B. Factors to Consider When Evaluating Potential Customer

Courts use a number of criteria to determine whether or not there's a likelihood of confusion between two names. If your domain name is very similar to an existing trademark, you will want to ask the same questions a judge would:
1.Are your goods or services closely related to those of the other business—that is, are they sold in the same marketing channels to the same general group of customers?
2.Do the goods or services compete—that is, will the decision by customers to buy one business's product or service be made at the expense of the other business?
3.Are the names very similar in sound, appearance and meaning?
4.Is the other trademark strong or distinctive?
5.Are the underlying goods or services expensive? How careful are people likely to be when deciding whether to buy them?
6.Does your business share the same customer base even if your goods and services aren't marketed in the same channels?
7.Does the other business use the name on several different products or services? Is it likely to do so in the future?
The first three factors are the most important. If none of them indicates a likelihood of confusion, you can probably stop there. In a borderline case, consider the rest of them.
CautionThis area of the law is unsettled.
The issue of when a domain name infringes an existing mark is a new one for the courts. So far they have used the same basic criteria as those used for conflicts between other types of marks. However, the U.S. Supreme Court has yet to rule in a domain name case, and federal Courts of Appeal are just beginning to weigh in. Visit the Updates section of the Nolo website at www.nolo.com to check for significant new developments.
1. Are the Goods or Services Closely Related?
When similar names are used on related goods or services, the risk of consumer confusion is high. You can determine whether goods or services are related by asking these questions:
•Do they belong in the same class of goods or services?
•Do they pass through related marketing channels?
a. "Classes" of Goods and Services
The U.S. Patent and Trademark puts every new trademark in one or more "international classes," which are categories of goods and services. There are 42 classes in all, 34 for products and eight for services. The Appendix contains a complete list of the classes and descriptions of each.
Goods or services within the same class are likely to be related either because they compete with each other or are marketed in the same channels.
Most commercial websites offer services, especially information services. Other examples of Web-based services are investing, auctions, entertainment and retail (for instance, Amazon.com provides a retail service even though it sells a wide variety of goods carrying their own marks). If your website offers information services (Class 42), and your domain name resembles a mark used by another information service provider, your domain name and the other mark fall within the same international class.
How can you tell what class the possibly conflicting mark belongs in? When you do a trademark search (described in Chapter 6), the search results will show what class or classes have been assigned to the marks the search turns up. If the goods or services offered on your website belong in the same class as those of the other business, this is a pretty good indication that the services will be considered related.
Example 1:
The owner of megasoft.com, a developer of downloadable software, wants to sue the owner of megasoft.net to stop megasoft.net from selling its custom-developed downloadable software. Both names fall into Class 9 for downloadable software. The owner who was first to use the mark for selling downloadable software would likely prevail if the dispute reached court.
Example 2:
Software developer megasoft.com probably couldn't stop a maker of ultra-soft, custom-knit blankets, which are in Class 24, Fabrics, from using the name megasoft.net to sell its blankets over the Web. Downloadable software and blankets don't compete in any way; they are not considered related goods, and the megasoft mark could be used on both without creating the likelihood of customer confusion.
By itself, the fact that two products or services are in the same classes does not conclusively establish that two names are legally in conflict. The classification system packs all goods and services into only 42 classes—combining, for example, abrasive cleansers and cosmetics—so products within the same class may be marketed in totally different ways so as to avoid customerconfusion. You could certainly argue that a trademark for a scouring powder that is similar to a trademark for lipstick won't confuse customers.
To classify your own product or service, study the list of classes in the Appendix. The choice may be obvious; if it isn't, look at the examples for each class. If you are still not sure, pick the three most likely classes and use them as possibilities.
b. Marketing Channels
It is also useful to look at the marketing channels through which the goods or services reach the public.
The fundamental question here is whether customers are likely to encounter or learn about the different products or services in the same store, website, catalog, advertising or other means of promotion or distribution. If so, then they are more likely to think the goods or services are associated in some way. It is the likelihood of this type of confusion that could cause a judge to order you to find a different domain name. If, on the other hand, non-competing products are marketed quite differently, then no confusion is likely to exist, regardless of what class they are in for registration purposes. For instance, digital cameras and computers are non-competing products, but because they are both electronic products, they often show up on the same websites. Use of the same mark on these different products would still likely confuse customers as to their source, even if there were no confusion as to the products themselves. However, except in large warehouse-type stores such as Costco and Wal-mart, vacuum cleaners and basketballs seldom share the same commercial space, and the likelihood of customer confusion would be low.
The Web itself can be seen as one large marketing channel. However, such a view would make all products and services sold through the Web related, which in turn would instantly create a legal conflict between many thousands of trademarks that have been adopted and used in reliance on the "separate channel" analysis. As with so many issues arising from the intersection of trademark law and the Web, this one has yet to be squarely addressed by the courts.
CautionBe conservative.
