U.S.Court of Appeals Upholds Right to Criticize Nissan Motor

August 6, 2004

U.S.Court of Appeals Upholds Right to Criticize Nissan Motor

District Court Improperly Restricted Content of Site After Advertising Was Removed

WASHINGTON, D.C. – In a decision issued today in Nissan Motor Co. v. Nissan Computer Co., the U.S. Court of Appeals for the Ninth Circuit upheld the rights of members of the public to criticize corporations without being deemed to have engaged in “commercial speech” that can be enjoined under the trademark laws.

The case involved Uzi Nissan, a North Carolinian who runs a computer business using his surname. He was sued by the giant automaker for trademark infringement and dilution because he operated a Web site with the domain name nissan.com; he also used his Web site to criticize the auto giant for picking on him.

The trial court issued a series of rulings holding that Nissan was guilty of both dilution and, to a limited extent, infringement, and consequently issued on order forbidding Nissan from using his Web site to criticize Nissan Motor in any way, even by linking to disparaging Web sites. The trial judge reasoned that such criticism became “commercial speech” and hence could be limited consistent with the First Amendment because it had the potential for injuring Nissan Motor’s business.

In a unanimous opinion written by U.S. Circuit Judge Pamela Rymer, the court of appeals flatly rejected this reasoning and overturned the injunction.   Judge Rymer explained that the injunction was an improper content-based restriction that is barred by the First Amendment.  She also held that the defining hallmark of commercial speech is that the speech “does no more than propose a commercial transaction,” and the potential for adverse impact on Nissan Motor’s commercial activities does not similarly make speech commercial. 

“The court of appeals ruling strikes down a prior restraint against free speech that set a dangerous precedent,” said Paul Alan Levy, the Public Citizen attorney who prepared its amicus brief. “Citizens who want to use the Internet to speak their minds about corporations can breathe easier after this ruling.”

The case also contains several rulings on trademark law that will be of significant interest.  Most important, the court decided that a trademark cannot become “famous” and thus eligible for protection under the federal anti-dilution law if it is being used commercially in any way, even in conjunction with another term. 

Under the federal law, dilution claims cannot be brought against a commercial use that began before the trademark became famous.  Nissan Motor had argued, and the trial judge had agreed, that Uzi Nissan’s mere use of his surname as part of the commercial name “Nissan Computer,” which began in 1991, was not enough to prevent the Nissan trademark from becoming famous, and hence only his 1994 registration of the domain name “nissan.com,” which used the Nissan name all by itself, could interfere with the development of the mark’s famousness.  The court of appeals sent the case back for a jury trial to decide whether the Nissan mark was famous in 1991.

In this ruling, the court of appeals agreed with the arguments made by Public Citizen in an amicus brief that it filed in the case.  To view a copy of the brief, click here.  To view the court’s opinion, click here.

###