Chapter 15

Trademarks in a Digital World: Domain Name Games and Other Fun

To the world, it seemed as if the Internet, that interconnected tangle of thousands of networks and millions of host computers, was born one day in 1993 or 1994. Even Microsoft master Bill Gates ignored it until then. By the mid-l990s, from daily news stories to hot stock offerings, a new mass medium arrived.

In truth, the Internet's roots date back several decades. Started as a U.S. government plan to coordinate super computers, it extended to university research institutions and their networks. When the means of sending graphic images was designed, it turned public. In its early days some enterprising hackers took advantage of public ignorance, adopting famous names as their own. That action had a trademark corollary that reverberated years later, as we shall see.

Now the Internet's commercial potential is being plumbed in every corner of the globe. As Internet technology ushers in a new era of mass communication, with emphasis on mass, the single most critical ingredient in finding your way along this information highway is knowing the sources of data you want to locate. While copyright law guides the use of content, trademark law provides the means by which the sources of the content are properly identified and the commercial reputations respected. To understand the importance of trademarks for this new medium, here is a quick Internet trademark tutorial.

The Address System of the Internet

In its early decades, the Internet's defining feature was a complex routing system. Interconnected networks were identifiable by a unique string of numbers or names. Today, the Internet contains thousands of computer networks and millions of “host” computers that share information. Locating a network and communicating with a specific computer on that network is the electronic equivalent of sending a letter to a specific address somewhere in the world. No two locations can be the same anywhere in the system.

For many years, the task of establishing electronic mailing addresses, called domain names, was regulated by national voluntary organizations. In the United States, the Internet Network Information Center (InterNIC), an organization funded by the U.S. National Science Foundation and managed by Network Solutions, Inc., of Herndon, Virginia, performed the function. In Europe, the task has been coordinated by RIPENCC and in Asia by APNIC.

Domain Names

A domain name is a unique combination of letters, numbers, and dashes that route packets of information among computer users. The domain name consists of both the arbitrary identifier chosen by the Internet user and a generic abbreviation that categorizes users (.corn for commercial, .edu for educational institutions, .gov for U.S. government agencies, .org for organization, .mil for U.S. military, and .net for network). To locate an individual at an organization, a clause (including a person's name and the symbol @) precedes the arbitrary identifier. Combining all the elements, the address and name would read: [email protected].

Another section of the Internet is the World Wide Web. The Web became the inspiration for the explosion of the Internet in the 1990s because this section is capable of transmitting pictures as well as text. The Web, identified after the @ sign by the letters www, transformed the Internet from a static collection of words to the colorful visual display everyone now knows.

Commencing in 1999, the domain naming system was privatized. During the latter part of the 1990s, one firm that had an agreement with InterNIC to assign names, Network Solutions, Inc., was acquired by a company called VeriSign. With that acquisition, VeriSign became the primary registry for millions of domain names. Furthermore, another organization known as ICANN (Internet Corporation for Assigned Names and Numbers) was designated to accredit private registries that in turn allocate domain names. Along with several other international groups, ICANN helped redesigned the big picture for Internet naming procedures in 2001. The combined effort resulted in several important changes, including the creation of a dispute resolution procedure and the creation of several new “top level domains” (including .biz, .name, .info) to ease pressure on the race to claim a name in cyberspace.

Domain Names May Be Used Like Trademarks

While Internet addresses are not trademarks per se, domain names function as a source of identification, much like a telephone number. Some telephone numbers, like 1-800-AMERICAN, 1-800-MATTRESS, and 1 -800-BLUEBOOK, have been held protectable as trademarks.

As a general proposition, for a trademark to be protected in commerce and registered with the PTO, it must be affixed to a good or label and used in commerce. Placing a mark on a box or other consumer item sold to the public or incorporated in advertising is sufficient. But what about cyberspace communications? The Trademark Office has said that a mark displayed on a computer screen is acceptable as evidence of use. Therefore, displaying logos on a computer screen establishes trademark rights. Since the PTO registers on-screen identifications when used in connection with the provision of services, domain names and their related home pages may also serve as marks for the viewing public.

