e-Toy Story

While corporations race to colonize the virtual frontier of the Internet, a recent

case that has surfaced amid the taming of the digital badlands demonstrates what uneasy neighbors art and commerce make. On Monday, the California State Court granted eToys.com, the leading online toy retailer, a preliminary injunction against etoy.com, an international Internet art site. This ruling could lead to an unfortunateprecedent, as it clearly favors American corporations and American commercial law when settling disputes stemming from Net conflicts.

Although etoy.com and eToys.com have been relatively peaceful neighbors for roughly a year, a few months ago a simple event pushed them into legal battle. On August 25, 1999, a consumer fired off this letter to eToys.com: "My grandson was looking for toys for his birthday and brought this to my attention. Are you completely nuts. What an irresponsible thing to show young children. We will never buy from you again." Attached to the letter were two pages printed out not from eToys.com, but etoy.com. Unbeknownst to the innocent grandfather, the Web site he had stumbled onto was the work of etoy, a group of digital artists in Europe. The first page on etoy's site offers visitors the option to "travel the old fashioned way (html only)." The phrase that the customer found so offensive was on the next page, which says, "We do not support the old fashioned way . . . get the fucking flash plugin!" Less than two weeks later, on September 10, 1999, eToys sued etoy for trademark infringement, dilution, and unfair competition.

etoy created this "share" certificate; eToys cried securities fraud.
illustration: courtesy Rennie Pritikin, San Francisco (value: 3800 etoy shares)
etoy created this "share" certificate; eToys cried securities fraud.

In the U.S., trademark registration is not the sole determining factor for exclusive rights to a word or logo, although it helps. Though eToys registered its trademark in May 1997, and etoy filed for its U.S. trademark in June 1997, etoy argues that it first used this name in 1994, when its members, who are scattered throughout Europe and describe themselves as "agents," began to work under that name as performance artists for techno events and raves. etoy registered its domain name on October 13, 1995, and eToys registered its own on November 3, 1997. That means that when eToys chose its domain name, it must have been aware that etoy existed. According to agent zai, the public affairs representative of etoy, who lives in Vienna, not only did eToys learn of etoy's existence, the company offered to buy the url. zai claims that the last offer was 7000 shares (trading at 68 as of press time) and $50,000 in cash. Despite its being an attractive sum of money, etoy refused. "Our emotions, our artistic integrity, our whole thing is the domain name. Probably the logical response is to get some money rather than lose. But our project was always radical, so for us it is better to risk everything and fight."

The group once posted on another of its Web sites controversial images of the postbombing Oklahoma City federal building, with the caption, "Such work needs a lot of training." zai insists that the images were intentionally provocative, and that they were accompanied by discussion. etoy's online work has always created enemies, but before eToys came along, says zai, "we could always handle it."

This type of case is common enough to have been given a name: reverse domain name hijacking. "Trademark holders are trying to muscle people out of using names that are arguably confusing and arguably belong to them," says David Post, a law professor at Temple University. "A lot of people cave because of the cost of litigating. But the pendulum is swinging. Recent decisions suggest that it may be harder [for trademarked companies to win]." One recent decision involved Hasbro, Inc., another toy maker, versus Clue Computing, Inc., a small Colorado-based computer consultancy. The judge ruled that Hasbro did not have the right to take away the contested url, clue.com, from Clue Computing, despite Hasbro's ownership of the trademark "Clue" for its popular board game. According to the decision, legitimate computing use of the domain name did not represent dilution; the judge wrote that "holders of a famous mark are not automatically entitled to use that mark as their domain name; trademark law does not support such a monopoly."

So far, there is no real governance for domain name disputes, although ICANN (Internet Corporation for Assigned Names and Numbers) is working on filling the void. In the meantime, corporations can't afford confusion. E-commerce sites need brand-name recognition in order to survive in an unbelievably competitive market. eToys's lawyer, Bruce Wessel, points to the fact that etoy is primarily European, claiming that simply because the group has registered with Network Solutions, a U.S.-based domain name company, doesn't mean it has a right to a top-level domain such as .com when its name is confusingly similar to eToys. He acknowledges that etoy had a Web site prior to eToys, but adds that, "If someone has a Web site, the question is whether they have worldwide rights to use the name in all circumstances just because they registered the name first. They were a European-based organization, and we have no problem with them having a European-based site, such as .ch, which is the Switzerland domain."

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