Intermatic Incorporpated,
Plaintiff,
v.
Dennis Toeppen,
Defendant.
No. 96 C 1982
Dated: Nov. 26, 1996
Hon. Ann C. Williams
Order
The court has carefully reviewed Magistrate Judge Denlow’s report and recommendation (“R&R”), the objections of defendant Toeppen, and responses of plaintiff Intermatic Inc. Toeppen’s main objection is that the R&R failed to consider whether a domain name has inherent attribute of a trademark. Defendant’s objection rests on the underlying fact that the internet is a new medium of communication. Although it is a new medium, courts must still apply traditional trademark law, while also considering the policy implications. Magistrate Judge Denlow’s R&R does just that. By applying the law of trademarks to the internet, Magistrate Judge Denlow strikes an appropriate balance between trademark law and the attendant policy concerns raised by the defendant. See Panavision International, L.P., v. Toeppen, No. 96 C 3284, 1996 WL 653726 (C.D. Cal. Nov. 5, 1996).
Additionally, the court grants Intermatic’s motion to strike the declaration of Patricia L. Gruber because a party may not hold back in the proceeding before the magistrate judge on the basis that additional affidavits or exhibits will be submitted to the district judge. The referral of the motion to the magistrate requires all parties to make the same presentation they would have submitted to the district judge. See Schaap v. Executive Industries, Inc., 760 F. Supp. 725, 728 n.3 (n.D. Ill. 1991); Anna Ready Mix, Inc. v. N.E. Pierson Const. Co., 747 F. Supp. 1299, 1303 (S.D. Ill. 1990) (citing Patterson-Leitch Company, Inc., v. Massachusetts Municipal Wholesale Electric Company, 840 F.2d 985, 990-91 (1st Cir. 1988)); 7 James Wm. Moore, Moore’s Federal Practice para. 72.04, p. 72-63 (2d ed. Sept. 1996). Assuming arguendo that the court allowed the declaration of Patricial L. Gruber to stand it would not change the court’s decision.
Magistrate Judge Denlow’s report and recommendation dated October 28, 1996 is adopted in full and supplemented by this Minute Order. Intermatic’s motion for summary judgment is granted in part as to counts III and IV, denied as to counts I, II, V, VI, and VII, and Toeppen’s motion for summary judgement is denied as to all counts. The court also grants Intermatic’s motion to strike the declaration of Patricia L. Gruber. The parties are instructed to discuss settlement before the next status hearing scheduled in this case.
Dated: Oct. 3, 1996
Judge Ann C. Williams
Magistrate Judge Morton Denlow
TO: THE HONORABLE ANN C. WILLIAMS
UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION
Welcome to cyberspace! This case presents the Court with the increasingly important issue of whether and how federal and state trademark laws apply to govern names selected by users for their Internet website. As the Internet grows in prominence as a venue for business, the courts will be called upon to apply traditional legal principles to new avenues of commerce. This is such a case.
Plaintiff Intermatic Incorporated (“Intermatic”), brings this action in seven counts against defendant Dennis Toeppen (“Toeppen”). Intermatic alleges that Toeppen’s use of the Internet domain name “Intermatic.com” violates sections 32(1) (Federal Trademark Infringement) (count I), 43(a) (Federal Unfair Competition) (count II), and 43(c) (Federal Trademark Dilution Act of 1995) of the Lanham Act (count III). 15 U.S.C. Section 1114(1); 15 U.S.C. Section 1125(a); and 15 U.S.C. Section 1125(c) respectively. Intermatic also alleges that Toeppen’s conduct violates the Illinois Anti-Dilution Act, 765 ILCS 1035/1 et. seq. (count IV); the common law of unfair competition (count V); the Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et. seq . (count VI); and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2. (count VII). Toeppen denies that his conduct is unlawful.
Intermatic and Toeppen have filed cross-motions for summary judgment on all seven counts. The Court held extensive oral argument on August 29, 1996 and has reviewed the briefs, stipulations, affidavits and exhibits submitted by the parties. For the reasons set forth below, the Court recommends that Intermatic’s motion for summary judgment be granted as to counts III and IV (the “Dilution counts”) and be denied as to the remaining counts. The Court recommends that Toeppen’s motion be denied as to all counts.
I. BACKGROUND FACTS
A. The Parties.
Intermatic is a Delaware corporation having a place of business in Spring Grove, Illinois. Intermatic has been doing business under the name INTERMATIC since 1941. Intermatic has 37 offices throughout the United States and has been in business in Illinois since 1892. Intermatic is a manufacturer and distributor of a wide variety of electrical and electronic products, including computerized and programmable timers and other devices which are sold under the name and trademark INTERMATIC.
Intermatic’s sales and advertising of INTERMATIC labeled products have been continuous since the 1940’s. (SF para. 6).[1] In the last 8 years, its sales in the U.S. have exceeded $850 million. Id . Intermatic’s products prominently bear the INTERMATIC name and trademark, and well over 100 million units have been installed in homes and businesses throughout the United States. (SF paras. 6, 9).
