Trademark Law on the Internet: Will It Scale? The Challenge to Develop International Trademark Law

David W. Maher <>
Sonnenschein, Nath & Rosenthal

Keywords: trademarks, law, international law, trademark law, alternative dispute resolution, IAHC, Domain Name System.



The rapid growth of the Internet has had at least one unintended effect: a serious collision between the efficient functioning of the domain name system (DNS) and the claims of trademark owners. The architects of the DNS originally attempted to sidestep trademark issues (cf. RFC 1591), but the courts in the U.S. and other countries have clearly recognized that domain names can have trademark implications. In order to reduce or eliminate the conflicts, proposals have been made to change the DNS so that all domain names are meaningless, perhaps random combinations of letters and numbers (analogous to telephone numbers); other proposals call for the creation of new top-level domains. Moving to a DNS with meaningless word and number combinations would likely make all the trademark problems disappear, but this proposal seems to have almost no support. The proposals for creation of new top-level domains will alleviate some of the trademark problems that have already arisen, but there remain other problems that may be equally difficult to resolve.

In a previous paper, "Trademarks on the Internet: Who's in Charge?" ( I reviewed the present status of various parties' claims to govern (or even "own") the Internet. In brief summary, there are only de facto operational bodies that perform various essential administrative functions. There is no governmental body anywhere in the world that controls the administration of the Internet. The answer to the question "who's in charge?" is: "no one."

In the field of intellectual property, national law (and in the U.S., state law) has already been applied to a number of legal problems that have arisen because of transmissions on the Internet. There are a number of well-publicized examples of the exercise of local jurisdiction over the content transmitted on the Internet. The issues of defamation, copyright infringement, trademark infringement, and the distribution of obscene or pornographic material have all been dealt with by courts in many jurisdictions. This paper will not attempt to survey the law on these issues but will focus rather on the vexing question of how to accommodate the interests and rights of trademark owners in the DNS and in the overall administration of the Internet.

Why trademarks are important

Numerous contributors to the ongoing debate about the DNS on various Internet e-mail discussion lists (e.g., "newdom" and "domain-policy") have argued that the DNS was never intended to cope with trademarks and that domain names were simply intended to provide an easy mnemonic device for recalling the addresses of users. The argument is made that domain names have no trademark significance and that all the controversy over trademarks in domain names is simply misplaced. This argument is no longer heard so frequently in view of the widespread use of domain names by commercial users for marketing purposes. The public at large has come to associate well-known trademarks (e.g. "IBM," "Kraft," etc.) with domain names and Web sites associated with these companies, such as "" and "," respectively. The overwhelming success of the Internet in attracting users, especially users who are no longer at the level of engineering sophistication that was common among the Internet pioneers, has created a situation that was never foreseen by the architects of the DNS. When billboards and advertising panels on buses include the URLs of major national brand advertisers, the argument that domain names have no trademark significance has become irrelevant to the real world.

In light of the present situation, it is clear that the organizations responsible for allocation and registration of domain names must take account of trademarks and trademark law. The question that then must be considered is whether and how trademark law can accommodate the technical requirements of the Internet. One of the greatest achievements of the designers of the technical protocols, such as TCP/IP, that enable the Internet to function is the scalability of these protocols--their ability to function as well with millions of users as with hundreds. Putting the trademark question in computer language, the question now is "Will trademark law scale?"

Before turning to a more detailed consideration of the problems in trademark law, it might be well to consider why trademark law is important in the first place, both on the Internet and in the rest of the world. The International Trademark Association (INTA), a U.S.-based organization that represents the interests of trademark owners from the entire world (approximately half the members are non-U.S.), adopted a resolution a number of years ago to address an argument that trademark law is important only to major advertisers in industrial countries and should not concern the rest of the world. The INTA resolution refutes this argument and sets forth the principles that should apply to the use of trademarks in the DNS:

