Facts

On June 4, 1994, Nissan Computer, defendant, registered the domain name "nissan.com." Nissan Computer, owned by Uzi Nissan, is a small North Carolina company that sells computer and Internet-related goods through its website. In 1999, plaintiffs Nissan North America Inc. and Nissan Motor Co. Ltd., sued defendant for trademark infringement and trademark dilution. Nissan Motor provided evidence that according to a survey, more than 75 percent of the consuming public associated the word "Nissan" with Nissan Motor, and more than 83 percent of the public using the Internet, associated "Nissan" with Nissan Motor. Further, Nissan Motor's marketing expert stated that inconsistencies in the parties' websites were harmful to plaintiffs' brand name.

Nissan Computer, on the other hand, provided evidence that consumers who seek automotive information on the Internet are sophisticated and would not be confused by the fact that its website had the word "Nissan" in its name. Defendant's marketing expert, Ronald Buckhammer, also said that Nissan Motor was late in implementing an Internet marketing strategy and that its failure to secure nissan.com would not materially harm its brand. Additionally, defendant's accounting expert, Dr. Barbara Luna, said that plaintiffs had not lost any sales as a result of defendant's possession of the domain name. Dr. Luna added that survey results show only 6.5 percent of people who start their Internet searches for the word "nissan" who arrive at nissan.com, are looking for information on cars.

PLAINTIFFS' CONTENTIONS:
Nissan Motor contended that by using low-tech advertising and selling discount products and services on "nissan.com," defendant was tarnishing their reputation, leading consumers to associate the Nissan brand with inferior products.

DEFENDANTS' CONTENTIONS:
Nissan Computer argued that its use of the "Nissan" trademark began before the trademark became "famous," as that word is used in the Federal Trademark Dilution Act. The defendant also alleged that Nissan Motor's trademark was not inherently distinctive and that its use of the name did not dilute plaintiffs' trademark. Nissan Computer also contended that posting non-automobile-related advertising at nissan.com did not lead to confusion with Nissan Motor's brand sufficient to constitute trademark infringement.

Damages

According to defense counsel, at the beginning, Nissan Motor sought "in excess of $10 million" in compensatory damages and an order for defendant to transfer the domain names, but at trial, Nissan Motor only sought injunctive relief.

Result

Judge Dean Pregerson found, on summary judgment, that Nissan Computer did not infringe the Nissan Motor trademark by posting non-automobile-related advertising at nissan.com. It also found that automobile-related advertising (which had been posted on nissan.com for only a few weeks in 1999) did infringe the mark. Following a bench trial, Judge Dean Pregerson found in favor of the defendant on the trademark dilution claim. The judge found that defendant's use of the name was not dilutive and declined to issue an injunction against either trademark dilution or trademark infringement. He held that the Nissan Motor trademark was "famous" in 1991 and had acquired distinctiveness. However, the judge held that defendant's use of the mark was not likely to cause dilution by blurring, because there was no evidence of an actual association between Nissan Computer and the Nissan Motor brand. Further, the court found that because of the lack of sophistication of defendant's website, and the sophistication of consumers with respect to Internet use, confusion between the two was unlikely. The court also found that defendant's use of the trademark was not likely to cause dilution of the trademark by tarnishment. The reason for this was that due to the visual appearance and quality of products sold on Nissan Computer's website, any chance of an association by Internet users of Nissan Computer with the "Nissan" name was remote. Judge Pregerson also concluded that the danger of Nissan Computer infringing the Nissan Motor trademark was too remote to justify an injunction against infringement, because Nissan Computer had voluntarily ceased the limited infringing activities in 1999 and there was no evidence it would begin to infringe again.