The defendants, Farzad and Lisa Tabari, are auto brokers, specializing in Lexus vehicles, who contacted authorized dealers, solicited bids and arranged for customers to buy from the dealers. They offered these services at buy-a-lexus.com and buyorleaselexus.com.
Toyota objected to, among other things, the Tabaris' use of the Lexus mark in their domain names, claiming that such use was likely to cause confusion as to the source of their website. After a bench trial, the District Court found infringement, ordered the Tabaris (who represented themselves both at trial and on appeal) to stop using their domain names and enjoined them from using the Lexus mark in any other domain name.
The Ninth Circuit vacated the injunction, concluding that it was overbroad based on the nominative fair use doctrine.
The Ninth Circuit, Chief Judge Kozinski writing, first noted that the District Court erroneously applied the Sleekcraft likelihood of confusion test and concluded that the domain names infringed the Lexus trademark. But that test does not apply when nominative fair use is at issue (e.g., where the defendant uses the mark to refer to the trademarked product itself). Instead, in nominative fair use cases, the court asks whether "(1) the product was 'readily identifiable' without use of the mark; (2) defendant used more of the mark than necessary; or (3) defendant falsely suggested he was sponsored or endorsed by the trademark holder." If the nominative use satisfies all of these factors, it does not infringe; if it does not, the court may order the defendant to modify use of the mark so that all of the factors are satisfied but "it may not enjoin nominative use of the mark altogether."
The breadth of the injunction, which precluded the use of Lexus in any domain name, troubled the Ninth Circuit:
A trademark injunction, particularly one involving nominative fair use, can raise serious First Amendment concerns because it can interfere with truthful communication between buyers and sellers in the marketplace. . . . To uphold the broad injunction entered in this case, we would have to be convinced that consumers are likely to believe a site is sponsored or endorsed by a trademark holder whenever the domain name contains the string of letters that make up the trademark.
But the Ninth Circuit was clearly not convinced that consumers were likely to have that belief. Instead, it concluded that the Tabaris needed to communicate that they specialized in Lexus vehicles and using the Lexus mark in their domain names accomplished that, even if that wasn't the only way to communicate the nature of their business. "One way or the other, the Tabaris need to let their consumers know that they are brokers of Lexus cars, and that's nearly impossible to do without mentioning Lexus, . . . be it via domain name, metatag, radio jingle, telephone solicitation or blimp."
On a procedural point, the Ninth Circuit also clarified the burden of proof on a nominative fair use defense:
A defendant seeking to assert nominative fair use as a defense need only show that it used the mark to refer to the trademarked good, as the Tabaris undoubtedly have here. The burden then reverts to the plaintiff to show a likelihood of confusion.
The Ninth Circuit thus vacated and remanded for "[a]t the very least," modification of the junction to allow some use of the Lexus mark in domain names by the Tabaris, noting that "[t]rademarks are part of our common language, and we all have some right to use them to communicate in truthful, non-misleading ways."
Notably, the Ninth Circuit (or at least Chief Judge Kozinski) had quite a bit to say about consumer understanding and expectations with respect to domain names and websites:
When a domain name making nominative use of a mark does not actively suggest sponsorship or endorsement, the worst that can happen is that some consumers may arrive at the site uncertain as to what they will find. But in the age of FIOS, cable modems, DSL and T1 lines, reasonable, prudent and experienced internet consumers are accustomed to such exploration by trial and error. . . . They skip from site to site, ready to hit the back button whenever they're not satisfied with a site's contents. They fully expect to find some sites that aren't what they imagine based on a glance at the domain name or search engine summary. Outside the special case of trademark.com, or domains that actively claim affiliation with the trademark holder, consumers don't form any firm expectations about the sponsorship of a website until they've seen the landing page--if then. This is sensible agnosticism, not consumer confusion. . . . So long as the site as a whole does not suggest sponsorship or endorsement by the trademark holder, such momentary uncertainty does not preclude a finding of nominative fair use.
In his concurring opinion, Judge Fernandez felt "compelled to disassociate" himself from statements such as these because he could not "concur in essentially factual statements whose provenance is our musings rather than the record and determinations by trier of fact."
As a somewhat interesting side note, the Ninth Circuit concluded its opinion with a comment regarding the Tabaris' pro se status:
Many of the district court's errors seem to be the result of unevenly-matched lawyering, as Toyota appears to have taken advantage of the fact that the Tabaris appeared pro se. . . . To avoid similar problems on remand, the district court might consider contacting members of the bar to determine if any would be willing to represent the Tabaris at a reduced rate or on a volunteer basis.
The concurring opinion specifically stated that he did not join in that portion of the majority's opinion, stating that "[t]o the extent that the majority sees [the Tabaris'] activities as especially socially worthy and above reproach, I do not agree." Nonetheless, he concurred that the District Court had erred in its handling of the nominative fair use defense.
The case cite is Toyota Motor Sales, U.S.A., Inc. v. Tabari, No. 07-55344 (9th Cir. July 8, 2010).
