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Client Alert - Dealing with Domain Names

10.03.2002

New and Existing Domain Names

In addition to the familiar .com, .net and .org domain names (known as generic top-level domains or 'gTLDs'), there are also approximately 250 country code top-level domains ('ccTLDs') to contend with. Moreover, seven new gTLDs (i.e., .biz., .info, .name) were recently added to the domain name system and plans are under way to introduce a new country code domain name, .eu. Given the infinite combination of domain names that are available under these TLDs, developing a domain name policy for your company to follow can be a daunting task.

Your Own Domain Names

A good place to start is with the domain names that your company already owns. Centralize ownership and contact information so you can keep track of what you own and monitor renewal deadlines. Many companies are not even aware of all the domain names they own. This is not surprising given that many large companies own thousands of domain names. Moreover, it is not uncommon for domain names to have been registered in employee or subsidiary names. If this has happened to you, you can transfer ownership to the division that owns your trademarks or that handles your company's website to ensure that all of your domain names are owned by the same company.

You should also modify the contact and administrative information so that it will be the same for all domain names. You don't want a domain name to lapse inadvertently because an employee who was listed as the administrative contact left the company. You can use generic administrative and contact information to make things easier -- for instance, <admin@company.com>. If you don't want to deal with these issues in-house, we can help you implement a registration and maintenance program with the help of a registrar that provides these kind of services.

Defensive Domain Name Registrations

You should also be proactive in protecting your trademarks and online presence against infringement and cyberpiracy. Register domain names that you anticipate using now or in the future and related names that cybersquatters might snatch up. It is usually cheaper to pay the registration fee than to try to recapture a 'stolen' domain name later. Of course, a cost-benefit analysis applies. Although the registration fee is only about $20-$30 a year for each domain name (and even less for some registrars), these fees can add up when you think of the endless combinations of misspellings, 'sucks' variants and country codes that are available -- and a cybersquatter will generally have more time to come up with new ways to misspell or hyphenate your company's name than you do.

Practical business considerations must come into play. Consider the value of your marks, the markets where you operate and the risks of objectionable uses. Take more active approaches in countries that are more high risk. For example, countries that allow the registration of multiple domain names or that don't require a local presence or trademark registration to register a domain name. These countries, like Austria, Denmark and the United Kingdom, pose a greater risk of cyberpiracy. On the other hand, if you don't anticipate using those markets, or that consumers will look for your online presence in those countries, these risks may not be significant to you.

Objecting to Domain Name Registrations by Others

In cases where you have failed to get there first, pick your battles. Rank offending domain names based on corporate priorities, famous marks and what is being done with the site. You may want to give priority to particularly offensive uses or sites that are clearly trading off your goodwill. A zero-tolerance policy for dealing with blatant cybersquatters may be unrealistic when it comes to marks that are capable of concurrent ownership. Don't worry about domain names that lead to inactive websites and that you don't want to use yourself. Some potentially threatening domain names may lapse for non-payment, or may remain inactive, preventing more aggressive cybersquatters from using them in an objectionable way. In those cases, you may want to simply send a letter advising the registrant of your trademark rights and giving notice that you might take further action if the site becomes active or the domain name is transferred.

Possible Actions Against Others

Once you have decided to take action against a domain name owner it is important to know the mechanisms available for redress and the costs involved. For cases involving blatant cybersquatting, there are two primary courses of action: A streamlined arbitration under ICANN's uniform domain-name dispute-resolution policy (known as the UDRP) or a lawsuit in federal Court under the Anticybersquatting Consumer Protection Act (known as the ACPA). For cases involving more traditional infringement (i.e., where the domain name owner is using a domain name to trade off your company's goodwill) a traditional trademark infringement and unfair competition court action may be best.

ICANN Arbitration

In the fight against cybersquatters, ICANN's policy has proved an effective weapon. Under that policy, trademark owners can invoke a special administrative procedure to cancel or transfer an infringing domain name. Since its inception in 1999, over 6500 disputes have been filed invoking ICANN's policy and the vast majority of trademark holders have prevailed, proving the policy to be a fast and cost-effective means for regaining 'stolen' domain names.

There are presently four approved organizations running these arbitrations, and you can pick one or three neutral arbitrators to decide your dispute. The procedure is handled largely online through the submission of a complaint and answer. There is no discovery, and the procedure is designed to take less than two months. Costs range from about $1,000 to $3,000 in administrative fees. Legal fees to prepare the complaint are an additional cost.

Under ICANN's policy, you must show that the domain name is confusingly similar to your mark; that the registrant has no rights or legitimate interests in the domain name; and that the domain name was registered and is being used in bad faith. Bad faith is typically shown by evidence of an offer to sell the domain name to the trademark holder, an intent to divert traffic from the trademark owner's website or the warehousing of multiple domain names that consist of the trademarks of others, among other things.

ACPA Litigation

If, on the other hand, your case involves difficult facts or multiple issues, you may be better served filing a court action under the ACPA. (See Client Alert: The Anticybersquatting Consumer Protection Act.) The ACPA, which took effect in the fall of 1999, targets persons who register a domain name with the 'bad faith intent to profit from that mark.' It also proscribes the registration of someone's personal name 'with the specific intent to profit ... by selling [that] domain name' to that person or a third person. Thus, just like ICANN's policy, the central inquiry under the ACPA is whether the registrant acted in bad faith in registering the domain name. Unlike ICANN's policy, however, the ACPA allows for statutory damages of up to $100,000 per domain name. Although the ACPA applies retroactively to domain names registered prior to its passage, statutory damages are only available for domain names registered after the date of the ACPA.

Infringement Litigation

In cases where the domain name was not registered in bad faith, traditional trademark law and familiar principles of likelihood of confusion and dilution may possibly be invoked. Thus, where a party obtains a domain name that is similar to a competitor's trademark, the analysis is fairly straightforward. In this context, the fact that both parties have or will use the internet to provide services may aggravate the likelihood of confusion. As the courts have noted, a competitor's web site is always but 'one click' away and a vast storehouse of information can be traversed in a matter of seconds. Thus, the web is rife with the potential for confusion.

Our Experience

Our firm has particular experience in helping trademark owners organize their domain names, monitor third party domain name registrations, develop appropriate enforcement policies and bring or defend against ICANN arbitrations and court actions.

For more information, please contact Meichelle MacGregor.
Copyright 2002, Cowan, Liebowitz & Latman, P.C.

 

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