Advertising and promotional expenditures for products bearing the INTERMATIC mark for the last 8 years have exceeded $16 million. (SF para. 7). Intermatic’s co-op advertising consists of approximately 700 print ads per year, with each displaying the INTERMATIC mark. Intermatic also advertises and promotes its INTERMATIC products, mark and name by way of trade shows throughout the United States, magazines, point-of-purchase displays, brochures, radio, and television. (12 M paras. 12, 31, 32).
Defendant Toeppen resides in Champaign, Illinois, where he operates an Internet service provider business known as Net66. Toeppen has registered approximately 240 Internet domain names without seeking the permission from any entity that has previously used the names he registered, because he contends that no permission was or is necessary. Among the domain names which he has registered are the following well known business names:
deltaairlines.com
greatamerica.com
britishairways.com
neiman-marcus.com
crateandbarrel.com
northwest airlines.com
ramadainn.com
ussteel.com
eddiebauer.com
unionpacific.com
One of Toeppen’s business objectives is to profit by the resale or licensing of these domain names, presumably to the entities who conduct business under these names.
B. Intermatic’s Trademarks.
Intermatic owns five incontestable trademark registrations issued by the U.S. Patent and Trademark Office for its INTERMATIC mark. (SF para. 4, Ex. 2). Intermatic is the exclusive owner of the INTERMATIC trademark and trade name, and there are no known third party uses of INTERMATIC in the U.S. (SF paras. 4, 11, Ex. 2). Prior to registering the intermatic.com domain name, Toeppen had never used the term intermatic for any purpose.
C. The Internet.
1. Domain Names.
The Internet is a vast and expanding network of computers and other devices linked together by various telecommunications media, enabling all the computers and other devices on the Internet to exchange and share data.
The Internet provides information about a myriad of corporations and products, as well as educational, research and entertainment information and services. An estimated 30 million people worldwide use the Internet with 100 million predicted to be on the “net” in a matter of years.[2]
A computer or device that is attached to the Internet is often referred to as a “host.” In order to facilitate communications between hosts, each host has a numerical IP (Internet protocol) address.[3] The IP address is comprised of four groups of numbers separated by decimals. For example, the IP address of one of Toeppen’s host computers is 206.139.80.66. Each host also has a unique “fully qualified domain name.” The “fully qualified domain name” may not be repeated in the Internet. In the case of 206.139.80.66, the “fully qualified domain name” is “winslow. net66.com”.
In its most generic form, a fully qualified domain name consists of three elements. Taking “winslow.net66.com” as an example, the three elements are the hostname (“winslow”), a domain name (“net66″) and a top level domain (“com”). A given host looks up the IP addresses of other hosts on the Internet through a system known as domain name service.
Domain name service is accomplished as follows: The Internet is divided into several “top level” domains. For example, “edu” is a domain reserved for educational institutions, “gov” is a domain reserved for government entities and “net” is reserved to networks. Although “com” is short for “commercial,” it is a catchall domain and the only one generally available to Internet users that have no special attributes i.e., they are not a school or a government office or a network. Each domain name active in a given top-level domain is registered with the top level server which contains certain hostname and IP address information.
In order to access the Internet, most users rely on programs called “web browsers.” Commercially available web browsers include such well-known programs as Netscape and Mosaic. If an Internet user desires to establish a connection with a web page hosted at winslow.net66.com, the Internet user might enter into a web browser program the URL “http://www.net66.com.” (URL stands for uniform resource locator.) The first element of the URL is a transfer protocol (most commonly, “http” standing for hypertext transfer protocol). The remaining elements of this URL (in this case, “www” standing for World Wide Web and “net66.com”) are an alias for the fully qualified domain name of the host winslow.net66.com. Once a URL is entered into the browser, the corresponding IP address is looked up in a process facilitated by a “top-level server.” In other words, all queries for addresses are routed to certain computers, the so-called “top level servers”. The top level server matches the domain name to an IP address of a domain name server capable of directing the inquiry to the computer hosting the web page. Thus, domain name service ultimately matches an alphanumeric name such as www.net66.com with its numeric IP address 206.139.80.66.
2. Registration of Domain Names.
Domain names using the suffix “.com” are established by registration with an organization called Network Solutions, Inc. (“NSI”). Registration of the other available top-level domain names, “edu,” “gov” and “net”, is handled by other organizations. With some limitations, NSI will register any combination of up to 24 alphanumeric characters as a domain name on a first-come, first-served basis to anyone who has access to at least two domain name servers. A domain name server is a host computer with software capable of responding to domain name inquiries and accessible on a full-time basis to other computers on the Internet. Registering a domain name is the step that allows the top-level servers within the Internet to know where the domain name servers or hosts associated with those domain names are located in the Internet. The cost for a domain name registration is currently $100. Domain name service can be operated by the domain name holder or obtained from any entity with the proper computer equipment, including hundreds of Internet service providers.
