6.2.1 Domain Name Disputes

 < Day Day Up > 



Character String Conflicts One type of conflict that emerged quickly during the domain name rush of 1994-1996 was contention over the same character string. Two or more organizations with the same name, or with some legitimate reason to register a domain, desired the same registration. Under pure common pool conditions, whoever registered the name first would get the assignment. The heightened economic stakes created by commerce on the Web, however, gave some market participants a strong incentive to challenge that rationing principle. The most convenient vehicle for such challenges was a trademark claim. As one lawyer involved in domain name disputes wrote, 'In a substantial fraction of domain name disputes the plaintiff presents the case as if it were a traditional trademark case with goods or services being marketed in a way that allegedly gives rise to confusion, while the reality is that no goods or services are involved, let alone confusion. In such disputes it becomes clear that the complaint, reduced to its essence, is ‘we wish we had registered the domain name first, and we really want to have the domain name now'' (Oppedahl 1997).

The potential for conflict over character strings was exacerbated by the unexpected way the Internet emerged as a mass medium. Hundreds of major companies were slow to recognize the commercial potential of the Internet. A report by Wired magazine found that in May 1994 only one-third of the Fortune 500 companies had registered domains corresponding to their corporate names, and 14 percent of them had had their names registered by someone else (Quittner 1994). The Miller Brewing Company found that miller.com had been registered by a computer consultant with the surname Miller. To the chagrin of Beanie Babies manufacturer Ty, Inc., its corporate name had been registered by an individual whose three-yearold son was named Ty. In some cases, the companies would simply pay the original registrant to relinquish the name, but in many others, the companies asserted trademark infringement and initiated or threatened lawsuits. The practice of using trademark litigation (or the Network Solutions dispute resolution policy; see section 6.2.2) to extract desirable domain names from legitimate prior registrants became known as 'reverse domain name hijacking' (Rony and Rony 1998, 392). A study conducted in 1998 found that about half of the publicly documented cases of domain name- trademark conflict could be classified as rooted in character string contention (Mueller 1999b).

Name Speculation Rights conflicts also developed over the practice of name speculation. Name speculation occurred when an individual registered domain names entirely for their resale value. From an economic point of view, name speculation was a predictable form of arbitrage given common pool conditions. The value of the names available, measured in terms of their predicted resale value or their ability to generate Web traffic, exceeded the cost of acquiring them. Since there were no limits on appropriating names and the registry's pricing did not discriminate between different levels of value among available names, the formation of a secondary market was inevitable. By 1997-1998 there were many organized domain name brokerages and online auction sites.

A large portion of name speculation involved registration of generic or catchy terms that the registrant thought might have value to someone later. As early as October 1994 a journalist observed that 'savvy business folks are racing out and registering any domain name they can think of: their own company names, obviously, and generic names like drugs.com and sex.com, and silly names that might have some kind of speculative value one day, like roadkill.com' (Quittner 1994). Common pool conditions encouraged indiscriminate appropriation, pushing major corporations such as Proctor and Gamble and Kraft/General Foods to register up to 200 domain names, including badbreath.com, underarm.com, and diarrhea. com.

On the other hand, a significant number of early name speculators deliberately registered and attempted to sell famous company names or trademarked brand and product names. Typically, the speculator would register the names but not link them to any Web site, and then contact the organizations or people with an interest in the name (or wait for them to call) and offer to sell the names to them for five- or six-figure sums. One of the pioneers of this type of speculation was an Illinois individual named Dennis Toeppen, who in 1995 registered approximately 200 domain names, most of them trademarked, such as 'Eddie Bauer,' many of them coined or unique, such as 'Panavision.' When contacted by the owners, Toeppen made explicit offers of sale to the companies. These practices led to strong legal challenges to the first-come/first-served principle by outraged trademark holders. At the time, the legal status of name speculation was still unclear. Toeppen's lawyers affirmed the legitimacy of the firstcome/first-served principle, and questioned whether mere registration of a domain name without any associated use capable of confusing or misleading customers could qualify as infringement or dilution. In the Intermatic and Panavision decisions, however, the U.S. federal courts came out unambiguously against speculation in trademarked names. Noting that while 'mere registration, by itself' was not sufficient to infringe or dilute a mark, the court said the defendant was making commercial use of the marks by trading on their economic value as domain names. [18 ]Such an unauthorized commercial use qualified as dilution under federal law. An analogous case in Great Britain also found name speculators guilty of passing off. [19 ]

