Intermatic Incorporated v. Dennis Toeppen
947 F. Supp. 1227 (1996)
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Rule of Law:
Registering a famous trademark as an internet domain name with the intent to profit from its resale to the trademark owner constitutes commercial use that unlawfully dilutes the trademark under the Federal Trademark Dilution Act of 1995.
Facts:
- Intermatic Incorporated is a Delaware corporation that has used the registered trademark 'INTERMATIC' for its electrical and electronic products since 1941, making it a famous and strong mark.
- Dennis Toeppen, an internet service provider, registered approximately 240 internet domain names, including 'deltaairlines.com' and 'neiman-marcus.com', without permission from the trademark owners.
- Toeppen's business objective was to profit from the resale or licensing of these domain names to the entities that conduct business under those names.
- In December 1995, Toeppen registered the domain name 'intermatic.com' without Intermatic's permission and having never used the term 'intermatic' for any purpose prior.
- When Intermatic attempted to register 'intermatic.com' for its own use, it was blocked by Toeppen's prior registration.
- Initially, Toeppen activated a web page at 'intermatic.com' for a software program he intended to sell, but after a demand from Intermatic, he removed it.
- Subsequently, Toeppen replaced the content at 'intermatic.com' with a web page displaying a map of Champaign-Urbana, Illinois.
- Toeppen never used 'intermatic.com' in connection with the sale of any goods or services, but his counsel conceded his intent was to eventually sell the domain name.
Procedural Posture:
- Intermatic Incorporated filed a seven-count complaint against Dennis Toeppen in the U.S. District Court for the Northern District of Illinois.
- The claims included federal trademark dilution (Count III) and Illinois anti-dilution (Count IV).
- Both parties filed cross-motions for summary judgment on all counts.
- The district court referred the motions to Magistrate Judge Denlow for a report and recommendation.
- Magistrate Judge Denlow recommended granting summary judgment for Intermatic on the federal and state dilution counts and denying both parties' motions on all other counts.
- Toeppen filed objections to the Magistrate Judge's report and recommendation, bringing the matter before District Judge Williams for a final ruling.
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Issue:
Does a person's registration of a famous trademark as an internet domain name, with the intent to sell it back to the trademark owner, constitute a commercial use that causes dilution of the mark in violation of the Federal Trademark Dilution Act?
Opinions:
Majority - Denlow, United States Magistrate Judge (adopted by Williams, District Judge)
Yes, a person's registration of a famous trademark as an internet domain name with the intent to sell it back to the trademark owner is a commercial use that causes dilution in violation of the Federal Trademark Dilution Act. The court found that Intermatic's mark is famous and entitled to protection. Although Toeppen's use of the '.com' designation alone or his brief attempt to sell software did not establish post-Act commercial use, his admitted intention to 'arbitrage' the domain name by selling it to Intermatic constitutes a commercial use under the statute. This use is 'in commerce' because the internet is inherently a global medium. Toeppen's conduct causes dilution in two ways: first, it lessens the capacity of Intermatic to identify and distinguish its goods and services by preventing the company from using its own famous mark as its domain name. Second, by associating the 'Intermatic' name with his own content, Toeppen erodes the mark's distinctiveness and places Intermatic's reputation at his mercy, which is the exact harm the dilution statute was designed to prevent.
Analysis:
This case is a landmark decision in the early jurisprudence of the internet, being one of the first to apply the newly enacted Federal Trademark Dilution Act of 1995 (FTDA) to the practice of 'cybersquatting.' The court's broad interpretation of 'commercial use' to include the act of registering a domain name with the intent to resell it was crucial. This established a vital legal tool for trademark holders to combat cybersquatters before Congress passed the more specific Anticybersquatting Consumer Protection Act (ACPA) in 1999. The decision affirmed that trademark rights extend into cyberspace and that dilution can occur merely by preventing a famous mark owner from using their name in a key commercial channel like the internet, even without direct competition or consumer confusion.