Trademark Disputes Flourish on the Internet

When famous marks are used as arbitrary identifiers, trademark conflicts arise. In the mid-1990s, there were a spate of Internet trademark litigations. One case involved use of the name Kaplan (famed for SAT review courses) by archcom-petitor Princeton Review, Inc. (PRI). Although the registration of kaplan.com by PRI was allegedly a prank, the dispute over its use reached the courts and arbitration. In addition to taking its name for the competitor's address, Kaplan accused PRI of “urg[ingl prospective customers to e-mail ‘KAPLAN horror stories’ to us at [email protected].” For its part, PRI claimed registration of kaplan.com broke no law or rule of the Internet. Its objective was to create an electronic brochure and comment on its competitor. The arbitration panel found for Kaplan and forced PRI to relinquish the name.

Kaplan and PRI were not alone. Although initially only a small fraction of the Fortune 500 companies claimed their name as an Internet address, as businesses awoke to the importance of Internet sites, parties began fighting to protect their names, including

• MTV. The cable service challenged a former employee, a VJ (video jockey), who registered mtv.com as his Internet address to promote music services related to his work for MTV. In the case, which was subsequently settled, the VJ asserted that he used the name with full knowledge and permission of MTV, after MTV saw no need for the address identifier.
• Better Business Bureau. In a case filed in federal court in Kansas City, Missouri, the Better Business Bureau claimed that the assignment bbb.com and bbb.org to Clark Publishing violated its long established trademark rights.
• Knowledgenet. Another trademark complaint involved Knowledgenet, Inc., an IBM subsidiary, against Boone and Co., which requested and was assigned knowledgenet.com for computer-related services, a business already occupied by the plaintiff. In an additional twist, Knowledgenet named Network Solutions as a co-defendant, asserting that its role in assigning the domain name without consideration of trademark law made it contributorily liable for infringement.

In response to the trend to assert trademark rights in domain names and to prevent becoming embroiled in trademark disputes, Network Solutions propounded a domain name policy in July 1995: When anyone seeks a domain name, it would have to affirm that it had the right to use the mark for interactive purposes and that, if a dispute were to arise, it would indemnify and hold Network Solutions harmless from any claims. Further, if a registered trademark owner challenged a domain name assignment, the party to whom the name was assigned would have to justify its use. Failure to satisfy Network Solutions would result in the domain name being withheld. If an objecting party were not registered but had trademark rights and the dispute could not be equitably resolved, Network Solutions could withdraw the name assignment and await a court order or arbitration decision. Network Solutions made clear that it did not believe it had any legal obligation to evaluate trademark rights before making domain name assignments, nor did it have the resources to conduct responsible trademark searches. It believed the domain name assignment process would be unduly burdened by any such effort, increasing costs and materially delaying name assignments.

Nevertheless, as an entity making such allocations, Network Solutions found it difficult to extricate itself from the trademark morass and was regularly joined as a material party to disputes. Coming to Network Solution's (or VeriSign's) aid was ICANN. Taking control of the naming dispute issue, ICANN developed a Uniform Domain Name Dispute Resolution Policy (the awkward acronym UDRP for short). The UDRP, which took effect in April 1999, was imposed by ICANN as a condition in its agreements with firms authorized as registries of domain names. The registries, in turn, required any party seeking a domain name to accept the UDRP process. In brief, whenever a domain name is assigned, the registry making the allocation reserves the right to cancel, transfer, or change a domain name based on resolution of a legitimate dispute. A mandatory administrative proceeding before an “administrative-dispute-resolution service provider” sanctioned by ICANN can be initiated by a party complaining that it, not the domain name assignee, owns the name. The party assigned the contested domain name must participate in the proceeding if

• The domain name is identical or confusingly similar to the complaining party's trademark or service mark.
• The party assigned the domain name has no rights or legitimate interest to it.
• The domain name has been registered in bad faith.

