IP Alert Resolving Domain Name Disputes

January 2008 IP Alert

Resolving Domain Name Disputes: A Primer

I. Introduction

A few years ago, if a child searching for information about Hannah Montana accidentally visited the website Disneychanel.com (as opposed to DisneyChannel.com), the child would be disappointed. If the child’s parent wanted to investigate family-friendly programming and went to parentstelevisioncouncil.com, the parent would not find the information sought (but rather would be directed to a website of a targeted program instead). If that person wanted information about a luxury sports car and went to porshe.com (as opposed to Porsche.com) or wanted to find a luxury handbag and went to LuisVuitton.com (as opposed to LouisVuitton.com), the person would not find the expected high quality sites. Instead these web travelers were being directed to sites where enterprising but not necessarily scrupulous entities awaited.

The companies behind the valid websites faced lost revenues, and tarnishing of their trademarks and goodwill as consumers spent money on such “typo domains.” However today, if those domains are accessed, individuals will either be automatically linked to the appropriate website, or the sites will display a “not found” notice with sufficient information to direct individuals to the appropriate website. The companies behind the valid websites no longer need to be as concerned with imposters, because they have learned to assertively protect their brands online. But no business with an image or a brand to protect can afford to let down its guard for very long. Danger lurks in every corner of the Internet.

With the explosion of Internet use and the burgeoning presence of commercial entities online in the past 15 years, it is not surprising that innumerable disputes have erupted over domain names. While the technologies supporting the Internet are sophisticated and complex, procedures for registering domain names are remarkably simple and inexpensive. It is largely a first-come, first-served system. A sophisticated, well-funded enterprise is not needed to register a domain name. A high school student without a job could be as dangerous as a multibillion-dollar competitor. Anyone can register a “dot-com” domain name not currently in use for as little as $6.95 a year.

Many companies eager to enhance their image and facilitate operations by launching a website have discovered their most obvious choice of domain name taken by another – often by a cybersquatter, an enterprising “investor” who preemptively amasses names in hopes of profiting down the road, or by a typosquatter, an entity seeking to capitalize on the innocent mistakes of Internet users who fail to accurately type in the domain name for the site they wish to visit. Other companies have discovered their bottom lines and goodwill jeopardized by sites with similar sounding names – sites to which their customers are often misdirected. It was not always clear where companies victimized by such conduct could turn. But new laws, universal dispute resolution policies and forums have brought a semblance of

0.AlertJan08 order to the growing battlefield over domain names. It is essential to grasp these developments, if one is to avoid the perils of cyberpiracy, or defend against a cybersquatting claim.

II. Birth of the Internet and Domain Names

The system of registering domain names for websites in use today was designed by University of Wisconsin researchers in the 1980s. By the 1990s, Internet use exploded in the commercial sector. A domain name is simply an address. It is an alias for the long IP or Internet protocol string of numbers – where web pages are located and e-mail is directed. However, unlike the name of your street or town, a domain name can be chosen by the addressee. In Internet lexicon, the letters after the “dot,” such as “.com,” “.edu,” and “.gov,” are termed “top- level” domain names, while the name directly to the left of the dot is called a “second-level” domain name.

The Internet Corporation for Assigned Names and Numbers (ICANN) is the organization responsible for the global coordination of the domain name system. Until December 1999, Network Solutions, Inc. was the sole registrar overseeing the registration of second-level domain names. By 2000, ICANN had accredited several more registrars, but they all followed Network Solutions’ general first-come, first- served, no-questions-asked policy for selecting domain names. It was not long before the inevitable happened. Companies eager to build a presence on the web discovered that the most logical domain name for them to use – their company or product name – was owned by someone else. Where the company and the website owner were at cross-purposes with conflicting values, litigation often ensued. Litigation also arose when the entity holding the domain name appeared to be merely “parking” it to collect revenues or otherwise exploit the name.

Example: When Hasbro Toys tried to register the domain name Candyland.com, it was too late. The name was registered to an adult entertainment provider. Hasbro ultimately sued and won rights to the name.

III. Uniform Domain Name Dispute Resolution Policy (UDRP)

In order to address the growing number of conflicts between owners of domain names and those claiming a legitimate interest in the domain name, a procedure was born to address such disputes, regardless of the geographic location of the parties.

