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Here's what website builders need to know about trademark law.

In theory, choosing a domain name is simple. If it is memorable, pronounceable, short, clever, easily spelled and suggests the nature of the commerce on your website, you've got yourself a winner. But even if your choice is brilliant from a marketing standpoint, it may be worse than foolish from a legal perspective. Your name is at risk if it legally conflicts with any one of the millions of commercial names that already exist. It's a big risk. If you put money and sweat into your website under one domain name and then are forced to give the name up, your Web-based business is likely to suffer a damaging, if not fatal, blow.

The rules for understanding whether a legal conflict exists comes from trademark law. Here are the basics you need to understand: Names that identify products or services in the marketplace are trademarks.

Distinctive (clever, memorable) trademarks are protected under federal and state law.

Distinctive business and domain names usually qualify as trademarks.

The first commercial user of a trademark owns it in case of a legal conflict with a later user.

One trademark legally conflicts with another when the use of both is likely to confuse customers about the products or services, or their origin.

If a legal conflict -- called an infringement -- is found to exist, the later user will have to stop using the mark and may even be held liable to the trademark owner for damages.

Customer Confusion

Applying these principles to your domain name selection, you are at risk of losing your chosen domain name if the owner of an existing trademark convinces a judge or arbitrator that your use of the domain name creates a likelihood of customer confusion. Confusion in this context can mean two different things.

Most commonly, it means that the goods or services a customer buys are different than what the customer intended to buy. For instance, suppose, on the recommendation of a friend, you decide to purchase Lee's famous Flamebrain barbecue sauce, which is sold only on the Web. You intend to type "flamebrain.com" into your browser but accidentally enter "flamerbrain.com" instead. You get a website run by Henry, who has both copied Lee's idea to offer a barbecue sauce for sale on the Web and, with a very minor variation, the name of Lee's sauce. You order two bottles, completely unaware that you ordered the wrong product from the wrong website.

The other kind of confusion occurs when a misleading name causes customers to believe -- wrongly -- that a product or service is sponsored by, approved of or somehow connected with a business they already know about. In other words, the customers are confused about the source of the product or service. This would be the case, for example, if you took your TV to a repair shop called IBM Electronics because you thought that IBM somehow sponsored the business.

The potential for confusion is a problem only when the names at issue are distinctive -- that is, clever, and therefore memorable. A name may be distinctive because it is made up (chumbo.com for an online software store), arbitrary in the context of its use (apple.com for computer products), fanciful (ragingbull.com for investment advice) or suggestive -- but not literally descriptive -- of the underlying product or service (salon.com for an online magazine). A name such as Ben and Jerry's, which by itself is weak because it uses personal names, may also become distinctive after it has been used for a long time and is recognized by the public. If the trademark owner has registered a name with the U.S. Patent and Trademark Office, it is probably distinctive.

Names that aren't distinctive don't qualify for trademark protection. Many domain names -- for instance, coffee.com, drugs.com and business.com -- are potentially powerful but generic. That is, they are the names of whole categories of products or services. Domain names that use surnames, geographic names or common words that literally describe some aspect of the goods or services sold on the website, such as healthanswers.com for, you guessed it, online health information, are also ineligible for trademark protection.

Avoiding Trouble

The way to choose a domain name that satisfies your own marketing needs and doesn't get in the way of anybody else's trademark rights is to search as many existing trademarks as possible, spot possible conflicts and then pick a name that's unlikely to generate a nasty lawyer's letter.

The first place to go for possible conflicts is the trademark database of the U.S. Patent and Trademark Office at http://www.uspto.gov. Searching this database gives you all registered trademarks and all trademarks for which registration is pending. You should search not only for your proposed mark but also for other marks that are logically close, such as synonyms and variant spellings. In addition, you should also search the Internet and any business name registers, such as Thomas Register Online at http://www.thomasregister.com. (For more information about trademark searching, see Conducting a Trademark Search in the Trademarks & Copyrights area of Nolo's Legal FAQs.)

If your search turns up any names that are the same or similar to your proposed domain name, ask these questions:

• Does your website offer goods or services that compete with the goods or services being sold under the other name?
• Does your website offer goods or services that typically are distributed in the same channels as the goods or services being sold under the other name? This would be the case, for instance, if you plan to offer sports equipment on your website, and the owner of the possibly conflicting mark sells sports clothing.
• Might your website in some way divert business away from the mark's owner because of the name? For instance, could the other owner show that your domain name is so similar to the other name that users might end up on your website by mistake?
• Is the other name very well known?

If the answers to all these questions are no, you can feel reasonably free to go ahead and use your name without fear of creating a legal conflict. If you answer yes to any of them, there will be some risk of a legal challenge down the road. If you aren't sure, take an informal poll of friends. Would they be confused by the simultaneous use of the two names? Might they end up on the wrong website? Another option is to run the possible conflicts by a trademark attorney. Although you can anticipate that the attorney will be more conservative than is actually necessary, you still may benefit from having a trained eye go over your circumstances. For more information about reserving, using and enforcing trademarks, see Using and Enforcing Trademarks in the Trademarks & Copyrights area of Nolo's Legal FAQs.)

Domain Name Bullies

Sometimes a powerful company tries to force a smaller one to give up a domain name that was legally acquired in good faith by the smaller company. Because trademark conflicts are ultimately resolved in court, a business that can easily afford to pay lawyers is in a powerful position to sue the smaller company for trademark infringement (assuming there is any basis for doing so, which there usually is). When the smaller company realizes that it will cost tens of thousands of dollars to defend the suit, the big guy proposes a settlement under which the small company parts with the name for a relatively meager sum. In other words, the powerful company ends up getting what it wants simply because the court system is manifestly unfair to those who can't afford attorneys. There are strategies to fight this sort of bullying. If the small company has the resources, of course, it can mount a defense and actually win. In addition, the Internet community has been extremely hostile to online bullies, and out-of-court campaigns sometimes make them back down. For more on this issue, visit the Domain Name Rights Coalition at http://www.domain-name.org/

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