Has The Texas Lottery Become "Domain Name Bullies"

Imagine if you will, that it's 1996 and you are just a plain, ole private tax paying citizen. But God has blessed you in that you're internet savvy - you have knowledge and foresight of a future boom - something that only a handful of people were blessed with between the years of 1996 and 1998.

For entertainment, you love to play the lotto - the very idea of becoming a lotto winner and a multi-millionaire is something everybody dreams about. Now, each time you go buy your lotto tickets - which is twice a week - you hear fellow players complaining about not being able to obtain the drawing results. Suddenly, the thought comes to you ... "lotto Texas drawing results ... internet ... lotto Texas drawing results ... internet ... lotto Texas drawing results ... internet."

Wow, what an idea you think! So you check it out and learn that in Texas and many other states, no one is providing that kind of service on the internet. You visualize a niche, and you think to yourself, "the lottery is sooo popular, if I post the Lotto Texas drawing results every night, that'll attract visitors to my web site and the web is the thing of the future ... It'll help the lottery and the players ...

Naturally, the first thing one does when starting a new venture/website is to decide on a name that's appropriate, legal, and descriptive of your service. Back then and even now, for website names, everyone goes to www.networksolutions.com - they are the domain name registry for internet addresses. One simply applies for the name they want but if someone already has the name, you CAN'T buy that name. Needless to say, the names "lottotexas," "texaslottery" and "texaslotto" were the best descriptive names for such a site & service, and surprisingly, the names were available. But, in using common sense, the name "texaslottery" was ruled out by both web site owners because the "official" name of the TLC is the "Texas Lottery Commission" so the name "texaslottery" was too close to their name. Apparently, they reasoned the Texas Lottery would eventually want that name and they would probably own the rights to that name too.

So, records show, one bought the name - "lottotexas.com" and the other one bought the name "texaslotto.com." Each one immediately built respective web sites - one built his in June 1996 the other built his in April 1998 and they proceeded to provide a much needed service "for free" that even the Tx Lottery Commission didn't offer. I might add that both web sites have obvious disclaimers that they are NOT the Texas Lottery nor are they affiliated with them and both sites have links to the official TLC site. Which I won't put on my site and if I were them, I'd remove faster than you could shake a stick.

In researching search engine referrals - the top 10 sites shown among the leading search engines - both web sites are listed in the top ten meaning they are extremely popular web sites. I think it would be safe to surmise the reason for the success is because both sites must have established first and foremost - credibility, consistency and reliability in posting drawing results - not to mention the simple little fact that they were the "pioneers" in posting lotto Texas results too.

I'd also like to think that I've done the same thing - my web site went online in early March 1998 and I too am in the top 10 listings with the major search engines. Anyway, the date the first site went online was three years prior to the TLC's web site debut which was on June 30, 1999.

It's important to note here that The Texas Comptroller, who originally oversaw the Texas Lottery in 1992 and 1993, had a web site too and they posted the drawing results. However, to access the data, you had to have a password, a username but more importantly, you had to figure out how to find the lottery numbers once you logged on - and believe me - that was tough and extremely frustrating. The point in mentioning this, it is apparent that "someone" had the foresight about the future of the internet, so why didn't they didn't buy whatever names they wanted before anyone else ever even considered it? As you can clearly see, they had the opportunity and foresight.

Now before I get to the heart of this story, I want to tell you up-front that it is my opinion, and that of others, that the words "lotto" and "Texas" cannot be trademarked, marked or copyrighted because the words are legally defined as "generic" and not "distinctive." I researched this tidbit back in June 1993 when I was naming "The Lotto Report." Then I researched it again in March 1998 when I applied for my web site address and again just this past week so I could write this story. FYI - The definitions of "generic" and "distinctive" are shown below so that you can form your own opinion too.

Now comes the problem. It appears the TLC hired an attorney, who in turn contacted the web site owners and attempted to take away these domain names. This in itself is a highly unusual move in that generally, attorney's recommend that the client, in this case the Tx Lottery, notify the web site owners of a conflict first just to see if they can work out a solution without involving attorney's or lawsuits. This is called a "cease and desist letter." But the TLC didn't do this. So, it appears to me that the TLC may have had "scare tactics" in mind when they decided how to approach the "take over" of these domain names.

