C Y B E R S Q U A T T I N G
By Bénédicte Ghanassia
INTRODUCTION[1]
At the turn of the millennium, a rumor quickly spread: sold for $10 million, year2000.com was said to be the most expensive domain name in history.
In fact, this historical sale was not consummated. The address year2000.com was indeed proposed for sale on December 22, 1999 under the heading private auctions of the American website e-Bay, but once the auction period concluded, on January 1, 2000, the $10 million man disappeared. Today, the only serious offer remaining is one for $2.1 million, far from the famous record for the address www.business.com, sold for $7.5 million. Why give such value to these few letters? Because today, companies recognize their future lies within the Internet. The companies which did not register their names in time have to buy it for a price equal to many thousands times real cost from greedy (or clever ?) people who anticipated this movement.
This practice is now referred to as cybersquatting as illustrated by the American case Intermatic, Inc. v. Toeppen[2], in which the term “cybersquatter” was coined for the first time. In that particular case, the defendant registered intermatic.com based on the plaintiff’s registered trademark. The defendant, in addition to this domain registration, also registered approximately 240 other domain names, many based on trademarks of well-known businesses, including deltaairlines.com, eddiebauer.com and neiman-marcus.com.
Anne Chaser, President of the International Trademark Association (INTA), has proposed the following definition of cybersquatting:[3]
“Cybersquatting is an activity that has emerged with the growth of the Internet, and while there is no formal or established definition for the term, it can be referred to generally as the registration and trafficking in Internet domain names with the bad-faith intent to benefit from another's trademark. Cybersquatters seek to capitalize on the investment made by trademark owners and the goodwill associated with the trademark.”
In the words of Francis Gurry, Assistant Director General for the World Intellectual Property Organization (“WIPO”), cybersquatting is “an abusive practice that undermines consumer confidence.”
“If the Internet is about getting rich quick, they don’t come any faster than "cybersquatters.”[4] That is what cybersquatting is all about : getting rich quick off of the hard work and investment of trademark owners. Piracy of trademarks in cyberspace has been on the rise since 1996, when e-commerce itself began to evolve as a factor in the overall global economy.
Today, a growing number of trademarks, famous or not, are still subject to cybersquatting. However, it is the famous marks which have been prime targets of cybersquatters, who are fast becoming the “pirates” of the new millennium.
Why do cybersquatters conduct themselves in this manner? Based on research, INTA has found that “cybersquatting” takes place for a number of reasons :
(1) To extract payment from the rightful owner of the mark. These are the most prevalent cases, since it costs only $70 to register a domain name with ICANN, the Internet Corporation for Assigned Names and Numbers[5], and the potential financial windfall (should a trademark owner opt to purchase the domain) is much greater.
- Warner Bros[6]. was offered warner-records.com; warner-bros-records.com; warner-pictures.com; warner-bros-pictures; and warnerpictures.com for the selling price of $350,000. Another cybersquatter offered to sell to Warner Bros. 15 domain names, including bugsbunny.net and daffyduck.net.
- The Mobil Oil Corporation reports that when the merger between Mobil and Exxon was announced on December 1st, 1998, it was contacted by a cybersquatter[7] who offered to sell the combined Exxon Mobil the domain names exxonmobil.com and exxon-mobil.com.
- Although not a trademark issue per se, Baltimore Orioles superstar Cal Ripken was asked to pay $100,000 for calripken.com[8]
(2) To
offer the domain name for sale publicly to third parties.
- In documents filed in the United States District Court for the Eastern District of Virginia, Porsche stated that www.porscheparts.com had been put up for sale by the party who had registered it as a domain name[9].
- The University of California at Los Angeles (UCLA), took action against a cybersquatter who registered www.ucla.com and then put up a “for sale” sign with a number to call. Shortly after counsel for UCLA sent a letter to the cybersquatter, it became a pornographic site. The party operating the pornographic site was found to have several addresses and phone numbers, none of which were legitimate[10].
(3) To use famous and well-known marks as domain names for pornographic sites or otherwise capitalizes on customer confusion.
- Gateway recently paid $100,000 to a cybersquatter who had placed pornographic images on the Web site www.gateway2000.com. [11]
- The Mobil Oil Corporation reports that its trademark, MOBIL 1, was used in a domain name to direct Web surfers to a pornographic site. The domain
name was mobil1.com. [12]
- On September 23, 1998, as part of the WIPO study on trademarks and domain names, a representative of Intel Corporation reported that a cybersquatter had registered www.pentium3.com, placing nude photos of celebrities on the page, and stating that he was willing to sell the domain name to the highest bidder. At the time Intel’s representative testified, the highest bid was $9,350.12 [13]
(4) To engage in consumer fraud, including counterfeiting activities.
- AT&T reports that a cybersquatter registered the domain names attphonecard.com and attcallingcard.com and established a Web site soliciting credit card information from consumers. AT&T was concerned because its brand name was being used to lure consumers to a Web site that might be used fraudulently to obtain financial information from unsuspecting consumers.
For many trademark owners, the lack of clear anti-cybersquatting mechanisms have left them without adequate and effective judicial remedies. Even though cybersquatters are trafficking in domain names, trademark owners in many cases cannot sue without proof of use or an offer of sale. Consequently, trademark owners are forced to engage in a continual monitoring program, waiting to see if the cybersquatter begins to use their domain name, offers it for sale to the public, provides legitimate contact information to the registration authority, or fails to renew the registration with the registration authority.
It is also important to keep in mind that even in cases where a trademark owner can sue, costs associated with litigation, and the difficulty of receiving damages in standard trademark infringements have a chilling financial effect. Frequently, trademark owners weigh the costs and choose to pay a cybersquatter in exchange for the domain name registration. Instances of cybersquatting continue to grow each year because there is little risk for cybersquatters who continue their abusive practices.
I) THE EXISTING RULES GOVERNING THE ASSIGNMENT OF DOMAIN NAMES DO NOT EFFICIENTLY PROTECT TRADEMARK HOLDERS
A- Assignment of domain names
1) What is a domain name
The Internet is often described as a "network of networks" because it is not a single physical entity but, in fact, hundreds of thousands of interconnected networks linking millions of computers around the world. Every computer connected to the Internet is assigned a numeric address, called an Internet Protocol Number (IP number), that designates its specific location, thereby making it possible to send and receive messages and to access information from computers anywhere on the Internet.
Most Internet sites, however, are better known to the public by their domain names, common, oftentimes popular, names that allow users to access a Web site without requiring them to remember a long string of numbers. For example, the IP number for the location of the THOMAS legislative system at the Library of Congress is 140.147.248.9; the corresponding domain name is "thomas.loc.gov". Domain names are relevant because consumers often perceive them as performing much the same role as trademarks which have historically played the role of identifying a favorite or trusted company or product.
Top Level Domains (TLDs) appear at the end of a domain name such as aol.com, club-internet.fr etc …There are two different categories of TLDs :
- the country code top level domain names (ccTLDs) which are a given country code, such as .jp for Japan or .fr for France,
- the generic top level domain names (gTLDs), such as .com for commercial activities, .org for non governmental agencies, .net for structures owing their existence to the Internet itself, , .edu for educational institutions. It is to be noted that the domain names .mil , used for military organisations and .gov, used for governmental entities, are not "genuine" gTLDs but rather US government domain names.
2) The assignment itself
Until recently, the domain names were assigned by an American body, governed by American law called the Internet Assigned Numbers Authority (IANA). This body delegated its powers to national structures for national domain names (country code top level domain names -ccTLD) and to NSI (Network Solutions Inc.), an American corporation based in Virginia, for generic domain names (generic top level domain names-gTLD).
The assignment of gTLD is done without any control on the sole basis of the rule " first come, first served." Thus, as soon as a domain name appears to be available, the registration is upheld even though there is patent bad faith when the domain name corresponds to a trademark belonging to a third party. Some have even declared that the relevant principle was in fact "first come, only served."
For national domain names (ccTLD), the registration is done country by country following the national applicable rules. There is no correlation between gTLD and ccTLD. Therefore, a domain name registered with .com will be available with .fr (France) , .uk (U nited Kingdom) or .jp (Japan) for example and vice-versa.
B- Domain names and trademark law
The first problem relates to who must control domain names: The Internet originated with research funding provided by the US Department of Defense Advanced Research Projects Agency (ARPA) to establish a military network. As its use expanded, a civilian segment evolved with support from the National Science Foundation (NSF) and other science agencies. NSF was responsible for the registration of nonmilitary domain names, and in 1992 put out a solicitation for managing network services, including domain names registration. In 1993, NSF signed a five-year cooperative agreement with a consortium of companies called InterNic to provide network management services. Network Solutions Inc. (NSI), a Virginia engineering and management consulting firm, operated the Internet domain names registration services under this cooperative agreement. Until recently, NSI was the only registrar to assign second-level domain names (such as www:companyname.com) for the .com, .org and .net generic Top Level Domains (gTLDs). Since NSI began imposing fees for the registration of domain names in 1995, criticism of NSI’s sole control over the registration of names in the .com domain has grown. Additionally, there has been an increase in trademark disputes arising out of the enormous growth of registrations in the .com domain. According to NSI, registration of domain names within a few generic top-level domains (.com, .net, .org) has increased from several hundreds per month in 1993 to one million in one month in 1999, the overwhelming majority in the .com category. There is no longer any justification today -taking into account the international characteristic of the domain names system and more particularly of the generic domain names- that it be exclusively monitored by American entities. Moreover, the company NSI ((Network Solutions Inc.) benefits, without any justification, of a monopoly over the assignment of domain names in .com.