Administered by ICANN, UDRP establishes how disputes over domain name registrations are resolved in the global top-level domains (.biz, .com, .info, .name, .net, .org and .aero, .coop, and .museum.). When Internet users register a name in one of these domains, they are required to sign a Registration Agreement in which they agree to abide by the UDRP terms. Under UDRP, owners of trademarks, whether registered or not, may file complaints with an accredited resolution service provider. Registration with WHOIS, a database of registered domain names, is mandatory, and the entry of false information can be construed by the courts or the ADR neutral as evidence of bad faith.

2 0.AlertJan08 a. Elements of UDRP Claim

In order to have the offending name canceled, suspended or transferred, the claimant must establish:

1. That he has a legally recognized trademark in a name that is identical or confusingly similar to the domain name; 2. That the current registrant of the domain name has no legitimate rights in the name; 3. Some evidence of bad faith or abuse.

The UDRP does not apply to personal names, unless such names are protected by trademark law.

The World Intellectual Property Organization (WIPO), a United Nations agency, has become internationally recognized as the leading ADR forum for domain name disputes. Resolving a domain name dispute through WIPO is much faster than litigation in the courts. From filing the claim to decision normally takes about two months with many of the procedures conducted online. The cost is considerably lower as well. For resolution of a dispute involving up to five domain names, with a single panelist, the current cost is $1,500; for three panelists, $4,000. For six to ten domain names, the cost increases to $2,000 for a case involving a sole panelist to $5,000 for a case involving three panelists.

Unlike in litigation, there are no damages awarded, and no injunctive relief is available. Rather, if the complainant prevails, the domain name will be canceled, or transferred to the complainant. If the claim is denied, the respondent may keep the domain name. Under UDRP, a WIPO decision may be appealed to the courts, although such appeals are uncommon. While the domain name may be kept by the original owner, this does not permit the owner to use the domain as he or she desires. Trademark law still prevents the owner from using the domain in a manner that conflicts with the rights of the trademark holder. For example, while the domain name owner of Sweeps.com was able to keep the domain (and use it in connection with sweepstakes and other games) (See WIPO Decision Case No. D2001-0031), the owner would probably not be able to change the use of his domain to sell vacuum cleaners, which would interfere with the complainant’s trademark rights in the mark “Sweeps” for retail services selling vacuum cleaners.

b. Other Arbitration Forums

Other currently operational ICANN accredited dispute resolution forums are the Asian Domain Name Dispute Resolution Centre (ADNDRC), with offices in Beijing, Hong Kong and Seoul, and the National Arbitration Forum.

The National Arbitration Forum is a private arbitration service that conducts many of the domain name disputes involving U.S.-based complainants. It has helped resolve thousands of domain name disputes since approved by ICANN in 1999 – disputes involving such well-known parties as Google, Dell and Hillary Clinton.

3 0.AlertJan08 c. Country Code Top-Level Domains

A country code top-level domain (ccTLD) is a two letter, Internet top-level domain generally used or reserved for a country or a dependent territory. These domains do not generally fall within the scope of WIPO’s function, but rather are within the realm of the Internet Assigned Numbers Authority (IANA), which is currently contracted to ICANN. IANA is responsible for determining an appropriate trustee for each ccTLD, and administration and control is then delegated to that entity, which is responsible for the policies and operation of the domain. Individual ccTLDs have varying requirements and fees for registering subdomains (e.g., some may require a local presence - the Canadian (ca) and German (de) domains – while others may have open registration - the Tuvalu (tv) domain, which has been used often by the entertainment industry for television-related domains).

While WIPO controls the UDRP procedure for many top-level domains, each of the ccTLDs have their own independent authorities dealing with such disputes (e.g., Czech Arbitration Court, Centro risoluzione dispute domini and MFSD Srl. (for the .IT ccTLD), British Columbia International Commercial Arbitration Centre, New Zealand Dispute Resolution Service, and others).