So what did the attorney tell these guys. Well, that's simple. First, he "claimed" that their domain names constituted an infringement of the trademark and other rights of the TLC. Then he informed them that if they would so graciously voluntarily agree to stop using the domain names and transfer ownership of the names to the TLC, then the TLC would release them from any damages that occurred as a result of the infringement.

Right now I'm thinking, "Damages? What damages? There's no way the TLC could show damages? Gimme a break."

Anyway, the TLC's attorney, Dwayne Goetzel, also admitted that the term "Lotto Texas" is not a registered mark, but he "claimed" that the TLC has "common law rights" to the mark and the use of those words. So how come all the newspapers have a section in their papers that say "Lotto Texas?" Aren't they using those words to show drawing results too? Isn't that an infringement?

Well, in short, neither web site owner wanted to part with their domain names. Imagine that. So, the next move was to "try" to work something out. The TLC's attorney then decided to offer the web site owner a licence so he could keep his own domain name. Wasn't this gracious?! But the license agreement naturally had terms. Let's see - just out of curiosity, what were the terms so generously offered by the TLC?

First term was that the web site owner agrees "that the TLC trademarks, including the marks, are valid, subsisting and enforceable, and agree to not challenge or contest in any manner the validity of the TLC trademarks, including the marks, or their registration, and agree to refrain from taking any action or proceeding, legal or otherwise, that will hinder TLC in its use and registration of the marks."

Yeah, right ... Sounds like a trick to me. Why would anyone have to agree to this if there was even a remote possibility of any "real" infringements? This reminds me of how the TLC makes 6 of 6 winners sign a statement that they agree to the amount being paid to them as payment in full. Then the winner finds out later he was shortchanged.

Second term, they could not advertise anything on the web site that would negatively impact the TLC. Absolutely no alcohol, tobacco, gambling or pornography advertising.

Now let's see. Don't all convenience stores have advertisements for tobacco hanging all over their counters? Don't liquor stores sell tobacco, alcohol and magazines such as Hustler and Playboy and the such that could be classified as pornography? And as for gambling, isn't just playing the Texas Lottery gambling? Doesn't the TLC provide point of sales pieces for their retailers to display? Isn't that in itself advertising gambling? And last but not least, let's not forget about all those 8 Liners.

Third term, that the web site provide a "prominent and permanent" link to the TLC web site from their web sites.

Now, I'd classify this as "demanding" free advertising. Did you know that 7-Eleven told the TLC to either pay them for the exposure provided in their stores or all lottery signs were coming down. Funny thing, 7-Eleven's no longer have lottery signs. I wonder, is the TLC willing to put a "prominent and permanent" link on their web site in exchange?

And the fourth term, that the web site owner report to the TLC the name of any "confused consumer" and refer them to the TLC for help.

I love the use of the word "consumer" here. Did you know that "consumers" are not protected by consumer laws because the Attorney General has no jurisdiction over "state agencies?" Did you know that the TLC has literally gotten away with false advertising even after being told of misrepresentations - this is clearly a violation of consumer laws - they have underpaid 6 of 6 winners - they passed a rule using "questionable documents" and posted them in the Texas Register claiming they were legitimate comments "for" the rule change - and finally, they refuse to make instant product data available to the consumers - like how many total prizes there are and how many tickets were printed. Yet auto dealers have to disclose mileage before they can sell a car. What's the differences?

Let's make sure we have this story right. For the privilege of taking the time 6 nights a week for the past 5 years and for future years to come, for spending their own money for expenses incurred that benefited the people of Texas and the TLC, the TLC will so generously let these guys keep their own domain names that they built, established and rightfully own. Poppy cock.

Now, let's see what the definitions are of domain name bullies ("bully" definition above in grey box), copyrights, marks, trademarks and what can and can not be "marked." Then you can be the judge and jury and see if you think the TLC has a right to claim infringements by persons having web site addresses that are "texaslotto.com" and "lottotexas.com."

