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Reversing an earlier decision, a federal appeals court in California this week ruled that a company with a trademark does not necessarily have the right to prevent others from registering coincidental domain names.

The decision stems from a lawsuit involving office supply company Avery Dennison Corp. and a Los Angeles businessman who registered "avery.net" and "dennison.net." Avery Dennison sued Jerry Sumpton and his company, FreeView Listings, claiming Sumpton was a cybersquatter -- someone who registers a domain name with the intent of selling it.

A three-member panel of the U.S. Ninth Circuit Court of Appeals ruled in favor of Sumpton, because Avery Dennison's trademarks are not "famous" enough to warrant exclusive use. It also said that "Avery" and "Dennison" are common last names for others to use.

Experts say the ruling could set a precedent for the ongoing cybersquatting debate in the Senate and among industry players.

This is not the first such case for the California court, which ruled in April that a registered domain name must be providing goods and services in order for it to receive trademark protection.

Brookfield Communications, a movie industry vendor, sued video rental chain West Coast Entertainment for infringing on its trademarked software database by registering Moviebuff.com. The court said that Brookfield used the name in commerce first, and therefore was entitled to trademark protection online.