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The Ninth Circuit released its opinion in Internet Specialties v. Milon-DiGiorgio on March 17, 2009.

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Plaintiff ISP used the mark ISWEST and Defendant ISP used the mark ISPWEST. Plaintiff knew of Defendant’s existence since at least 1998, but did not send a cease and desist letter or bring a lawsuit until six years later, after Defendant had expanded into offering DSL service in addition to its prior dial-up offerings. The majority and the dissent agree that the two companies offered similar enough services that Plaintiff should have recognized the likelihood of confusion in 1998, when it became aware that ISPWest was providing Internet access, e-mail, and web-hosting; that Plaintiff was not entitled to wait until ISPWest’s business grew large enough to constitute a real threat; that Plaintiff was not diligent and did not file suit within the analogous 4-year statute of limitations period and therefore, a presumption in favor of laches applies; and that Plaintiff’s delay in bringing suit was unreasonable, so laches bars equitable remedies unless there was no prejudice to ISPWest as a result of the delay.

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The majority and the dissent finally part ways on this issue of prejudice, with the majority holding that ISPWest was not prejudiced because it did not “build a valuable business around its trademark during the time that the plaintiff delayed the exercise of its legal rights.” The majority and dissent acknowledge that ISPWest grew its business substantially during the relevant time period and spent significant sums advertising, but the majority finds these efforts were not focused “around its trademark” because the mark was rarely used in that advertising. The dissent instead focuses on the fact that customers went to the ispwest domain to access services and had @ispwest.com email addresses.

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I think the majority fails to adequately appreciate the association customers will develop around the ISPWEST mark when it is primary part of their email address, and as the dissent argues, the extent to which it creates a public interest that weighs against an injunction. One’s email address is something you have to remember to share with friends and that appears on one’s business card, etc. The majority looks for brand awareness or public association with the mark rather than being satisfied with the customers’ awareness or association. Even if that standard is appropriate, the public may well have gained such an association by interacting with the 13,000 customers whose email address bore the ISPWEST mark. The public may be able to gain this awareness without being subjected to advertising using the mark, something the majority seems not to consider. The dissent finishes with a solemn warning:

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The majority’s evisceration of laches means that a big company can lurk in the tall grass while its little prey gradually fattens itself by dint of great effort and expense. Then, when the small competitor has succeeded, the big company can shake it down for a cut of its hard-won success, or destroy the name under which it innocently did business for years. That is trademark law as protection racket, rather than trademark law as prevention of consumer confusion.

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