The Laws

The following questions and answers were taken directly from the nolo.com web site. I also read the actual laws and I agree with the assessments made by Nolo's editors and authors - most of whom are lawyers themselves.

Be sure you go and browse Nolo's Law Centers. The Copyrights & Trademarks and Internet Law links can be found in the left column. The best part about this web site is that it explains the law in layman's terms. The entire purpose of Nolo's web site is to help private citizens understand the laws better. A link to their web site is at the end of this section and in the "Domain Name Bullies" box above.

Note: The writings in blue are my opinions about the law and the current situation.

When does an Internet domain name qualify as a trademark or service mark?

A domain name, such as nolo.com, can qualify as a trademark or service mark when it is used in connection with a website that offers goods or services to the public. This includes all sites conducting e-commerce and sites such as Yahoo.com that provide Web-related services.

However, only some types of commercial domain names qualify for trademark protection. For instance, while domain names that use common or descriptive terms, such as healthanswers.com or stampfinders.com, may work very well to bring users to a website, they usually do not qualify for much trademark protection. This means that owners of such domain names won't have much luck stopping the use of these words and phrases in other domain names. In other words, by using common terms in a domain name, the owner of the name will have less protection against the users of similar domain names than she would if her domain name was distinctive.

Do Internet domain names that use common terms such as healthanswers.com or stampfinders.com qualify as trademarks?

Although domain names that use common or descriptive terms may not qualify as strong trademarks, they may work very well as domain names, because they help bring in users to the website. But the downside, as with other types of trademarks, is that you won't have much luck stopping the use of these words and phrases in other domain names. In other words, by using common terms as domain names, you will have less protection against the users of similar domain names than you will if your domain name is distinctive.

Are there marks that can't be protected under the trademark laws?

Yes. When a trademark is used to describe a type of product rather than a brand of product, the mark is said to be generic and won't be given any protection. Sometimes an inherently distinctive mark is so successful that people start to consider the mark to be synonymous with the product itself, and the mark becomes generic. For example, aspirin was originally a highly distinctive brand name for a type of analgesic (salicylic acid). After a while, aspirin became synonymous with salicylic acid itself and was no longer considered distinctive. Escalator and cellophane were once distinctive marks, as well. And not too long ago, the Xerox mark for photocopiers was in grave danger of losing protection because of the common use of the term as a noun (a xerox) and a verb (to xerox something). To prevent this from happening, Xerox launched an expensive campaign urging the public to use "Xerox" as a proper noun (Xerox brand photocopiers). (In this case, Lotto Texas is a "type" of game (product), the "brand" would be the Texas Lottery - that's why the TLC's web address is "txlottery.org" - which appears to be a customary name among most state lotteries.)

Sometimes the name originally chosen for a mark is simply too descriptive of the underlying product to qualify for trademark status. For instance, assume that a new cellular telephone manufacturer calls its product "The Cellular." Because the term "cellular" is the descriptive name for the product itself, it cannot legally be considered a trademark or service mark. If the term "cellular" were used on a facial creme, however, it would be considered suggestive, and therefore distinctive, in that context.

Even though generic or highly descriptive names make lousy trademarks, they can make terrific domain names (names used to identify websites, as in nolo.com). Cars.com, coffee.com and drugs.com all use generic terms that arguably are not entitled to protection as trademarks because they lack distinctiveness. But since every domain name must be unique, the owners of these generic domain names have an indefinite monopoly on names that, for all practical purposes, operate as trademarks bringing customers to the underlying websites.

Which trademarks or service marks receive the least protection?

Trademarks and service marks consisting of common or ordinary words are not considered inherently distinctive and receive less protection under federal and state laws. Typical examples of trademarks using common or ordinary words are:

people's names, such as Pete's Muffins or Smith Graphics

geographic terms, such as Northern Dairy or Central Insect Control, and

descriptive terms -- that is, words that attempt to literally describe the product or some characteristic of the product, such as Rapid Computers, Clarity Video Monitors or Ice Cold Ice Cream. (Wouldn't "texaslotto" or "lottotexas" meet this very criteria? After all, the word "lotto" is just a name of a game used worldwide and the word "texas" is a geographic term and/or a state name - neither word is "distinctive.")