Typo-Squatting A variant of name speculation that developed somewhat later was typo-squatting. Typo-squatters registered common misspellings of the domain names of popular Web sites or company names in order to benefit from potentially large volumes of spillover traffic generated by users who incorrectly typed in a domain name (table 6.2). Major Internet-related names such as 'AOL' and 'Yahoo' were favorite targets of typo-squatters. [20 ]By diverting users to their own Web sites, typosquatters might generate thousands of 'hits,' which were commercially valuable as a way of getting the visitors interested in their own wares or increasing revenue from advertisers whose payments were based on 'hits.' The more innocuous typo-squatter sites just contained a display ad and even a link to the correctly typed site name, but in a few cases careless typists found themselves staring at porn sites.

Table 6.2: Typosquatting on Yahoo!

All 37 names were registered by one person

atlantayahoo.com

yahooe.com

ayahoo.com

yahoof.com

bostonyahoo.com

yahoofr.com

cayahoo.com

yahoola.com

dcyahoo.com

yahoony.com

dfwyahoo.com

yahoop.com

jahu.com

yahoouk.com

kyahoo.com

yahop.com

layahoo.com

yahpoo.com

nyahoo.com

yalhoo.com

nyyahoo.com

yaohh.com

pageryahoo.com

yashoo.com

seattleyahoo.com

yayou.com

wyahoo.com

yhahoo.com

yaghoo.com

yhu.com

yahjoo.com

yiahoo.com

yahoa.com

youhoo.com

yahooca.com

yuahoo.com

yahoode.com

 

ICANN Uniform Dispute Resolution Policy

Source: (UDRP), WIPO case no. D2000-0273

Parody, Preemption, and Diversion The unique ability of domain names to locate and retrieve Web sites facilitated their use for preemption or diversion of competitors' Internet traffic. By registering a competitor's name in the coveted .com space, one could block it from getting the name and, even better, divert people who might be seeking the competitor's site. Some surprisingly large and respectable businesses succumbed to this temptation in 1994. Telecommunication carrier Sprint briefly held the registration for mci.com. The college directory and test preparation service Princeton Review registered kaplan.com, a domain name associated with its chief competitor, Stanley Kaplan, and used it to post an unfavorable comparison of Kaplan's service with its own. An arbitrator ordered the name transferred to Kaplan. [21 ]

These kinds of cases involved commercial activities that fell rather easily into established definitions of unfair competition. But domain names could also be used as the labels for sites that parodied or criticized the named organization. The most famous early case of this type involved the domain name peta.org. PETA was an acronym commonly associated with the animal rights group People for the Ethical Treatment of Animals. In 1995 peta.org was registered by Michael Doughney and used to create a satirical Web site promoting a fictitious organization, People Eating Tasty Animals. Litigation commenced in 1996; [22 ]one product of this was the formation of the Domain Name Rights Coalition, a Washington-based activist organization funded by Doughney to lobby against the domination of the domain name space by trademark interests. The animal rights group PETA, taking a page from its critic's book, registered ringlingbrothers.com and used it to direct Web users to information critical of circuses' treatment of animals. An anti-abortion activist registered plannedparenthood.com, using it to promote his book against abortion. [23 ]These cases raised important questions about the definition of commercial use and the proper balance between free speech rights and intellectual property rights in the name space.

