Lockheed v. NSI

Citation: Lockheed Martin Corp. v. Network Solutions Inc., 985 F. Supp. 949 (C.D. Cal. 1997), aff’d, 194 F.3d 980 (9th Cir. 1999).

Factual Background
Lockheed, owner of the federally registered mark SKUNK WORKS, sued NSI for direct and contributory trademark infringement, dilution, and unfair competition stemming from NSI’s acceptance of third-party registrations of the domain names “skunkworks.net,” “skunkworks.com,” “skunkwerks.com,” and “skunkworx.com.”

Trial Court Proceedings
NSI moved to dismiss Lockheed’s claims, but the court refused. After the court denied Lockheed’s motion to amend its complaint to include a count for contributory dilution,

NSI filed a motion for summary judgment as to all of Lockheed’s claims. The court granted NSI’s motion in its entirety, holding that NSI could not be liable for direct trademark infringement or unfair competition under the Lanham Act where NSI had not used Lockheed’s mark in connection with the sale, offering for sale, distribution, or advertising of goods or services. The court found that NSI’s use of domain names was connected with their technical function of designating computers hooked up to the Internet, and not with a trademark function of identifying the source of goods or services.

As to dilution, the court held that NSI’s acceptance of domain name registrations did not amount to a commercial use in commerce of the domain names as trademarks as required by the FTDA.

Turning to contributory infringement, the court held that it was inappropriate to hold NSI liable in view of the inherent uncertainty in determining whether the use of a particular term in a domain name infringes the trademark rights of another. The court found that NSI had neither induced infringement nor continued to supply a product when it knew or should have known that its customers were using the product to infringe Lockheed’s service mark. In so holding, the court noted that NSI’s registration of a domain name, without more, did not constitute trademark infringement and announced that NSI had no affirmative duty to police the Internet for possible infringing uses of domain names.

Appellate Court Proceedings
The Ninth Circuit affirmed the district court’s ruling, finding that NSI did not supply a “product” or exercise the kind of direct control and monitoring necessary to justify liability for contributory infringement.