However, non-distinctive marks may be come distinctive through use over time or through intensive marketing efforts. And marks consisting of common terms or names may be distinctive because the words are combined into a clever phrase or slogan, such as "Taco Johns" or "Don't Leave Home Without It," or because the name itself is highly unusual, as in Orville Redenbacher's Popcorn Products.

What is a trademark?

A trademark is a "distinctive" word, phrase, logo, Internet domain name, graphic symbol, slogan or other device that is used to identify the source of a product and to distinguish a manufacturer's or merchant's products from others. Some examples are Nike sports apparel, Gatorade beverages and Microsoft software. In the trademark context, "distinctive" means unique enough to help customers recognize a particular product in the marketplace. A mark may either be inherently distinctive (the mark is unusual in and of itself, such as Double Rainbow ice cream) or may become distinctive over time because customers come to associate the mark with the product or service (for example -- Safeway markets).

Consumers often make their purchasing choices on the basis of recognizable trademarks. For this reason, the main thrust of trademark law is to make sure that trademarks don't overlap in a manner that causes customers to become confused about the source of a product. However, in the case of trademarks that have become famous -- for example, McDonald's -- the courts are willing to prohibit all use of the trademark (or anything close to it) by anyone other than the famous mark's owner. For instance, McDonalds was able to prevent the use of the mark McSleep by a motel chain because McSleep traded on the McDonald's mark reputation for a particular type of service (quick, inexpensive, standardized). This type of sweeping protection is authorized by federal and state statutes (referred to as anti-dilution laws) designed to prevent the weakening of a famous mark's reputation for quality.

What is a service mark?

For practical purposes, a service mark is the same as a trademark -- but while trademarks promote products, service marks promote services and events. As a general rule, when a business uses its name to market its goods or services in the yellow pages, on signs or in advertising copy, the name qualifies as a service mark. Some familiar service marks: Amazon.com (retail website), Jack in the Box (fast food service), Kinko's (photocopying service), ACLU (legal service), Blockbuster (video rental service), CBS's stylized eye in a circle (television network service), and the Olympic Games' multi-colored interlocking circles (international sporting event).

Customer Confusion

Applying these principles to your domain name selection, you are at risk of losing your chosen domain name if the owner of an existing trademark convinces a judge or arbitrator that your use of the domain name creates a likelihood of customer confusion. Confusion in this context can mean two different things.

Most commonly, it means that the goods or services a customer buys are different than what the customer intended to buy. For instance, suppose, on the recommendation of a friend, you decide to purchase Lee's famous Flamebrain barbecue sauce, which is sold only on the Web. You intend to type "flamebrain.com" into your browser but accidentally enter "flamerbrain.com" instead. You get a website run by Henry, who has both copied Lee's idea to offer a barbecue sauce for sale on the Web and, with a very minor variation, the name of Lee's sauce. You order two bottles, completely unaware that you ordered the wrong product from the wrong website. (You can't buy any Texas lottery products from these web sites)

The other kind of confusion occurs when a misleading name causes customers to believe -- wrongly -- that a product or service is sponsored by, approved of or somehow connected with a business they already know about. In other words, the customers are confused about the source of the product or service. This would be the case, for example, if you took your TV to a repair shop called IBM Electronics because you thought that IBM somehow sponsored the business. (Both web sites have obvious disclaimers that they are NOT the Texas Lottery and surprisingly, both web sites actually provide links to the TLC web site which I wouldn't do unless the TLC paid for the ad space.)