Because the law in this area is so uncertain, we strongly advise you to be conservative. If your search turned up a similar mark or domain name, choose another domain name if the two names are distinctive to some degree (see Chapter 4), and customers would likelyencounter both of them in pursuit of a particular product or service on the Web.
2. Do the Goods or Services Compete?
Goods and services directly compete if the purchase of one negatively affects the purchase of the other. If the goods or services offered on your website directly compete with goods or services dentified by an existing mark, a court would probably find a likelihood of confusion if the existing mark is distinctive and your domain name is similar in sound, appearance or meaning to it. (See Section 3, below.)
3. How Similar Are the Names?
The third factor in determining whether using similar names will cause a likelihood of confusion is how similar the names are. Do they sound or look alike, and if so, how much? Do they convey the same meaning? The closer two names are in sight, sound and meaning, the more likely it is that a legal problem will arise. For example, trains4travel.com and trainsfortravel.com would obviously create confusion in the marketplace.
Even marks with greater differences may create the likelihood of customer confusion in the same market. Courts have found that Quirst is too close to Squirt, Sarnoff too much like Smirnoff, Lorraine too reminiscent of La Touraine. Each of these pairs of names were used on nearly identical goods. Probably the use of such close names would have passed legal muster if they had been on very different kinds of products. But the more that competitive names are in the same classor market channels, the less similar the names have to be to cause confusion.
The last four factors, though usually not as important as the first three, are sometimes significant.
4. Is the Other Trademark Strong?
You are safer in using a name that is similar to an existing weak trademark than one that is similar to an existing strong trademark. A mark is considered strong either because:
•the words, phrases, or symbols it consists of are distinctive (arbitrary, coined or suggestive), or
•long and continuous use has made the public recognize it as the symbol of a particular product or service (it has acquired a secondary meaning).
The weaker a name is, the less legal protection it is given, and the more likely it is that your domain name will be found to not be confusingly similar, even if it has many similarities.
Example:
New Legal Solutions, Inc., wants to use the domain name webdocs.com for its website, which offers electronic forms. However, a trademark search discloses that the term "Webdocs" is registered on the Federal Principal Trademark Register. New Legal Solutions is surprised at theregistration, because Webdocs appears to be too descriptive to qualify for the Principal Register (see Chapter 8). New Legal Solutions decides to run a search for Webdocs on the Internet. The search engine returns hits for 150 different websites that use Webdocs for the same purpose intended by New Legal Solutions.
Because the term is in such general use, and therefore legally weak, New Legal Solutions decides to go ahead and use it as a domain name. The trademark owner may technically have an infringement claim against New Legal Solutions, but New Legal Solutions would have a strong defense, which is the mark's lack of distinctiveness due to its widespread use throughout the Internet. (Using the name, however, is probably not the best choice for other reasons discussed in Chapter 4.)
5. Are the Goods or Services Expensive?
Because customers tend to take their time and consider carefully when buying an expensive item, the more expensive the item, the less chance of confusing customers. An item that is cheap or likely to be bought on impulse, however, is more likely to result in customer confusion if it is sold with a mark that is similar to another on goods that are even slightly related.
6. Do Your Businesses Share the Same Customer Base?
Two businesses that use similar names to sell to the same customers are highly likely to cause customer confusion. But if businesses have separate customer bases, then the use of similar names is unlikely to confuse anyone. For example, the market for replacement wood windows is likely to be limited to contractors and homeowners with spare cash. As a result, a window manufacturer who uses the domain name WallsofLight.com and the same name in its advertising probably won't confuse the customers of a climbing gym supplier that calls its special demonstration the Wall of Lights. The two groups of customers don't overlap.
It's useful to look at how large a sector of the market uses your product or service. If a small sector of the market knows and purchases a service, a similar mark used by a different small group is unlikely to confuse the two sets of consumers. But if a large segment of the public knows one name, use of a similar name is more likely to cause customer confusion, even if aimed at a slightly different market, because of the greater potential for overlap between the two groups.
7. Is the Name Used on Several Different Products or Services?
A red flag should go up if the potentially conflicting name has already been used on a variety of products or services by the same business, even if you wish to use it on a product that is unrelated to any of these uses. An owner who uses the name on several products or services has what is called in legal lingo the "right of expansion." Some examples of businesses that do this are Calvin Klein and Pierre Cardin, who have expanded from clothing to fragrances, accessories and other products.
The rationale for this rule is that the public, having seen a name on a variety of goods made by the same company, is likely to assume that any new uses also belong to that company, and thus are likely to be confused. For example, the public would expect the name Yamaha, which already appears on motorcycles, lawnmowers and guitars, to represent the same company if it also appeared on computers or musical recordings.
Courts also assume that the first user may wish to expand the name's use further, and they protect this right of expansion by permitting very few other uses of the same name. So a second business seeking to use such a name, even on greatly dissimilar products, will have less luck than if the name were being used in a more limited fashion.