Nike filed a trademark infringement lawsuit on June 12 against Eastern Mountain Sports (EMS) in the Federal District Court for the District of Oregon over the use of the term "DRI-FIT."
Dri-Fit is a trademark of Nike. According to the complaint filed by Nike (click here to read), EMS has contracted with Yahoo, Google and MSN search engines to send customers to its website when the term Dri-Fit is used as a search term. The advertisers who purchase these so-called “keyword triggers” allegedly can also use them in descriptive text or in the search terms on search pages. According to the complaint, EMS has been using the term Dri-Fit since October 2006.
When searched, the keyword triggers, the name for terms sold by search firms, brings up the advertiser's website as a paid ad either at the side of the search page or highlighted somewhere on the search page. The search engines will sell anyone any word or word combination and seem to not have any liability for making money selling someone else's trademark.
EMS also allegedly used the trademarked term in its webpage addresses. The complaint includes the following webpage address with the term Dri+Fit at the end of the page -- click here to view.
When we clicked on the link above, we were directed to the EMS website and the page shown at the right, which at the time of this article was still up and shows no Dri-Fit product by Nike. In fact, a search of the EMS website as well as a Google search of Dri-Fit and EMS indicates that EMS does not sell any Nike brand products as also alleged in the complaint.
A trademarked word, term or phrase is solely and completely under the control of the owner of the trademark. A trademark is property just like a desk or building. Anyone using the term without license or permission from the owner of the trademark is in violation of federal law. When a retailer enters into an agreement to sell a manufacturer's products, with that agreement typically comes the right to use the manufactures trademark terms to assist in promoting the products being sold.
What is interesting about trademark law is as an owner of a trademark, you have to actively defend it or risk losing the trademark status of the word. From a purely legal standpoint, Nike had to sue EMS over the use of the term or possibly lose the term Dri-Fit as a proprietary asset.
Nike is suing for damages based on three claims of relief and it is alleging that use of the trademarked term by EMS is causing customer confusion, unfair competition and dilution of the term (all known as trademark infringement) under federal trademark law. 15 U.S.C. § 1125.
Nike is asking for an injunction to immediately and forever stop the use of the term, damages which would be all profits made from the use of the term and Nike's costs in the lawsuit and "enhanced" damages. Enhanced damages can be up to three times the amount of the original damages.
SNEWS® View: This case is a mix of hundred-year-old law and recent Internet technology creating a lawsuit which, on first reading, appears to be a slam dunk for Nike. Customer confusion is the reason this case is being brought. A company such as Nike goes to a lot of time and expense to create a proprietary product and a trademark for the product and then market that trademark through advertising, POPs, and other branding efforts. The intent of any trademark term, certainly, is to help the customer know what they are buying and more easily find a specific product within range of choices in an ever-competitive market. At the same time, the law understands that customers can become easily confused if a trademark term takes that customer to an entirely different product. By using a trademarked term to grab a customer, a trademark infringer is basically using the old "bait and switch." The customer is lured in to a site they might not have visited and perhaps a site that doesn't even carry the brand of products they are seeking -- all by using words and terms the customer most likely knows. And, in the end, the customer is quite likely sold a different product than they had started looking for. Little wonder Nike is ticked off. It is also possible the mistake was an innocent one by EMS. Either way, Nike and EMS will probably work out a quick settlement if the allegations in the complaint are true.
These types of cases are hard to defend and very costly in the long run. SNEWS readers should be aware that other manufacturers have told us retailers and even competitors have regularly engaged in the practice of buying search engine key words using another's trademark to ensure traffic is driven to a particular site when a potential customer begins a search. It's something we're going to start watching a bit more closely too. Using someone else's trademark terms to garner business just isn't right.
Because of the damages awarded by the courts in these types of cases, it is important to realize that while a plaintiff must first front the cost for the litigation, if the case has merit it is likely the defendant will subsequently have to pay all of the plaintiff's legal costs, any damages the court decides are appropriate, and cease using the trademarked term.