Bearing in mind the increased attention trademarks have been receiving in developed countries and in various international bodies; and bearing in mind the tendency in certain countries to alter traditional concepts of trademark protection;
It is determined advisable to record that:
  1. An adequate trademark system is very important to consumers in developing countries, because it permits these consumers to rely on a particular standard of quality associated with the trademark and identify the origin of the trademarked goods, rather than have no means of distinguishing goods from different sources.
  2. An adequate trademark system is very important to enterprises in developing countries because it permits them to develop domestic and foreign markets for their products. Without an adequate trademark system, it is very difficult to start a new business or introduce a new product line and compete with established foreign and domestic enterprises, particularly in consumer product lines.
  3. Therefore, trademark protection is at least as important for the consumers and enterprises of developing countries as it is for consumers and enterprises of developed countries.
  4. Also, a trademark may be of particular assistance in the transfer of technology to enterprises in developing countries. The license recipient will have to acquire know-how and technical skills in order to maintain the quality standard required by the license supplier, and the licensed trademark, particularly if it is known in his country, will help the license recipient develop the market faster than would otherwise be possible.
  5. The question of the significance of trademark systems in developing countries is worthy of further investigation and analysis by The [International] Trademark Association, providing essential trademark information to national and international governmental bodies and particularly enterprises in developing countries.

The problems of scaling trademark law

The collisions between trademarks and the DNS are occurring more and more frequently. The first type of collision is the demand for the same domain name by multiple owners of the same mark (the "access conflict"). This problem would be bad enough if the only conflicts arose among owners of registered trademarks. In the U.S., it is exacerbated by U.S. legal recognition of so-called "common law" marks. Judicially recognized rights in a "common law" mark in the U.S. arise from use of the mark alone. There is no registration requirement of any kind. As a result, there can be multiple users of marks such as "Acme" or "Eagle" who have never registered the marks. Under the present DNS, however, there can be only one "", putting the "Acme" owner who got there first and registered "" in a significantly advantageous position.

In most countries outside the U.S., there is no concept comparable to "common law" marks; most countries require that a mark be registered in order to gain recognition by the courts and other government bodies. Registration systems, however, do not solve the multiple ownership problem. There are multiple federal registrations in the U.S. of some popular names, for example "Genesis", held by different trademark owners for various products and services. The same situation prevails in other countries.

Taking "Genesis" as an example, in the U.S. there are nine different owners of this mark in just one of the 42 classifications of products and services recognized by the trademark authorities of most countries throughout the world. National trademark law has been able to accommodate these multiple registrations because the marks function in the marketplace without colliding with each other. According to the test established by U.S. trademark law, there is not, in practice, a "likelihood of confusion" as to the sources of the various goods and services offered by the different owners of the same mark. It should be noted that this can change. Actual confusion may occur in the future; one user may abandon the mark or another user may embark on an expansion of its product line that causes confusion with an existing user. Trademark owners may be forced to resort to litigation as the situation changes, but the registration system by and large works well in the U.S. and in other countries.

The DNS, as presently structured, allows no such accommodation for different owners of the same mark. Proposals have been made for the subdivision of ".com" into the internationally recognized trademark classifications of goods and services, allowing registration of "," "," and so on. Even this expansion of the DNS would not accommodate the multiple owners of "Genesis" in a single classification, nor would it accommodate the owners of common law marks.

Another area of collision is the practice referred to as "piracy" and "extortion," on the one hand, or "free enterprise" on the other, depending on one's point of view. A number of entrepreneurs have registered domain names, using trademarks (some famous, some not so famous) that belong to others. These entrepreneurs have then offered to transfer the domain name registration, for a price, to the owner of the trademark.

Yet another type of collision occurs when a trademark owner who does not have a domain name registration believes that the use of the identical mark by another on the Internet is itself an infringement of the first owner's trademark rights (the "infringement" conflict).

The best-known example of an attempt to resolve these conflicts is the dispute resolution policy of Network Solutions, Inc., the administrator of the ".com" domain. The policy allows the owner of a U.S. federal or other national registration to put "on hold" a domain name registration held by another party that has not registered the name as a trademark. This policy is applied even though the domain name registrant may have acquired significant and well-recognized common law trademark rights. The policy has led to numerous lawsuits involving trademark owners who are concerned about access or infringement or both.

Collisions on the international level are occurring where the same trademark is owned by different parties in different countries. This can lead to an access conflict or an infringement conflict or both, with the added complication that separate national trademark laws, which may be significantly different, govern the issues.

All of these collisions of trademark law and the DNS have already resulted in litigation. Most lawsuits have arisen in the U.S., probably reflecting the fact that there are far more users of the Internet in the U.S. than in any other country. However, there has also been litigation in England, Germany, and a number of other countries, and it seems fair to assume that this curve will continue geometrically, following the expansion of the Internet itself. This paper will not attempt to examine the current state of national law as reflected in these court cases in the U.S. or elsewhere.

