Bosley Medical Institute, Inc., a Delaware Corporation, and Bosley Medical Group, S.C., an Illinois Corporation v. Michael Steven Kremer
Docket: 04-55962
Court: Court of Appeals for the Ninth Circuit; April 4, 2005; Federal Appellate Court
Michael Kremer, dissatisfied with services from Bosley Medical Institute, Inc., created a website at www.BosleyMedical.com that negatively depicted the company. Bosley, the registered trademark holder, filed a lawsuit against Kremer for trademark infringement. Kremer contended that his noncommercial use of the trademark did not constitute infringement under the Lanham Act. The court sided with Kremer, ruling that using a trademark as a domain name for consumer commentary is not actionable infringement.
However, the court found the issue of Kremer's potential bad faith in cybersquatting—specifically, whether he intended to profit from the trademark use—remained unresolved due to incomplete discovery. Therefore, the district court mistakenly granted summary judgment in Kremer's favor regarding the cybersquatting claim.
Additionally, the court ruled against Kremer’s motion to strike Bosley Medical's state-law claims under California's anti-SLAPP statute, determining that Bosley's complaint about unauthorized trademark use was not devoid of merit at an early stage.
Bosley Medical, which has been using the trademark "BOSLEY MEDICAL" since 1992 and registered it in 2001, has invested significantly in advertising its services. Kremer had previously filed a medical malpractice suit against Bosley in 1994, which was dismissed. Following the registration of his domain name in 2000, Kremer delivered a letter to Bosley’s founder, suggesting potential repercussions if his grievances were not addressed.
The document addresses legal actions taken by Bosley against Kremer, focusing on trademark infringement and related claims. It outlines that Kremer operated a website, www.BosleyMedical.com, which critiques Bosley and summarizes a 1996 investigative report without selling goods or services or linking to Bosley’s competitors. Bosley alleged various claims including trademark infringement, dilution, and libel, the latter of which was settled. Following limited discovery, Bosley dismissed the libel claims and amended the complaint. Kremer sought dismissal of the amended complaint and partial summary judgment on commercial use and likelihood of confusion, with Bosley filing a cross-motion for partial summary judgment. The district court ruled Kremer's use of "Bosley Medical" was noncommercial and unlikely to cause confusion, granting summary judgment in favor of Kremer and dismissing state law claims under California's anti-SLAPP statute. Bosley appealed this ruling. The jurisdiction for appeal is under 28 U.S.C. 1291, with a de novo review standard for summary judgment and special motions to strike under California's anti-SLAPP statute. The document further explains that the Lanham Act prohibits trademark uses likely to confuse consumers, emphasizing that infringement claims require a demonstration of commercial use.
In 1996, Congress enacted the Federal Trademark Dilution Act (FTDA), broadening federal trademark law by allowing owners of famous marks to seek injunctions against unauthorized commercial use of their marks. The term "commercial use in commerce" is interpreted similarly to the infringement statute's requirement of use "in connection with" the sale of goods and services. This interpretation underscores that the FTDA protects the goodwill of mark owners and helps consumers distinguish between competing products. The Act aims to prevent consumer confusion regarding the source of goods, ensuring that a trademark owner can safeguard their brand against similar marks used by others. The Supreme Court has clarified that trademark infringement law is focused on unauthorized uses that could mislead consumers about the source of goods. The Lanham Act specifically seeks to prevent consumers from being misled into thinking they are purchasing goods from a different source. Additionally, while the First Amendment allows for regulation of commercial speech, it does not protect competitors who use confusingly similar marks to promote their products, as trademarks do not grant the right to suppress all unauthorized uses, particularly when the usage involves the expression of ideas.
The district court concluded that Kremer's use of Bosley’s mark was noncommercial, basing this on the "use in commerce" terminology instead of the "use in connection with the sale of goods" standard. This approach is deemed incorrect, as "use in commerce" serves merely as a jurisdictional basis under the Commerce Clause, while 15 U.S.C. 1127 defines "commerce" more broadly. The court should have evaluated whether Kremer's usage related to the sale of goods or services. Nonetheless, the appellate court can uphold the summary judgment on any supported grounds.
The key issue is whether Kremer's use of the domain name BosleyMedical.com constitutes use in connection with the sale of goods or services. Bosley argues it satisfies this requirement through three points. First, it claims that a mark on a noncommercial website can still connect to goods and services if it links to a commercial site. However, this argument fails since Kremer’s site only links to a discussion group with no direct commercial offerings, contrasting with cases like Nissan, where commercial use was evident. Kremer's site did not sell products or host paid advertisements.
Second, Bosley argues Kremer's site was created for an extortion scheme, asserting that his intent to profit from the domain name constitutes commercial use. However, precedents indicate that merely attempting to sell a trademark or domain does not automatically establish commercial use unless it involves actual sales or services. Kremer’s site did not meet this standard, as it provided no commercial links or offers.