The potential for confusion is a problem only when the names at issue are distinctive -- that is, clever, and therefore memorable. A name may be distinctive because it is made up (chumbo.com for an online software store), arbitrary in the context of its use (apple.com for computer products), fanciful (ragingbull.com for investment advice) or suggestive -- but not literally descriptive -- of the underlying product or service (salon.com for an online magazine). A name such as Ben and Jerry's, which by itself is weak because it uses personal names, may also become distinctive after it has been used for a long time and is recognized by the public. If the trademark owner has registered a name with the U.S. Patent and Trademark Office, it is probably distinctive.(This is probably the law that the TLC "banked on" to use the name "Texas Two Step" for their new game. I would consider "Two Step" to be distinctive. After all, it is well known first and foremost as a dance. There's the Two Step, Double Two Step, and Progressive Two Step dance. Or, did the TLC infringe on patents and marks by using this name? A "patent" is an invention and the Two Step dance was certainly "invented." I wonder too, did the TLC, by naming a "gambling" game " Two Step," negatively impact a well known good name by associating the two?)

Names thataren't distinctivedon't qualify for trademark protection. Many domain names -- for instance, coffee.com, drugs.com and business.com -- are potentially powerful but generic. That is, they are the names of whole categories of products or services. Domain names that use surnames, geographic names or common words that literally describe some aspect of the goods or services sold on the website, such as healthanswers.com for, you guessed it, online health information, are also ineligible for trademark protection.(The names lottotexas, texaslotto, pick3, cash 5, coloradolotto, connecticutlotto, delawarelotto, floridalotto, georgialotto, illinoislotto, indianalotto, kansaslotto, kentuckylotto, etc are "generic" game names - used world wide. You could add poker, gin rummy, bowling, soccer, football, lottery, slots and many other names to this list.)

Are Internet domain names -- names for sites on the World Wide Web -- covered by trademark law?

The short answer is yes. Most people are familiar with website names like www.yahoo.com or www.amazon.com. The words between "www" and the extension following the period -- for example, com, org, gov or edu -- are typically used to identify the business that owns the website or a well known product or service that is featured on the site. Frequently, this identifier is an abbreviation of the company or product name. The U.S. Patent and Trademark Office allows these identifiers to be registered as trademarks as long as they are being used in connection with a site that is, in fact, providing goods or services. And the courts offer them the same protection as other types of trademark. ( The "company" name established for the Texas Lottery is the "Texas Lottery Commission" which means that one would be infringing on the TLC's rights if one tried to use "www.texaslotterycommission.org" or "www.tlc.org" for a web address. Also, the TLC is a state agency which means that they should only use the extension "org" for their web address. Neither of these web site owners have "org" extensions. That in itself makes it known they are not the TLC. )

What You Must Prove to Win

If somebody else has already registered your business name or other mark as a domain name, you can sue the registrant in federal court to have the domain name transferred to you. To win, you'll have to prove all of the following: the registrant had a bad-faith intent to profit from your mark (see below), your mark was distinctive at the time the domain name was first registered, the domain name is identical or confusingly similar to your mark, and your mark qualifies for protection under federal trademark laws -- that is, you were the first to use the mark in commerce.

Unlike a trademark infringement lawsuit, you don't have to show that customers are likely to be confused. This means you can sue the domain name registrant even if the website sells products or services that are completely unrelated to yours.

Bad Faith

To win a lawsuit based on the Anti-Cybersquatting Act, you must show bad faith on the part of the domain name registrant. This will not be easy. There is no bad faith if the person who registered the name had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful. If a cybersquatter is able to show a reason for registering the domain name other than to sell it back to the trademark owner, then the courts will allow him to continue. If you can answer yes to any of the following questions, then there may be no bad faith:

Does the domain name registrant have an arguable claim to the name because of the registrant's existing trademark rights? There may be concurring uses of the same name that are noninfringing, such as the use of the "Delta" trademark for both air travel and sink faucets. Similarly, the registration of the domain name "deltaforce.com" by a movie studio would not tend to indicate a bad-faith intent on the part of the registrant to trade on Delta Airlines' or Delta Faucets' trademarks.

Does the domain name identify the registrant as an individual? A person is entitled to his or her own name, whether in business or on a website. Similarly, a person may bear a legitimate nickname that is identical or similar to a well-known trademark, such as in the well-publicized case of the parents who registered the domain name "pokey.org" for their young son who goes by that name.

