Go Pets Ltd. v. Hise Highlights Importance of Internet Property Rights for Chicago Businesses

The Internet has opened a new legal frontier; businesses must now be as concerned about online ownership, trademark and copyright issues as they are about their brick-and-mortar operations.

In some cases, businesses survive and thrive entirely online. In all case, protecting the online name and reputation of your business is critical to success. Annual Internet sales are increasing by double digits each year -- and passed $100 billion a year in 2007. When issues involving intellectual property and technology threaten the health and welfare of your business, a Chicago business law firm familiar with Internet issues must be contacted at the earliest stages of such cases.

In Go Pets Ltd. v. Hise, GoPets LTD. filed a lawsuit against Joseph Hise and a California corporation over www.gopets.com. The suit was filed under the Anticybersquatting Consumer Protection Act.

The court ruled Hise registered the domain in 1999, long before GoPets LTD registered its service mark, and therefore he was not in violation of the cyber squatting laws. The law was put in place to prevent individuals from buying domain names for a few dollars each and then holding them hostage for outrageous fees.

Where the court found Hise in violation, was for registering additional domain names. The U.S. Court of Appeals for the Ninth District found he had acted in bad faith and affirmed the district decision that Hise violated the Lanham Act with his use of www.gopets.com. The case was returned to the district court for a determination of damages.

In this case, the defendant had registered the domain and built a business plan as part of a marketing class in 1999. The defendant, together with a relative who was a veterinarian, also owned a company that had owned and registered more than 1,300 domain names. Most seemed to be geared toward plausible businesses but were not the names of existing corporations.

By 2004, a South Korean company, Go Pets Ltd., had made several attempts to register the name. In 2005, the companies filed a dispute over ownership of the domain with the Internet Corporation for Assigned Names and Numbers (ICANN), which oversees domain names. A dispute was also later field with the World Intellectual Property Organization (WIPO), which administers ICANN's dispute policy. A WIPO arbitrator found in favor of Edward Hise. It was ruled Hise had been registering the name for years and had not initially registered it in bad faith.

Hise later sent a letter stating that Go Pets Ltd's registration of www.gopetslive.com could confuse consumers and hurt the www.gopets.com name. While purchase of the name could clear up any confusion and provide for less search result competition. The letter offered to sell the domain for $5 million. Meanwhile, screen captures of Internet archives reveal that Hise began building site content for the domain and turning it into a viable web property. After the decision by WIPO, company owned by Hise began registering other names similar to www.gopets.com

In 2007, the South Korean company filed the complaint in U.S. District Court, claiming a violation of the cybersquatting statute and unfair competition under the Lanham Act. The Lanham Act violation stems from putting content on the site and calling it the "Official GoPets site." The Act contains the statutes covering federal trademark law.

In other words, the court found Hise may have had the right to the domain name but did not have the right to conduct business or infringe upon the trademark rights of GoPets Ltd.

Jeremy A. Gibson & Associates is a law firm dedicated to technology and business litigation in Chicago and elsewhere in Illinois. Call 877-452-4529 for a free consultation.