on his web site and in the press recommending that PETA attempt to ‘‘settle’’ with him and ‘‘make him an offer’’; (VII) Doughney made false statements when registering the domain name; and (VIII) Doughney registered other domain names that are identical or similar to the marks or names of other famous people and organizations.

Merchandising cybersquatting

"Owe no one anything except to love one another, for he who loves another has fulfilled the law." (Romans 13:8)

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Merchandising cybersquatting


  • Anti-cybersquatting Protection Act

Merchandising cybersquatting

‘‘The paradigmatic harm that the ACPA was enacted to eradicate’’ is ‘‘the practice of cybersquatters registering several hundred domain names in an effort to sell them to the legitimate owners of the mark.’’ Lucas Nursery & Landscaping, Inc. v. Grosse, 359 F.3d 806, 810 (6th Cir. 2004).

Commercial speech

Commercial speech

  • 1st amendment doctrine

  • Controversy: lower 1st amendment protection?

  • Issue dodged here – no TM infringement liability, no 1st A defense

Ipnta 5 th ed 864

IPNTA 5th ed 864

[W]e need not resolve that question or determine whether Sections 32 and 43(a) apply exclusively to commercial speech because Reverend Falwell’s claims of trademark infringement and false designation fail for a more obvious reason. The hallmark of such claims is a likelihood of confusion—and there is no likelihood of confusion here.

Shields v zuccarini ipnta 5 th p 869

Shields v. Zuccarini – IPNTA 5th p. 869

  • ACPA Case

  • “Typosquatting” at issue

Joe s cartoons site

Joe’s Cartoons site


  • Post-Google environment may be a bit different . . .

Merchandising cybersquatting

John Zuccarini (born c. 1947) is an American businessman who served time in federal prison for violating the Truth in Domain Names Act. Zuccarini operated a domain name speculation business. He is reported as owning 5500 domains before his arrest.

John Zuccarini was charged under "truth in domains" legislation

Domain name speculation

Zuccarini registered thousands of domains that were close misspellings or "typos" of popular sites such as Cartoon Network and Homestar Runner or even acquired domains identical to well known brands such as Hot Wheels. Speculators normally place a pay-per-click web page in place of the legitimate website visitors expect to find. A PPC page looks similar to a search engine page but the design additionally blankets the home page with a copious amount of links that are often related to the subject of the domain name. Under the normal model of business, the speculator profits from the money obtained from visitors clicking on these links. However, Zuccarini deviated from this business convention by redirecting his audience of largely children to pornographic websites.

John zuccarini

John Zuccarini

Domain name tasting

Domain Name Tasting

  • Spin Off on Old Fashioned Act of Cybersquatting

  • Domain Name Tasting –Exploits a Loophole in ICANN’s Domain Name Registration Process

  • You can Register Unlimited Domain Names for 5 Days and Return them for a Full Refund.

  • “Tasted Names” Infringe and Dilute famous Trademarks

  • Infringing Domain Names are “Parked” on Temporary Websites Loaded with Ads


Merchandising cybersquatting


Merchandising cybersquatting


Other new domain name abuses

Other New Domain Name Abuses

  • Domain Name Kiting – Registrars Taste, Park Domain Name in Bulk and Drop Them. Using an Automated Process, They Automatically Re-Register Them Again and Again.

  • Domain Name Spying – Cybersquatters See Name You Search and Grab Them Before You Can Register Them.


How bad is the problem

March 2005 – Nearly 43 million .com and net domain names registered.

Only 2.5 million names were deleted that same month.

In April of 2006, 35 million names registered.

Of those names 32.7 million were used again and again but never registered permanently!

How Bad is the Problem?


Connecting the dots we have problem

Connecting the Dots: We Have Problem

  • In April of 2006, only 2 Million Names Were Actually Purchased, Meaning that over 92% of all Domain Names Registered Were Part of Tasting Schemes!

  • Of the 32 Million Domain Names Registered That Month, 50% infringed on the Rights of Trademark Owners


Recent litigation

Recent Litigation

  • Dotster sued by Neiman Marcus and Bergdorf Goodman -- case settled

  • Over 120 infringing variations of Verizon trademarks were included as an exhibit to the Dotster complaint

  • March, 2007 – Neiman Marcus sues Name.Com, another Registrar

  • Many new cases from brand owners, including new Verizon suits


They meant what they said

They Meant What They Said

  • 1999 – Anti-Cybersquatting Consumer Protection Act.

  • Senate Report:

    “Specifically, legislation is needed to clarify the rights of trademark owners with respect to bad faith, abusive conduct, and to provide adequate remedies for trademark owners…”


Merchandising cybersquatting


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