Domain Name Disputes

By: Michael D. Stewart


The objections of many to US control over the Internet and the functioning of the domain name system, led to the creation of the Internet Corporation for Assigned Names and Numbers (“ICANN"), a not-for-profit entity established by the United States government to remove the DNS from U.S. Governmental control for the benefit of all nations, and to take over many of the management functions of the DNS.

The United States Government, in its June 5, 1998 Statement of Policy on the Management of Internet Names and Addresses (the “White Paper"), called for the privatization of the DNS “in a manner that allows for the development of robust competition and that facilitates global participation in the management of Internet names and addresses." The need for change in the DNS was seen to arise from 1) dissatisfaction with the absence of competition regarding domain name Registrars; 2) the increasing occurrence of conflicts between trademark and domain name owners, and the fact that the mechanisms for overcoming these were seen as expensive and cumbersome; 3) the call from commercial interests for more formal management of the Internet; 4) increasing desire from non-U.S. interests in participation in the management of various aspects of the Internet; 5) the need for accountability in the decision of whether to add new generic top-level domains (“gTLDs"); and 6) the inappropriateness of U.S. agencies managing and funding commercial enterprises on the Internet.

The White Paper resulted in the formation of ICANN, which now, for the time being, has taken over many of the management functions of the DNS. The ICANN By-laws call for the creation of Supporting Organizations (“SOs") to develop proposals for the improvement of various aspects of the Internet. The initial three SOs were 1) the Address SO - concerned with the system of Internet Protocol addresses, 2) the Protocol SO - concerned with the technical standards that let computers exchange information, and 3) the Domain Name SO. The SOs serve as advisory bodies and have “the primary responsibility for developing and recommending substantive policies regarding matters falling within their specific responsibilities." Whereas the first two SOs relate to the more technical functioning of the Internet, the Domain Name SO (“DNSO") is of particular interest to the intellectual property community.

Within the DNSO, are Constituency groups that were ratified by ICANN. These Constituency Groups are self-organized and made up of interested individuals and entities. According to the ICANN By-laws "[a]ny group of individuals or entities may petition the Board for recognition as a new or separate Constituency." The Constituency Groups make recommendations to, and select members for the Names Council, which is responsible for consensus building, and communicating DNSO recommendations to the Board of Directors. There are also various advisory committees within ICANN as well as an At-Large Membership with an "open and inclusive" membership.

The White Paper also called upon WIPO to develop a process designed to culminate in recommendations concerning domain name issues to be submitted to ICANN. This process resulted in the April 30, 1999 WIPO Final Report. The recommendations contained in the report relate generally to 1) Best Practices for Registration Authorities; 2) Administrative Procedures Concerning Abusive Domain Name Registrations; 3) Exclusions for Famous and Well-known marks; and 4) New TLDs.

A further WIPO domain name Report, WIPO2 RFC-3, Interim Report of the Second WIPO Internet Domain Name Process, April 12, 2001, was published for comment, which deals with the subjects of personal names; International Nonproprietary Names (“INNs") for pharmaceutical substances; names of international inter-governmental organizations; geographical indications, indications of source and geographical terms; and trade names.

The WIPO Final Report stated that “A constant consideration has therefore been to ensure that the recommendations of the WIPO process are practical and do not interfere with the functionality of the Internet by imposing unreasonable constraints on the high-volume and automated operations of domain name registration authorities,"

One of the first actions taken by ICANN was the introduction of competition among Registrars in providing registration services for the .COM, .ORG and .NET gTLDs. Previously, Network Solutions, Inc. (“NSI"), under contract with the United States Government, had been the only Registrar authorized to provide these services. ICANN has now accredited numerous Registrars to provide competing registration services.

To ensure uniformity in the resolution of domain name disputes, ICANN has made accreditation to provide domain name registration services that all Registrars must contractually agree to be bound by ICANN's Uniform Dispute Resolution Policy, outlined below.

When NSI was the only domain name Registrar, in order to prevent the increasing occurrence of disputes involving domain names, NSI implemented its “on hold" procedure. Under this procedure, a trademark owner, with a registered mark identical to the domain name in question could apply with NSI to place the domain name “on hold," so that no one could use the domain name until the dispute was resolved, either amicably or through a lawsuit.

The NSI policy did not allow comparison of the goods and services covered by a trademark in relation to those associated with a given domain name. The NSI policy lead many trademark holders to engage in “reverse domain name hijacking," by threatening to place domain names being used in good faith for goods/services unrelated to the trademark holder’s mark “on hold," unless the domain name was transferred to the trademark owner.

Under the ICANN Registrar Accreditation Agreement, a Registrar must agree to abide by the Uniform Domain Name Dispute Resolution Policy (“UDRP"), which was adopted on August 26, 1999. The implementation documents for this policy were approved on October 24, 1999. Updates to these documents, if any, can be accessed on the Internet at Uniform Domain Name Dispute Resolution Policy; and Rules for Uniform Domain Name Dispute Resolution Policy. The first day in which complaints could be submitted to accredited Dispute Resolution Providers was on December 1, 1999, for disputes involving domain names registered with Registrars, for various reasons, other than America Online, the NameIT Corp. and NSI. The first day complaints could be submitted in respect of domain names registered by these other three Registrars was on January 3, 2000.

The Uniform Domain Name Dispute Resolution Policy is incorporated by reference into every Registrar’s Registration Agreement with domain name Registrants and sets forth the terms and conditions for resolving disputes between the Registrant and another party concerning the registration and use of a name.

