Foreign Entity’s Use of a Mark in Its Domain Name Is “Use in Commerce”
April 5, 2004
On January 8, 2004, the U.S. District Court for the District of Delaware handed down a decision in Argos v. Orthotec, LLC, 2004 WL 60691 (D. Del.) addressing whether a foreign entity has standing to sue in a United States court under the cybersquatting provisions of the Lanham Act. The court answered affirmatively, finding that a foreign entity’s use of its mark with the “.com” generic top level domain, and its operation of the corresponding Web site to promote its services in the United States, were sufficient to overcome the defendant’s argument that a foreign company had no standing to sue under the Lanham Act.
To bring an infringement suit under the Anticybersquatting Consumer Protection Act (ACPA), a trademark owner must show “use in commerce” within the meaning of the Lanham Act.[1] The line of domain name cases since the passage of the ACPA in 1999 has elaborated that standard as it applies to domain name holders in the United States. However, the Argos decision is a rare case applicable to domain name holders located outside of the United States and is instructive regarding what is required for foreign companies to have standing to file suit in a United States court.
The Argos case involved a French association, Argos, which provides information regarding spinal surgery research and operates a Web site promoting its services at www.argus-europe.com. Argos sued Orthotec, LLC, a Delaware entity, for registration and use of www.argos-us.com, which the defendant used in connection with spinal surgery goods and services.
Orthotec moved to dismiss on several grounds, including lack of standing to sue based upon the argument that Argos’ promotion of its mark throughout the world via its Web site did not constitute “use in commerce” as defined by the Lanham Act. The court denied Orthotec’s motion, ruling that using a domain name to operate a Web site is “use in commerce” because it affects a party’s ability to offer services, consistent with the decision in Planned Parenthood v. Bucci, 1997 U.S. Dist. LEXIS 3338 *10 (S.D.N.Y. 1997). The court further ruled that a foreign entity’s Web site that is accessible by users throughout the world, including the United States, is sufficient to satisfy the “use in commerce” requirement within the meaning of the Lanham Act.
Notably, the court also denied Orthotec’s motion to dismiss for failure to state a claim because Argos failed to allege facts permitting an inference of bad faith intent to profit, an element that the plaintiff must prove to prevail under ACPA.[2] In particular, Orthotec argued that Argus failed to show Orthotec tried to sell the domain name to Argos. However, under a number of cybersquatting cases, it is well established that bad faith can be shown by actions other than an offer to sell. The court held that Argos’ allegations that (1) Orthotec attempted to trade upon Argus’ goodwill, and (2) Orthotec’s creation of confusion as to affiliation and sponsorship by Argos, were sufficient enough allegations of bad faith to survive a motion to dismiss for failure to state a claim. The specter of bad faith may have been clearer to the court given that the majority shareholder of Orthotec was formerly a member of Argos.
For any foreign entity that wants to enforce its trademark rights against an alleged U.S. cybersquatter in a U.S. forum, the decision in Argos
is noteworthy as it provides guidance about what is required for standing to sue
under the Lanham Act.
For more information, e-mail Elayna Pham at
elayna.pham@hklaw.com or call toll free, 1-888-688-8500.
1. “Use in commerce” as defined in the Section 1127 of the Lanham Act means “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark … a mark shall be deemed to be used in commerce … when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.”
2. To establish a claim of cybersquatting, a plaintiff must show: (1) defendant registered, traffics in, or uses a domain name that is identical or confusingly similar to a distinctive or famous trademark; and (2) defendant has a bad faith intent to profit from that mark. 15 U.S.C. Section 1125(1)(A)(2003).