The second problem arises from the fact that the present US domain name registration system does not adequately deal with the fact that registered trademarks are issued in 42 international classes, so that many similar marks exist for the same word or acronym. Even within a specific trademark class, there is often more than one registered trademark owner. For example, the UNITED mark exists for UNITED AIRLINES UNITED VAN LINES, UNITED CLEANERS, UNITED MANUFACTURING and for many other UNITED companies, none of which are deemed in conflict under the trademark laws, if they are in different lines of business. The question then is, who is entitled to the single united.com domain name out of this group? One solution might be the one adopted by the two owners of the SCRABBLE mark, Mattel and Hasbro who litigated this, and then prior to a judicial decision, agreed to share the initial scrabble.com web page[14].
The current assignment system of domain names does not enable two marks identical in names but existing in two very different environments to coexist. Indeed, the domain names are assigned on the basis of the rule "first come, first served". Thus the first company or individual who registers a given domain name prevents any other company with the same name or holder of an identical trademark to register the same domain name. Moreover, when there is an application for the registration of a domain name there is no preliminary verification made as to whether there is already an existing similar trademark and no proof of legitimate ownership need be given (such as a trademark registration certificate). Indeed, the only search performed by NSI before granting a request for a domain name is a review to make sure that no other party registered the name as a domain name. NSI will register a domain name even if it is confusingly similar to another domain name. Clearly, the policies applied to assignment of domain names by NSI do not correspond with the established principles of trademark law. Application of trademark law principles to domain names registration would permit assignment of the same domain name to multiple users provided that no confusion as to the source of goods or services offered was present. Application of those principles would also prevent assignment of confusingly similar domain names to different parties. But the computer system simply cannot handle two identical domain names with identical top level domains.
Finally, the system fails to take into consideration that trademarks have historically been national in nature and most national trademarks have no enforceability beyond the boundaries of the country. The Internet has no boundaries and thus the potential exists for infinite conflicts between owners of similar marks in different countries.
Considering all these uncertainties, the relative low cost to register a domain name ($70) and the value it represents for companies, one can understand the growing registration of domain names in bad faith for the sole purpose of selling them for thousands of dollars. For many trademark owners, the lack of clear anti-cybersquatting mechanisms have left them without adequate and effective judicial remedies.
II) THE EXISTING NATIONAL
SOLUTIONS
A- The adoption of new principles: the
example of the US
1) The US and
litigation
Use of domain names has sometimes been
enjoined by courts under the grounds of likelihood of confusion. The cases tend
to turn on whether the domain name is actually being used as part of a Web
site. If it is used, then the question is whether there is a likelihood of
confusion. For example, in Cardservice
International, Inc. v. McGee,[15]
the District Court held that defendant’s promotion and operation of a website named
“cardservice” and located at cardservice.com providing credit and debit card
services infringed the plaintiff’s registered trademark CARD-SERVICE
INTERNATIONAL for identical services. To constitute actionable infringement,
there must be use of the domain name "in connection with the sale,
offering for sale, distribution or advertising of any goods or services on or
in connection with which such use is likely to cause confusion or cause mistake
or to deceive”[16]
If the domain name is not in use, an infringement
analysis is impossible, unless the court adopts the position that the mere
registration of a domain name is itself an infringing statement. To date, no
court has taken that position. The cases dealing with vanity telephone numbers
are consistent with the conclusion that the registration of a domain name,
without more, does not constitute use of the name as a trademark.[17]
A toll-free number with an- easy- to remember letter equivalent is a valuable
business asset. As with domain names, courts have held that the promotion of a
confusingly similar telephone number may be enjoined as trademark infringement
and unfair competition.[18]
The infringing act, however, is not the mere possession and use of the
telephone number. If it were, trademark holders would be able to eliminate
every toll-free number whose letter equivalent happen to correspond to a
trademark. In Holiday Inns, Inc. v. 800
Reservation Inc,[19]. the Court of Appeal from the
Sixth Circuit held that the defendant had not infringed the plaintiff’s trademark
because the defendant had used the number only as a telephone number, and not
as a trademark. Domain names and vanity telephone numbers both have dual
functions. Domain names, like telephone numbers, allow one machine to connect
to another machine. Domain names, like telephone numbers, are also valuable to
trademark holders when they make it easier for customers to find the trademark
holder. Where the holder of a vanity telephone number promotes it in a way that
causes a likelihood of confusion, the holder has engaged in an infringing use.
Thus, the mere registration of a domain name by the defendant does not enable
the plaintiff to sue for trademark infringement.
Instead, courts
have held that the act of registering a domain name and then offering to sell
the domain name to the public is an act of commerce for the purposes of the
Federal Trademark Dilution Act[20],
and that foreclosing a famous mark owner from utilizing its famous mark is one
of the aspects of dilution the Act is intended to prevent. Thus, in Panavision v. Toeppen[21]
(“Panavision”), the court held that the defendant “did considerably more than
simply register Panavision’s trademarks as his domain names on the Internet. He
registered those names as part of a
scheme to obtain money from Panavision[22].
He made commercial use of Panavision’s trademarks and his conduct diluted those
marks".[23]
Toeppen had attempted to “warehouse” the domain names by utilizing them in a
non-commercial manner, namely by displaying a Web page containing images of the
town of Pana, Illinois. When Panavision contacted Toeppen, he offered to sell
back the addresses for $13,000. Toeppen tried to argue that his use was not
commercial, thus not actionable. However, the Ninth Circuit Court of Appeals
ruled that the offer to sell the domain names satisfied the commercial activity
requirement of the Statute. Yet, this dilution argument[24]
was generally only available under traditional principles of trademark law for
famous marks where there was a showing of dilution by blurring[25]
(i.e., “when a defendant’s uses a
plaintiff’s trademark to identify the defendant’s goods or services, creating
the possibility that the mark will lose its ability to serve as a unique
identifier of the plaintiff’s product”) or tarnishment[26]
(i.e., “when a famous mark is
improperly associated with an inferior or offensive product or service”).
But the courts
make a more lenient application of the Federal Trademark Dilution Act in
Internet cases as shown by the Panavision
case, where the court declared that “to find dilution, a court need
not rely on the traditional definitions such as blurring and tarnishment”.[27] All that is required to show dilution is to
prove these 4 elements :
* the disputed
mark is famous;
* the defendant
used the infringing mark in commerce;
* the defendant
used the infringing mark after the mark became famous;
* dilution
occurred as a result of the defendant’s infringing use.
Once proven the mark is famous and likelihood
of confusion being irrelevant, the Federal Trademark Dilution Act authorizes a
court to issue an injunction against the other person’s use in commerce of the
mark.
Eight factors,
enumerated in the Act, are generally used by the United States Patent and
Trademark Office (PTO) and the courts to determine whether a mark is famous or
not :
* the degree of
inherent or acquired distinctiveness of the mark;
* the duration
and extent of use of the mark in connection with the goods or services with
which the mark is used;
* the duration
and extent of advertising and publicity of the mark;
* the
geographical extent of the trading area in which the mark is used;
* the channels
of trade for the goods and services within which the mark is used;
* the degree of
recognition of the mark in the trading areas and channels of trade used by the
mark’s owner and the person against whom the injunction is sought;
* the nature and
extent of use of the same or similar marks by third parties;
* whether the
mark was registered under the Act of March 3, 1881 or the Act of February 20,
1905 or on the principal register.
The Ninth
Circuit, in Panavision even simplifies this test by articulating a practical,
user-focused rationale for its finding that the PANAVISION mark was diluted by
Toeppen’s use. The Court declared that users typically guess that a company’s
name or trademark plus the .com nomenclature would be its domain name; when
this fails to locate the trademark holder, users may stop searching for the
trademark’s holder’s site “due to anger, frustration or the belief that
plaintiff’s home page does not exist”[28]
and if they do search, they may encounter so many irrelevant references that
they will be deterred from searching further. This rationale, combined with the
holding that neither blurring nor tarnishment need be shown, solidifies the new
doctrine of dilution per se by use of famous marks as domain names.
The relaxed
standard developed by courts in Internet cases explain why the primary means of
enforcing a trademark’s owner rights is through dilution. The following cases have shown that there are
generally three types of Internet domain names disputes brought under the
Federal Trademark Dilution Act:
* a trademark’s
owner seeks to register a domain name that is identical to its registered mark
but cannot do so because a third party has already registered the mark as its
domain name;
* there are two
trademark’s owners with valid federal registrations for the same mark for
different goods or services and each wishes to register the mark as its domain
name;
* a
cybersquatter seeks to extract a financial benefit from the trademark’s owner
in exchange for the domain name.
