In this increasingly “on-line” world, clients’ rights in their valuable trademarks are at risk from disgruntled customers or ex-employees who publish gripe websites on the internet. Today, anyone with a computer and ten dollars can purchase a domain name and publish a gripe website, in some cases using your client’s own trademarks to trash it on-line.
Use of its trademark to identify a gripe website implicate clients’ rights under the Lanham Act on the one hand, and the cyber-griper’s First Amendment right to free speech on the other. Therefore, it is important to understand how courts have balanced these competing interests, as well as knowing other steps which can be utilized to help a client avoid being the victim of a cyber-griper, or at least to minimize the impact if such an event happens.
In order to establish a claim for trademark infringement under the Lanham Act, (15 U.S.C. sections 1125(a) and 1114), a trademark holder must establish an unauthorized “commercial” use of the trademark, which is likely to cause confusion to potential customers about the source of goods and services. Accordingly, in order to implicate the Lanham Act, the defendant’s use of the trademark must be commercial. If the gripe website’s purpose is only to publish critical commentary about the trademark holder and not to sell goods or services associated with the cyber-griper, “fair use” may well defeat a Lanham Act claim. However, if the trademark holder can show that the cyber-griper intended to profit from the use of the trademark, the courts will find that the trademark holders’ rights in its intellectual property prevail over the cyber-griper’s First Amendment right to free speech.
Additionally, if a client’s trademark is “famous,” the trademark holder may have a claim under the Federal Trademark Dilution Act (15 U.S.C. section 1125(c)) which protects a famous mark from having its distinctive quality diluted. Similar to the trademark infringement claim, a plaintiff pursuing a claim for dilution must show: (1) its trademark has been used by the defendant for a commercial use in commerce; and (2) its trademark is famous. However, the requisite level of “fame” is extraordinarily high, and unlikely to be satisfied unless the goods or services are household names.
Finally, in cases where the cyber-griper has identified the offending website with a domain name which incorporates a client’s trademarks, a claim may arise under the Anti-cybersquatting Act (15 U.S.C. section 1125(d)). In an Anti-cybersquatting case the trademark holder must establish both that the domain name is identical, confusingly similar to, or dilutive of, a trademark, and that the cyber-griper has a bad faith intent to profit from the good will established by the trademark holder in the trademark. Text book examples of a bad-faith intent to profit are when the cyber-griper: (1) registers the domain name and offers to sell it to the trademark owner, its potential rivals, or the highest bidder; or (2) registers the domain name and erects a site with objectionable content to give the trademark owner a special incentive to buy the domain name from the cyber-griper quickly and at a high price.
However, thoughtful planning can at least prevent a cyber-griper from using the client’s trademarks to identify a gripe website. Clients who have trademarks should spend the few dollars necessary to register their trademarks as domain names and all reasonable “typos” of such trademarks with all of the applicable suffixes, i.e., .com, .org, .net, .info, .biz, etc. Once a gripe website has been published, clients can attempt to minimize the damage by bringing an administrative action against the cyber-griper under the Uniform Domain Name Dispute Resolution Policy (“UDRP”). The UDRP provides an expedited procedure for trademark holders in certain cases to force the registrar to transfer the offending domain registration to the trademark holder. Finally, if a client is stuck with the cyber-griping website being on-line and it is damaging enough, the client may consider setting up a rebuttal website.
Planning ahead and understanding the law can greatly assist clients in protecting their valuable intellectual property rights from cyber-gripers in the on-line world.
By Laurie Thompson
Before 2007, Florida’s Condominium Act provided that unless the condominium declaration stated otherwise, 100 percent of the owners had to agree to terminate a condominium. Accordingly, just one owner could halt the termination process even when it was in the community’s economic interest to do so, such as when a condominium needs significant repairs to meet building codes and regulations.
In 2007, the Florida Legislature amended Fla. Stat. Section 718.117 to make it easier to terminate a condominium by allowing termination if 80 percent of the owners vote for the change unless more than 10 percent objected. However, in 2008, the South Florida real estate market was hit by the Great Recession causing a glut of condominium units to be on the market. As a result no one was willing to rescue economically distressed condominiums. Accordingly, in 2010, the Florida Legislature passed the Distressed Condominium Relief Act which encouraged bulk buyers to rescue these failing condominiums.
However, another problem arose when the bulk purchasers realized that there was greater value in terminating the condominium and converting the buildings into rental units. This caused some unit owners to lose their homestead when they were forced to sell their unit at current market value which in some cases did not even cover the mortgage. This resulted in many homeowners losing their homes maintaining a mortgage.
The Florida Legislature recently passed, and the governor is expected to sign, a law which attempts to remedy this situation. Specifically, the law revises the requirements for the termination of condominiums and swings the pendulum back toward making it harder to terminate when bulk owners are involved. Specifically, the law provides that if 10 percent or more of the voting interests of a condominium reject a plan of termination, another termination may not be considered for 18 months. The law also creates certain conditions and limitations for the termination of a condominium if at least 80 percent of the total voting interests are owned by a bulk owner. A bulk owner is defined as the single holder of such voting interests or an owner together with a related entity or entities that would be considered an insider, as defined in section 726.102, who collectively hold such voting interests. To the extent a bulk owner is involved the following conditions and limitations apply:
- Upon timely request, unit owners must be allowed to retain possession of units and lease their former units for 12 months after the effective date of the termination if the units are offered to the public.
- Any unit owner whose unit was granted a homestead exemption must be paid a relocation payment equal to one percent of the termination proceeds allocated to the unit.
- Unit owners other than the bulk owner must be paid at least 100 percent of the fair market value of their units as determined by one or more independent appraisers.
- The fair market value for a unit of an owner who was an original purchaser from the developer and who dissented or objected to the plan of termination must receive at least the original purchase price paid for the unit.
- The plan of termination must provide the manner by which each first mortgage on a unit will be satisfied in full at the time the plan is implemented.
While the attempt to address the problem of unit owners losing their homes while still owing a mortgage is laudable, as written, this law may result in going back to the bad old days when there was no viable way to address the problems of distressed condominiums without providing real assistance to the unit owners. The requirement that each first mortgage on a unit be satisfied in full in the plan of termination will cause a disincentive for bulk buyers to take the risk of buying up units in order to rescue an ailing condominium because this requirement will dramatically increase their costs and reduce profits.
While this provision will prevent unit owners from losing ownership to bulk buyers – because bulk buyers will likely no longer be interested in terminating the condominium – the owners will now likely be required to fund significant reserve requirements and to pay special assessments to improve the property to the level it should be. Accordingly, without a termination, these unit owners will be subject to substantial financial burdens and may be in a worse situation when the next real estate downturn arrives.