December 13, 1999, Monday

HEADLINE: DISPUTE BETWEEN ETOYS AND ETOY

ANCHORS: BOB EDWARDS

REPORTERS: MADELEINE BRAND

BODY:

BOB EDWARDS, host:

eToys. com, the online toy store, is suing etoy. com, a European art group, for trademark infringement. eToys says the group's name is too close to its own and is confusing to shoppers who forget to type the S and end up on the artists' Web site. But the artists are fighting back. They say they had the name first. NPR's Madeleine Brand reports.

MADELEINE BRAND reporting:

eToy did have the name first, at least online, which is where both eToy and eToys do their business. And the art group insists it is a business. Its full name is the eToy Corporation. Founding member Xai(ph), no first name, spoke from Zurich, Switzerland. He says his group would cease to exist if it had to change its name.

ZAI: It will be the same thing if you force them to use another name. Maybe it's hard to understand for people who are not familiar with the eToy art concept. But it's really all about this domain name. It's written on every piece of art, it's published in many, many books, in many art books and in magazines, so it's impossible to change its name. I mean, it would be the end of the group and of the venture etoy. com.

BRAND: eToy. com is an Internet-based art site that tries to challenge consumer culture. In order to spoof the mania for Web stocks, for example, they've sold shares in themselves. But now their venture is over. A judge in California has granted the toy company a preliminary injunction and the artists have had to shut down their Web site and stop selling their shares in the US. They're appealing the decision, saying they had their domain name and were on the Internet first in 1994. eToys went online three years later. But the toy company owns the trademark eToys and whether owning a trademark in the real world should extend to owning that mark on the Web is unclear. So far, it's been perfectly legal to own the Web address of a famous company like McDonald's.com. Even if you have nothing to do with that company, you can do it by simply buying that domain name. But Megan Gray(ph), a lawyer who specializes in Internet and intellectual property law, says this is not a case of cybersquatting. It's a case of two companies with two different goods and services who happen to share a name, sort of like United Airlines and United Van Lines.

Ms. MEGAN GRAY (Attorney): The test for trademark infringement is whether you use a substantially similar name on similar goods and services. So there's two components there. It's not just whether you've got a similar name. It's whether it's something that's going to cause confusion in the marketplace. And you cause confusion among consumers only if the goods and services are somehow related.

BRAND: For instance, if someone had the company name NPR and wanted to sell dog food, that would be OK?

Ms. GRAY: Yep.

BRAND: But eToys says it's not OK that eToy is selling something different. In fact, that's the problem. eToys is afraid that customers who find themselves on the art site will be offended by some of the images there and blame the toy company. Another concern, says Internet law specialist Michael Lindsey(ph), is something known as initial interest confusion.

Mr. MICHAEL LINDSEY (Internet Law Specialist): The initial interest confusion could lead someone to believe that etoy. com was the same entity that they look to for the source of toys, and upon arriving at the etoy. com location could discover, well, it's not exactly toys, but there might be something here that could be of value to me. And they go forward and make a purchase at etoy. com, thereby depriving etoys. com of the opportunity for that person's patronage.

BRAND: Despite co-existing with eToy for years, the toy company decided to take action this fall, around the same time it was preparing to start its new British venture. A spokesman for the toy company denies that eToys wanted the eToy site to increase its European business. He says they filed the lawsuit after two customers complained about the art site. But as Internet companies expand, they're realizing that not owning all the permutations of their domain names threatens their profits. Take amazon.com. There's another book-selling Web site called Amazom--with an M--.com. Popular Mechanic--no S--.com is actually a porn site. And Delta, a financial services company, had been in a dispute with Delta Airlines, so on its Delta.com site, there was a link to American Airlines. eToys offered half a million dollars for the eToy Web site, which the artists rejected. Xai says it's more important to fight.

ZAI: There are a lot of things which are really, really scary for us. We are fighting here against a corporation with a huge, huge amount of money in the background. They asked to bring in hundreds and hundreds of documents like passports, employment information, university documents. I mean, it's not so easy to sleep at the moment, feeling all this pressure against us. But on the other side, you can also say, yes, it is a very, very interesting situation for our artwork. People have to think about ownership, about corporate greed, about art on the Internet and also the balance between cultural content and commercial content on the Internet.

BRAND: And about the international nature of the Internet. Just because the US has dominated the lucrative .com so far, doesn't mean it should continue to do so, says lawyer Michael Lindsey.

Mr. LINDSEY: At the moment, I think that etoys --plural--.com would have the stronger case under the US trademark law. The question is, from a global Internet perspective, whether that's an appropriate resolution; whether because companies in the United States have gotten out early and registered their names as trademarks, whether we should be able to preempt people in other countries from using similar names, even if they could be characterized as confusingly similar. The question is one that's of some significant moment on the European continent because people there are quite concerned that the United States is, in essence, making the Internet one of its territories.

BRAND: He believes disputes like the one between eToy and eToys should be resolved out of court. There's a new agency run by the United Nations that is meant to do just that. It heard its first case this month. But there's nothing compelling companies who want to sue from going to court. eToys is pursuing its case in a California court; eToy says it will countersue in Europe. Madeleine Brand, NPR News, Washington.

EDWARDS: This is NPR's MORNING EDITION. I'm Bob Edwards.

LANGUAGE: English

LOAD-DATE: December 22, 1999