Some authors[29]
have claimed that dilution is not a proper means of resolving domain name
disputes involving cybersquatters : indeed, the Federal Trademark Dilution Act
requires the mark to be famous. In the Panavision
case, the Court found the mark to be famous despite the fact that it
was recognizable to very select markets. Moreover, the Federal Trademark
Dilution Act also requires a commercial use of the mark or tradename in
commerce. In the Panavision case,
Toeppen only displayed maps of Pana, Illinois on the site bearing the
objectionable domain name. However, the Court held that Toeppen's registration
of the domain name with the intent to sell it was a sufficient commercial use
and that merely having a domain name on the Internet constituted commerce. To
contend that a cyberpirate commercially uses a mark when he or she in fact
treats the mark as the good, fudges the commercial requirement too much. As a
consequence, dilution as well as infringement, which require use of the mark in
connection with goods or services in interstate commerce, are not adapted in
cybersquatting cases. A sounder solution would be to analogize these disputes to
the corporate name disputes fought out already under state unfair competition
law :
Since the 19th
century, state courts have grappled with defendants accused of purloining the
corporate name of another like cyberpirates today. What has emerged is a cohesive
precedent across many states that "it is a wrongful act to organize a
domestic corporation by the same name as that already known to be used in the
state by a foreign corporation.”[30]
Much as the courts have tended to do in domain name disputes, the courts
sitting in corporate name disputes have distinguished between innocent
defendants and pirates: where the defendant has been a domestic corporation
that properly filed articles of incorporation with the state and the plaintiff
failed to abide by the laws for doing business within the state, the courts
have generally held that the domestic corporation that first registered the
name has superior rights to it. If the defendant registered the name in bad
faith, however, the courts will find that the foreign corporation has priority
rights in the name even if the foreign corporation did not comply with the
state law for certifying the name. Bad faith in these cases means that the
defendant registered the name "with the fraudulent purpose of pirating the
business of the corporation or with actual knowledge of the existence and name
of the foreign corporation."[31]
Unlike the theories of trademark infringement or dilution, this theory has a
second qualifier that fits domain name disputes perfectly: a defendant need not
intend to directly compete in commerce with the plaintiff. If the defendant
merely knows of the plaintiff and that the name he or she has registered is the
name under which the plaintiff does business, the court will enjoin the
defendant's further use of the name. This is exactly what mark owners hope to
accomplish in their pursuit of cyberpirates.
2) The US and prevention
The US, while adapting trademark law to the
new issue of cybersquatting have also enacted new legislation in this area: the
Anticybersquatting Consumer Protection Act, (hereinafter “ACPA”)[32]
SB 1948, Pub. L. No. 106-113, 113 Stat. 1501, 1537 et seq. (1999).
In apparently the first ACPA decision,[33]
on December 8, 1999, the New Zealand Yachting Federation convinced a federal
district court in San Francisco to enjoin the americascup.com domain name and
site.[34]
Since then, Morgan Stanley won back the rights to online.msdw.com[35]and
Teen Magazine was able to close down teenmag.com, a pornography site.[36]
More recently, the New York Yankees have sued to recover newyorkyankees.com
from an avowed fan.[37]
Despite administration opposition, political support for a statutory response in 1999 to cyberpiracy proved to be overwhelming. To circumvent a presidential veto, ACPA was included in SB 1948 as part of the enabling legislation enacting the 2000 budget compromise. The bill was introduced by senator Spencer Abraham on June 21 1999 and defined cybersquatting as “unauthorized registration or use of trademarks as Internet domain names or other identifiers of online locations.” The bill provided for both civil and criminal remedies. The Senate Judiciary Committee approved a substitute bill, which had bipartisan support. It was introduced by Senator Hatch (Republican), the Chairman of the Judiciary Committee and Senator Leahy (Democrat), the Ranking Member on the Judiciary Committee. The Bill deleted the criminal penalties in the original bill and added provisions to protect Internet users who use others’ trademarks fairly and use protected speech online.
Most importantly, the Bill finds that
the registration, trafficking in, or use of a domain name that is identical to, confusingly similar to, or dilutive of a trademark or service mark of another that is distinctive at the time of registration of the domain name, without regard to the goods or services for the parties, with the bad faith intent to profit from the goodwill of another’s mark (commonly referred to as cyberpiracy and cybersquatting) results in consumer fraud and public confusion as to the true source or sponsorship of goods and services.
Section 3002(a), creating a new section 43(d)
to the Lanham Act,[38]
provides a civil remedy against persons who, "with bad faith intent to
profit from the goodwill of a trademark or service mark of another, register,
traffic in, or use a domain name that is identical to, confusingly similar to,
or dilutive of such trademark or service mark." This provision applies so
long as the mark is distinctive at the time of registration of the domain name
without regard to the goods or services of the parties. This is a strong
provision because it applies to mere registration of an identical or
confusingly similar domain name and removes the requirement in trademark
infringement cases of showing likelihood of confusion through, among other
things, the similarity of the goods and services of the plaintiff and
defendant. Thus, the Bill creates a new cause of action that is more analogous
to trademark dilution than to trademark infringement.
Section 43(d)
(1) (B) lists several factors that courts may consider in determining bad faith
intent to profit from the goodwill of the trademark or service mark of another
party, the prerequisite for liability under the Bill :
* the trademark
or other intellectual property rights of the person, if any, in the domain
name;
* the extent to
which the domain name consists of the legal name of the person, or a name
commonly used to identify that person;
* the person’s
prior use, if any, of the domain name in connection with the bona fide offering
of any goods or services;
* the person’s
legitimate noncommercial or fair use of the mark in a site accessible under the
domain name;
* the person’s
intent to divert consumers from the mark owner’s online location to a site
accessible under the domain name that could harm the goodwill represented by
the mark, either for commercial gain or with the intent to tarnish or disparage
the mark, by creating a likelihood of confusion as to the source, sponsorship,
affiliation or endorsement of the site;
* the person’s
offer to transfer, sell or otherwise assign the domain name to the mark owner
or any third party for substantial consideration without having used, or having
an intent to use, the domain name in the bona fide offering of any goods or
services;
* the person’s
intentional provision of material and misleading false contact information when
applying for the registration of the domain name;
* the person’s
registration or acquisition of multiple domain names which are identical to,
confusingly similar to, or dilutive of trademarks or service marks of others
that are distinctive at the time of registration of such domain names.
The statute also makes clear that the courts
are free to consider other factors that show bad faith intent.
The Committee
gave consideration to a broad in rem provision that would have permitted a
trademark owner to bring a single suit against all of the companies that had
registered domain names that infringe its marks. However, concerns about the
constitutionality of that approach led to a narrow in rem provision (see
Section 43 (d)) which permits a trademark owner, who has shown due diligence in
seeking to locate the owners of domain names but has been unable to do so, to
file an in rem action. This is an important provision because trademark owners
have often had difficulties in locating cybersquatters because of their
practice of registering their names under aliases or otherwise providing false
information.
Plaintiffs can
elect at any time before final judgment to recover statutory damages, instead
of actual damages and profits, in the amount of no less than $1,000 and not
more than $100,000 per domain name, as the court considers just. However, the
court shall remit statutory damages where the infringer believed and had
reasonable grounds to believe that use of the domain name was a fair or
otherwise lawful use.
Domain names
registrars are excused from monetary liability for compliance with a court
order. Domain name registrars are also shielded from monetary liability if they
implement “ a reasonable policy prohibiting the registration of a domain name
that is identical to, confusingly similar to, or dilutive or another’s mark
registered on the Principal Register of the PTO”, as shown by Section 3004.
This Statue has also raised two major criticisms: first,
trademark owners can also act in bad faith by claiming ownership rights to a
particular domain name, already registered to someone else, if the desired
domain name is similar to a registered trademark (known as reverse domain name
hijacking). A good example was provided by Ty Inc., the proprietor of the
popular BEANIE BABIES.[39]
This trademark owner wanted an existing registered domain name on which to
maintain its web page for its business but was unwilling to purchase the domain
name so he tried to hijack it by pushing a small businessman into major
trademark litigation to defend it. The problem for small businessmen is that
such litigation can cost from $150,000 to $250,000 and takes considerable
management time as well as creating uncertainty as to the outcome for many
months.
