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Digital operates one of the best known "search engines" on the Internet-- "AltaVista." The search engine is available on a Digital web site at http://www.altavista.digital.com/. Digital makes the search engine available in part to showcase Digital's Alpha workstations, on which the search engine runs.
When Digital was preparing to offer this search engine, it found that another computer company was already using the AltaVista trademark, and the other company already had a web page up at http://www.altavista.com/.
Digital entered into negotiations with the other company, AltaVista Technology, Inc. (ATI), and purchased the AltaVista trademark. Digital then licensed certain rights back to ATI. ATI was allowed to continue using the name "AltaVista," but only in its corporate name, and it was allowed to continue using the altavista.com domain name. Digital then established its AltaVista web site at http://www.altavista.digital.com/.
The search engine proved very popular, and word spread about the AltaVista search engine. In one account, the site was reported as receiving some 20 million "hits" a day. However, a significant number of Internet users looked for the AltaVista search engine at the address http://www.altavista.com/ -- a natural place to look for people who are familiar with common methods for guessing the location of entities on the Internet, yet who are not familiar with where to find this search engine in particular. All of these people found themselves looking at the web page for AltaVista Technology, Inc. Supposedly hundreds of thousands of people mistakenly found themselves at ATI's page every day.
ATI lost little time in capitalizing on this confusion. Within a few months after ATI signed the licensing agreement with Digital, ATI had modified its web site. Accidental visitors to the web site were presented with an opportunity to download "demo versions of AltaVista software." There was also a link to an anonymous search engine, labeled "Search the Internet" (which happened to be Digital's AltaVista search engine). Also, at the top of the page, visitors would also see, in large type, the word "AltaVista" sans the rest of ATI's corporate name.
After a few more months, ATI made further modifications to its web page. Namely, the "Search the Internet" line was replaced with "Digital's AltaVista." Also, ATI began selling "banner ad" space on its web site.
At this point, Digital sent a letter to ATI accusing it of violating the companies' license agreement. Specifically, the letter argued that by using the name "AltaVista" alone on the web page, it was a use beyond the two allowed in the license agreement-- in the full corporate name, AltaVista Technology, Inc., and in the Internet address http://www.altavista.com/.
ATI apparently took this letter to heart (perhaps motivated by the threat to cancel the license agreement under one of the agreement's provisions), and modified its web page yet again. Underneath the large AltaVista logo, ATI added the word "Technology" in smaller type. This, however, was not the only change ATI made to its web page.
In addition to the banner ad that had been added earlier, a link was added which invited advertisers to "click here for advertising information-- reach millions every month!" Below this legend, was a replica of the Digital AltaVista search engine interface (complete with logo and a label that users can Search with Digital's AltaVista), which would then execute the searches entered using the Digital search engine. In essence, visitors to ATI's site, who either did not know any better or did not look carefully, would easily believe they had reached Digital's AltaVista.
In an interview conducted by Newsbytes, Jack Marshall, ATI president, argues that the changes to the web page were not made to capitalize on the confusion between the two AltaVistas, and that a certain amount of this "side traffic" was discussed in the licensing negotiations with Digital. This side traffic, Marshall states, was one of the motivations to transfer the AltaVista mark to Digital. Nonetheless, a lawsuit ensued (Digital Equipment Corp. v. AltaVista Technology, Inc., No. 96-12192NG, D. Mass, March 12, 1997).
U.S. District Judge Nancy Gertner granted Digital a preliminary injunction. A large portion of the court's decision was spent analyzing whether the court had jurisdiction. Continuing the recent trend of finding jurisdiction wherever a web page can be accessed, the court found that the California software company was subject to personal jurisdiction in Massachusetts. Also following a recent trend, the court worked to avoid the need to claim that web page activities alone were sufficient to convey jurisdiction. The court stressed that ATI had solicited advertising and sales in the forum state (though from its web page), had a contract with a Massachusetts company, and could foresee causing damage to trademarks in the forum state.
Nonetheless, Gertner did acknowledge that ATI's sales in Massachusetts were minimal, the contract was not signed in Massachusetts, and no one from ATI had dealt with Digital in that state. Furthermore, the court stated that ATI was chargeable with knowing that its web page was available in the forum state, and thus ATI was subject to liability there. The court said that it was not unreasonable to make the defendant defend itself on the other side of the continent-- rather such a burden was just a cost of doing business on the Internet-- which ATI should have kept in mind before engaging in the conduct subject to this controversy.
As to the specific allegations, Judge Gertner agreed that ATI exceeded its license rights. She stated that the license did not allow ATI to use the AltaVista name in conjunction of ATI's offer of free software, nor was ATI allowed to use the name by itself at the top of its web page. When ATI later added the word "technology" in smaller type, it did not cure the apparent use of the AltaVista name in a trademark or servicemark like fashion. These and other uses of the name constituted a likely breach of the license agreement.
Next, the court turned to the issue of trademark infringement (as well as unfair competition). The court held that there was a valid trademark used in interstate commerce in a fashion that was likely to cause confusion.
Specifically, the court found the two companies' AltaVista marks to be similar, especially in light of their use on both web pages for search services. Furthermore, the services indicated by the marks were identical-- and more so than usual-- Digital used its mark to identify its search service, and ATI used the mark to identify its search service, which was also the Digital search engine. Next, the two companies both provided computer software and Internet services to a similar market. Furthermore, not only were people actually confused as to which company's web page they were using, the court held ATI intended to benefit from the popularity of Digital's AltaVista mark.
The outcome of this case is not really a surprise. It is, however, a useful lesson in business planning for Internet use. Just as some companies acquire common "misdials" of other companies telephone numbers and then offer a competing service to callers who dial the wrong number, so too can the same sort of activity occur on the Internet. In this case, Digital allowed ATI to retain use of the altavista.com domain name. If Digital had acquired the domain name as well as the AltaVista trademark, or picked another mark altogether, this case would not have been.
Digital's marketing scheme had some reason to it. The search engine was intended to showcase Digital technology. Internet users could not use the service from the official AltaVista web page without seeing that the search engine was housed at the digital.com domain. Unfortunately, the Digital-ATI license agreement left open a hole that took litigation to plug.
While the particular facts make this an unusual situation, as new top level domains (e.g., .com, .edu) are added to relieve the Internet addressing crunch, such disputes are bound to arise in a new context. I wonder if anyone has registered digital.biz, digital.corp, or altavista.web yet?