Fourth Circuit applies 'abandonment' principle in domain name case

In Sloan v Auditron Electronic Corporation, the US Court of Appeals for the Fourth Circuit has affirmed a district court decision rejecting the plaintiff's claim that the defendant's use of 'auditron.com' amounts to trademark infringement. Because the plaintiff (i) had not used his service mark AUDITRON for 15 years, and (ii) could not prove any intent to use it, the appellate court concluded that he had abandoned the mark. Thus, the defendant was able to keep its 'auditron.com' domain name.

William Sloan had owned a federal trademark registration for the mark AUDITRON since 1965 and sought to enjoin Auditron Electronics Corporation (AEC) from using the domain name 'auditron.com' when the company registered it in 1998. Thus, Sloan brought an action under Section 32 of the Lanham Act and the Anti-cybersquatting Consumer Protection Act. AEC claimed that Sloan's trademark registration had been abandoned because he had not used the mark continuously and in a consistent way.

On appeal, the Fourth Circuit adopted the analysis of the US District Court for the Northern District of West Virginia and found for AEC on the abandonment issue. The appellate court rejected Sloan's self-serving after-the-fact testimony regarding ongoing use that contradicted admissions and documentary evidence. The appellate court also agreed with the district court that Sloan was unable to meet its evidentiary burden to show he intended to resume use of the mark.

In the same opinion, the Fourth Circuit strictly construed the Anti-cybersquatting Consumer Protection Act to require a plaintiff seeking to enjoin use of a domain name to meet its burden to plead and prove that the subject domain name was adopted in bad faith. The appellate court, quoting the district court, reasoned that AEC's long-standing use of its company name (since 1978) was strong evidence that its adoption of the disputed domain name was not in bad faith.

The Sloan decision should serve as a reminder that ownership of a federal trademark registration alone is usually insufficient to prevail in a cybersquatting or infringement case. Plaintiffs need to meet the strict burdens of proof imposed on them to have a reasonable chance of prevailing.

Keith Medansky and Julianne Needle, Piper Rudnick LLP, Chicago

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