Some fear that
this Statute might give trademark holders the upper hand in disputes with
smaller companies that may have a legitimate claim to the same name or word
that a larger company has as a registered trademark. " The Bill will
increase the problem of reverse domain name hijacking where someone who covets
a domain name but has no legal claim to it tries to coerce the domain owner
into handing over the domain name” says Carl Oppedahl, a Colorado trademark
lawyer, who had been involved in several cases challenging the policies of the
domain name registrar NSI. There have been several highly publicized cases of
reverse domain name hijacking, including that of a young boy nicknamed Pokey
who almost lost pokey.org to the toy company that owned the rights to the Gumby
and Pokey characters, and a young girl named Veronica whose website was sought
by Archie Comics. Moreover, the small Internet consulting firm company, Clue
Computing had to face three lawsuits from the toy
maker Hasbro Inc. for the domain name
clue.com that they wanted to use to promote their game Clue. But Clue
Computing's legal victory might be short lived as Hasbro announced its decision
to file an appeal with the First Circuit Court of Appeals.[40]
Secondly, some fear that the enactment of
such legislation is likely to ruin international efforts to deal with
cybersquatting. The White House itself opposed the cybersquatting legislation,
saying it preferred to see rules governing such disputes set by the global
network’s executive body, the Internet Corporation for Assigned Names and
Numbers or ICANN. The group enacted a policy that is intended to set uniform
international rules for such disputes by requiring that all claims related to
trademarks be sent to arbitration panels. The goal of the ICANN policy is to
reduce the cost of resolving the arguments by keeping them out of court and to
make sure there is a uniform set of rules that can be applied worldwide. A.
Michael Froomkin, professor of law at the University of Miami who has been
closely following attempts to set rules for cybersquatting at the international
level, feared that the Statute, by allowing people to file suit in the country
where a name is registered, will likely invite retaliation by other countries,
and could ultimately hurt the American companies that currently register the
bulk of Internet addresses.
B- The application of traditional trademark principles
1) The example of France
Before examining how French courts deal with cybersquatting, it is to be noted that several major French companies have already used the Uniform Domain Name Dispute Resolution System and filed a complaint with WIPO instead of going before French courts where the process is more time consuming and more expensive (see the Alice case mentioned later, where the plaintiff had to wait for more than a year to know that he was entitled to the domain name corresponding to his trademark).[41]
The first case dealing with the issue of cybersquatting is a decision of the Tribunal de Grande Instance (also called TGI, French equivalent of a trial court) of Bordeaux on July 22, 1996[42]commonly referred to as the Atlantel case. The Sapeso company had registered the mark ATLANTEL in 1981 in several international classes while creating a subsidiary bearing the same name. In 1996, the latter registered the domain name atlantel.fr. Another company, an internet service provider, registered at about the same time the domain name atlantel.com. Sapeso and Atlantel sued this company seeking an injunction prohibiting the use of the mark ATLANTEL, on the ground that the registration of the domain name atlantel.com constituted infringement. The court, ordered the defendant to redeem its domain name on the grounds of fraud. The defendant was also prohibited from using under any other form the mark ATLANTEL under article L716-6 of the Code de la Propriete Intellectuelle.[43] This decision emphasizes several principles used in later decisions: first, a company cannot register a domain name in the .fr level (i.e., in France) which would be identical to the legitimate interest of a third person over a mark unless this company also has a legitimate interest in an identical name (see the ALICE case where the court decided that when there was no fraud and no likelihood of confusion, the principle of first come, first served ought to apply[44]); secondly, one cannot defeat the legitimate interest of a trademark owner simply by registering a domain name in another category of Top Level Domains (TLDs) (i.e., .com or .net and not .fr)[45]. Recent decisions tend to take into account the purpose of the cybersquattters as the case of Sfr against W3 Systems[46] illustrates: the W3 SYSTEMS company had developed a commercial activity of sale of domain names over the Internet. More than 300 domain names had been registered, corresponding mainly to famous French marks such as AGNES B, BOUYGUES, TF1 and SFR. To put pressure on the trademark holders, the American company W3 SYSTEMS had activated some of these domain names in order to reroute internet users to the competitors websites. Thus, when one entered the address sfr.com, one was automatically sent on the website of FRANCE TELECOM, its major competitor. Although SFR had registered a domain name in the .fr level, the impossibility to register its domain name in the .com level deprived SFR of a major commercial advantage. The TGI of Nanterre handed down its decision on January 18, 1999: the court considered that the infringement of the trademark SFR by W3 SYSTEMS was characterized by the mere registration of the mark as a domain name, without any need of a commercial exploitation of the name. But the court took into consideration the commercial exploitation of the name to determine the damages and ordered W3 SYSTEMS to pay SFR one million francs as damages.
France, as well as being active in the field of litigation, is also active in trying to prevent cybersquatting disputes from arising. On July 2, 1998, the Conseil d'Etat (the French highest administrative authority) drafted guidelines [47]to be used on the European level or internationally to adopt norms regulating the domain name system.
First, the Conseil d'Etat underlines the current problems of the domain name system : considering the trans-boundary aspect of the Internet, it is no longer justified that the gTLDs should still be controlled by the US. Moreover, the second problem arises because of the discrepancies between the domain name system and trademark law; a person, by the mere fact she applies for a domain name corresponding to a mark she does not own, could be sued for trademark infringement by the holder of this trademark. Moreover, marks are only protected within one country and this protection is limited to one or several classes of products. Thus, identical marks relating to different classes of products are able to coexist. But the current attribution of domain names prevents two identical marks relating to different products to coexist. Indeed, NSI applies the principle "first come, first served" and NSI registers domain names without any prior control, contrary to the AFNIC (Association Francaise pour le Nommage Internet en Cooperation, which is in charge of the French ccLTD, corresponding to the .fr addresses). Finally, there is currently neither international convention nor common law rule indicating which law is to be applied in the event of a dispute between two trademark holders of a similar mark relating to different products, registered in different countries, who wish to have the same domain name in the .com gTLD.
After having underlined the current problems, the Conseil d'Etat lays down several solutions that could be applied in the future, inspired by three basic principles:
1) domain names are a public resource and thus must be regulated in accordance with the public interest;
2) the bodies in charge of the domain name system must be international bodies: it is mandatory that the latter be governed by rules defined at the international level. Moreover, the different regions of the world should be represented in its board, by industrials or internet users but also by members representing the public interest. Moreover, it would be preferable if the registrars were non profit organizations; such registrars should also be capable of registering any domain name, regardless of the gTLD which is sought. Indeed, it would be dangerous that one registrar, even if it is a non profit organization, benefits from a monopoly on a gTLD. As a consequence, in case of a dispute between holders of a domain name in the relevant gTLD and trademark holders of a trademark registered in another country, the law of the country where the registrar is located would de facto apply. Such a solution would give an unjustified advantage to companies which have registered their mark in the country where the registrar is located. It is thus necessary that the gTLDs remain international. The registrars should inform applicants of domain names about basic trademark law principles. But it appears useless to check each application before granting the registration, such a procedure being necessarily cumbersome and expensive. Moreover, such procedure would be difficult to implement as in some countries, like the US, unregistered trademarks are also granted protection. The applicants should declare that they have a legitimate interest in the domain name. Such a declaration would establish the good or bad faith of the applicant in case of a dispute with a trademark holder. The registrars should publish online new domain names to facilitate oppositions. Finally, rules should allow the registrars to declare the domain name forfeited if not used effectively after a brief period (for example 6 months).
3) the domain name system must not be contrary to basic principles of trademark law : two radical solutions must be avoided. The first one would be to suppress gTLDs and only keep ccTLDs. This solution would go against the international character of the Internet. The second solution would be to consider that a domain name is a mere electronic address and not a source identifier. Thus, there would never be any infringement. This solution totally contradicts recent cases and trademark law principles. Moreover, this solution is harshly criticized by companies which do not want to take the risk to see their name or mark used by third parties and have no legal means to prevent such use.
The first major principle in trademark law is the geographic scope of marks, limited to one country. But as more and more companies are doing business at an international level, it appears difficult to give each company a domain name which would correspond to a given country. As a consequence, if two companies have the same mark in two different countries, for similar products or services, the second company wishing to have the domain name corresponding to its mark could add a geographic identifier (for example company.fr.com) or any other identifier (for example company.finance.com). Another solution would be to encourage the two companies to set up a common homepage where the two sites are briefly described to enable Internet users to go to the site they are looking for.[48]
The second major principle in trademark law is that trademarks are limited to one or several classes of products. New gTLDs should be created: enough should be created to be able to indicate precisely the activity concerned, but not too many as domain names must be easily remembered by Internet users. These new gTLDs could be based on the existing international classification of products (42 classes), by simplifying it to enable users to quickly find the information they need. For example, .fin could be used for financial services, .ind for industrial companies .... This classification of gTLDs by the nature of the activity concerned should enable similar marks applying to different products to coexist, even if they have been registered in the same country. Yet, in the few extreme cases where the products, although different, would correspond to the same gTLD (for example .ind), the second domain name applicant could add an identifier such as united.coaches.ind and united.faucets.ind. It is also possible to use the solution of the common homepage which reroutes users to the relevant website. Another solution could be to assign a number to each gTLD rather than a name. The ISPs or the browsers would have to convert the name of a gTLD as typed by the user in his own language (for example .fin for financial activities) into the number of the corresponding gTLD (for example class 1).
