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Data Concepts, Inc. v. Digital Consulting, Inc.

The Sixth Circuit, reversing the court below, held that issues of fact precluded the court from determining on a motion for summary judgment that plaintiff's use of the domain name "DCI.com" infringed defendant's federal trademark in the mark "DCI."

Plaintiff provides performance software for data management and process control. In 1993, it began operating a website at the domain "DCI.com." Prior to this, from 1982 to 1993, plaintiff utilized an unregistered stylized mark which contained a combination of the letters d, c and i in lower case format to market its software.

Defendant owns the federal trademark in the mark "DCI", which it registered in 1987. Defendant is engaged in the business of providing education seminars on numerous technical matters, including database management. It too utilizes the Internet to market its services, operating a website at "DCIEXPO.com".

The lower court determined that plaintiff's use of the domain name "DCI.com" infringed defendant's "DCI" mark. Central to this determination was the court's holding that consumers were likely to be confused by plaintiff's use of defendant's mark in this fashion.

The Sixth Circuit found the lower court's analysis of this issue flawed, and accordingly reversed. In the Sixth Circuit: eight factors ... are to be considered to determine whether a likelihood of confusion exists. The eight factors are: (1) the strength of the plaintiff's mark; (2) the relatedness of the goods or services; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the marketing channels used; (6) the likely degree of purchaser care; (7) the defendant's intent in selecting the mark; and (8) the likelihood of the expansion of the product lines.

The Sixth Circuit found fault with the lower court's analysis of a number of these factors. The court below found that defendant's mark was strong which, in turn, supported its finding of a likelihood of consumer confusion. A trademark that has been registered and uncontested for at least five years, such as defendant's, is entitled to a presumption that it is a strong mark. Plaintiff, however, had submitted evidence that at least 90 other websites utilized the letters DCI in their domain names. "A mark is weakened outside of the context in which it is used if there is a third-party use of the mark." The lower court improperly failed to evaluate this evidence in deciding that defendant possessed a strong mark.

The Court of Appeals also found fault with the lower court's determination that the parties' services were related given that plaintiff sold software, while defendant sold educational services.

The Court of Appeals also held that the record indicated that plaintiff did not intend to infringe defendant's mark when it decided to use "DCI.com" as its domain name. This was contrary to the lower court's determination. The Court of Appeals reached this conclusion despite defendant's contention that plaintiff had failed to do a trademark search prior to selecting its domain name, which defendant claimed supported a finding of intent to infringe.

Because the lower court's analysis of these and other factors used to determine whether consumers are likely to be confused by plaintiff's use of the mark were flawed, the Sixth Court reversed the lower court's determination that plaintiff's use of the domain name "DCI.com" infringed defendant's "DCI" mark. Instead, said the court, "this case appears to present too close a question to decide as a matter of law."

The Sixth Circuit did affirm the lower court's determination that defendant, not plaintiff, possessed the senior mark. Plaintiff argued that it possessed the senior mark as a result of its use since 1982 of a mark consisting of the lower case letters d, c, and i in a stylized format. The court disagreed, finding that this mark was not similar enough to the "DCI.com" domain name at issue to be entitled to tack or extend the period of plaintiff's use. As plaintiff only began its operation of the "DCI.com" domain after defendant registered its mark, defendant's mark was senior.

Of particular interest is the concurring opinion of Judge Merritt. While concurring in the majority's opinion, Judge Merritt questioned whether plaintiff used defendant's mark to identify its goods or services. If it did not, noted Judge Merritt, its use would not constitute trademark infringement. Said Judge Merritt:

When a domain name is used only to indicate an address on the Internet and not to identify the source of specific goods and services, the name is not functioning as a trademark. See Lockheed, 985 F. Supp. at 956; McCarthy §7:176.1, at 7-24. ... See 1 McCarthy § 7:17.1 (domain names, like telephone numbers, street addresses, and radio station call letters, which permit one to locate and communicate with a place or a person, do not, without more, function as trademarks). Thus, it is unclear whether Data Concepts used the dci.com domain name merely as a means of communication or whether the company used the name to identify its goods and services. Since resolution of this question could dispose of the case, I would instruct the District Court to consider this matter on remand.

In this regard, Judge Merritt's analysis is similar to the court's holding in Patmont Motor Works, Inc. v. Gateway Marine, Inc., et al., No. C96-2703 TEH (N.D. Cal. Dec. 18, 1997) where the court held that use of trademark in the path name of a site did not constitute trademark infringement because the path name only served to identify a page of the allegedly infringing website, and not goods or services sold by defendant.