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TEXASTEXAS BUSINESS ◆◆◆ REVIEW Bureau of Business Research • McCombs School of Business • The University of Texas at Austin JUNE 2001 he development and protection, than going directly to the Web site. “Location, Tthrough intellectual property rights, Someone wanting to find Dell Com- of brand image in cyberspace is an area puter Corporation, for example, might Location, of particular interest to researchers.1 type in dell.com as a quick way to find Much of this interest in Internet brand the firm’s Web site. An effective domain Location” in image focuses on domain names and the name translates into more Internet domain name system (DNS). Comput- customers accessing and doing business Cyberspace ers route actual data packets according with a firm. In essence, a registered to Internet protocol addresses (e.g., domain name is to Internet commerce E-Commerce 172.356.21.741), but these numbers what “location, location, location” is to are difficult for people to remember. traditional brick-and-mortar businesses. and the Domain The domain name system was devel- The registration of domain names is Name System oped so that easily remembered names easy. Numerous domain name regis- (e.g., www.yourcompany.com), rather trars, such as Network Solutions or than their numeric equivalents, could Register.com, will register a “second be used as address locators. level” domain name for an applicant. With the growth in electronic com- Typically, this refers to the letter string by Emerson H. Tiller merce, the issues surrounding DNS have following the “www” prefix and preced- multiplied and become global in nature. ing the various top level domain (TLD) Bureau of Business Research Many Texas companies have found Fellow and Associate Professor themselves in the middle of domain Business, Technology, and Law name controversies as they establish an University of Texas at Austin online presence and develop, or move, A Glossary of Acronyms their companies and product brands on the Internet. DNS domain name system TLD top level domain ccTLD country code top level domain What’s in a Name? ICANN Internet Corporation for Assigned Names and Numbers Like a trademark, a domain name is a UDRP Uniform Domain Name Dispute valuable asset in a firm’s communica- Resolution Policy tions and marketing strategy. Domain ACPA Anticybersquatting Consumer names establish the firm’s persona and Protection Act expedite transactions. Without intuitive WIPO World Intellectual Property domain names, customers might spend Organization valuable time navigating through NAF National Arbitration Forum guides, indexes, and search tools, rather Texas Business Review 1 June 2001 suffixes such as “.com” and “.net.” The Table 1 domain names are usually assigned to Domain Name Registrations the applicant on a first-come-first-serve July 1998–January 2001 basis, regardless of any trademark rights United Tsotal as of Texa World that the applicant may or may not have States on the word or letter string registered. In addition, there are more than 200 J9uly 1998 887,19 1,409,53 3,282,117 country code top level domains (ccTLDs). These include country J0anuary 1999 1,61,95 2,566,275 5,504,151 identification suffixes; for example, “.il” stands for Israel, “.ca” for Canada, and J0uly 1999 2051,55 4,024,10 9,098,066 so forth. Because of their international presences, many companies also regis- J0anuary 2000 3724,85 5,357,52 13,402,448 ter their trademarks in these ccTLDs. This gives the company the appearance J0uly 2000 4087,40 8,794,30 23,864,611 of being local—as with compaq.ro for Compaq Computer in Romania—and J0anuary 2001 6079,65 13,310,65 33,045,397 prevents international “cybersquatting.” (The cybersquatter is someone, other Table 2 than the company holding the trade- Number of .com Domains by State The numerous varia- mark, who registers a domain with the July 1998 and January 2001 intent to sell it to the trademark holder tions on domain July January Percentage or to use it otherwise to the detriment State names make it difficult of the trademark holder.) Some compa- 1998 2001 change nies also register ccTLDs to take for any one company C4alifornia 3001,63 25,398,45 69 advantage of the possible alternative to capture all possible meanings. For example, .tv or .md stand N0ew York 1009,99 9023,75 74 names that might for the countries Tuvalu and Moldava but have obvious alternative uses. identify or relate to The growth in the number of domain F0lorida 906,66 7246,65 67 the company or its name registrations has been phenom- T9exas 807,19 6979,65 67 product in cyberspace enal (table 1). As of April 2001, the total number of domains registered worldwide stood at 35 million, 22.4 I1llinois 504,01 4211,75 66 million of which are in the popular Source: Matthew Zook, Internet Geography Project, “.com” top level domain, 4.2 million in http://socrates.berkeley.edu/~zook/domain_names/ the “.net” TLD, and another 2.7 million (reported on Web site, April 14, 2001, UC Berkeley). in