A recently filed federal suit by DSW, Inc. is a warning to corporations that they should be cautious when engaging in “affiliate marketing.” Affiliate marketing is a Web-based marketing practice in which a business compensates an affiliate for each visitor or customer directed to a company’s Web page by the affiliate’s marketing efforts. DSW, a leading footwear retailer, claims that Zappos.com, Inc., one of DWS’s online competitors, acting with its affiliate, Commission Junction, Inc., an online advertiser, deceptively redirected customers searching for DSW products to Zappos.com’s online store.

Zappos.com hired Commission Junction to advertise its online store through affiliate marketing. Commission Junction established a number of Web sites for Zappos.com, including dswreview.com, dsw-shoes.net, and dswshoesreview.com. These sites were not negative, but instead provided reviews of DSW, a company history, and other information about DSW. The sites also contained photographs of the exterior of DSW stores, photographs of the interior of DSW stores, and prominent displays of DSW’s trademarks and service marks as well as a link that said “Click Here to Buy Shoes.” Visitors were redirected to Zappos.com if they clicked on this link. DSW alleges that customers visiting these Zappos.com Web sites were confused into thinking they were on a DSW-sponsored Web site because of the use of photographs of DSW stores and the presence of DSW marks on the Web pages. Further, Commission Junction used metatags containing the trademark “DSW” to draw consumers searching for DSW to Zappos.com’s Web sites.

 DSW alleges that defendants infringed its registered trademarks and service marks by using deceptively named Web sites, such as , , and . DSW claims that these Web sites have caused confusion among consumers that are seeking DSW’s online store to purchase shoes.

Defendants’ conduct, argues DSW, is a violation of (i) 15 U.S.C. § 1114, for federal trademark and service mark infringement; (ii) 15 U.S.C. § 1125, for false designation of origin and false descriptions and misrepresentations; and (iii) the Ohio Deceptive Trade Practice Act.  DSW requested that the district court permanently enjoin defendants’ from using DSW’s marks, order the transfer of the infringing domain names, and award damages from lost profits and attorneys’ fees due to Zappos.com’s willful and flagrant misuse of DSW’s marks.

Bill Jordan, Senior Vice President and General Counsel of DSW said, “We intend to rigorously defend and protect our intellectual property and our brand against any sort of misuse. It is unacceptable and we will not hesitate to pursue our legal rights in matters of this sort.” Zappos.com and Commission Junction have not yet answered the complaint.

Companies are advised to seek legal counsel before engaging in affiliate marketing. Further, companies should monitor the methods of advertising that their affiliates employ because a company’s careless use of trademarks or service marks could lead to competitors taking legal action.

Arent Fox is continuing to monitor this case for further developments. For more information, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Sarah L. Bruno
bruno.sarah@arentfox.com
202.775.5760

Matthew R. Mills
mills.matthew@arentfox.com
202.715.8582