Trademarks and Domain Names: The New Remedies
They may be better than you think
By Carol Anne Been <email@example.com>
and David W. Maher <firstname.lastname@example.org>
There are new remedies available for infringement of trademarks arising from registration and use of second-level domain names in the Internet's domain name system (DNS). The much maligned, but much used, Dispute Policy of Network Solutions, Inc. (NSI), is now history. It may be mourned by the owners of registered trademarks, but most trademark owners will find that the new arsenal of weapons against infringement are perhaps even better, especially when dealing with the cyberpirate, or cybersquatter.
For the uninitiated, a bit of history to begin. The DNS is a global system for identifying networks connected to the Internet. The top-level domains include the familiar .com, .net, and .org, as well as the two-letter country-code top-level domains (ccTLDs) such as .uk (United Kingdom), .de (Germany), and .cn (China). There are approximately 250 ccTLDs. All top-level domains are equally accessible anywhere in the world. Second-level domains are the names immediately to the left of the dot in the top-level domain. For example, in sonnenschein.com, the top level is .com and the second level is sonnenschein. Trademark infringement issues arise from the use of names and marks in the second level. Cybersquatting and cyberpiracy are the common terms for the bad-faith registration of another's name or mark by the registrant of a second-level domain name.
The year 2000 opened with both a new anticybersquatting law in the United States and a new domain-name dispute-resolution policy adopted by the Internet Corporation for Assigned Names and Numbers (ICANN). Both the law and the dispute-resolution policy target bad-faith registration of domain names. The dispute policy formerly administered by Network Solutions has been replaced completely by the new ICANN policy.
On November 29, 1999, an omnibus intellectual property law went into effect that included the Anticybersquatting Consumer Protection Act. This act makes the bad-faith registration of domain names in the .com, .net, and .org domains a new type of trademark infringement. By its terms, the act applies to all domain names assigned by any registration authority, but there are as yet unresolved jurisdictional questions regarding remedies for infringement arising from registration in a ccTLD. If the registration authority of a ccTLD is located outside the United States, it seems unlikely that the act would apply unless jurisdiction were available on some other grounds.
Under the law, which is codified as new section 43(d) of the Trademark Act (Lanham Act), anyone who in bad faith registers, traffics in, or uses a domain name that infringes or dilutes another's trademark has committed trademark infringement. Factors involved in assessing bad faith focus on activities typically associated with cyberpiracy or cybersquatting, such as whether the registrant has offered to sell the domain name to the trademark holder for financial gain without having used or intended to use it for a bona fide business; whether the domain-name registrant registered multiple domain names that are confusingly similar to the trademarks of others; and whether the trademark incorporated in the domain name is distinctive and famous. Other factors are whether the domain name consists of the legal name or common handle of the domain-name registrant and whether the domain-name registrant previously used the mark in connection with a bona fide business. The complaining trademark owner does not need to own a trademark registration for the mark that was incorporated into the domain name.
The act does not provide recourse against incorporation of another's trademark into a domain name on legitimate grounds or under the belief that the use was a fair use or otherwise lawful.
If bad-faith cyberpiracy is established, the trademark owner may be entitled to an order requiring forfeiture or transfer of the domain name, as well as the remedies available in other trademark cases: damages, profits, and fees. In addition, the trademark owner may elect to recover statutory (presumed) damages from $1,000 to $100,000 per domain name in lieu of actual damages and profits. Statutory damages, although long available for copyright infringement, are a new form of remedy in trademark law.
The act also protects a domain-name registrant from a trademark owner who knowingly and materially misrepresents to a registrar that a domain name infringes on a trademark. Remedies available to the domain-name registrant are reactivation of the domain name and damages against the trademark owner.
For those situations when the domain-name registrant cannot be identified or found despite a reasonable effort, the act allows an in rem action against the domain name itself to obtain forfeiture or transfer of the domain name.
Two decisions under the act give us some insight into its application. In what appears to be the first decision under the act, in late January 2000, a federal magistrate recommended to a Virginia federal judge that a default judgment be entered against two dozen domain names that were the subject of an in rem action, which would make the names transferable to the plaintiff, Bell South. In the first appellate decision under the act, the Second Circuit federal appeals court applied the act to a case pending on appeal. The court held that the defendant had registered a domain name that incorporated the name of the defendant's competitor and then sold the domain name to its subsidiary in a different line of business to keep the domain name away from the competitor. While the court noted that those circumstances did not fit neatly into the factors enumerated in the act, it found bad faith in this conduct.
The act has some advantages: it provides a basis for a temporary restraining order or preliminary injunction prior to full adjudication, it allows damages, and it allows all trademark and unfair competition claims to be brought in one forum. The disadvantage of the act is that it entails all of the usual costs of litigation in a U.S. federal court. For parties who would prefer to avoid the expense and delay of litigation, the ICANN policy is a viable, speedy alternative.
ICANN Uniform Domain Name Dispute Resolution Policy
On October 24, 1999, a new Uniform Domain Name Dispute Resolution Policy was promulgated by ICANN, a California not-for-profit corporation that has assumed some of the duties of administration of the DNS. ICANN operates under close supervision by the U.S. Department of Commerce. NSI, the largest domain-name registrar, adopted the ICANN policy shortly thereafter, and in November 1999 NSI ceased processing disputes under its old policy. Domain names that were placed on hold under the old NSI policy are now being reactivated, and parties may seek relief under either the new ICANN policy or the new Anticybersquatting Consumer Protection Act. The ICANN policy differs from the prior NSI policy-which had been in effect since 1996-in three key respects. Under the new ICANN policy:
To assess bad faith, the ICANN policy considers factors similar
to those listed in the new U.S. act. Registering a domain name
for the purpose of selling or renting it to the trademark owner,
or to prevent the trademark owner from registering that domain
name, or for the primary purpose of disrupting commerce or diverting
customers is indicative of bad faith. Legitimate registration
of a domain name may be shown by preparation to use the domain
name in connection with bona fide business, by incorporation into
the domain name of a name by which the domain-name holder is commonly
known, or by use of the domain name for a noncommercial purpose
or other fair use with no intent of commercial gain or of tarnishing
a mark. The specific goods and services of the parties involved
may be taken into account.