V. Sample Disputes and Resolutions through WIPO

The UDRP proceedings require basic elements to be met to prevail as noted above. The burden is not overwhelming and respondents often default (the arbitrator still makes an independent evaluation of the dispute). The following are two recent cases that were resolved by WIPO:

For the Complainant:

In National Association for Stock Car Racing, Inc. v. R.H.P., WIPO Case No. D2007-1400 (November 26, 2007), the complainant, a well-known regulating, governing and sanctioning body of stock car racing, filed a complaint concerning the domain name “NascarCollectibles.com,” which was registered by “R.H.P.” in March 1997. The respondent used the domain name to direct traffic to the respondent’s “Mad Hungarian Sports Apparel & Collectibles” website, where, among other items, the respondent offered for sale clothing and other merchandise related to NASCAR events and drivers. Significantly, the respondent was not licensed or authorized to use the NASCAR mark.

The respondent failed to respond to the allegations and the arbitrator evaluated the matter based upon the record submitted by the complainant. The arbitrator found that the disputed name was confusingly similar, since NASCAR clearly had established rights through registration and continued use of the mark. The panel found that the mere addition of the descriptive word “collectibles” did not “dispel the confusing similarity” with the complainant’s mark, especially since the disputed domain name incorporated the complainant’s mark in its entirety.

The arbitrator also found that the complainant made a prima facie showing that the respondent had no right or legitimate interest with respect to the domain name since it was undisputed that the respondent 4 0.AlertJan08 was not authorized or licensed to use the NASCAR mark. In order to meet the third criteria of having registered and used the domain in bad faith, the arbitrator found that a “strong inference can be drawn from the circumstances of this case that the Respondent was well aware of the Complainant’s well-known NASCAR mark when it appropriated the Complainant’s mark for use in its domain.” The arbitrator further found that the domain was used “in an attempt to profit from and exploit the Complainant’s NASCAR mark.”

Since the arbitrator found that the complainant met the three criteria for the UDRP proceeding, the arbitrator ordered the domain name “NascarCollectibles.com” to be transferred to the complainant.

For the Respondent:

The Jack Daniel’s Properties v. Imanez/jackdanielsgifts.com, WIPO Case No. D2007-1443 (November 20, 2007) case illustrates that these cases are not always found in favor of the complainants and careful attention must be given to the three criteria when determining which course of conduct should be pursued.

The complainant owned the Jack Daniel’s whiskey brand and held a registered trademark in the United States and other countries. In the U.S. and Britain, the trademark had been registered for various collateral uses in addition to whiskey, including clothing, drinking glasses, lighters, and other gift items.

In 2005, the complainant discovered that the respondent had registered the domain name “jackdanielsgifts.com” in May 2003. The complainant wrote the respondent, asserting ownership of the trademark and expressing concern about the use of its trademark on the respondent’s site. The whiskey company demanded that the respondent make changes to the background of its website and provide a broader disclaimer that it had no affiliation with the complainant and was in no way endorsed by the complainant. The respondent replied by letter that it considered the disclaimer sufficient, but agreed to make the requested changes to the background of its website. The complainant wrote again and raised for the first time the issue of the domain name, requesting that it be changed. By letter, the complainant then demanded the transfer of the disputed domain name to the complainant. The respondent expressed a willingness to change the website, but reluctance to transfer the domain name. The complainant argued in further correspondence that the respondent could not keep its domain name because the complainant had to protect its brand and prevent consumer confusion.

Before WIPO, the complainant argued that the respondent registered its domain name long after the Jack Daniel’s trademark was well established and known in the U.S. and the U.K. The respondent’s site offered what appeared to be licensed goods bearing the Jack Daniel’s trademark. In addition, the complainant noted that some of the goods sold on the site bore trademarks of competitors. The domain name, the complainant argued, was identical or confusingly similar to the complainant’s Jack Daniel’s trademark.

Reviewing the first required element, the panel found the complainant had trademark rights in the name Jack Daniel’s, and that the respondent’s trade name was identical or confusingly similar to the Jack 5 0.AlertJan08 Daniel’s mark. The panel noted that “multiple panels had found that the fact that a domain name wholly incorporates a Complainant’s registered mark is sufficient to establish confusing similarity, despite the addition of other common descriptive words to such words. [Citations omitted].”