3. Web Pages.
One way to establish a presence on the Internet is by placing a web page, which is, ultimately, a computer data file on a host operating a web server within a given domain name. When the web server receives an inquiry from the Internet, it returns the web page data in the file to the computer making the inquiry. The web page may comprise a single line or multiple pages of information and may include any message, name, word, sound or picture, or combination of such elements. Most web browsers will show somewhere on the screen the domain name of the web page being shown and will automatically include the domain name in any printout of the web page. There is no technical connection or relationship between a domain name and the contents of the corresponding web page.
There are a number of ways for an Internet user to find a web page. Web browsers feature access to various indexes, commonly referred to as search engines. Well-known indexes include InfoSeek Guide, Lycos, Magellan, ExCite and Yahoo. These indexes will allow the user to enter a name or a word or a combination of words, much like a Lexis or WestLaw search, and will return the results of the search as a list of “hyperlinks” to webpages that have information within or associated with the document comprising the page responding to the search.
4. Hyperlinks.
A hyperlink is a link from one site on the Internet to a second site on the Internet. “Clicking” on a designated space on the initial page which references the subsequent site by a picture, by some highlighted text or by some other indication will take a person viewing the initial web page to a second page. In addition to their use in indexes, hyperlinks are commonly placed on existing web pages, thus allowing Internet users to move from web page to web page at the click of a button, without having to type in URLs.
Hyperlinks can be and commonly are established without reference to the domain name of the second site. A hyperlink for the Champaign-Urbana map page might be a picture of a map or a statement such as “a map of Champaign-Urbana” or, more simply, “Champaign-Urbana.” A hyperlink is not technically related to a domain name and therefore it can be identical to an existing domain name without conflicting with that domain name. For example, were Intermatic to establish an Intermatic home page at http://www.xyz.com, any number of indexes could be employed and hyperlinks could be established to bring up the page through use of the word INTERMATIC.
D. The Dispute.
In December of 1995, Toeppen applied for registration of the domain name http://www.intermatic.com (“intermatic.com”) and NSI registered the domain name to Toeppen’s domain name servers. A given domain name, the exact alphanumeric combination in the same network and using the same suffix, can only be registered to one entity. Intermatic subsequently attempted to register the same domain name and was prevented from registering “intermatic.com” as its domain name because of Toeppen’s prior registration of that domain name.
Intermatic also became aware that Toeppen was using the mark “Intermatic” in connection with the sale of a computer software program. Upon discovery of Toeppen’s prior registration and use of the Intermatic mark, Intermatic made a written demand on Toeppen that he relinquish or assign the “intermatic.com” domain name registration and discontinue use of the Intermatic mark. Toeppen agreed to discontinue using the Intermatic mark for his software product but refused to give up the “intermatic.com” domain name registration. In response to a formal request by Intermatic, NSI put Toeppen’s registration on hold in April of 1996.
As long as Mr. Toeppen is allowed to retain the “intermatic.com” registration, Intermatic will be unable to acquire “intermatic.com” as an Internet domain name or use “intermatic.com” as an e-mail address on the Internet. However, Intermatic is technically capable of establishing its web page at another domain name, including, for example, “intermatic-inc.com” and it is technically capable of establishing at any available domain name a web page featuring the INTERMATIC mark and any other Internet-related marketing or business information. To date, Intermatic has not chosen to reserve any other domain name or to take any other action to establish a presence on the Internet. However, some of its distributors have placed Intermatic information on the Internet.
Until NSI placed the intermatic.com domain name on hold, Toeppen maintained intermatic.com as an active domain name on the Internet. Although he initially set up a web page regarding a software program he was developing and intended to call “Intermatic,” Toeppen removed that page (which was available for less than a week) and dropped the proposed name for his software in response to demand from Intermatic. No software programs were ever sold. He then instituted as a web page a map of Champaign-Urbana, the community where Toeppen resides.
When Toeppen became aware of Intermatic’s efforts to have the intermatic.com domain name placed on hold, he changed the web page associated with intermatic.com to bear the caption “Champaign-Urbana Map Page/has Moved To www.c-u.com.” Toeppen moved the map and put the forwarding address on the intermatic.com page so that Internet users could update relevant hyperlinks before the NSI freeze simply locked them out of the page, as is now the case. Presently, entering intermatic.com will return a message that there is no functional domain name server at that domain name.
At no time did Toeppen use intermatic.com in connection with the sale of any available goods or services. At no time has Toeppen advertised the intermatic.com domain name in association with any goods or services. Presently, the intermatic.com domain name is not available for use by any party. Toeppen did not seek permission from Intermatic to use the intermatic.com domain name because he believes that no permission was or is necessary. Intermatic disagrees. This litigation ensued.
II. SUMMARY JUDGMENT STANDARD
