Nominative Fair Use Overview
“Nominative fair use” is one exception to the general rule that you may not use another’s trademark in commerce. That is, use of another’s trademark is allowed under the nominative fair use doctrine. Nominative fair use, by definition, is not trademark infringement because such use is not likely to confuse consumers. The nominative fair use defense gives protection to those who use another’s trademark for the purpose of identifying the brand without suggesting affiliation or sponsorship with the brand owner. The following test evaluates the likelihood of confusion in nominative use cases. To determine whether nominative fair useapplies, courts generally look to three factors:
- whether the product was “readily identifiable” without use of the trademark;
- whether use of the trademark than necessary (also known as the minimum necessary test); or
- whether the trademark’s use falsely suggested sponsorship or endorsement by the trademark owner.
A recent court case provides guidance regarding nominative fair use in the context of domain names and websites. If you want to get a summary of what we learned from this case, see the Nominative Fair Use for Websites & Domain Names heading below. This case, issued on July 10, 2010 in the 9th Circuit, provides some guidance regarding the issue of what constitutes nominative fair use. Even though this decision is from the 9th Circuit, it provides guidance for the rest of the country on the issue of nominative fair useas it relates to websites and domain names.
Toyota Motor Sales, U.S.A., Inc., v. Farzad Tabari
In this case, Tabari is a independent auto broker legally helping to sell LEXUS automobiles. Clients hire him to find the best deal on a luxury car. Tabari specializes in the Lexus brand car. He owns two domain names at issue, buy-a-lexus.com and buyorleaselexus.com. Toyota brought suit claiming trademark infringement. The District Court analyzed the case under a likelihood of confusion analysis and found in favor of Toyota and issued an injunction preventing Tabari from utilizing the domain names. Tabari appealed.
District Court Decision
The District Court determined that a likelihood of confusion analysis was inappropriate given these facts. Rather the nominative fair use analysis should have been applied. Their analysis concluded the following:
Applying the first factor, the Court found that using the word Lexus was necessary to convey to consumers that they specialized in the Lexus brand of cars. It would be almost impossible to convey that message without using the Lexus name.
Applying the second factor, the use of the logo was more than was absolutely necessary to convey their intended message. At the time of trial, however, Tabari had discontinued use of the logo on his website. This is important because Toyota had requested relief against future acts, not past ones. Using the name alone, without the logo was no more than necessary to describe Tabari’s services.
Applying the third factor, the Court found no indication of joint sponsorship or endorsement by Lexus. As part of the changes to Tabari’s website, he included a disclaimer that stated, “We are not an authorized Lexus dealer or affiliated in any way with Lexus. We are an Independent Auto Broker.” Although a disclaimer is not required to prove a nominative fair use defense, it certainly goes to show that there would be no confusion as to sponsorship or endorsement by Lexus.
9th Circuit Court of Appeals’ Holding
The Court of Appeals found that the Tabaris had made nominative fair use of the Lexus name in their domain names. The injunction was vacated and the case remanded back to the District Court for consideration using the nominative fair use test in place of the likelihood of confusion test. The Court instructed the district court to apply only the factors for nominative fair use and not the Sleekcraft factors for finding likelihood of confusion. The nominative fair use test was provided in New Kids on the Block v. News Am. Publ’g, Inc., 971 F.2d 302 (9th Cir. 1992). Under the nominative fair use test in New Kids, the Court concluded that Tabaris:
- had to use the LEXUS mark to describe the genuine LEXUS products they were helping to sell;
- were using no more of the mark as necessary (which in this case was the LEXUS mark in its entirety); and
- did not create a likelihood of consumer confusion through the use of those domains.
For the full case, see Toyota Motor Sales, U.S.A., Inc., v. Farzad Tabari, No. 07-55344 (9th Circ. July 8, 2010).
Nominative Fair Use for Websites & Domain Names
In short, what we learned from this case is that website owners may use another’s trademark on their website if they meet the requirements of nominative fair use:
- the website owner must use the trademark to describe the genuine trademarked products being sold;
- the website owner is using the trademark no more than necessary (which in this case was the LEXUS mark in its entirety); and
- the website owner did not create a likelihood of consumer confusion through the trademark.