Rights of Personality Another area in which the nature of domain name conflicts tested the application of traditional trademark rights involved the registration of other people's names. Usually the name registered was of someone famous: movie stars, singers, and other media personalities, real and invented. In some cases, the registrations seem to have been executed for speculative purposes, and in other cases, they were linked to fan sites or information about the personality in question. [24 ]

6.2.2 The Network Solutions Dispute Resolution Policy

One early lawsuit over a second-level domain name prompted Network Solutions to draw back from pure first-come/first-served assignment criteria. In March 1994 a Virginia business consultant, David Boone, registered the domain knowledgenet.com as part of his plan to build an email circle of business consultants for the exchange of referrals and leads. Less than a year earlier, a computer networking and consulting firm, KnowledgeNet, Inc., had registered a service mark and trademark (but not a domain name) for the same term. After learning of Boone's domain name registration in June 1994, it sent cease-and-desist letters to Boone and complained to Network Solutions. The registry insisted that it assigned domain names on a first-come/first-served basis and could not make any changes without the consent of the Boone's company. Boone refused to give up the domain name.

KnowledgeNet sued for trademark infringement, unfair competition, and 'racketeering activities' in federal court in December. The defendants included the registry Network Solutions and Boone's Internet service provider as well as Boone. Network Solutions was charged with 'facilitat[ing] illegal use of the marks' by 'allowing, and then refusing to reassign, the domain name.' [25 ]The case was settled in mid-1995 when Boone found the legal expenses of defending his case too burdensome and entered into a consent decree giving the plaintiff nearly everything it had asked for. But the KnowledgeNet case had unsettled Network Solutions, at the time a small company unused to lawsuits and financially strapped by the flood of registrations. In July 1995, Network Solutions issued a 'Domain Dispute Resolution Policy Statement' designed to shield itself from future trademark-related lawsuits. In its policy statement, Network Solutions declared that it 'has neither the legal resources nor the legal obligation to screen requested Domain Names to determine if the use of a Domain Name by an Applicant may infringe upon the right(s) of a third party.' It then set out a series of contractual conditions that would be imposed on all registrants in the InterNIC-operated domains. It required registrants to certify that they had a bona fide intention to use the name, and that the proposed name did not interfere with or infringe the trademarks or intellectual property rights of any third parties. The policy gave Network Solutions the right to withdraw a domain name from use if presented with a court order or arbitration panel decision transferring the name.

The policy's most important and controversial feature was an attempt to privilege trademark holders in disputes over names in order to protect Network Solutions from litigation. If a party could show that it had a trademark in a domain name registered by someone else, and if the registrant could not present evidence of its own trademark in the name, or show use of the name prior to the grant of the trademark, the registry would place the disputed name on hold pending resolution of the dispute. As long as a domain was suspended, the name would not resolve in DNS. [26 ]Only federally registered marks were recognized, leaving common law trademarks unprotected.

The opportunity to suspend disputed names was quickly seized upon by hundreds of trademark holders. Dispute resolutions under the policy numbered 166 in 1995, 745 in 1996, 905 in 1997, and 838 in 1998. But the policy was widely criticized among Internet users and the legal profession for its encouragement of reverse domain name hijacking. The policy, one legal scholar wrote, 'unilaterally cuts off a domain name at the behest of a trademark holder, even in the absence of infringement or dilution, ignoring otherwise permissible concurrent use of registered and common law trademarks. This policy also encourages poaching by trademark holders who might not otherwise have a colorable claim in court' (Nathenson 1997).

By substituting a mechanical test (the presence or absence of a prior trademark registration) for the case-specific determinations needed to evaluate claims of trademark infringement, the policy routinely produced blatant injustices. Generic terms innocently registered under the .com domain, such as clue, perfection, prince, and roadrunner, were suspended under the policy. The policy reached its nadir in 1997, when it was invoked by the Prema Toy Company, producers of the Gumby and Pokey characters, in an attempt to take away the domain pokey.org from a 12-year-old child's personal Web site. [27 ]Moreover, the policy failed to keep Network Solutions out of litigation. Although the small businesses and individual domain name holders who were the victims of the policy lacked the resources to be as litigious as the typical trademark holder, a significant number of them challenged Network Solutions' domain name suspensions in court. [28 ]The policy did not satisfy many trademark holders, either, because it could not encompass misspellings or variants, just domain names that exactly matched the character string of a registered trademark. The unpopular policy went through several iterations after 1995 as the negative reaction mounted. See Ballon (2000) and Oppedahl (1996) for detailed descriptions.