It should be noted that the legal situation is complicated by the fact that there are other legal issues in addition to the technical trademark questions. The trademark-DNS cases that have already arisen present intriguing new problems about jurisdiction over the parties. In the U.S., a domain name owner in California may be the subject of a lawsuit filed by a trademark owner in New York. U.S. law has well-established statutory and constitutional requirements (the "long-arm" and "due process" concepts) that have been applied to decide whether the Californian must come to New York to defend against the suit or the New Yorker must go to California.

In the international arena, there are no such well-established rules. The trademark owner in India who finds that its mark is being used as a domain name in ".com" by a U.S. company probably cannot force the U.S. entity to come to India to defend a claim of trademark infringement (assuming that the U.S. company is not doing business in India). Conceivably the Indian company can go to the U.S. and file a lawsuit in a court having jurisdiction over the U.S. company, but the expense may be prohibitive. What if the Indian company persuades the Indian courts to consider the claim even in the absence (in a physical sense) of the U.S. company? If the Indian company wins a judgment from the Indian court, it might then take its judgment to a U.S. court that has jurisdiction over the U.S. company, and ask the U.S. court to recognize the Indian judgment as a matter of "comity," a well-recognized principle of international law. Comity, however, will probably not extend this far; U.S. courts can be presumed to be dubious about enforcing an Indian judgment rendered in an action where the U.S. defendant was not present, especially if the only contact between the U.S. defendant and India was its use of a ".com" domain name.

Where multinational companies are doing business in jurisdictions outside their home country, the courts of the countries where business is being conducted will generally have jurisdiction, and each court will apply its own national law. This is a problem that has already been faced by multinationals in other legal contexts, but it becomes more complex because of the global scope of the Internet. A court in Malaysia may have jurisdiction over a German company because of the German company's factory in Malaysia, and the German company will take care to obey local law in its business affairs in Malaysia. However, if the German company is accused of violating Malaysian law based on something available on its Web site originating in Germany, the German company may not consider it fair that it must answer in Malaysia for activity that is perfectly legal in Germany.

Returning to trademark law, the question of applying a universally accepted body of "international trademark law" has great appeal. However, there is no generally accepted international law of trademarks. Although national trademark law is similar in nearly all countries of the world, there are important differences that make it impossible to appeal to universally accepted principles when disputes arise in an international arena.

A court today, in most instances, applies the law of the nation where the court is located to disputes that come before it. An important exception is that, when the parties to the lawsuit have agreed upon a choice of law, most courts will respect that choice, so long as there is some reasonable connection between the transaction and the law that is specified.

Conflicts in national trademark law

Although there are basic similarities among the various national laws governing trademarks, the differences introduce an element of uncertainty that can be a matter of real concern to the owners of trademarks, especially those whose trademarks are well-known and international in scope. These marks, known generally as "famous" marks, are usually those that are supported by the largest expenditures for advertising and marketing.

The major differences in national treatment of trademarks are in the areas of dilution, geographical terms, famous marks, rights of publicity, and religious and social issues.


Dilution is a concept of trademark law that allows the owner of a famous mark to assert an infringement claim against an entity using the same mark even though there is no competition between the two parties. In U.S. law, it is defined as "the lessening of capacity of a famous mark to identify and distinguish goods or services." By contrast, infringement claims are usually based on confusion or likelihood of confusion, which arises when there is competition or potential competition between two trademark users. The rationale for dilution protection comes from two concepts of unfair competition--first, that a mark's strength is diluted when a newcomer gets a free ride on the reputation established by the first user, and second, that a mark can be "tarnished" by being linked to products of lesser quality or by being used in a negative way.

Dilution is now recognized as part of U.S. statutory law. The federal Dilution Act took effect in 1995 and establishes criteria for dilution protection:

Until recently, the dilution concept has not been part of the law of many countries other than the U.S. This situation is now changing as a result of certain international treaties that require signatory nations to afford dilution protection to trademark owners.