The last problem highlighted by the Conseil d'Etat relates to the law to be applied if a dispute arises: as trademarks and service marks are, by essence, national, it does not seem possible to determine a simple rule to solve conflicts of law when two holders of a similar mark for different products, registered in different countries, wish to have the same domain name. Moreover, an infringement suit against the holder of the domain name corresponding to this trademark or service mark has only limited effects, limited to the country where the mark has been registered, which is useless as domain names are international. In addition, there is neither reason to apply the law of the country where the registrar is located, nor reason to apply the law of the country where the main registrar of domain names is. Thus, the more appropriate solution to solve disputes appears to be through an alternative dispute resolution mechanism such as mediation or arbitration where solutions such as a common homepage or the adjunction of an identifier could be suggested. Such a solution appears to be flexible, fast and cheap and would solve the disputes arising because of the discrepancies between the domain name system and trademark law without having to make an inquiry before granting the domain name to the applicant.
2) The example of Italy
Although Italy did not enact any specific statute about cybersquatting, Italian courts had to deal with the problem of cybersquatting on numerous occasions. In a decision of May 27, 1998,[49] the Pretura of Valdagno (the Italian equivalent of a district court where only one judge sits) has recognized that it must be guaranteed by the law that a company has the right to use its own trademark even as a domain name. Each company, indeed, has the inalienable right to present itself both to the market and to the public of consumers using every means of existing communication. In each case, Italian courts resorted to traditional trademark law principles to restore rights of trademark owners, and more particularly the concept of unfair competition : for example, the Tribunale of Milano (the Italian equivalent of a district court where there is a panel of three judges), in a decision rendered on July 22, 1997,[50] declared that the use of a domain name on the Internet that reproduced the registered trademark of another company (used itself as a domain name) is a case of falsity in trademarks and unfair competition. The same tribunal, in a decision of June 9, 1997[51] ruled that, in circumstances analogous to the previous case, there was unfair competition and such behavior was therefore illegal and had to be stopped.
Yet, note that Italian courts do not systematically refuse to recognize rights of domain name holders. In a decision rendered on July 24, 1996, the Tribunale of Bari[52] dismissed the lawsuit of a company which tried to prevent the use of its corporate name as a domain name. It did so on the grounds that the domain name was used only as an address and not a source identifier and therefore, there was no risk of trademark dilution.
3) The example of Germany
In a decision of the court of Appeal of Berlin on March 25, 1997,[53] the court affirmed the trial court's holding that "German courts have jurisdiction over the American .com domain name." The District Court of Berlin had to deal with an American firm that had registered more than a dozen of domain names and tried to sell or rent them to German companies. The domain name in dispute was concert-concept.com and concert-concept.de, the term "concert-concept" being identical to the name of a German company. The Court did not discern any difference between the .de and .com registration but assumed that the American firm would be subject to the Court in Berlin and to German law because the website could be received by Internet users in Berlin. It further held that the use of the domain name violated the German company's name deriving from Section 12 of the German Civil Code because German Internet users could assume an economic or administrative connection between the two companies. The Court consequently held that the American company should be enjoined from using the domain name.
It is interesting to note that both US courts and German courts require a commercial use of the domain name to trigger the protection of trademark laws : US courts have ruled that offering the domain name itself for sale represents the commercial use required to trigger the protection of US trademark laws.[54] But German courts go in a different direction. They examine whether there is a threat of a future infringing use of the domain name by the cybersquatter. Is there a high chance that the cybersquatter himself or somebody that later buys the domain from the cybersquatter will use the domain name in a website that infringes the trademark? If this is likely, and German courts most often reach this conclusion when the defendant seems to be a cybersquatter, they will forbid this future use. Threat of future use may be apparent, if the holder of the domain name offers the domain to a third party that is likely going to offer goods or services on the Internet, as examplified by the Epson case.[55] The facts follow: defendant registered the domain name epson.de and offered it to Epson, Germany for 3000 Deutschmark (approximately $1,500). At the same time, the defendant negotiated a rental contract to rent the domain name out to the owner of a shop that sold Epson products. The negotiated rent was as high as 400 dollars per month. After Epson Germany sent a cease and desist letter to the defendant, the latter increased the amount he was asking for the transfer of the epson.de domain up to 25,000 Deutschmark (approximately $12,500). The court ruled that there was a clear threat that the defendant would enable a future commercial use of the domain name by renting it to the owner of the shop that sold Epson products. It has also been ruled by a court[56] that the mere registration of the domain name deta.com by the defendant represented a threat of infringing use. The court considered that if someone pays for the registration of the domain name, he or she plans to use it in connection with a website. Therefore, in both cases, the threat of future infringing use was established and, as a consequence, the prerequisite of commercial use to trigger German trademark laws was fulfilled.
4) The example of Japan
There have been no law suits of this type in Japan but taking into account the disputes that have arisen all over the world and especially in the United Kingdom and the United States, Japan has realized there is a pressing need to investigate how to cope with disputes involving domain names. In July 1998, the Study Group on Internet Domain Names, Japan, released a Final report called " A Vision for the New Era of Domain Names in the 21st Century".[57] This document suggests guidelines for regulations to be adopted in the future.
The document lists specific measures that could be adopted -- ex ante measures (avoiding disputes in advance) as well as ex post measures (resolution of disputes after it actually occurred). The ex ante measures include the idea that only domain names that match the official name of the business or organization could be registered as well as the idea that the applicant must furnish evidence that there is no infringement on the trademark rights of a third party. Moreover, there should be a 60 day period prior to registration; if this period elapses without objection, the registered domain name would be favorably treated if a dispute arises. The ex post measures include the idea that the registration organization itself should provide the means for resolving the dispute between the holder of the trademark rights and the registered owner of the domain name or that the resolution of the dispute is dealt through mediation by an outside dispute-handling agency. If the registration organization does not provide any of the means of resolving disputes described above, the domain name dispute should be resolved by trial proceedings but the registration organization should adopt a mechanism to reflect the results of the trial (for example, revoking a domain name registration).
The document also emphasizes several elements that ought to be taken into consideration while drafting regulations : "It is necessary to always recognize that ensuring the reliability of the domain name system and the Internet by executing the domain name system registration duties reliably and without interruption is of the utmost importance." Thus, the disputes should be handled quickly and without creating excessive costs. Moreover, there is a tendency to give weight to the protection of trademarks, and the approaches for resolving disputes that involve domain names ought to be based on the logic of trademark rights. However, there are many cases in which it would not be possible to claim the trademark and the domain name as the same thing. For example, for a trademark, the range of protection is limited to a given product classification contrary to a domain name, which range of protection is not limited to a product classification. Moreover, the assumption is that the protection given to a trademark holder is to prevent a third party using the trademark so there will likely be no dispute if a domain name is only registered and not utilized. Finally, there should be differences between remedies for trademark rights and remedies for domain names: remedies for trademark rights should include prohibiting the use of the infringed trademark and compensation for damages, while remedies based on domain names should include elimination or revocation for the domain name registration and transfer to the trademark holder. This document also emphasizes that, since Internet users comprise a wide spectrum, including smaller businesses as well as individuals, due attention should be paid to provide some protection to these users. Besides, this report notices that there is a general trend these days from ex ante regulation to ex post correction. From this point of view, it would be considered a bit too strict to require the applicant to provide proof during the registration procedure that there will be no infringement on the trademark rights of another person as a result of the use of the requested domain name. Combining this with the fact that it is extremely important to register domain names quickly, a strict, substantive examination from the viewpoint of avoiding trademark disputes is not desirable. At the time of registration, the procedure should be such that a domain name can be registered if the conditions (registration policies) which can be formally evaluated are met. But, regarding ex post measures, the registration organization must make it clear in advance as to what kind of steps are to be taken if a dispute arises, whether the responsibility is left to court procedures or the registration organization creating its own dispute-handling policy.
This report also notes that the administration of domain names has been traditionally performed by the private sector. However, there has been an increasing number of opportunities for government participation in the domain name issues in recent years. The main role for government in the development of the Internet is generally assumed to be to create an environment that allows the private activities to be carried out smoothly, and when necessary, to support these private activities. Today, the government is expected to provide support by preparing procedures for handling disputes. Moreover, when competition for registration becomes a reality, governments will be expected to maintain a fair competitive environment among registration organizations, and to provide a framework which ensures that the registration is operated properly and efficiently.
Finally, the report suggests that for companies trying to increase access to their web site from users, a multilingual domain name system would be needed which accepts not only domain names with Roman alphabet but also those with Japanese, Chinese or Arabic letters. It is also said that such a system would enable companies to adopt different languages according to their customers, while the disputes caused by the problems with regard to trademark rights would be limited to the sphere of the specific language used in the domain name. However, this issue would lead to that of the functions of computers: for example, if the domain name system using Chinese is introduced, a problem would emerge outside the Chinese world as to how Chinese letters could be entered with computers. This is a more fundamental problem of computer communication, rather than a problem of the domain name system itself.