All three elements must be proven by the complainant. In particular, bad faith is defined in the policy. Bad faith means circumstances indicating that the registrant acquired the name to (1) sell it to the complainant, who is the owner of a trademark or service mark or a competitor of that owner; (2) prevent a trademark owner from acquiring it; (3) disrupt the business of the complainant; or (4) create confusion for commercial gain. For more details on UDRP check out http://www.icann.org/udrp/udrp-policy-240ct99.htm.

UDRP is a sensible answer to a nagging policy. It was also dictated by a federal law, adopted in 1999, that is designed to bring an end to the unfair taking of domain names rightfully belonging to more prominent parties. The Anticyber-squatting Consumer Protection Act (ACPA) amends the Lanham Act (the center-piece of U.S. trademark legislation) and prohibits the practice of cybersquatting, a word coined to cover all the sins of those who take domain names in conscious derogation of the rights of trademark proprietors. Simply stated, ACPA decrees that the bad faith exploitation of domain names infringes federal trademark rights. Anyone who adopts a domain name with the intent to take advantage of another's trademark, create confusion, or dilute the value of the mark will be liable for cybersquatting. That activity can result in an injunction ordering the cancellation or transfer of the domain name. Also, a complaining party may seek actual damages and profits, or a statutory claim of $1,000 to $100,000. Domain name registries can be contributorily liable; however, if they adopt the UDRP, they can escape liability. So that lawyers do not go too hungry, ACPA has a savings clause that allows a domain name registrant to defend its squatter's rights on grounds of fair use or free speech. Many of the initial cases involve so-called suck-sites; that is, uses of a trademark in a domain name designed to attract people complaining about the goods or services of the trademark proprietor, à la kaplansucks.com.

Yet, disputes on the Internet will not go away simply because an administrative resolution is feasible or a statute prohibits bad faith acts.

Trademarks on the Internet: legal Quicksand

Trademarks on the Internet pose a legal quicksand for other reasons as well. While famous brand proprietors may have a strong claim to ownership of unique words, owners of a trademark known in a narrow specialty, such as Kaplan, may find their trademarks claimed by similarly named but unrelated parties, quite possibly by total strangers. Because domain names are granted exclusively and nationally, the trademark principle of concurrent use cannot apply in cyberspace.

A related issue is name depletion. Since there can be but one address kaplan.com, the list of available names can be quickly allocated, forcing firms desirous of using a specific name to seek alternatives. Although simply adding one letter, for example, skaplan, creates an entire difierent domain site, it may not relieve the trademark problem of likelihood of confusion as to cyberspace sources.

Another issue waiting in the wings is that of trade dress protection for computer screen images. The “look and feel” questions, which have been analyzed in copyright infringement claims, have a trademark corollary. With the US. Supreme Court holdings that trade dress and color are each entitled to trademark protection, creators of computer screen images may try to protect their display images and screen colors. Core questions raised when seeking to protect screen images will be whether the screen images are functional, whether they establish a distinctive visual impression, and whether they have achieved secondary meaning.

In one of the most ironic trademark proceedings in PTO history, two nonprofit groups that were organized to promote the Internet, the Corporation for National Research Initiatives (CNRI) and the Internet Society, brought a trademark cancellation action to recover public use of the word Internet. Robert Kahn and Vint Cerf, visionaries who worked for the U.S. government during the 1960s when the jumble of federal computers was being organized and personally coined the term Internet from their “internetworking” computers, discovered somewhat by chance that the Trademark Office had granted a federal registration for the word Internet for banking and publishing services to a company called Internet, Inc. Internet, Inc., was owner of the MOST automated teller network, and it sought dominion over the word in connection with all banking services.

