DOMAIN NAME DISPUTES EDWARD E. SHARKEY 4641 MONTGOMERY AVENUE SUITE 500 BETHESDA, MD 20814 (301) 657-8184 ESHARKEY@SHARKEYLAW.COM WWW.SHARKEYLAW.COM
CONTENTS Introduction... 3 Domain Name Basics... 4 Trademark Basics... 5 Trademarks in Domain Names... 7 Reverse Domain Name Hijacking... 10 Recommendations... 11 2
INTRODUCTION Not surprisingly, the recent boom in online commercial activity has been accompanied by an increase in domain name disputes. On one side are businesses and trademark owners, aware of the value of a domain name that corresponds to the name of their company or trademark. Often, these businesses and trademark owners discover that their desired domain, the one that is the same as their corporate name or trademark, is already registered and being used by someone else an individual who has unwittingly registered the domain, a non-profit that has chosen the domain for a non-commercial purpose, or another business that has selected the domain for the unlawful purpose of profiting from the other s name or mark. Historically, those corporations who have acted to take their desired domain from another user have filed trademark lawsuits, asserting that the use of the domain infringes on or dilutes their trademark. The traditional principles of trademark law, however, were developed without the Internet in mind, and, for this reason, often make it difficult for the business or trademark owner to present a strong trademark case for the domain. Accordingly, Congress passed the Anticybersquatting Consumer Protection Act to make it easier for companies and individuals to take over domain names that are confusingly similar to their names and trademarks. In addition, most accredited domain name registrars require that registrants submit to an arbitral proceeding, governed by the Uniform Domain Name Dispute Resolution Policy, to resolve domain disputes. While the Anticybersquatting Consumer Protection Act and the Uniform Domain Name Dispute Resolution Policy have filled the gap in protection left by traditional trademark law, many corporate entities use them as swords against legitimate domain name registrants. For example, some companies routinely file claims each time they see their name or mark used on the Internet, without investigating the lawfulness of the use. As a result, many legitimate registrants lose their domain names. The Anticybersquatting Consumer Protection Act and the Uniform Name Dispute Resolution Policy provide a means for these registrants to get their domains back. Under both regimes, registrants can file a claim for reverse domain name hijacking. names. This paper provides an overview of the law of the use of trademarks in domain 3
DOMAIN NAME BASICS Definition: A domain name is an Internet address. It is used to find a website. For example, the web address for The Law Office of Edward E. Sharkey LLC is www.sharkeylaw.com. Without the domain name, a computer would have no idea where to look for the web page of The Law Office of Edward E. Sharkey LLC. Characteristics: Every domain name is divided into a hierarchy. The top-level hierarchy appears after the last dot in a domain name. In the example above,.com is the toplevel domain name. Sharkeylaw is the second-level domain, and www is the subdomain. Domain name disputes concern the second-level name. This is because it is impossible for two identical second-level domain names to exist under the same top-level domain. Registration: United Technologies and United Healthcare would probably both like to have the domain united.com. It is, however, United Airlines that uses the domain. Why would United Airlines trump United Technologies, United Healthcare, or any other business operating under the name United? Presuming that united.com has not been bought, sold, or transferred since its initial registration, it is because United Airlines was the first to apply to register the domain. In order to register a second-level domain name under a top-level domain, a request must be made to the registrars that have the power to assign names for that top-level domain. Registrars of.com,.net, and.org domain names are accredited by The Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit formed to control domain name management and perform similar functions. All registrars assign domain names on a first-come, first-served basis, regardless of the registrant s trademark rights in the name. 4
TRADEMARK BASICS Definition: A trademark is any word, symbol, or phrase used to identify and distinguish one s goods. The trademark Starbucks, for example, identifies and distinguishes the coffee of one particular company from that of another (e.g., Seattle Coffee Company). When such marks are used to identify services rather than products, they are called service marks. [This paper s discussion of topics related to trademarks applies equally to service marks.] Characteristics: To serve as a trade or service mark, and to be subject to protection under the law, a mark must be distinctive, or capable of identifying the source of a particular good or service. To determine the distinctiveness of marks, courts group them into four categories based on their relationship with the underlying product or service. Generic terms describe the general category to which the underlying product or service belongs, and they cannot serve as trade or service marks. Descriptive terms, those that merely describe the underlying product or service, can serve as a mark only after the consuming public primarily associates them with a particular producer or provider, rather than the underlying product or service. Fanciful and arbitrary marks (those that do not bear a logical relationship to the underlying product or service) and suggestive marks (terms that suggest a characteristic of the underlying product or service without actually describing it) function as marks as soon as they are used in commerce. The Lanham Act: By making goods and services easier to identify, trade and service marks give manufacturers and service providers an incentive to invest in the quality of