Has the registrant ever used the domain name in connection with the offering of goods or services? If the registrant has a commercially sensible reason for using the domain name (other, that is, than selling it back to you), there is probably not bad faith.

Is the registrant legally using the mark on the website itself? It's legal to make noncommercial or fair uses of others' marks online, such as in comparative advertising, comment, criticism, parody or news reporting. The mere fact that the domain name is used for one of these purposes would not alone establish a lack of bad faith.

Congress has also provided us with some indicators of the bad faith necessary to prove a cybersquatting charge. If the answer to any of the following questions is yes, the court may be inclined to find that the registrant is acting in bad faith, or did so when the domain name registration was made.

Is the registrant using the domain name to divert users from your site to another site where customer confusion is likely to result or your trademark's reputation for quality is harmed? In other words, is the domain name being used in a way that negatively affects your website or the value of your trademark? (NO, the TLC didn't even have a web site at the time these site were built.)

Has the registrant offered to sell the domain name to you without having ever legitimately used the domain name on a commercial website? (NO, both web sites post drawing results and have for far longer than the TLC has.)

Has the registrant provided false or misleading contact information to the domain name registry or failed to keep this information up to date? (NO, they've renewed each year and have drawing results posted promply each night - 6 nights a week since 1996 and 1998.)

Has the registrant registered multiple names that are the same or confusingly similar to distinctive marks? In other words, is there an apparent pattern of cybersquatting? (NO, they own one name each but one has both .com and .net extensions.)

Is the mark in question famous or highly distinctive? The more distinctive or famous the mark, the more the court is likely to conclude that the registrant acted in bad faith.(NO, there is no "mark" on the domain names.)

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In Conclusion

I want to point out one more thing. All of Texas' games have "registered trademark logo's" that would absolutely be protected under copyright/trademark laws. It's the "graphic" or "artwork" that shows the hat being thrown into the air and/or the cowboy boots for the Texas 2 Step logo. It is against the law to publish these designs as each "design" belongs to the TLC - it's their "mark" and it clearly represents the TLC. They paid for the design, the art work and they advertise the logo's heavily. This "mark" includes the colors, the typeface and the design. If you want to reproduce their logo's, you should obtain written permission. When you see these logo's, it indicates the TLC may be a sponsor, a part of that business or lottery products are available there - even though they offer the logo's to download from their web site. The TLC may have offered these logo's from their web site "on purpose" as a way to claim "infringements" when they want to enforce their "trademarks" rights. This could be an excellent "scare tactic" because NO ONE can lawfully reproduce those logo's unless you have permission or are associated with the TLC.

Finally, I concluded that since the TLC came back and offered a so called "license agreement" to my fellow web site owner, I can only assume the web site owners must have been smart and contacted their respective attorneys. Their attorney's probably told them the TLC doesn't have a leg to stand on. So now I wonder, what did that cost them and how can they be reimbursed? Do they have the resources to sue the TLC to recover their losses? Probably not, they're just plain ole hard working private citizens who were dedicated to posting drawing results each night and this is how the TLC thanks them ... by attempting to "bully" them and take away their web sites and/or domain names.

Well, I think help might be right around the corner. Maybe there are some angry readers out there right now - like the Domain Name Rights Coalition, Texas Press Association, the Society of Professional Journalists, fellow reporters, newspaper publishers, magazine publishers, TV stations, private citizens or maybe an angry lotto winner that was shortchanged - that may be reading this that will take it upon himself to come forward and help my fellow web site owners recover their losses and damages. If you are out there and want to help them, just contact me - my phone number is (972) 686-0660. E-mail links are on this page too. Someone has to stop the TLC from what they are "really" doing to innocent, hard working, well intentioned people.

Let it be known, if the Texas Lottery wants our web sites and/or our domain names, by golly, they can have them. All they have to do is buy them from us then, maybe, we'll sign agreements not to ever publish again. And just think, the player's biggest complaint, next to the 4 ball issue, is that they can't obtain the drawing results ... and the Commissioners wonder why this is such a problem.