5) The example of Great Britain
As early as 1996, the High Court of Great Britain condemned the infringement of a trademark by a domain name in the case of HARROD’S Ltd c/ UK NETWORK SERVICES .
More recently, on July 23 1998,[58] the English Court of Appeals decided that cybersquatting constitutes both passing off and trademark infringement. The suit was brought by six well-known UK companies, Marks & Spencer (the famous department store chain), Ladbrokes (the famous bookmaker), J. Sainsbury (the famous grocery store chain), Virgin, BT (British Telecom) and Celinet against a company called One in a Million, its directors and their respective unincorporated businesses. The cybersquatters had registered as domain names the well-known company names as the plaintiffs. In holding that the cybersquatters were liable for trademark infringement, the Court of Appeals, applying local trademark law found that the registrations were unfair and detrimental because the domain names were registered merely to take advantage of the distinctive character and repute of the plaintiffs’ trademarks. Moreoever, the Court found that although the domain names could be used in a non-deceptive way, the real danger of cybersquatting lays in the threat that the domain names could be used in a fraudulent way. In addition to a monetary award, the Court granted permanent injunctions against all of the defendants and ordered them to assign the disputed domain names to the rightful owners of the respective marks. The following statement made by the lower court is worth quoting in full:
Any person who deliberately registers a domain name on account of its similarity to the name, brand name or trademark of an unconnected commercial organization must expect to find himself on the receiving end of an injunction to restrain the threat of passing off, and the injunction will be in terms that will make the name commercially useless to the dealer.
What constitutes the passing off and infringement is the free ride on the goodwill on the mark by selling the domain name which is associated to this mark.
6) The example of Canada
At the beginning of 1999, the Canadian Courts addressed the issue of cybersquatting:[59] Chapters book stores and The Globe & Mail teamed up to form an on-line book store at chaptersglobe.com. The day after the partnership was announced, Richard Morochove, a technology writer, registered the URL chapters-globe.com. When Chapters and the Globe demanded that Morochove stop using the name, Morochove offered to do so if he was paid a percentage of the sales from the Chapters/Globe website. Chapters/Globe went to court and received a preliminary injunction that prevents Morochove from using his URL until a full trial has taken place.
III) THE SEARCH FOR AN INTERNATIONAL SOLUTION
A- From NSI to ICANN: in search of an international compromise
1) The proposals of the Internet International Ad Hoc Committee (IAHC),
All the criticisms about NSI and the inadequacy of the existing rules relating to domain names prompted actions both in the US and internationally. The Internet International Ad Hoc Committee (IAHC), an international advisory body formed at the initiative of the Internet Society and the Internet Assigned Number Authority (IANA), released a proposal for the administration and management of gTLDs on February 4, 1997.
It recommended that twenty to thirty new companies per year in various parts of the world be authorized to assign new Internet addresses to accomodate the dramatic growth in use of the Internet. Also under consideration was an alternative approach to name assignment which would involve the creation of an international consortium to perform that function in addition to other broader network management activities for the Internet.
The IAHC also recommended that seven additional categories of addresses, beyond the existing .com, .edu, .org and .gov designations, should be created to help respond to the increased Internet use. In addition, the IAHC recommended several measures intended to address some of the domain name/trademark conflicts: the IAHC suggested the use of a sixty-day notice period to give trademark owners an opportunity to contest assignment of domain names before they are registered. Requested domain names would be identified on a website that would be publicly available and highly visible, and interested parties would have sixty days from the date of first posting to comment on the applications. The IAHC registration recommendations also included the use of domain names consisting of random alphanumeric figures which would be available to users pending approval of their requested domain names.
IAHC suggestions included creation of separate top-level domain name categories to be available only for domain names which are registered trademarks. It noted that a system under which each country would have at least one domain name registry and a separate TLD in that registry would be reserved for domain names that are registered trademarks in that country. The IAHC also recommended the establishment of an international TLD which would be reserved for domain names that are registered trademarks in more than one country. Under this system, a user of the Internet would be assured that if the TLD associated with a domain name was one reserved for names which were registered trademarks in the country or internationally, the owner of the domain name was in fact the owner of the trademark. The IAHC suggested that the World Intellectual Property Organization, for example, would be the most appropriate forum to develop and implement such a system of international trademark and domain name management.
The Internet Society, as the informal governing body for the operations of the Internet, took the first steps toward implementing some of the recommendations regarding domain names made by the IAHC. The society announced its intention to authorize up to twenty-eight different companies to become new domain name registrars. Moreover, the Internet society planned to create seven additional top-level domain categories. In addition to the existing .com, .edu, .gov, .org, and .net TLDs, there would now also be .firm (for firms and businesses), .store (for sales organizations), .info (for organizations offering informational services), .web (for organizations involved with Web activities and functions), .arts (for cultural and entertainment activities), .rec( for recreational activities) and .nom (for personal sites). The Internet society also created a Council of Registrars (CORE), consisting of representatives from each of the twenty-eight domain name registration organizations. One of the primary functions of the Council would be the handling of appeals associated with domain names assignment and use, including conflicts between trademark owners and domain name registrants. The CORE approach would thus effectively place authority over domain name assignment in an international body.
2) The American “Green Paper”
The United States expressed concern about this proposal and established an interagency task force directed by the Office of Management and Budget to develop a US policy on management of Internet resources, including domain names. This task force released “A Proposal to Improve Technical Management of Internet Names and Addresses” on February 20, 1998 (also called “the Green Paper”).
The proposal called for a private, non-profit corporation, headquartered in the United States, to manage the domain name system and IP addresses. The corporation would be incorporated under United States law but have a board of directors that included representatives from foreign nations. The proposal also recommended creating an unlimited number of "registrars" to compete for the subscriptions of new Internet users. The US government would oversee the transition to the new system but would phase out its involvement no later than September 30, 2000.
The European Union and other international interests have expressed opposition to the recommendations, based in large measure on their perception that the proposals preserve US jurisdiction and influence over much of the domain name management process.[60]
3) The American “White Paper”
On June 5, 1998, the taskforce issued a final statement of policy, "Management of Internet Names and Addresses". Called the White Paper, the statement reaffirmed the principles and goals of the Green Paper, but essentially deferred to the private sector in deciding how these principles and goals might be met.
The White Paper stated that the US government was prepared to recognize and enter into agreement with a « new not-for-profit corporation formed by private sector Internet stakeholders to administer policy for the Internet name and address system. ». In deciding upon an entity with which to enter such an agreement, the US government assessed whether the new system ensured stability, competition, private and bottom-up coordination, and fair representation of the Internet community as a whole.
In effect, the White Paper endorsed a process whereby the divergent interests of the Internet community would come together and decide how to administer Internet names and addresses. Accordingly, Internet constituencies from around the world (calling themselves "the International Forum on the White Paper" or IFWP) held a series of meetings during the summer of 1998 to discuss how the new, not for profit corporation might be structured.
The new corporation chartered by the group was called the Internet Corporation for Assigned Names and Numbers (ICANN). After five iterations, the final version of ICANN’s bylaws and articles of incorporation was submitted to the Department of Commerce. On November 25, 1999, the United States Department of Commerce and ICANN signed an official Memorandum of Understanding, whereby the Department of Commerce and ICANN agreed to jointly design, develop and test the mechanisms and procedures necessary to transition management responsibility for the domain name system functions to ICANN. Until the full transition to a private sector controlled domain name system is completed, the Department of Commerce remains responsible for monitoring the extent to which ICANN satisfies the principles of the White Paper as it makes critical domain name system decisions. Under its bylaws, ICANN is governed by a nineteen member Board of Directors. This Board consists of the President of the ICANN, nine at-large members representing six different international geographic regions, and nine members representing ICANN’s three supporting organizations - the Address Supporting Organization, the Domain Name Supporting Organization, and the Protocol Supporting Organization. In turn, each of these supporting organizations is comprised of constituencies that represent various interests that wish to take part in ICANN policymaking. the current designated constituencies include: ccTLD registries, commercial and business entities, gTLD registries, ISPs, non-commercial domain name holders, registrars and intellectual property interests. Although ICANN is in its formative stage, controversy has already arisen over its structure. Specifically, questions have been raised as to how the original nine-at large members were chosen and some critics have complained that the new, interim Board has operated in secrecy and lacks the legal authority it purports to hold.
