NISSAN dilution case driven back to the district court

In Nissan Motor Co v Nissan Computer Corporation, the US Court of Appeals for the Ninth Circuit has reversed in part and remanded a district court decision in relation to the defendant's use of the name Nissan, and registration and use of 'nissan.com'. The Ninth Circuit held that the lower court had used the wrong date from which to determine the fame of the plaintiff's NISSAN mark.

The defendant company, Nissan Computer Corporation, is owned by an individual named Uzi Nissan. Nissan has used his last name for several businesses since 1980. He set up computer store Nissan Computer in 1991 and the company later registered the domain name 'nissan.com' in 1994. The domain name hosted a website that advertised various products. In 1999 the website started to feature automobile-related products. Japanese car manufacturer Nissan Motor Co filed a lawsuit claiming, among other things, federal trademark dilution.

With respect to the dilution claim, the US District Court for the Central District of California found that Nissan Computer's first use of the name Nissan was in 1994, when it registered the domain name 'nissan.com', because that was the only use identical to the NISSAN mark. The district court further opined that by 1994, Nissan Motor's NISSAN mark had become famous and Nissan Computer's use of 'nissan.com' diluted the quality of Nissan Motor's mark. It issued a permanent injunction enjoining Nissan Computer from posting commercial content on the 'nissan.com' website (for a discussion of the case, see Commercial content banned from 'nissan.com' website).

On appeal, the Ninth Circuit remanded the district court's decision as to the dilution claim. It noted that injunctive relief is available under the Federal Trademark Dilution Act (FTDA), if a plaintiff can establish that:

  • its mark is famous;

  • the defendant is making commercial use of the mark in commerce; and

  • the defendant's use began after the plaintiff's mark became famous.

Central to the dilution claim in this case was what date to fix as Nissan Computer's first use of the Nissan name, as this was the date at which to determine the famousness of Nissan Motor's NISSAN mark.

Nissan Motor argued that the date to determine the famousness of the NISSAN mark was the first time Nissan Computer used Nissan by itself as a trade or company name, instead of as a composite trade or company name. This, Nissan Motor argued, was in 1994 when Nissan Computer registered 'nissan.com'. On the other hand, Nissan Computer argued that fame must be measured as of the actual first use of the mark, not the first use that the plaintiff finds objectionable.

The Ninth Circuit found that a proper interpretation of the FTDA is that any use of a famous mark in commerce is arguably a diluting use that fixes the time by which famousness is to be measured. In this case, the Ninth Circuit found that commercial use of Nissan for computers in the name Nissan Computers was a use of the NISSAN mark in commerce that was arguably diluting. Such use occurred in 1991. Therefore, the fame of the NISSAN mark must be measured as of 1991.

Accordingly, the Ninth Circuit found that the district court erred in fixing the date to determine the famousness of Nissan Motor's NISSAN mark as 1994 and remanded the case back to the district court to determine the famousness of the NISSAN mark as of 1991.

Susan Natland, Knobbe Martens Olson & Bear LLP, Newport Beach

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