So as not to paint the Trademark Office in a negative light, it should be noted that the registration was granted in 1989, before the word became publicly synonymous with the international computer network. On the eve of the mark becoming “incontestable,” and thus subject to fewer bases for legal objection, the CNRI and Internet Society petitioned the PTO to cancel registration of the mark. At the same time, these two opposers, as well as hundreds of other parties using the word Internet in their business activities, filed applications for registration. Pending the resolution of the dispute, whenever the PTO granted a trademark or a service mark to a company whose business involved the Internet, it could not define the goods or services offered as relating to the Internet. That was the trademark of Internet, Inc., and trademark policy and law prohibited the use of a registered mark in the definition of goods or services. So the PTO required all Internet-related applications to utilize the neutral phrase global computer network. Moreover, hundreds of other applicants who sought to register a mark that incorporated the word Internet were put on hold pending the dispute.

After 5 long years of wrangling, dozens of pleadings covering procedural and administrative claims, and numerous preliminary rulings by the PTO, Internet, Inc., finally wearied of its plight and agreed to withdraw its registration. Thus, the men who coined the word Internet and made it part of intellectual property history saved it for all to use.

The Geography of the Internet and Trademarks

Another important trademark phenomenon of the Internet is its international aspect. Electronic communications are not bound by traditional geographic considerations. Because the Internet can be accessed with the touch of a keypad and it stretches across oceans to foreign lands, trademark proprietors find that the territorial integrity of their marks may be breached.

Although traditional trademark law allows different trademark proprietors in New York and Florida to use the same mark, defending exclusive geographic zones in a digital world is difficult. People can communicate as readily with colleagues or customers residing thousands of miles away in foreign countries as with those in the same building.

The degree to which trademarks reiating to new services on the global information superhighway can coexist is becoming clearer. The World International Property Oganization, the international organization that administers treaties (mentioned in the copyright context), is also important for trademarks. With the support of many nations, WIPO initiated its own administrative dispute resolution process. Whenever trademarks have international conflicts, a complainant can initiate a WIPO review of the conflicting assignment.

Transborder communications, whether across state or national lines, also raise the legal issues of jurisdiction choice of law. For example, is an Internet user liable to be sued anywhere its home page can be displayed? When cases arise, what governing law applies—the jurisdiction where the transmission originates, where the transmission is received, or somewhere in between? In one decision, a California couple that operated an “adult” bulletin board was found guilty of transmitting obscenity via interstate telephone lines under Tennessee law and sentenced to several years in prison. In another case, a New York court dismissed a trademark suit against a Missouri business because its only contact with New York was the fact that its home page could be accessed online.

The company eBay became embroiled in an international dispute when a German court determined that the posting of Nazi paraphernalia on its auction site violated German law. Even though the order originated outside the United States, because eBay does business worldwide, it could not let the order stand unchallenged. It went into US. court and obtained a decree setting aside the German order on the grounds that the US. Constitution's First Amendment guarantees allowed it to maintain the material on its website.

Colonel Sander's Kentucky Fried Chicken franchise, now utilizing the more dietetic acronym KFC, discovered that a company in China registered www.kfc.corn.cn using Chinese characters. When KFC challenged, alleging it was already a famous mark in China, the erstwhile domain competitor resisted, denying that the mark was really prominent in China. That dispute persists in Chinese court, as does a comparable claim by Rolex, which is embroiled in a claim over www.rolex.com.cn against a company utilizing the native Chinese language.

For serious trademark owners and users, the message is clear: It is obligatory to pay attention to the details of foreign laws as well as those in the United States, lest they be in for a big surprise.

Moving On

We now have an overview of trademark and many of its practical applications. Trademark and copyright are two of the key pillars of laws governing content rights. But others come into play, most notably Unfair Competition, Privacy and Publicity, Antitrust, Patents, and Trade Secrets. Detailed discussion of these laws is beyond the scope of this book, but a general grounding is necessary to avoid unexpected pitfalls. As we turn to these disciplines, here is an encapsulation of trademark law (Figure 15-1).

Figure 15-1 Core of Trademark

Core of Trademark