their goods and services. Trademark law developed to protect these investments and regulate the proper use of marks. Federal trademark law is codified in the Lanham Act, 15 U.S.C. 1051-1141. Assuming a mark is distinctive, rights in the mark can be acquired in two ways. The first way to acquire rights in a mark is by being the first to use the mark in commerce. Trade or service mark rights acquired through use extend only to the geographic area in which the mark is actually used. The second way to obtain rights in a mark is by being the first to register it with the U.S. Patent and Trademark Office. Registration of a mark provides its owner with national rights to the mark. Trademark Infringement: The Lanham Act provides a mark owner with a civil cause of action for infringement against parties that use its mark. The remedies available in an infringement action include injunctive relief, costs, and, in exceptional cases, attorney s fees. Where the owner gave the user notice of, or the user had actual notice of, the owner s registration of the mark, the owner may be entitled to the user s profits from use of the mark and/or damages. To succeed on a claim of trademark infringement, the owner must establish that the other party s use of the trademark in connection with the sale of goods is likely to cause consumer confusion as to the source of the goods or the sponsorship or approval of such goods. Courts typically look at a number of factors in determining the likelihood of confusion, among them: (1) the strength of the mark; 5
(2) the similarity of the marks; (3) the similarity of the products or services; (4) the likelihood that the consuming public will perceive that the owner crossed over into the defendant s business; (5) instances of actual confusion; (6) good faith in using the mark; (7) the quality of the defendant s product or service; and (8) the sophistication of the consumers. Trademark Dilution: In addition to a trademark infringement action, the Lanham Act provides that the owner of a famous mark may bring a civil cause of action for dilution. In a dilution claim, the owner must establish (1) that its mark is famous and (2) dilution by blurring (weakening the mark s power by identifying it with dissimilar goods) or by tarnishment (casting the mark in an unflattering light, typically by associating it with inferior or unseemly goods or services). In deciding whether a mark is famous, courts consider many factors, including the degree of inherent or acquired distinctiveness, the duration and extent of use, the amount of advertising and publicity, the geographic extent of the market, the channels of trade, the degree of recognition in trading areas, any use of similar marks by third parties, and whether the mark is registered. Lawful Trademark Use: There are two basic defenses to a trademark infringement or dilution claim: parody and fair use. It is lawful to use a mark to parody, as long as the parody is not too directly tied to commercial use. Fair use occurs when a term is used descriptively, rather than in a trademark sense. In other words, the mark is used for its primary meaning to describe the product rather than to identify it with a particular source. For example, Ocean Spray s use of sweet-tart to advertise its juice is a descriptive, fair use of the SweeTART candy mark. Some courts have recognized nominative use, closely-related to fair use. Nominative use refers to use of a mark where it is necessary for the purpose of identifying another producer s product, not the user s own product. For example, an America Online mailing directed at AARP members that stated if you tuned into Dick Clark is a nominative, fair use of Dick Clark. 6
TRADEMARKS IN DOMAIN NAMES Use: There are a variety of ways in which a registrant can use another s trademark in connection with a domain name. Cybersquatting refers to the purposeful registration of marks as domain names in order to sell them to the mark owner for a hefty price. Similarly, typosquatting involves the registration and use of a domain name that contains a common misspelling of a mark. Cybergriping is the incorporation of a mark into a domain name at which a website critical of the owner is posted. Application of the Lanham Act: Although traditional trademark law does govern the use of a trade or service mark in a domain name, it does not provide adequate protection for the trade or service mark owner in all circumstances. For example, to succeed on a claim of infringement, a mark owner must establish that the registrant of a domain name that corresponds to its mark is using it in a manner that is likely to cause confusion. Because cybersquatting involves the registration of a domain name, rather than its use, a mark owner could not get its domain through an infringement action. For this reason, additional laws and policies have developed in the area of domain name disputes. Anticybersquatting Consumer Protection Act (ACPA): In November 1999, Congress enacted ACPA, 15 U.S.C. 1125. The ACPA provides a mark owner with a civil cause of action for cybersquatting. To succeed on a claim under ACPA, a plaintiff must establish that it is the owner of a distinctive or famous mark and that the defendant used, registered, or trafficked in a domain name that is identical, confusingly similar to, or dilutive of the plaintiff s mark, with the bad faith intent to profit therefrom. Where the owner succeeds on its claim under the Act, relief may include injunction, damages, profits, costs, or attorney s fees. Courts use traditional trademark rules and standards to determine if the mark at issue is distinctive or famous, and to determine if the defendant s domain is identical or confusingly similar thereto. The ACPA provides several factors to guide courts in determining whether the defendant has acted in bad faith. Among these are: whether the defendant has trademark rights or other intellectual property rights in the disputed domain, the extent that the domain is the defendant s legal name or a name by which the defendant is commonly known, whether