In addition to spurring the formation of ICANN, the White Paper also signaled the Department of Commerce’s intention to ramp down the government’s Cooperative Agreement with NSI, with the objective of introducing competition into the domain name registration process while maintaining stability and ensuring an orderly transition. On October 6, 1998 the United States Department of Commerce and NSI announced an extension of the Cooperative Agreement between the federal government and NSI through September 30, 2000. During this transition period, government obligations will be terminated as domain name system responsibilities are transferred to ICANN. Specifically, NSI committed to a timetable for development of a Shared Registration System that will instill competition into the registration of domain names by permitting multiple registrars to provide registration services within the .com, .net and .org gTLDs. ICANN is responsible for overseeing this transition and is charged with ensuring both competition and Internet stability through the accreditation of these new private registrars. On April 26, 1999, NSI initiated the test bed phase of the Shared Registration system designed to allow five private registrars to begin registering Internet domain names. Soon followed the designation of 93 other companies[61]. On November 4, 1999, the ICANN board approved a new five-year Registrar Accreditation Agreement, which is now in effect for all accredited registrars. On January 25, 2000, ICANN announced that twelve additional applicants met the criteria to be accredited as domain name registrars in the .com, .net and .org domains.[62] Under this domain name registration system, competing ICANN-accredited registrars register domain names utilizing one shared, central registry operated and maintained by NSI. Until recently, NSI refused to sign ICANN’s registrar accreditation agreement because it claimed this agreement gave ICANN too much regulatory authority (including the ability to terminate a registrar’s accreditation with only two weeks notice). Because of its refusal to sign the ICANN accreditation agreement, NSI did not have to comply with several ICANN policies designed to protect intellectual property owners (policies that the other private, accredited registrars must follow). An example of one such ICANN policy is the requirement that registrants pre-pay to register a domain-name, rather than allowing them to reserve a name for up to two months without payment, which was the practice of NSI. By requiring pre-payment, ICANN hoped to prevent “cybersquatters” from registering thousands of domain names, at no cost, and then extorting companies to pay for those names. A landmark agreement was reached on September 28, 1999 under which NSI is allowed to remain the exclusive registry of top-level domains .com, .net, and .org for another 4 years.
In exchange, the company agreed to several concessions aimed at leveling the playing field with its competitors : NSI must lower the price it charges rival registrars for entering domain names into the registry it still controls (from 9 dollars to 6 dollars). NSI also concedes access to its registry, the “Whois “ database that lists the owners of current Internet domain names. It will allow others to access the bulk data for no more than $10,000 a year.
B- The Uniform Domain Name Dispute Resolution Policy (UDRP)
1) Background
NSI has maintained a domain name dispute policy since 1995, but it has been criticized by many intellectual property owners. Only owners of trademarks that are registered with the US Trademark Office’s principal register and are identical to the disputed domain name could invoke the domain name policy. This meant that NSI did not act on complaints from parties that had federal registrations on the Supplemental Register, had state trademark registrations, or had only common law trademark rights. Additionally, even if the policy was applied, NSI would place the domain name on hold rather than terminating it, unless there was a court decision directing it to do so. Moreover, trademark holders often chose the NSI “court” because NSI was likely to side with the challenger and against its customer, regardless of the actual merits of the challenge. When NSI made its decision to side with the challenger, it sent a 30-day letter to the domain name owner in which it announced that the domain name would be cut off in 30 days. Three recent cases[63] have reached the merits in which domain name owners, faced with NSI decision in favor of challengers, brought court actions to block NSI cutoffs. In each of these cases, a court reversed NSI’s decision and ruled that the domain name owner was innocent of any wrongdoing and was entitled to keep its domain name. The first reversal of a NSI decision by a district court was Interstellar Starship Services, Ltd v. Epix, Inc.[64] The domain name owner Interstellar Starship Services, Ltd (“Interstellar”) registered the epix.com Internet domain name in January 1995 and used it to promote theater groups. Epix, Inc. (Epix), had a trademark registration dating from 1984. In 1996, Epix tried to obtain the epix.com domain name and found out it was not available. Epix asked NSI to cut off Interstellar’s domain name. NSI sent Interstellar a 30-day letter. Interstellar filed suit in a federal district court to block NSI’s plans. The court noted that promoting a theater group is much different than selling electronic circuit keyboards and software and ruled that the domain name owner was not infringing any rights of the challenger. The second case was Cd Solutions v. Tooker.[65] It was decided in favor of a domain name owner that reversed NSI and involved the domain name cds.com. A company called CD Solutions that sells compact discs selected the domain name cds.com in 1996. Eight years earlier, a company called CDS Networks had started to use the mark CDS. In 1997, it tried to register the domain name cds.com but found that it was not available. CDS Networks did not go to a judicial court but instead selected NSI’s ”court”. As usual, NSI ruled in favor of the challenger and mailed a 30-day letter to CD Solutions. In its ruling, the court declared that “there is no prohibition against the use of trademarks or service marks as domain names. Only uses that infringe or dilute an owner’s trademark or service mark are prohibited”. The third and most recent consideration of a NSI decision came with the case of Data Concepts Inc v. Digital Consulting Inc.[66] In 1993, a company called Data Concepts Inc. (Data Concepts) decided to obtain dci.com as its domain name. Another company called Digital Consulting Inc. (Digital Consulting) had registered DCI as its trademark in 1987. In 1996, it tried to obtain dci.com but found that it was not available and thus brought a challenge in NSI’s “court”. As usual, NSI sided with the challenger and sent a 30-day letter to Data Concepts. Data Concepts filed suit but the district court ordered the transfer of the dci.com domain name to the challenger. The Sixth Circuit Court of Appeals reviewed the eight trademark likelihood of confusion factors[67] and it stated that the district court incorrectly and inadequately analyzed the relatedness of services, the similarity of the marks, and the likely degree of purchaser care. These three cases illustrate what has come to be called “reverse domain name hijacking” in which a trademark owner covets an existing domain name and seeks to gain possession of the domain name by launching a challenge in NSI’s “court”. This weapon is being used as a leverage by large companies regardless of the merits since they realize the small company users cannot afford the costly litigation inevitable in such disputes.
The criticism of the current domain name dispute policy and its failure to adequately protect intellectual property interests led the United States government to ask the World Intellectual Property Organization (WIPO) to undertake a study of the issue and to propose recommendations to ICANN. Following extensive discussions, WIPO released its final recommendations on April 30, 1999 emphasizing the need of the implementation of an improved dispute resolution process for resolving certain domain name conflicts. The WIPO recommendation would limit this procedure to cases of abusive registration of domain names, i.e., cybersquatting. Under the WIPO proposal, alleged cases of abusive registration would be adjudicated by a panel of three neutral decision-makers. If a registration was found abusive, then the panel could (1) cancel the offending domain name registration, (2) transfer the registration to the third party complainant and (3) allocate the responsibility for payment of the costs of the proceedings. Importantly, the proposed administrative procedure is designed to preserve the right of either party to litigate their dispute in civil court. To this end, the recommendation encourages ICANN to require registrants to submit to jurisdictions of the courts of the country where the registrar is located in order to prevent cybersquatters from avoiding prosecution due to jurisdictional restraints.
2) Basic mechanics of the UDRP
The WIPO recommendations were adopted by ICANN on August 26, 1999 and the implementation documents were approved on October 24, 1999.[68]
The UDRP differs from the former Dispute Resolution enforced by Network Solutions, Inc. ("NSI") in several significant respects: first, the UDRP provides for the cancellation or transfer of the offending domain name in the event the complaining party is successful. With NSI, the only remedy was to place the domain on hold.
Second, the UDRP applies to both registered and common law trademarks contrary to NSI's policy which applied only to registered trademarks.
Third, the UDRP applies to identical or confusingly similar domain names; NSI's policy applied only to domain names identical to a registered trademark.
The UDRP is incorporated by reference into the registration agreement between the domain name holder and the registrar and Paragraph 4(a) of the policy requires a domain name holder to submit to a mandatory administrative proceeding whenever a third party complainant asserts that:
1.the domain name holder's domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;
2.the domain name holder has no rights or legitimate interests in respect of the domain name; and
3.the domain name holder's domain name has been registered and is being used in bad faith.
In order to prevail, a complainant must prove that all three of these elements are present. The most important element, however, is that the domain name holder has both registered and is using the domain name in bad faith. Paragraph 4(b) of the UDRP provides the following non-exclusive list of circumstances that will be considered evidence that the domain name has been registered and used in bad faith:
1.circumstances indicating that the domain name holder has registered or the domain name holder has acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of the domain name holder's documented out-of-pocket costs directly related to the domain name; or
2.the domain name holder has registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the domain name holder has engaged in a pattern of such conduct; or
3.the domain name holder has registered the domain name primarily for the purpose of disrupting the business of a competitor; or
4.by using the domain name, the domain name holder has intentionally attempted to attract, for commercial gain, Internet users to the domain name holder's web site or other on-line location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of the domain name holder's web site or location or of a product or service on the domain name holder's web site or location. It remains to be seen how these bad faith provisions will be interpreted by the administrative panels deciding cases under the UDRP.
Paragraph 4(c) contains another pivotal provision of the UDRP. This paragraph sets forth a non-exclusive set of circumstances which, if found to exist, will establish a domain name holder's legitimate rights in a domain name. They include:
1.before any notice to the domain name holder of the dispute, the domain name holder's use of, or demonstrable preparation to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services;
2.the domain name holder (as an individual or business, or other organization) has been commonly known by the domain name, even if the domain name holder has acquired no trademark or service mark rights; or
3.the domain name holder is making a legitimate non commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.