6.2.3 The Liability of the Registry

Another trademark-related lawsuit sought to impose on Network Solutions an even stronger form of involvement in the policing of registrations. The defense contractor Lockheed Martin was attempting to prevent various small businesses and individuals from registering the term 'skunk works' or several variants as a domain name. On May 7, 1996, Lockheed sent Network Solutions a letter advising the company that Lockheed owned the mark and demanded that the InterNIC cease registering domain names that referred to or included the trademarked terms. It also requested a list of registered domain names containing the words 'skunk works' or any variations of it. When Network Solutions refused to accede, Lockheed sued, contending that the registry had a duty to screen domain name applications and that its failure to do so made it guilty of trademark infringement, dilution, and contributory infringement.

In November 1997, U.S. District Judge Dean Pregerson issued a summary judgment clearing Network Solutions of the charges. [29 ]The opinion is one of the most clearly stated and carefully reasoned discussions of the relationship between domain names and trademarks in U.S. law. Domain names, the judge noted, have two distinct functions: a technical one as a unique identifier of hosts on the Internet, and a trademark function that can identify an offering of goods or services on the Internet. Pulling together legal precedents involving toll-free telephone numbers, radio broadcast call letters, and other domain name cases, the opinion held that registration of a domain name by itself cannot infringe a trademark. Infringement occurs when the domain name is used in certain ways. Network Solutions was innocent of trademark infringement because it was not making use of the domain names to identify goods and services: 'NSI's use of domain names is connected to the names' technical function on the Internet to designate computer addresses, not to the names' trademark function to distinguish goods and services.' NSI was innocent of dilution because, although it profited from the sale of domain names, it was not trading on the value of domain names as trademarks but only on their value as addresses. Finally, Network Solutions was cleared of contributory infringement because its involvement with the use of a domain name was remote; the company had little if any knowledge of or control over the use of a domain name, nor was it in any position to judge the validity of a trademark claim. Network Solutions, in its capacity as registry, had 'no affirmative duty to police the Internet for infringing uses' of trademarks. A similar case seeking to find the New Zealand country code registry guilty of contributory infringement also resulted in a victory for the registry, absolving it of responsibility to police trademarks at the point of registration. [30 ]

6.2.4 The Battle over Transaction Costs

From 1995 to 1997, the courts in the United States and in other nations gradually established precedents capable of resolving property rights conflicts over second-level domain names. Established legal tests for trademark infringement, such as consumer confusion, commercial use, unfair competition and contributory infringement, were being applied to the new fact patterns of domain name registration. The courts were consistently deciding against speculators in trademarked names and (fairly consistently) overturning attempts at reverse domain name hijacking. The courts had also established a clear precedent that domain name registries could not be vested with a duty to police the registration process on behalf of trademark owners.

And yet, major trademark holders were still highly dissatisfied with the situation. They felt victimized by rampant name speculation and did not see litigation as the answer. The cost of nuisance registrations (US$100) was extremely low; the cost of litigation to recover objectionable registrations started in the tens of thousands of dollars. The high transaction costs of litigation adversely affected innocent registrants as well as trademark holders because many ordinary registrants could not afford to contest unfair challenges. Both foreign and domestic registrants were not required to identify themselves correctly in the registration record.