However, in review of the second element, the panel found the respondent was able to demonstrate rights or a legitimate interest in the domain name. Under Paragraph 4(c) of the UDRP, there are three circumstances under which a respondent may demonstrate such interest or rights:

(i) before any notice to Respondent of the dispute, its use, or demonstrable preparations to use the domain name or a name corresponding to the domain name was in connection with a bona fide offering of goods or services; or

(ii) the Respondent as an individual or business or other organization has been commonly known by the domain name even if the Respondent has acquired no trademark rights; or

(iii) the Respondent is making a legitimate non-commercial or fair use of the domain name without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark at issue.

The panel found that the owner had originally registered the domain name only to sell licensed Jack Daniel’s goods and had added other goods only after the dispute arose, in a misconceived attempt to comply with the complainant’s demands. Before notice of the dispute, he was using the domain name in connection with a bona fide offering of goods and services and was not trying to use the mark to attract consumers and then switch them to other brands. The panel concluded that the respondent had a current legitimate interest in the domain name pursuant to Paragraph 4(a)(ii) of the UDRP.

Because the complainant failed to meet the second element, the panel did not consider whether the domain name was registered and used in bad faith. The complaint was denied, and www.jackdanielsgifts.com remained registered with the respondent.

VI. Anti-cybersquatting Law

It is often cited that technology outpaces legislation, and the law often needs to react after the fact to situations that arise. In regard to domain names, trademark holders were limited to certain relief under the UDRP proceedings and traditional trademark law. Moreover, while a UDRP is typically cheaper and quicker than a court proceeding for a legitimate mark holder to exercise its rights, litigation often provides additional remedies for trademark holders. Not all disputes lend themselves to the UDRP type of alternative dispute resolution. Court action is often necessary, particularly where the claimant seeks damages and/or injunctive relief as well as transfer of the domain name, or where the claimant cannot demonstrate that he or she held the mark prior to the holder of the domain.

6 0.AlertJan08 In 1999, Congress passed the Anticybersquatting Consumer Protection Act (“ACPA”). Congress designed the ACPA to deter the misuse of domain name registration. Specifically stated, Congress intended “to protect consumers and American businesses, to promote the growth of online commerce, and to provide clarity in the law for trademark owners by prohibiting the bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks – a practice commonly referred to as ‘cybersquatting.’”

To prevail in a court action, a plaintiff must demonstrate why a domain name registered to another should be canceled or transferred to the plaintiff, even where it is clear the plaintiff did not register the name first. Under traditional trademark principles, this was often difficult; especially if the plaintiff could not show likelihood of confusion, or if the plaintiff was a famous person who never established trademark rights in his or her own name.

Both trademark owners and famous individuals lobbied Congress intensively for relief. The result was passage of the ACPA. The act made it easier for individuals and companies to take over domain names confusingly similar to their names or valid trademarks – provided they could establish the owner of the name registered it in bad faith. The act allows an individual to file a civil action if anyone turns his or her name into a domain name for profit. The law would also protect a company against persons who, in bad faith, register a domain name the same or confusingly similar to its own.

To prevail under this legislation, a plaintiff must show:

(1) the defendant registered or used a domain name; (2) the defendant’s domain name is confusingly similar to or dilutes the plaintiff’s trademark; (3) the plaintiff’s trademark was famous at the time the defendant registered or acquired the domain name; and (4) the defendant registered or used the domain name in a bad faith effort to profit from the plaintiff’s trademark.

Courts can consider the following factors in weighing whether a domain registrant has acted in bad faith:

• Does the domain name holder have trademark rights in the domain name? • Is the domain name the legal name of the domain name holder, or some other name that is otherwise commonly used to identify that person? • Has the domain name holder made use (prior to the dispute) of the domain name in connection with a bona fide sale of goods or services? • Is the domain name holder using the mark in a bona fide noncommercial or fair use way at a website accessible at the domain name? • Is the domain name holder attempting to divert consumers from the trademark owner’s website in a confusing way, either for commercial gain or in an attempt to tarnish or disparage the mark?

7 0.AlertJan08 • Has the domain name holder offered to sell the domain name to the trademark owner (or anyone else) for financial gain without having any intent to use the mark with the sale of goods or services? • Has the domain name holder behaved in a pattern of registering and selling domain names without intending to use them in connection with the sale of goods or services? • Did the domain name holder provide false information when applying for the registration of the domain name (or do so in connection with other domain names)? • Has the domain name holder registered domain names of other parties’ trademarks?; and • How distinctive and famous is the trademark owner’s trademark?

