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Decision against travel bureau over domain name draws sharp dissent on appeal

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An Indiana Court of Appeals judge recently wrote that her colleagues who formed the majority to rule against a local tourism board were “out of touch,” and she suggested a case over an Internet domain name presented a novel issue that no court in the country has addressed.

At issue: Does a local visitors bureau have a common-law unfair competition claim against a resort that quickly registered the Web address “visitmichigancitylaporte.com” just after the name was announced during a public meeting?

A trial court ruled in favor of the visitors bureau on seven common-law claims, but a divided Court of Appeals panel reversed in Serenity Springs, Inc. and Laura Ostergren v. The LaPorte County Convention and Visitors Bureau, by and through its Board of Managers, 46A04-1309-MI-470. The majority – authoring Judge Melissa May and Chief Judge Nancy Vaidik – applied 100-year-old caselaw, which dissenting Judge Patricia Riley wrote was unresponsive to the realities of the Internet age.
 

riley-patricia.jpg Riley

“Despite my state and nationwide research, no single similar case exists – even Indiana case law in general is extremely sparse with respect to trademarks, let alone trade names. Although factually some cases might come close, no court before us has dealt with the almost simultaneous registrations of domain names in the context of common law unfair competition.”

In this case, the Serenity Springs resort registered the URL shortly before the visitors bureau attempted to do the same. The resort then used the Web address to direct Internet traffic to its website.

Riley held that this should give rise to a common-law unfair competition claim, as the trial court held, largely relying on Restatements of Torts to make the argument.

“By appropriating the Bureau’s trade name and linking it to its own website, Serenity created this probable confusion and deception and consequently committed unfair competition with the Bureau,” Riley wrote. “I would affirm the trial court’s finding of unfair competition in favor of the Bureau.”

But some legal experts believe that no trade name even exists in this case. The phrase in question isn’t trademarked,

and the Court of Appeals has rejected claims that the bureau has established a right of use.

Michigan City attorney Michael S. Bergerson represents the LaPorte County Convention and Visitors Bureau and said he expects the board will authorize a petition to seek transfer to the Indiana Supreme Court, based in part on the strength of the dissent.

“It would appear to me at least and others who read (the opinion) that the court is essentially inviting the visitors and convention bureau to seek transfer,” Bergerson said.

“It’s bad law, what they did,” he claimed of the Court of Appeals ruling. “It opens the door for a lot of charlatans out there who want to pass off their goods as somebody else’s.”

Attorney Jonathan Watson of Passaro Kahne & Taylor of Benton Harbor, Michigan, represented the resort and doesn’t see it that way. “I don’t think the Supreme Court is likely to take this one,” he said. “The Court of Appeals opinion is pretty much in line with what is generally legal nationwide.”

In a prior ruling, the Court of Appeals threw out the trial court ruling that enjoined Serenity Springs from using the domain name. In the current case appealed after remand that again found in favor of the bureau, May wrote for the majority that “Visit Michigan City LaPorte” was not a protectable name and Serenity Springs’ use wasn’t unfair competition.

Valparaiso University School of Law Professor Curt Cichowski said the key to the ruling was the majority’s holding that this phrase had not become identified with the visitors bureau before the resort began to use it.

Curt Cichowski Cichowski

“I don’t see this case as breaking any new ground,” said Cichowski, who teaches courses on intellectual property, trademark and unfair competition, among others. Cichowski said it’s impossible for domain names to be almost simultaneously registered, as Riley suggested in dissent, because the first registration earns the right to use the name.

“Serenity obviously adopted someone else’s future slogan as their URL. They did not act in the best of faith,” Cichowski said. “Gut instinct suggests the bureau should have some remedy. But Serenity did not infringe any trademark of the bureau, they did not unfairly compete, and they did not cyber-squat.

“There is no question they ‘took’ it from the bureau and adopted it as their own URL. But it takes more than ill intent to establish consumer confusion. The case turns on what the consuming public took the phrase to identify,” he said. “It does not turn on who thought of the phrase first, but who used it first to establish an identity – in the relevant consumers’ minds – for their goods or services.”

“The bureau could have avoided all of this by simply having the URL registered before they made the public announcement,” Cichowski said. “In hindsight, a simple cure.”

The majority relied on Hartzler v. Goshen Churn Ladder Co., 55 Ind. App. 455, 104 N.E. 34 (1914), in which the court ruled that it was unfair competition “(w)here such words or names by long use have become identified in the minds of the public with the goods or business of a particular trader.”

The majority held, “As Serenity Springs bought and began using the domain name immediately after the Bureau announced it in a public meeting, the name could not have ‘previously come to indicate and designate [the Bureau’s] goods,’ nor could it have, by ‘long use’ become identified in the minds of the public with the Bureau.”

In the interim, the bureau is using the URL michigancitylaporte.com as its Web address Bergerson said, and Watson said Serenity has parked the visitmichigancitylaporte.com domain for the time being, in compliance with the trial court order.

Bergerson claims the bureau was harmed because it invested more than $100,000 in a marketing campaign that found added value in the domain name that it sought to register. He bristles at the suggestion that the bureau and a hired marketing company simply didn’t have their ducks in a row before announcing the domain name.

“We attempted to settle the case,” he said, accusing Serenity of trying to profit from the sale of the domain name. “The demand they made was outlandish,” he said.•

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  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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