the “.org” TLD. Texas lists fourth— behind California, New York, and Florida—among the top five states in domain name registrations (table 2). (AOLTimerwarner.com, AOLTW.com, Furthermore, Houston, Dallas, and for example) just prior to the merger of Austin all show substantial numbers of the two companies and has since registrations compared to other cities. registered many more. The multitude of The numerous variations on domain variations—along with the fact that names (such as www.your-company- some companies and individuals, name.com) make it difficult for any one including cybersquatters, “beat” trade- company to capture all possible names mark holders to the domain name that might identify or relate to the registration of their trademarks or company or its product in cyberspace. closely related letter strings—has AOL registered more than twenty brought companies that own trade- variations of AOL-Time Warner marks in conflict with others. Texas Business Review 2 June 2001 Domain name conflicts come in the corporation. This process is much various forms. Some result from mere less expensive than going to court, and speculation, i.e., domain registrants because everything can be done electroni- hope that trademark owners will pay cally, the arbitrators are universally large sums of money for the domain available. name. Some alleged cybersquatters are ICANN decisions are based on the competitors, registering the domain Uniform Domain Name Dispute Reso- name to generate visitors who would lution Policy (UDRP). When registering otherwise go to the trademark holder. a domain name in “.com,” “.net” or Domain variations on “Playboy,” for “.org,” applicants must now agree to the example, proliferated as competing policy. Some countries also use the adult sites attempted to draw traffic UDRP for disputes within their indi- from Playboy Enterprises. Disgruntled vidual ccTLDs. The UDRP requires that employees, dissatisfied customers, and the domain registrant submit to ICANN consumer protection groups have also arbitration if an individual or a company registered domains incorporating the brings a complaint to ICANN about the trademarks of others. Occasionally, ownership rights to the name. The noncompeting businesses have similar UDRP requires that a domain name be names or trademarks that can create transferred to the trademark holder or confusion when reduced to a single domain cancelled altogether if the registrant: name. Consider that Delta Airlines, Delta Faucets, and Delta Dental all own • has registered a domain name that is Many companies trademarks on Delta, with Delta Airlines confusingly similar to a trademark, have paid thousands, holding the domain name delta.com. • has no legitimate interest in the Cisco Systems, rather than American domain name, and if not millions, of Airlines, held the domain american.com • has acted in bad faith in registering dollars to individuals after purchasing a small company with and using the domain name. or other companies that domain name. Many companies have paid thousands, if not millions, of All three conditions must apply. What for particular domain dollars to individuals or other companies constitutes “confusingly similar,” for particular domain names. “legitimate interest,” and “bad faith” is names. part, the ICANN arbitration panels have interpreted these provisions in the favor Resolving Current and Future Conflicts of company trademark holders and ordered transfers of the domain names. U.S. trademark law allows companies Brick-and-mortar companies, such as J. to sue to recover certain domain names. Crew and Wal-Mart, and web-based The U.S. legal system, however, has companies, such as Yahoo and proven to be a slow and often expensive GeoCities, have used the ICANN dispute option for trademark holders.2 The system successfully to claim domains Internet Corporation for Assigned registered by alleged cybersquatters. Names and Numbers (ICANN) created With this system, many Texas compa- a more efficient dispute resolution nies—Exxon Mobile, Compaq Com- system. As the organization given the puter, Cellular One, and Enron, to name power by the U.S. Department of a few—have claimed domain names Commerce to oversee the technical registered by others. Some Texas firms coordination of the domain name have also used the ICANN UDRP to system, ICANN established a system force the transfer of dozens of domain that ensured that any dispute over names. Dell Computer, for example, domain names would be resolved within recovered 122 domain names in one two to three months from when the ICANN proceeding alone. Those trademark holder brought the case to domain names include dell-it.com, Texas Business Review 3 June 2001 dellmobile.org, and dellservices.com, territory to try to take brand names among others. Texas-based Internet hostage. Others welcomed the expan- America recovered the domain name sion of the TLDs as an opportunity for that was identical to its company name greater expressions and brand differen- (internetamerica.com).