Internet Trademark Case Summaries
Nike, Inc. v. Nikepal Int'l, Inc.
2007 WL 2782030 (E.D. Cal. Sept. 18, 2007)
Plaintiff Nike sold athletic footwear and apparel under the federally registered trademark NIKE and NIKE-formative marks since 1971. Defendant Nikepal provided services and products such as syringes through its website at "nikepal.com" and via phone to analytical, environmental, and scientific laboratories under the mark NIKEPAL since 1998. Nikepal also registered, but did not use, the domain names "nikepal.biz," "nikepal.us," nikepal.tv," "nikepal.net," and "nikepal.info," which the domain name registrar linked to "under construction" pages that contained links to products and services of Nike and its competition. Nike opposed Nikepal's application to register its NIKEPAL trademark, but the TTAB held for Nikepal finding that the marks were not sufficiently similar to support Nike's dilution claim. Nike appealed the TTAB decision to this court and brought additional claims of federal dilution, infringement, and unfair competition, among other claims. Regarding Nike's dilution claims, the court easily found that NIKE was a famous mark prior to the first use of NIKEPAL applying the TDRA fame factors, finding that Nike spent over one billion dollars promoting its trademark nationally for over 20 years before Nikepal even came into existence and Nike's sales exceeded one billion dollars by 1998; several third-party brand surveys showed that NIKE had been consistently ranked as a top brand in the United States since the early 1990s; Nike's own survey "overwhelmingly indicated recognition" of the NIKE mark without the "Swoosh" logo; and Nike owned ten federal registration for NIKE covering various uses. The court then held that there was a likelihood of dilution by blurring after weighing all the relevant factors. First, the marks were "nearly identical," as NIKEPAL was a composite of the dominant and identically pronounced word "Nike" and the term "pal," the term "Nike" in both marks was pronounced identically, and defendant displayed its mark as "NikePal." Moreover, the vast majority of Nike's survey participants consisting of Nikepal's target customers associated the mark NIKEPAL with Nike and/or its products. Second, it was undisputed that the NIKE mark was inherently distinctive. Third, Nike's use of the NIKE mark was "substantially exclusive." Nikepal could point to only one other third party, Nike Hydraulics, that used the term. Fourth, the degree of name recognition was "quite strong" for the reasons discussed above. Fifth, the court discredited Nikepal's assertion that it selected its name completely at random despite his prior awareness of Nike. Sixth, the registrar for Nikepal's "unused" domain names created pay-per-click pages for those sites displaying links to websites that offered NIKE products, and Nike's survey evidence showed that over 87% of NikePal's target customers associated NIKEPAL with NIKE. Thus, all six dilution-by-blurring factors favored Nike. The court then determined that a permanent injunction was warranted under the eBay test. First, without an injunction against Nikepal, Nike will face an "escalating erosion" of the NIKE mark's "ability to serve as a source-identifying mark," which a monetary damage award could not compensate. Second, the balance of hardships favored Nike. Nikepal chose its name with "full awareness" of the NIKE mark. Moreover, because Nikepal's business was relatively small, it would not be unduly burdensome for it to notify customers of its name change. Finally, the public interest would not be disserved by issuing an injunction against Nikepal. The court permanently enjoined Nikepal from using NIKEPAL in connection with offering any goods or services in commerce, including domain names, on web pages, and in printed matter within sixty days after the court's order. Nikepal was allowed to continue to use its numeric telephone number, but could not advertise or associate it with the designation "1-877-NIKEPAL." The court also reversed the TTAB's denial of Nike's opposition to Nikepal's trademark application. It found that Nike's new survey evidence showing a strong association between NIKEPAL and NIKE in the minds of Nikepal's target customers supported a finding that the marks were sufficiently similar. Further, the court found that the other dilution factors (e.g., degree of recognition of NIKE mark, Nike's substantially exclusive use of NIKE, Nikepal's intent), which the TTAB had not considered, also favored Nike. Because the court found for Nike on its dilution claims, it did not decide the infringement and unfair competition claims.