Kremer was not found to be attempting to sell the domain name associated with Bosley, as his communication to Bosley threatened to disclose negative information online without mentioning any ransoming of the trademark or commercial use of the domain. Bosley claimed it was denied discovery opportunities to investigate Kremer's alleged attempts to sell the domain but failed to formally request further discovery under Federal Rule of Civil Procedure 56(f) and instead filed for summary judgment. The district court did not err in granting summary judgment without allowing additional discovery.
Bosley also argued it met the commercial use requirement of the Lanham Act, asserting that Kremer's use of Bosley's trademark hindered access to Bosley's goods and services. The court referenced *People for the Ethical Treatment of Animals v. Doughney*, which held that a parody website violated the Lanham Act despite lacking a commercial purpose because it obstructed access to PETA's services. However, the court disagreed with the rationale that merely using a trademark as a domain name suffices to satisfy the commercial use requirement, as it could impose excessive restrictions on consumer commentary.
The court noted that a broad interpretation of the Lanham Act would encompass nearly all uses of a registered trademark, even those intended for consumer criticism, which is not supported by the statute's text or the intent of trademark law. Trademark laws aim to protect consumers from confusion regarding product origins, and limiting the Act's application to cases where there is an intent to profit aligns with established legal principles and the Supreme Court's views on trademark function.
The Second Circuit ruled in United We Stand America, Inc. v. United We Stand, America New York, Inc. that the Lanham Act's requirement for "use in connection with the sale of goods and services" does not necessitate actual sales. The focus is on whether Kremer offers competing services, and it was determined that Kremer acts as a critic rather than a competitor of Bosley. His use of the Bosley mark relates to expressing his opinion, not selling goods or services, and therefore does not mislead consumers or capitalize on Bosley's goodwill. Bosley's harm stems from Kremer's criticism, not from competitive sales under its mark, meaning the Lanham Act cannot be utilized to silence Kremer.
Regarding the Anticybersquatting Consumer Protection Act (ACPA), enacted in 1999 to combat cybersquatting, it defines cybersquatting as the registration of a trademark’s domain name by someone other than the trademark owner, intending to profit. The ACPA holds individuals liable if they register or use a domain name confusingly similar to another’s mark with bad faith intent to profit. The district court dismissed Bosley's ACPA claim based on the lack of commercial use by Kremer, but this dismissal was reversed, as the ACPA does not require commercial use for liability. Kremer's argument that the noncommercial use exception applies to cybersquatting claims was rejected, as it conflicts with the ACPA's language, which emphasizes that various actions, including registration and use, can violate the Act, regardless of commercial intent.
The use of a domain name linked to a noncommercial or fair use of a trademark does not automatically indicate a lack of bad faith on the part of the registrant, as established in Coca-Cola Co. v. Purdy. The statutory framework is designed to prevent registrants from circumventing the law by merely operating a noninfringing website under an infringing domain. Courts are encouraged to interpret statutes in a manner that maintains their intended purpose, avoiding interpretations that render any provisions meaningless.
The statute, specifically 15 U.S.C. 1125(d)(1)(B)(i)(IV), includes a factor regarding the registrant's bona fide noncommercial use, suggesting that noncommercial uses cannot be completely exempt from scrutiny under the Anticybersquatting Consumer Protection Act (ACPA). Previous case law, including DaimlerChrysler and Ford Motor Co. v. Catalanotte, indicates that a trademark owner must demonstrate a valid mark, its distinctiveness or fame, similarity of the defendant's domain name, and bad faith intent to profit, without necessitating commercial use.
The district court incorrectly applied a commercial use requirement to Bosley’s ACPA claim, instead needing to assess whether Kremer acted with bad faith regarding Bosley's mark. Bosley satisfactorily demonstrated that Kremer’s domain name was identical to the mark. The district court's summary judgment favoring Kremer was erroneous as it did not properly address the ACPA claim, nor did it allow Bosley to conduct discovery on this issue. It remains uncertain whether Bosley can prove Kremer's bad faith or authenticate the letters Bosley claims were sent by Kremer.
California's Anti-SLAPP Law, enacted in 1993, aims to combat lawsuits intended to suppress free speech and petition rights. SLAPP suits are characterized by their lack of merit and their purpose of economically disadvantaging defendants to deter future claims. The law allows defendants to file a motion to strike complaints that arise from actions in furtherance of free speech or petition rights on public issues. A defendant must initially show that the plaintiff's lawsuit relates to such protected activities; the plaintiff's intentions are irrelevant to this determination.
In this case, the district court found that Bosley was attempting to limit Kremer's free speech, granting Kremer's anti-SLAPP motion to strike Bosley's state law trademark claims. However, this ruling was reversed, as the court determined that trademark infringement claims do not inherently impair free speech rights. The court emphasized that domain names do not automatically receive First Amendment protections, and each case must be assessed on its specific circumstances. Although a summary judgment might have been appropriate, the anti-SLAPP motion was not. The court affirmed the summary judgment in favor of Kremer regarding infringement and dilution claims but reversed the anti-SLAPP ruling and remanded the case for further proceedings on state law claims. No costs were awarded.
