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Lockheed Martin Corp. v. Network Solutions, Inc., 985 F. Supp. 949 - Dist. Court, CD California 1997:

In holding that the degree of uncertainty over infringing uses of domain names makes it inappropriate to impose contributory liability on NSI, the Court is not making new trademark rules for the Internet. Contributory infringement doctrine has always treated uncertainty of infringement as relevant to the question of an alleged contributory infringer's knowledge. See Mini Maid, 967 F.2d at 1521 (instructing district court to consider extent and nature of alleged infringement in determining whether to impute knowledge to alleged contributory infringer); Restatement (Third) of Unfair Competition § 26 cmt. a (1993) (noting that a person's liability for contributory infringement "depends upon the nature of the business relationship between the person and the direct infringer and the knowledge attributable to the person on the basis of that relationship"). A trademark owner's demand letter is insufficient to resolve this inherent uncertainty. Coca-Cola Co. v. Snow Crest Beverages, 64 F.Supp. 980 (D.Mass.1946), aff'd, 162 F.2d 280 (1st Cir.1947), a seminal contributory infringement case, addressed the contention [page 965] offered here by Lockheed that an attorney's demand letter should be sufficient to impute knowledge of infringement. There, Coca-Cola asserted that Snow Crest had contributorily infringed its mark by selling "Polar Cola" to bartenders who sometimes mixed the soda into customers' "rum and Coke" drinks. Coca-Cola, 64 F.Supp. at 989. Coca-Cola asserted that Snow Crest should have known about the infringement because Coca-Cola's counsel had told Snow Crest's president of the bartending practice. The court found that such "lawyer's argumentative talk" was insufficient to establish that a reasonable business person in Snow Crest's position should have concluded that its products were being used to infringe. Id. at 990. The court reasoned that if it imputed knowledge to the defendant based on Coca-Cola's blanket demand, the court would be expanding Coca-Cola's property right in its trademark, allowing Coca-Cola to secure a monopoly over the entire mixed drink trade. Id. The same reasoning applies here. Lockheed's argument would require the Court to impute knowledge of infringement to NSI in circumstances where the use of the term "skunk works" in a domain name may or may not be infringing. Such an expansion of contributory liability would give Lockheed a right in gross to control all uses of "skunk works" in domain names.

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