the defendant has made prior use of the domain to identify bona fide goods or services, whether the defendant has made bona fide non-commercial or fair use of the domain, whether it is the defendant s intent to divert consumers from the trademark owner s site to the defendant s site either for commercial gain or to tarnish, dilute or disparage the trademark owner s mark by confusing consumers into believing that the defendant s site is sponsored by the trademark owner, whether the defendant offers the domain for sale to the trademark owner, with the intent to profit from the sale, without intending to use the domain for a bona fide purpose, or there is an indication of a pattern of such conduct, whether the defendant uses false contact information when registering the domain, or has a pattern of such conduct, whether the defendant has acquired multiple domain names which the defendant knows are similar to famous or distinctive marks, and to what extent the trademark used in the domain of the defendant is distinctive or famous. 7
The ACPA provides a safe harbor for defendants who have acted in good faith: if the defendant had a good faith belief that its use of the domain name was a fair use or otherwise lawful, there will be no bad faith intent. A defendant who has acted, even partially, in bad faith is not entitled to the protection of this provision. For example, in Virtual Works, Inc. v. Volkswagen of America, 238 F.2d 264 (4 th Cir. 2001), Virtual Works, Inc. was required to turn over its domain even though it had some legitimate interest in the domain at issue. Virtual Works, an internet service provider, registered the domain vw.net despite the facts that, at the time it did so, it knew that it might be confused with Volkswagen and that other domains, including virtualworks.net, were available. When it chose the name, Virtual Works had in mind the possibility of one day selling it to Volkswagen for a substantial sum, and, when Volkswagen expressed interest in the domain, Virtual Works demanded that it purchase it within twenty-four hours or the domain would be sold to someone else. Volkswagen filed a cybersquatting claim against Virtual Works, and the court entered judgment in Volkswagen s favor. Virtual Works appealed, but the appellate court affirmed the decision, holding that, although Virtual Works had used its initials in the domain in connection with its business, part of the reason it selected the domain was the chance to profit from the association with Volkswagen s famous VW mark. In this manner, Virtual Works engaged in unlawful cybersquatting, and, for that reason, it was forced to turn the domain over to Volkswagen. Uniform Domain Name Dispute Resolution Policy (UDRP): In most instances, an aggrieved trademark owner can opt to institute an administrative proceeding under the UDRP rather than bring a judicial cause of action for the misuse of its mark in a domain name. The UDRP was developed by ICANN, and, within each domain name registration granted by an accredited ICAAN registrar, there is an agreement to submit disputes concerning the domain to a UDRP proceeding for resolution. At any stage of the proceeding, and until ten days following the decision, either party can submit the dispute to a court of competent jurisdiction for independent resolution. A complainant must establish three elements to succeed on its claim under the UDRP (1) the disputed domain name is identical or confusingly similar to a trade or service mark in which the complainant has rights; (2) the current domain name registrant has no rights or legitimate interest in the domain name; and (3) the disputed domain name has been registered and is being used in bad faith. The UDRP provides that a registrant has rights or legitimate interest in the domain if, before becoming aware of the dispute, the registrant used, or prepared to use, the domain name or a name corresponding thereto in connection with a bona fide offering of goods or services, the registrant has been commonly known by the domain name, even if it has not acquired trade or service mark rights to it, or the registrant is making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain, to mislead customers, or to tarnish the trade or service mark at issue. Factors that are considered to evidence bad faith, in terms of the UDRP, include: the domain was registered or acquired primarily for the purpose of selling, renting, or otherwise transferring the domain name to the owner of the trade or service mark, or its competitor, for valuable consideration in excess of the costs directly related to the domain name; the domain was registered to prevent the trade or service mark owner from reflecting its mark in a domain name, provided that the registrant has engaged in a pattern of such conduct; the domain was registered primarily for the purpose of disrupting the business of a competitor; or the domain was used to intentionally attempt to attract internet users for commercial gain by creating a likelihood of confusion with the complainant s mark as to the source, 8
sponsorship, affiliation, or endorsement of the web site or location or of a product or service thereon. An example of the bad faith use of a domain name in which the registrant had no rights can be found in The Sports Authority Michigan, Inc. v. Banks, Nat l Arb. Forum Decision, Claim Nos. FA0307000173374, FA0307000173376, and FA0307000175287 (October 6, 2003). The complainant was the operator of The Sports Authority sporting good stores. The complainant owned the Sports Authority and The Sports Authority trademarks, and it operated websites at www.thesportsauthority.com and www.sportsauthority.com. The respondents typosquatted by registering domain names corresponding to misspellings of the Sports Authority sites, including sportsauthoroty.com and sportsauthoity.com. In addition, the respondents registered with the complainant s affiliate program so that each time they directed an Internet user from one of their sites to the complainant s sites, they received a commission. The panel