Geographical terms

Many geographic identifiers have, over the years, become identified with products and services and are protected in their country of origin. Well-known examples abound in the food and beverage areas: Chablis wine, Chianti wine, Camembert cheese, and Champagne sparkling white wine. It is equally well known that countries outside the country of origin have generally tended not to respect the rights of the original geographic region. Even today, in the U.S., gastronomic crimes are committed by the sale of sparkling white wine under the name "Champagne" with little or no relation to the famous product of the Champagne region in northern France. This gastronomic crime has no remedy in U.S. courts; despite years of effort by the French government, "champagne" is considered an unprotected descriptive term for sparkling white wine in the United States.

Famous marks

As noted above, famous marks are generally given a broader scope of protection than the more common terms used as trademarks. "Kodak" is an example of an arbitrary, coined term that has become famous on a worldwide basis. Protection of famous marks has long been a controversial subject in international commerce. Developing countries in particular have tended to disregard the fame of famous marks and have turned them into generic terms to describe products or services from various sources. The World Intellectual Property Organization (WIPO) has established a program to harmonize the laws of its member nations on this subject, but the effort still has a long way to go. Trademark treaties have also brought about increased protection for famous marks in many countries.

Rights of publicity

Closely related to the trademark arena are so-called rights of publicity--the rights of publicly prominent persons to prevent the use of their names and likenesses for commercial purposes. This is also a developing area of law, and the scope of protection for individuals' names varies widely from country to country.

Religious and social issues

Probably the most difficult and intractable of all problems of conflicting national law is the question of protection (or lack thereof) for religious terms and names. Harmonizing the conflicting linguistic and naming issues of Buddhism, Confucianism, Christianity, Hinduism, Islam, Judaism, and Taoism, to mention only the most populous world religions, is likely to be as easy as bringing lasting peace to the areas where religious wars are still being fought. Social issues, such as what constitutes obscenity, and commercial and intellectual property issues, such as the protection afforded to patented therapeutic drugs and their names, also offer a fertile field for disagreement on an international scale. These disagreements can and will spill over into the DNS, and there is no body of international law to offer guidance to tribunals that will decide the questions.

New approaches to internationalizing trademark law

The final report of the Internet International Ad Hoc Committee (IAHC), published on 3 February 1997, provides for expedited online mediation and administrative challenge procedures for disputes arising from the assignment of second -level domains in the new generic top-level domains. The two procedures will be administered by WIPO, the organization best equipped to do the job. Although the two procedures do not preclude resort to litigation in the courts, they are designed to provide a fair and efficient means of dispute resolution that should have far-reaching effects.

The IAHC has established a new category of generic top-level domains (TLDs); initially there will be seven, and in the future many more. When applicants are assigned second-level domain names, information about the registrations will be available on the Internet, so that trademark owners (and others) will have prompt access to information about new registrations.

Under the expedited online mediation procedure, a WIPO mediator will be available to mediate, through e-mail submissions, disputes between holders of second-level domain names and parties who are aggrieved by the assignment of the name. The aggrieved party could be a trademark owner or anyone else who objects to the assignment. The mediator will make a recommendation for resolution of the dispute; the recommendation will not be published and will not be binding on the parties. However, the U.S. experience with mediation as one of the new alternative dispute resolution procedures has demonstrated that a neutral mediator can often point out grounds for settlement of disputes that the parties will accept.

The other new procedure is more structured, and has the significant difference that the outcome will be binding within the DNS. Under the administrative domain name challenge procedure, an aggrieved party can, within 60 days following assignment of a second-level domain name, file a complaint with a neutral panel of trademark experts selected from countries other than the countries of the parties. Proceedings will be open for public comment, and may be conducted by e-mail or face to face, as the parties prefer. A quick decision for suspension of a domain name registration will be available, and, in any event, a final published decision will be made within 30 days. The final decision could result in cancellation of the domain name registration, or a decision that the name involves a famous mark, or a decision that the name is to be excluded from all or one or more of the generic TLDs. This decision, which will be subject to an administrative appeal, will be binding on all registrars of domain names.


The scalability of trademark law is still uncertain, but the Internet, and the proliferation of domain names, are making the limitations of national laws and the absence of an accepted body of international law unacceptable to Internet users as well as trademark owners. The IAHC report and the documents implementing the report explicitly state that the new administrative procedures are not intended to deprive anyone of rights under existing law. However, the self-regulation of the generic TLD registrars, as carried out by the deliberations and public decisions of the administrative challenge panels, should at least point the way toward a new and creative approach to the resolution of trademark problems on an international scale.