August 26, 1999 Web posted at: 1:19 p.m. EDT (1719 GMT) by Elinor Mills Abreu

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ALSO        Laying down the law on domain names    Sign up for the Computer Connection email service    For more computing stories INTERACTIVE Should the owner of a trademark have an exclusive right to use it as a domain name? Yes No View Results

(IDG) -- Raising the bar on trademark protection, a U.S. federal appeals court has ruled that the Avery and Dennison trademarks of the office products company Avery Dennison Corp. are not famous enough to prevent another company from registering them with the .net domain.

The case involves Mailbank.com, an online service that sells personalized e-mail and Web addresses to individuals. Free View Listings Ltd., which operates Mailbank.com, registered avery.net and dennison.net domain names for use by people with those as first or last names.

Avery Dennison, which has trademarks for both names, sued claiming Mailbank was diluting its trademarks. The U.S. District Court for the Central District of California ruled in Avery Dennison's favor and ordered the president of Free View, Jerry Sumpton, to transfer the domain name registrations to the company in exchange for $300 each.

Sumpton appealed to the U.S. Court of Appeals for the Ninth Circuit and a three-judge panel issued its ruling in his favor this week. The appeals court reversed the earlier ruling and ordered the case back to the lower court with instructions to enter summary judgment for Sumpton and to consider his request that Avery Dennison pay his attorney fees.

To successfully claim trademark dilution, a company must prove that its trademark is famous, that the defendant is making a commercial use of the mark and that the use is likely to dilute the distinctive value of the trademark, among other things, the opinion said.

However, although Avery Dennison's trademarks meet the criteria for being distinctive, they do not meet the threshold of fame, Judge Stephen Trott wrote in the opinion. "Therefore, to meet the 'famousness' element of protection under the dilution statutes, 'a mark (must) be truly prominent and renowned,'" he wrote, citing a prior ruling.

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In addition, Sumpton was not making a commercial use of the mark, but using names for domain purposes that happen to be trademarks, Trott said.

The judge also pointed out that both Avery and Dennison are common surnames and other companies have used one or the other surname in various other trademarks. He added that Avery Dennison would have had a stronger case if the lawsuit involved the .com domain, which Avery Dennison already owns, rather than the .net domain.

Several intellectual property attorneys said the ruling now puts a significant burden on companies seeking to protect their trademarks in the online world.

"What it does, I think, is it indicates that there is going to be a situation in which domain names can exist that are similar to, or even that use some of the same words as a trademark and the trademark owner isn't (necessarily) going to be able to stop that," said Gary Frischling, a partner at the firm of Irell & Manella LLP in Los Angeles.

The ruling may allow courts to consider what alternative uses the trademarked words have and the nature of what the defendant is doing with the words, as long as the use doesn't confuse people, he said.

"There won't be the automatic free pass that some other cases suggested, that if you had a trademark you had some exclusive space on the Web," Frischling added.

Another intellectual property attorney said the Anticybersquatting Consumer Protection Act (S1255) reported in the U.S. Senate this year would be a more objective way to approach trademark protection cases than the federal statute governing trademark dilution because the Senate bill examines more closely whether the defendant is truly a cybersquatter.

The act would make someone liable in a civil action if he or she, in bad faith, profits from the goodwill of a trademark, or traffics in or uses a domain name that is identical to or confusingly similar to a trademark.

The act would allow a court to consider intent by looking at factors such as whether: the defendant has any intellectual property rights in the domain name; the domain name consists of the legal name of the defendant; the defendant has used the domain name previously for business purposes; and if the defendant has registered as domain names other words that are similar to a trademark.

Kenneth Wilton, a partner at Small & Larkin LLP in Los Angeles, also objected to the appeals court's focus on famousness. By ordering the lower court to issue a summary judgment ruling for the defendant, the court is indicating that it doesn't think Avery Dennison could prove at trial that it was famous as an issue of fact, he said.

"Fame in dilution cases has always been sort of an obscenity standard -- you know it when you see it," Wilton said.