The Policy provides that a domain name Registrant is required to submit to mandatory administrative (arbitration) proceedings if a third party complains with respect to a .COM, .NET or .ORG, and now a .BIZ, .INFO or .NAME domain name, to one of the ICANN accredited Dispute Resolution Providers. Current accredited Dispute Resolution Providers include are WIPO, Consortium, the National Arbitration Forum, and the CPR Institute for Dispute Resolution. Each provider has its own supplemental rules of procedure. A Complainant must assert to the chosen Provider that:

(i) the domain name is identical or confusingly similar to a trademark or servicemark in which the complainant has rights;

(ii) the Registrant has no rights or legitimate interests in respect of the domain name; and

(iii) the domain name has been registered and is being used in bad faith.

Evidence of a bad faith registration, without limitation, includes:

(i) circumstances indicating that the domain name was registered primarily for the purpose of selling, renting, or otherwise transferring the domain name 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 costs related to registering the domain name; or

(ii) the domain name was registered in order to prevent the Complainant from reflecting the mark in a corresponding domain name, provided that there is a pattern of such conduct; or

(iii) the domain name was registered primarily for the purpose of disrupting the business of the Complainant; or

(iv) the Registrant intentionally attempted to attract, for commercial gain, Internet users to his web site or other on-line location, by creating a likelihood of confusion with the Complainant’s mark.

As a defense to a complaint, any of the following circumstances, if found by the Panel, indicates the Registrant's legitimate interest in the domain name:

(i) the Registrant's use, or demonstrable preparations to use the domain name in connection with a bona fide offering of goods or services; or

(ii) the Registrant (as an individual, business, or other organization) has been commonly known by the domain name, even if he has acquired no trademark or service mark rights in the name; or

(iii) the Registrant is making a legitimate noncommercial or fair use of the domain name, without intent of commercial gain, to confuse consumers or to tarnish the trademark or service mark at issue.

The remedies available under the UDRP are limited to requiring cancellation of the domain name or the transfer of the domain name to the Complainant. Either party can file an action in a court of competent jurisdiction at any time during a pending UDRP action. The Complainant has the choice of either a one-person or a three-person panel. If the Complainant chooses a one-person panel, the domain name Registrant is given the opportunity to choose a three-person panel, in which case the domain name Registrant will be required to pay half of the costs associated with the procedure. A Complainant or Respondent will usually choose a three person panel when they believe that they can secure at least one panelist who has ruled favorably in similar cases because a three person panel is comprised of a panelist nominated by each side, with the third panelist selected, if possible, from ranked lists submitted by the parties, but ultimately chosen by the dispute resolution provider.

Another important change that has benefitted trademark practitioners, particularly in the United States, was a United States law, which amended the Lanham Act by adding new Section 43(d), known as "The Anticybersquatting Consumer Protection Act (“ACPA"). The ACPA was enacted into law on November 29, 1999 and, except for the damages section, applied retroactively.

Section 43 (d)(1)(A) states that:

"A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person--

(i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section

(ii) registers, traffics in, or uses a domain name that -

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark."

Liability under this section depends on whether the person registered or used the domain name in “bad faith", and includes a provision whereby the complainant may elect at any time before final judgment to recover either actual damages and profits, or an award of statutory damages in an amount of not less than $1,000 and not more than $100,000 per domain name in the discretion of the court. Thus, unlike the stated policy of ICANN’s UDRP, a domain name Registrant can be liable for merely registering a domain name in bad faith, without the necessity of use. It should be noted, however, that under the UDRP, certain panelists have found bad faith in cases of mere “passive holding" of a domain name.

Another important section in the ACPA is Section 43(d)(2) under which the owner of a mark may file an in rem civil action against the domain name itself in the judicial district in which the domain name Registrar, domain name Registry, or other domain name authority that registered or assigned the domain name is located, if the court finds that the trademark owner is not able through due diligence to obtain in personam jurisdiction over the person who would have been the defendant. The remedies available under this action are limited to a court order for the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark.

In determining whether a registration was in bad faith, a court may consider the following nine non-exclusive factors:

(I) the trademark or other intellectual property rights of the person, if any, in the domain name, which takes into account the fact that various persons or entities can have the coexisting right to use a particular name. For example, an Apple Computer and an Apple shipping company would both have the theoretical right to register and use the APPLE.COM domain name. Since there can only be one APPLE.COM in use at a given time, it certainly pays to register your domain name early.

(II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person.

(III) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services.

(IV) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name which recognizes that under certain circumstances a person can use another’s trademark in a domain name in a lawful way. Examples of such uses would be parody and comparative advertising.

(V) 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.

(VI) the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct.

(VII) the person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure to maintain accurate contact information, or the person's prior conduct indicating a pattern of such conduct.

(VIII) the person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties.

(IX) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous.

Bad faith intent will not be found where the court determines that the person believed or had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.

In any civil action involving registration, trafficking, or use of a domain name, a court may order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the trademark.

Experienced counsel should be consulted and utilized in determing the best method of resolving disputes involving domain names.

The law Offices of Michael D. Stewart can assist you in these and a variety of other issues. You may contact us at Michael D. Stewart, Esq. * Law Offices of Michael D. Stewart * 335 S. Biscayne Blvd., #UPH00 * Miami, Florida 33131 * * * 1-305-394-8546 Telephone * 1-866-438-6574 Toll-free * 1-866-380-8986 Facsimile

© Copyright 2006-2007 Michael D. Stewart

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