Trademarks Scuttle Some Firms’ Plans for Web Names

Credit.com had no idea how much it didn’t know about trademark law.

The San Francisco-based online service spent five years building a profitable business that provides credit reports, loan information and other services to 300,000 Web site visitors each month.

Long after making a name for itself, the company discovered that its name has made it a target of scores of confused consumers. And a similar-sounding company that runs a similar business, Creditcomm, has threatened its very existence.

After receiving a letter in March from Fairfax, Va.-based Creditcomm telling it to change its name, the San Francisco company fought back by filing a million-dollar lawsuit in federal court, accusing Creditcomm of unfair trade practices.

All of this has left Credit.com’s owners wondering how they got into such a mess.

At the heart of the dispute are the blurred lines between the rights of companies that stake out claims to online domain names and those that have real-world trademarks. And such disputes will only grow more common as the registering of domain names becomes decentralized.

“There is this tension between the trademark world and the Internet world,” concedes Bob Anderson, deputy assistant commissioner for trademarks in the U.S. Patent and Trademark Office.

Trademarks are the single most common source of disputes about Web site monikers, according to Network Solutions Inc., which until last month had a monopoly on assigning domain names.

Credit.com President Todd Meagher, a former credit analyst who grasped the power of the Web early, never saw the trademark tension coming.

After quitting his job on “the dark side of debt collection,” Meagher turned to the Net, partnering with a former state credit regulator.

In 1994, they opened an educational services credit business on the Web. “We built ourselves into a trusted resource,” said Meagher.

Some resources are easier to protect than others, Meager learned. The trademark office, which evolved during simpler times, basically ignores the “.com” suffix, and “credit” is too descriptive, lawyers said. Because of that, Credit.com couldn’t get a trademark on its name.

“The closer you get to being merely descriptive, whether e-commerce or regular commerce, the less likely you are to get registered as a trademark,” said Anderson of the patent office. “If Toasters.com specialized in the sale of toasters, that would probably not be registerable.”

Buy.com and Shopping.com are also without trademark protection, though Shopping.com is trying.

Because Creditcomm had a more unusual name, it applied for trademark protection in December (the request is pending), then demanded that Credit.com change its name.

The San Francisco company had already heard more than enough about its East Coast rival.

“We were getting 20 or 30 people complaining a day” about Creditcomm after getting the two companies confused, Meagher said after filing suit. Creditcomm refused to discuss its history or the legal case.

“As a matter of policy, we have no comment on any request for information on pending matters,” company spokeswoman Melissa Levanowitz wrote in an e-mail.

Credit.com has a good chance of prevailing in court and even of getting Creditcomm’s trademark squelched, lawyers said, because being first in public is more important than being the first with a government piece of paper.

“If Credit.com can establish it was using it as a trademark or a service mark, it has gone a long way toward proving infringement,” said Carla Oakley, a trademark specialist at Brobeck Phleger & Harrison not involved in the case.

But the company faces an uphill battle. Courts have tended to lean toward backing trademark holders in similar disputes.

Recently, for example, the U.S. 9th Circuit Court of Appeal in San Francisco ruled that a company that had trademarked the name MovieBuff had the right to shut down a Web site at https://www.moviebuff.com.

Network Solutions has taken a similar tack. In disputes involving trademark infringement, the Herndon, Va.-based company will act to take down an offending Web site when there is direct conflict between the trademark and the domain name.

After a determination, there is a 90-day period during which both parties can use the site name, said David Graves, director of business affairs at Network Solutions.

Graves said the policy has been invoked 3,000 times, out of 4 million domain names.

“You have to recognize the fact that trademark law came about over a period of time, never anticipating that there would be anything like the Internet,” Graves said.

“And when the Net was designed and implemented, people never thought it was going to be a center of e-commerce.”

Five companies besides Network Solutions are now in the business of registering domain names in a test run by the Internet Corp. for Assigned Names & Numbers. The issue will become even more important if the reform of the system for registering domain names sets off real estate rushes for spots in categories such as .biz or .fin.

Interim ICANN Chairwoman Esther Dyson said she hopes Web-trademark conflicts will be addressed at ICANN’s meeting this month in Berlin.

In the meantime, experts said, companies should get both a trademark registration and a domain name.

Any fix will come too late for Credit.com.

“If you can’t protect your mark,” Meagher said, “that’s pretty scary.”