concluded that the disputed domains were confusingly similar to the complainant s protected marks and that the respondents use of the names to earn commissions from Internet users inadvertent typing errors was not a bona fide offering of goods or services or a noncommercial or fair use under the UDRP. To the contrary, the panel held that, because they were using the domains to profit from the complainant s marks, the respondents were acting in bad faith. Accordingly, the panel ordered that the domains be transferred to the complainant. The UDRP proceeding is conducted in writing, and, in that manner, it avoids much of the cost and time associated with legal proceedings. Most often, a mark owner submits a single page complaint presenting its factual and legal arguments, and the domain name registrant has twenty days to submit a written response. At that point, the dispute is given to a single arbitrator or a panel of arbitrators for decision within fourteen days. If the arbitrator(s) determines that the claimant has succeeded, it can order that the disputed domain name be canceled or turned over to the complainant. If such an order is entered, unless the registrar receives notice that the registrant has commenced a lawsuit against the complainant in court, the registrar will turn over or cancel the domain name within ten business days. 9
REVERSE DOMAIN NAME HIJACKING Under the ACPA: When a domain has been transferred, suspended, or cancelled as the result of a UDRP proceeding, the ACPA permits the registrant to bring a reverse domain name hijacking claim in court to establish that its use of the domain was lawful. A successful registrant is entitled to injunctive relief, including the reactivation or transfer of the domain back to the registrant. The elements of a reverse domain name hijacking claim are: (1) that the plaintiff is the domain name registrant, (2) that its registered domain was suspended, disabled, or transferred under the registrar s policy, (3) that the owner of the mark who prompted the domain to be suspended, disabled, or transferred is on notice of the action, and (4) that the plaintiff s use or registration of the name is not unlawful pursuant to the Lanham Act. In Barcelona.com., 330 F.3d 629, the registrant, an individual who used the domain barcelona.com as a tourist portal with information about Barcelona, Spain, successfully asserted a claim for reverse domain name hijacking. The Barcelona City Council, which owned many trademarks incorporating the term Barcelona, filed a UDRP claim against the registrant, resulting in an order by the panelist that the domain be turned over to the City Council. The registrant filed a declaratory action in District Court for reverse domain hijacking. Reasoning that the term Barcelona has geographical significance because it designates a specific area, the court found that it is not entitled to trademark protection until it has acquired secondary meaning. Because Barcelona had not yet achieved the secondary meaning, the court held that the registrant s use of the domain was not unlawful and ordered its immediate transfer back to the registrant. Under the UDRP: The UDRP permits a registrant against whom a claim has been filed to assert, in response, reverse domain name hijacking to request that the arbitration panel find that the complainant is misusing the arbitration process to take a domain or to harass the registrant. To prevail on such a claim, the registrant must show that the complainant knew of the registrant s right or legitimate interest in the domain or its clear lack of bad faith but brought the complaint anyway. The UDRP fails to establish any specific penalties for reverse domain name hijacking, and panels rarely find that it has taken place. The keys to those decisions in which the panel does find reverse domain name hijacking appear to be (1) the generic nature of the disputed term(s) and (2) the obviousness of the registrant s good faith. 10
RECOMMENDATIONS Because the freedom of the internet conflicts with the territorial nature of trademark law, it is likely that most trademark owners, and most domain name registrants, will become involved in a domain name dispute. Whether your business is the owner of a mark or a domain name, there are steps you can take to protect your property. Protect your marks: (1) Register your trade and service marks with the U.S. Patent and Trademark Office. (2) Once you have established rights in a mark, police the internet for its use by others. The more the mark is used by others, the weaker it becomes. (3) Register the domain names that correspond to: your name, your trade and service marks, common misspellings of your name and marks, yourtrademarksucks.com, and yourbusinesssucks.com. (4) When communicating with registrants of domains containing your mark(s), use appropriate tone. If the registrant is fairly using the mark, the only way to obtain the domain is via agreement with the registrant. (5) Prior to selecting a panelist for a UDRP proceeding, check panelist track records at www.icann.org. Keep in mind that statistics show that, in an overwhelming majority of cases, the decisions handed down by single panelists favored the complainant. Protect your domain names: (1) Register only domains in which you have a legitimate interest. (2) When in receipt of a cease and desist letter, buy time to research the domain name by responding with a letter acknowledging receipt and advising the sender that you are investigating the matter and will contact them in due time. (3) If a UDRP complaint is filed against you, respond with more than a naked denial. Attempt to demonstrate facts that evidence your rights or legitimate interest in the domain or that you are not using it in bad faith. Useful facts include: you are not a competitor of the complainant, you have not tried to sell the domain to the complainant or anyone else, you are not making trademark use of the word or phrase in which the complainant has trademark rights, and the word or phrase is common. (4) Keep in mind number (5), above. 11