See: Vin&Sprit Aktiebolog v. Hanson et al. 2001 U.S. Dist. LEXIS 2484,16; 1b U.S.P.O. 2D (BNA).

In V&S Aktiebolog, the plaintiff vodka manufacturer moved for summary judgment against a company operating two websites that sold summer clothing. The manufacturer in its complaint, asserted claims of trademark infringement, unfair competition, anti-cybersquatting and trademark dilution. The plaintiff owned the registered trademark ABSOLUT® for vodka and various clothing items. The defendant subsequently coined the mark Absolut Beach™ to sell its beachwear via mail order catalogs and the Internet and registered the domain name absolutebeach.com and absolutbeach.com – generating sales to U.S. residents.

The court held the plaintiff was entitled to judgment as a matter of law on its trademark infringement and unfair competition claims because the plaintiff had a protectable interest in the Absolut® trademark, and the plaintiff demonstrated a likelihood of confusion existed between the marks. Plaintiffs won on the anti-cybersquatting claim because the defendant registered the domains at a time when the plaintiff’s Absolut® mark was already famous, and defendant’s coined Absolut Beach™ was registered in a bad faith effort to profit from the plaintiff’s trademark.

Domain owners, however, are not without rights or defenses. When confronted by a claim under the ACPA or under a different trademark theory, domain owners can challenge the legitimacy of the complainant’s claim by arguing, among other defenses: Lack of fame or distinctiveness; Domain name owner's prior bona fide use; Domain name owner’s reasonable belief in legitimate use; No commercial use; Fair use; Free speech; Parody; Laches; Acquiescence; and Abandonment.

VII. New Problems Arise – Domain Tasting

Today, even large tech savvy companies like Dell, Inc., Microsoft Corp. and Yahoo! Inc. are plagued by cybersquatters and must devote tremendous resources to monitoring their marks online and litigating against infringers. But cyberpirates are finding new creative ways to avoid detection or dodge the law. A troublesome trend is “domain tasting,” which capitalizes on a loophole in registration rules. The loophole allows registrants a five-day grace period after registering a name before paying for it. An unscrupulous 8 0.AlertJan08 organization can thus register hundreds or thousands of names at one time at no cost, and test the domains’ marketability in terms of the traffic they attract and the corresponding amount of advertising revenue they might yield. The names these organizations select to “taste” are usually names that have just been discarded, typo domains, or generic terms likely to attract high traffic (such as pandabear.com). Discarded domain names may still be active in search engines, and other hyperlinks, so that they are likely to receive high traffic and generate advertising revenues greater than the nominal cost of registering the site. Such temporary registrations far exceed the number of permanent domain registrations. Thus owners of corporate brands are finding variants of their marks tied up by such “tasting companies” – which can spit the names out and re-taste them again at will, over and over again without ever having to pay. In addition, current processes for resolving domain name disputes and protecting against bad faith cybersquatters have yet to catch up with these elusive automated registrants who, it appears, will not be deterred by the threat of having to transfer one domain name.

Moreover, while domain name owners previously have had to identify themselves for inclusion in the WHOIS database, many registrars are now offering privacy services, under the guise that it reduces identity theft and cuts down on spam and junk mail that get generated by people who mine the WHOIS directory. While the privacy offerings may have that effect, the failure to have full disclosure in the WHOIS database may interfere with the ability to pursue the domain name owner. Typically, however, the registrar will act as the agent for the domain name owner, but it is often difficult to ascertain information from a foreign registrar when a WHOIS listing showing a local registrant would ease the ability to bring a claim against the offending domain name owner.

VIII. Conclusion

As technology and its applications advance at light speed, the law is being required to progress with similar swiftness. Ultimately, the law catches up to the latest trends, but the companies that are confronted by such influences in their area of business are facing new challenges every day. It is important to keep current with the potential remedies and avenues that a mark holder can pursue.

Wilson Elser’s Intellectual Property Team is available to discuss this issue and other issues related to copyrights, trademarks, trade secrets, patents and unfair competition. For further information regarding Wilson Elser’s Intellectual Property capabilities, please contact Thomas A. Leghorn at [email protected] or Adam R. Bialek at [email protected].

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