In a warning to would-be cybersquatters and others who seek to capitalize on the value of Internet domain names, the Ninth Circuit clarified the legal standard for trademark distinctiveness in David Lahoti v. Vericheck Inc., No. 08-35001 (9th Cir. Nov. 16, 2009), which involved the mark "VeriCheck." Lahoti purchased the domain name "www.vericheck.com" in 2003, and earned income by redirecting visitors to this site with links to the Web sites of competitors of Vericheck Inc., a Georgia corporation that provides electronic financial transaction services. After failed negotiations between the parties, Lahoti sought a declaratory judgment from the U.S. District Court for the Western District of Washington that the mark "VeriCheck" was descriptive and not distinctive, and that his use of the domain name was not a violation of the Lanham Act. Vericheck asserted various counterclaims, including violation of the Lanham Act and the Anti-Cybersquatting Consumer Protection Act. Id. at *15241. The district court ruled in favor of Vericheck on all claims and counterclaims, finding the mark "VeriCheck" was inherently distinctive. Id. at *15242. Reviewing the decision under the clear error standard, the Ninth Circuit vacated and remanded, finding the district court's underlying reasoning was, in part, contrary to federal trademark law. Id. at *15251.
The question in determining trademark distinctiveness, according to the Ninth Circuit's decision, is not whether a mark describes allof the offered services, as reasoned by the district court, but whether the mark immediately conveys information about the natureof those services. Id. at *15251. The Ninth Circuit further ordered that the mark "be examined in the industry context rather than in the abstract." Id. at *15251-52 (citing In re Patent & Trademark Servs. Inc., 49 U.S.P.Q.2d 1537 (T.T.A.B. 1998)).