E-Stamp Corp. Wins Court Order on Trademark Infringement; Ruling Sets Important Legal Precedent on E-Commerce.

Business Editors

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--July 19, 2000

In a ruling with broad implications for many Internet companies, E-Stamp Corporation (NASDAQ: ESTM) recently won its trademark infringement case against David Lahoti, an individual intent on occupying web domains for the purpose of selling them to businesses associated with those names. Judge Gary A. Feess, in the United States District Court, Central District of California, found in the case E-Stamp Corporation v. David Lahoti that "E-Stamp" did constitute a proper trademark, agreeing with the Company's arguments that an Internet company can put "e" before a generic word to create a trademark. The Judge ruled for E-Stamp on all of its claims against Lahoti including federal trademark infringement, trademark dilution and unfair competition.

"This ruling sets an important legal precedent for the many e-commerce companies that create a market identity around an 'e-business' and web site domain," said Ed Malysz, Chief Counsel for E-Stamp Corporation. "The ruling means any legitimate Internet company establishing a trademark associated with a web domain name has protections against cybersquatters seeking to use that name for profit. The Judge makes clear that the laws governing fair competition and commerce are as relevant to the Internet as to any other business domain."

Robert "Bo" Ewald, President and CEO of E-Stamp Corporation said, "We're extremely pleased with the judge's order as it protects not only the E-Stamp brand, but the overall branding validity of an important sector of Internet commerce. We're happy that the case was resolved in our favor and we will continue to dedicate our energies to growing our business."

E-Stamp received the E-Stamp Federal Trademark on April 21, 1998 and acquired the e-stamp.com domain name in March 1996. In February 1999, Lahoti created a web site with the domain name "estamps.com" with the admitted intent of selling the name for profit. On his "estamps.com" web site, Lahoti described "estamps" as "stamps in electronic form...estamps allow new ways for paying and affixing postage." Lahoti's web site failed to distinguish his purported services from those of E-Stamp Corporation. The court ruled in May of 1999 that these and other actions infringed on the E-Stamp trademark.

In his defense, Lahoti claimed that E-Stamp was a generic term and, therefore, not entitled to trademark protection.

In his Findings of Fact, Judge Feess disagreed. The Judge examined media usage, dictionary usage, survey results and other factors to find that E-Stamp was not a generic term for Internet postage. In addition, the Judge noted that through E-Stamp's aggressive marketing and policing of its trademark, "E-Stamp" has come to be recognized by consumers as designating E-Stamp Corporation as the source of the goods.

In his Conclusions of Law, the Judge ruled that the E-Stamp mark is not generic, and that Lahoti's assertions were invalid.

The Judge ordered Lahoti to pay all of E-Stamp's attorney fees incurred in this case and to transfer to E-Stamp all rights, titles, interests and control of any Internet domains in which he has had an interest that are similar to E-Stamp.

E-Stamp was represented in the case by John A. O'Malley and Nicole E. Krasny of Fulbright & Jaworski L.L.P.