The Ninth Circuit ruled this week on an unfair competition case where defendant driving school was sued by a competitor for deceptively causing its website, DMV.org, seem like an official affiliate of the State DMV. TrafficSchool.com, Inc., et al. v. Edriver Inc., et al., 08-cv-56518 (9th Cir., July 28, 2011).
The first issue before the Court was whether plaintiff had standing to sue for unfair competition under the Lanham Act. Plaintiff’s website was in no way similar to “DMV.org,” so there was no direct infringement issue; thus, for plaintiff to have standing, the Court had to find that plaintiff’s business suffered harm from defendant’s use of a potentially deceptive domain name. The Court found standing.
Next, the Court was asked to decide whether the District Court’s injunction on defendant, which forced defendant to create a click-through splash page on its website informing users that it was not affiliated with the State DMV, violated defendant’s First Amendment rights. The Court found that the injunction did not violate defendant’s rights per se, but remanded to the lower Court to place some sort of time limitation on the injunction, or at least explain why the splash page should remain up indefinitely.
Finally, the Court decided that the lower court’s denial of attorneys’ fees to plaintiff ought be reevaluated (and therefore was probably incorrect). The District Court’s denial of attorneys’ fees was based on the fact that plaintiff merely won an injunction, not money damages. The Ninth Circuit held that the injunction could be a sufficient “win” to warrant attorneys fees as per the Lanham Act.
Takeaway: Deceptive online practices, even if they do not directly infringe on competitors’ intellectual property, could land businesses in considerable trouble (including a hefty payout of attorneys’ fees to the competitor).
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