Subparagraph 4(c)(ii), commonly known as the "nickname exception," is the most troubling to trademark owners because it would seem to be a "get-out-of-jail-free card" for any alleged cybersquatter. During the drafting process, INTA suggested that this provision be revised to include some type of high evidentiary standard (i.e., requiring the domain name holder to present "clear and convincing evidence" that he/she/it was "commonly known" by the domain name). Unfortunately, these suggested revisions were not adopted by the ICANN staff when it prepared the final version of the UDRP. Given the present wording of this provision, trademark owners will simply have to wait and see whether the panels entrusted with interpreting this provision require a domain name holder to make a showing beyond merely providing evidence such as self-serving affidavits.
The UDRP has a genuine international scope as it is available for any trademark holder and it covers virtually all .com, .org and .net domain names. Moreover, the complainant and the domain name holder can be anywhere.
The whole procedure under the UDRP can be summarized in 5 stages :
1. the trademark owner files a complaint with an ICANN accredited provider[69]
2. the domain holder has 20 days to file a response;
3. the provider, within 5 days appoints a 1 to 3 person panel (composed of trademark law experts);
4. the panel issues a decision after 2 weeks;
5. the registrar implements the decision within 10 days (unless the domain registrant provides notice of a lawsuit).
So the whole process usually takes less than 2 months, from the filing of the complaint to the implementation of the panel's decision.
The decision trends, as of March 28, 2000 were the following :
85 decisions had been rendered in favor of the complainant-trademark owner (domain name transferred)
17 decisions had been rendered in favor of the respondent-domain name holder (domain name maintained)
In 4 decisions, the registration of the domain name was cancelled.
3) “worldwrestlingfederation.com” : the first application of the Uniform Domain Name Dispute Resolution Policy
On December 2, 1999, a few days after the implementation of the UDRP, the WIPO Arbitration and Mediation Center, an ICANN accredited dispute resolution provider, received a complaint for the domain name "worldwrestlingfederation.com".[70]
In the case at issue, the World Wrestling Federation, holder of the service mark and trademark WORLD WRESTLING FEDERATION tried to register the domain name worldwrestlingfederation.com but was informed that this domain name had already been registered. They were soon contacted by a California-based cybersquatter who had registered that name. He proposed to sell them the domain name worldwrestlingfederation.com for $1000. He was sued by the World Wrestling Federation.
The panel noted that :
- respondent has not made a good faith use of the domain name;
- the domain name at issue is not related to any legitimate interest of respondent;
- the domain name is identical or confusingly similar to the service mark and trademark of complainant.
The panel identified the three elements necessary to require a domain name holder to submit to a mandatory administrative proceeding according to Paragraph 4 (a) of the UDRP.
As a result, the panel in its January 14, 2000 decision required that the registration of the domain name worldwrestlingfederation.com be transferred to the complainant.
The subsequent cases provide examples of what is required each to succeed on the three findings and establish a case of cybersquatting :
- The domain name must be similar to the complainant's mark
For example, in the case of Parfums Christian Dior v. Netpower, Inc.,.[71] the panel, on March 3, 2000 held that the domain name chistiandiorcosmetics.com was infringing the trademark Dior even if the domain name was not identical to the trademark. What must be established is a confusing similarity.
- The domain name registrant must have no legitimate rights to the domain name
Such legitimate rights could include a prior use with a bona fide business, a registration of domain that corresponds to a trade name or personal name or a legitimate non-commercial or fair use of a domain. For example, in Adaptive Molecular Technologies, Inc. v. Priscilla Woodward & Charles R. Thorton d/b/a Machines and More,[72] the panel, on February 28, 2000 refused to conclude that the respondent had not right to use the mark as he was an authorized distributor of complainant and that complainant legally acquiesced in respondent's registration of the domain name.
- There must be bad faith registration and use of the domain name
This criterion includes the registration for the purpose of selling at a profit, the pattern of "stealing" domain names from trademark holders, the registration for the purpose of disrupting a competitor's business and the registration to create confusion. Thus in Adaptive Molecular Technologies, Inc. v. Priscilla Woodward & Charles R. Thorton d/b/a Machines and More, the panel refused to find bad faith because of the relationship of the parties.
CONCLUSION
In the early days of the Internet, few could have predicted its rapid growth, and only the imaginative could have foreseen its impact on society. Likewise, few would have thought that the next race for gold would be in valuable domain names. ICANN’s dispute resolution policy succeeds in addressing the main problems created by domain name disputes involving cybersquatters. Indeed, under the new rules, a domain name can be transferred to a trademark holder in less than 60 days after the complaint is filed. These rules also enable a trademark holder to recover a domain name from a cybersquatter without incurring the time and expense of national litigation. But the growth of cases involving cybersquatters worldwide show in fact that a much deeper reform of the domain name system is needed: the next priority will be to find alternatives to the already too crowded . com addresses, for which companies fight so fiercely.
Appendix 1 : U.S. Anticybersquatting Act and
the ICANN UDRP:
A Side-by-Side Comparison
Chart drafted by Ellen Shankman; Eitan,
Pearl, Latzer & Cohen-Zedek; Herzlia, Israel
There are now two new weapons in the trademark owner’s arsenal in the war against Internet domain name cybersquatting: The U.S. "Anticybersquatting Consumer Protection Act" (hereinafter "the Act") and the Uniform Domain-Name Dispute Resolution Policy (hereinafter "the UDRP"). Both measures are meant to address cybersquatting only – i.e. bad faith misappropriation of trademarks as Internet domain names -- and not legitimate trademark conflicts.
Since all Members of INTA may not share extensive experience with the "alphabet soup" of Internet names and terms or the details of the latest measures, the following chart is meant to serve as an extremely brief overview comparing key sections of the two, in order to assist a trademark owner to determine where and how it may wish to proceed against cybersquatters. A copy of the Act may be found at http://thomas.loc.gov – S. 1948, which is included as Title III of the Omnibus Appropriations Act. A copy of the UDRP may be found at http://www.icann.org.
|
WHO |
WHAT |
HOW |
WHERE |
WHEN |
WHY |
|
|
Anticybersquatting Act |
UDRP |
|
WHO |
||
|
Against whom? |
Civil action against anyone who, with bad faith intent to profit, registers, traffics in or uses a domain name that is : 1. Identical or confusingly similar to a mark that was distinctive when
the domain name was registered; 2. identical, confusingly similar or dilutive of a mark that was famous
when the domain name was registered; or 3. infringes marks and names protected by statute (e.g. Red Cross). |
Mandatory administrative proceeding against domain name registrant where the domain name is: 1. Identical or confusingly similar to a mark in which the complainant
has rights; and 2. domain name registrant has no rights or legitimate interests in
respect of domain name; and 3. the domain name has been registered and is being used in bad faith. |
|
Who can be affected world-wide? |
Non U.S. residents or citizens may be subject to jurisdiction under the Act. |
Any g-TLD domain name registrant world-wide may be subject to "jurisdiction" under the policy. |
|
WHAT |
||
|
What’s at stake? |
Domain name, costs, damages and injunction |
Domain name only |
|
What top level domains (TLDs) affected? |
Not limited to gTLDs by its terms. Could arguably include .us or other cc-TLD. |
Any domain name filed under ICANN – currently only gTLDs. Country code (cc) -TLD’s not affected. |
|
What about warehousing? |
Yes, as a factor of bad faith. |
Refers to registration and "use" of domain name. |
|
HOW |
||
|
How is it done? |
Additional cause of action under
Lanham Act. |
Mandatory administrative proceeding. |
|
How is it judged? |
Nonexclusive list of factors that may evidence (non)/existence of bad faith. |
·
Non-exclusive list of
factors to evidence registration and use in bad faith. · Non-exclusive list of factors to show legitimate interest in domain name. |
|
How much? Remedies |
·
Actual damages and
costs or statutory damages from $1000 to $100,000 per infringing domain name,
attorney’s fees and costs, recovery of domain name, injunctive relief, defendant’s
profits. ·
Reduced relief
available for “in rem” and retroactive actions (see below). · In rem: forfeiture, cancellation or transfer of domain name. No damages. |
Cancellation or transfer of domain name. |
|
WHERE |
||
|
Where decided? Arbiter of dispute |
U.S. Court |
Administrative panel |
|
Jurisdiction/venue |
· U.S. Federal Civil Procedure rules for where jurisdiction lies. · In rem actions: where the domain name registrar, registry or other domain name authority is located; or Where documents sufficient to establish control and authority regarding disposition of the registration and use of the domain name are deposited with the court. |
Complainant selects provider to administer proceedings. Complainant pays fees for one panelist. Fees split where respondent expands panel from one to three. |
|
WHEN |
||
|
When does it kick in? Retroactivity |
Yes. Injunctive relief only available for domain names registered/misappropriated prior to effective date of act. |
Possibly. (See registration agreement made between registrar and registrant.) |
|
WHY |
||
|
Why use it? Advantages |
·
Determination made by
court of law. ·
Very broad
jurisdictional ·
No risk that
compromise |
Fairly inexpensive. Quick,
expedited resolution. |