In this regard, the NSI dispute resolution policy was a highly significant development in Internet governance. Although put forward by Network Solutions with the stated objective of relieving itself of responsibility for screening registrations, it was actually the first attempt to bypass formal litigation, rooted in the law of territorial states, and to use the bottleneck power of the registry itself to police and enforce property rights in names. Similarly, the lawsuits attempting to force registries to police registrations on behalf of trademark holders, despite their lack of success, were also milestones in the struggle over name space governance. They indicated clearly that trademark holders wanted to be able to shift the transaction costs of policing marks in the name space away from themselves and onto other parties. What national courts refused to give them, applying traditional standards of law, they would achieve later via the World Intellectual Property Organization (WIPO) and ICANN.

And so, a new epistemic community was drawn into the domain name fray: the intellectual property bar. Organizations such as the International Trademark Association (INTA), the U.S. Patent and Trademark Office, and the American Intellectual Property Law Association, as well as lobbyists and intellectual property counsel for major brand-holding corporations such as IBM and AT&T, started to investigate the issue at this time.

[18 ]Panavision International v. Toeppen, 46 U.S.P.Q.2d 1511, 1998 WL 178553 (9th Cir. April 17, 1998); Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D.Ill. 1996).

[19 ]Marks & Spencer PLC, British Telecommunications PLC, Virgin Enterprises, Ltd., J. Sainsbury PLC, Ladbroke Group PLC v. One in a Million, et al., Judgment (On Appeal in the High Court of Justice, Supreme Court of Judicature Chani, 98/ 0025/B-July 23, 1998); British Telecommunications Ltd. and Others v. One in a Million, Ltd. (1999), FSR 1 (C.A.).

[20 ]As of mid-2000, Yahoo! was a complainant in four UDRP cases involving 99 domain names; AOL was a complainant in nine UDRP cases involving 34 domain names.

[21 ]'Online Legal Issues,' New York Law Journal, February 15, 1995.

[22 ]People for the Ethical Treatment of Animals v. Doughney, CA No. 99-1336-A, E.D. Va., June 12, 2000.

[23 ]Planned Parenthood Fed'n of America, Inc. v. Bucci, 42 U.S.P.Q.2d 1430, 1432 (S.D.N.Y. 1997).

[24 ]Chet Flippo, 'Country Artists Sue ‘Cybersquatter.'' Billboard, April 25, 1998, p. 82.

[25 ]Amended Complaint, KnowledgeNet, Inc. v. D.L. Boone & Co., Network Solutions, Inc., and Digital Express Group, Inc., U.S. District Court for the Northern District of Illinois, Eastern Division, No. 94-C-7195.

[26 ]In the first six weeks after adoption of the new policy, the rate of domain name registration fell from about 20,000 per month to 6,000 per month. But the effect was temporary, and growth in the number of registrations resumed at the previous rate shortly thereafter. Investor's Business Daily, October 17, 1995, p. A10.

[27 ]Because of public pressure, Prema backed down from its claim.

[28 ]Roadrunner Computer Systems v. Network Solutions, Inc, Civil Action No. 96-413 (E.D. Va., March 26, 1996); Giacalone v. Network Solutions, Inc., Case No. 96-20434 (N.D. California, June 14, 1996); Network Solutions, Inc. v. Clue Computing, Case No. 96-CV-694 (D. Colorado June 21, 1996).

[29 ]Lockheed Martin Corp. v. NSI, 43 U.S.P.Q.2d 1056, 1997 U.S. Dist. Lexis 10314, 1997 WL 381967 (C.D. Cal. 1997).

[30 ]Oggi Advertising Ltd. v. McKenzie and others, CP.147/98 (High Court of New Zealand, Auckland Registry), June 2, 1998. See also Domainz Media Statement, November 13, 1998, <http://www.domainz.net.nz/newsstand/stories/court4.html>.



 < Day Day Up > 



Ruling the Root(c) Internet Governance and the Taming of Cyberspace
Ruling the Root: Internet Governance and the Taming of Cyberspace
ISBN: 0262134128
EAN: 2147483647
Year: 2006
Pages: 110

Similar book on Amazon

flylib.com © 2008-2017.
If you may any questions please contact us: flylib@qtcs.net