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Bosley Medical Institute, Inc., et al. v. Michael Steven Kremer

Use Of Trademark In Non-Commercial Gripe Site's Domain Does Not Constitute  Trademark Infringement Or Dilution

In this domain name dispute, the Ninth Circuit holds that the use of another’s trademark as the domain name for a non-commercial gripe site does not constitute trademark infringement or dilution in violation of the Lanham Act.  To run afoul of the Lanham Act, a mark must be used in connection with the sale of goods or services.  A web site which is merely critical of another’s goods or services does not fit this bill.  The Ninth Circuit accordingly affirmed the District Court’s grant of summary judgment, dismissing plaintiff’s trademark infringement and dilution claims.

The Ninth Circuit reversed, however, so much of the District Court’s decision which dismissed plaintiff’s Anticybersquatting Consumer Protection Act (“ACPA”) claim.  The ACPA does not have a commercial use requirement, and, accordingly, establishing that the mark was used as the domain for a non-commercial gripe site does not absolve the griper from potential liability under the ACPA.  Because that was the basis on which the lower court dismissed plaintiff’s ACPA claim, its dismissal was reversed.  The matter was remanded to the District Court to determine whether defendant used the mark with a bad faith intent to profit therefrom, in violation of the ACPA.

Dissatisfied Consumer Launches  Non-Commercial Gripe Site  

Defendant Michael Kremer (“Kremer”) was dissatisfied with the hair restoration services he was provided by plaintiff Bosley Medical Institute (“Bosley Medical”).  As a result, he launched a web site at the domain BosleyMedical.com that was highly critical of plaintiff and its services.  “Bosley Medical” is a registered trademark owned by plaintiff, which it uses to market its hair restoration services.

Kremer did not sell or offer to sell any products at this site, nor did he derive any revenue from its operation.  No advertisements were displayed on this site.  The only links on the site were to the website of the lawyers representing Kremer, and to another site Kremer operated at bosleymedicalviolations.com.  This second site, in turn, contained a link to a newsgroup which contained advertisements for plaintiff’s competitors.

After acquiring the BosleyMedical.com domain, but prior to the launch of his website, Kremer sent Bosley Medical a letter urging them to engage in settlement discussions.  Failing that, Kremer would publicize his negative views about Bosley Medical on the Internet.  The letter did not contain an express offer to sell the BosleyMedical.com domain to plaintiff.

Bosley Medical responded by commencing this suit, asserting, inter alia, claims for trademark infringement and dilution under the Lanham Act, as well as a claim that defendant’s use of the mark violated the ACPA.

Non-Commercial Use Neither Infringes Nor Dilutes

Kremer moved for summary judgment, arguing that the non-commercial use of plaintiff’s mark in his web site did not run afoul of the Lanham Act.  The Ninth Circuit agreed.

To establish an infringement claim under the Lanham Act, the trademark owner must demonstrate a use of his mark “in commerce . . . in connection with the sale, offering for sale, distribution or advertising of any goods or services . . .”.  15 U.S.C. §1114(1)(a).  The Ninth Circuit held an “analogous” requirement is found in the Federal Trademark Dilution Act’s (“FTDA”) strictures against “another person’s commercial use in commerce of a mark or trade name . . .”.  15 U.S.C. §1125(c)(1).

The Ninth Circuit held such a requirement was lacking in a non-commercial gripe site.  Kremer derived no revenue from the operation of his site, which contained no advertisements, nor offered any products for sale.  It merely contained information critical of Bosley Medical.

The Court held that neither Kremer’s links to his lawyer’s site, nor his links to a sister site which contained a link to a newsgroup that displayed competitors’ advertising, rendered his site commercial.  Said the Court:

Kremer’s website contains no commercial inks, but rather contains links to a discussion group, which in turn contains advertising.  This roundabout path to the advertising of others is too attenuated to render Kremer’s site commercial.  At no time did Kremer’s BosleyMedical.com site offer for sale any product or service or contain paid advertisements from any other commercial entity.

In reaching this result, the Court rejected Bosley Medical’s contention that Kremer’s use of its mark was commercial because it prevented users from obtaining plaintiff’s goods and services.  This argument had found favor with the Fourth Circuit in People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359 (4th Cir. 2001).

The appropriate inquiry, held the Court, was instead whether Kremer offers competing services.  Failing that, his use of plaintiff’s mark was not one against which the Lanham Act was designed to protect.  Said the Court:

[T]he appropriate inquiry is whether Kremer offers competing services to the public.  Kremer is not Bosley’s competitor; he is their critic.  His use of the Bosley mark is not in connection with a sale of goods or services — it is in connection with the expression of his option about Bosley’s goods and services.

The dangers that the Lanham Act was designed to address are simply not at issue in this case.  The Lanham Act, expressly enacted to be applied in commercial contexts, does not prohibit all unauthorized uses of a trademark.  Kremer’s use of the Bosley Medical mark simply cannot mislead consumers into buying a competing product — no customer will mistakenly purchase a hair replacement service from Kremer under the belief that the service is being offered by Bosley.  Neither is Kremer capitalizing on the good will Bosley has created in its mark.  Any harm to Bosley arises not from a competitor’s sale of a similar product under Bosley’s mark, but from Kremer’s criticism of their services.  Bosley cannot use the Lanham Act either as a shield from Kremer’s criticism, or as a sword to shut Kremer up.

Anticybersquatting Consumer Protection Act Claim Reinstated

The Court held that the Anticybersquatting Consumer Protection Act (“ACPA”) did not impose the same commercial use requirement.  The Court rejected Kremer’s argument that such a commercial use requirement was found in the language of 15 U.S.C. §1125(c)(4).  While that language states that a “noncommercial use of the mark” “shall not be actionable under this section,” the Court held this language inapplicable to ACPA claims.  The Court rested its decision, in part, on the ACPA’s prohibitions against the registration of another’s mark with a bad faith intent to profit thereon, as well as the Act’s listing of noncommercial use as only one factor to be used by the Court in analyzing whether the defendant acted in bad faith.  Because the lower court held to the contrary, its decision was reversed, and plaintiff’s ACPA claims remanded for a determination of whether Kremer acted in bad faith, in light, inter alia, of his pre-launch letter threatening to publish his criticisms of Bosley Medical if his dispute was not settled.

Finally, the Ninth Circuit reversed the District Court’s grant of Kremer’s motion to dismiss under California’s SLAPP statute.  Said the Court:

An infringement lawsuit by a trademark owner over a defendant’s unauthorized use of the mark as his domain name does not necessarily impair the defendant’s free speech rights.