Domain Name Disputes: An Update

February 2001
by Ivan Hoffman, B.A., J.D.
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Ivan HoffmanIvan Hoffman is an Internet law, publishing, copyright, corporate training and online education, trademark, and music attorney, practicing for over 28 years.  He practices in the Los Angeles area.  His web site is www.ivanhoffman.com. You may reach him at ivan@ivanhoffman.com. This article is not intended as legal advice. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. You should consult with an attorney familiar with the issues and the laws. This article does not create any attorney client relationship.


As the Net continues to evolve, policies dealing with domain name disputes continue to evolve as well. Given the likely adoption of up to seven new top level domains such as “biz,” “info,” and the like sometime in early to mid 2001, the potential effect on both trademark owners and site developers is very significant. Let me then examine some of the issues and procedures that impact on domain name ownership and disputes.

Effective January 1, 2000, Network Solutions Inc. and other domain name registrars adopted a new dispute policy that incorporates the Uniform Domain Name Dispute Resolution Policy (“UDRP”) developed by the Internet Corporation for Assigned Names and Numbers (“ICANN”). Further adding to the complex overlay of law and policy was the passage of the “Anticybersquatting Consumer Protection Act” (“The Act”), which is an amendment to the United States trademark law. If you are a Web designer, site owner, or the like, you must be familiar with the issues presented by domain names generally and these new laws and policies in particular.

Initially, both the UDRP and The Act are meant to deal only with what is referred to as a bad faith adoption and/or misappropriation, through the reservation and use of a domain name that infringes or dilutes another party’s registered trademark or rights of trademark. This means that the
use of the domain must be identical or confusingly similar to that of a registered trademark under The Act or trademark rights under the UDRP and such use must be in bad faith. Neither the UDRP nor The Act deal with other forms of trademark infringement questions including the legitimate
use of a domain name that is allegedly an infringement of a trademark. For issues dealing with this latter aspect, read “Domain Names and Trademarks” and “Jimi, Julia and Cybersquatting: An Update” on my site http://www.ivanhoffman.com/. Click on “About Trademarks and Domain Names.”

Bad Faith

What may constitute bad faith is, of course, determined on a case-by-case basis, but the following factors are among those to be considered. The reader should note that the rights of the party claiming that the other is acting in bad faith depend in some instances upon that party being the owner of a registered trademark. This is certainly true under The Act and goes a long way toward establishing the primacy of the claimant’s rights under the UDRP. Thus, to avail oneself of the benefits of these acts and policies, you should register your marks. This, of course, is a good
business approach to take even without regard to these domain name issues.

Among other things, “bad faith” as used in the UDRP means:

  1. If a domain name owner has obtained a domain name primarily for the purposes of selling, renting, or otherwise transferring it to a party who owns a registered trademark or to a competitor of that trademark owner.
  2. Registering a domain name in order to prevent the owner of a registered trademark from protecting that trademark in the form of a domain name.
  3. Adopting a domain name primarily for the purpose of disrupting the business of a competitor.
  4. Intentionally attempting to draw visitors to the Web site of the domain by creating a likelihood of confusion between the domain and the trademark.

Whether the legal proceeding is under The Act or the UDRP, bad faith is a key to the claim on the part of the trademark owner. The owner of the domain has the right to defeat any claims of bad faith by showing that that owner has legitimate rights to use the domain.

How Claims Are Presented

If a claim is to be presented against a domain name registration, there are a few ways it may be set up. Firstly, the owner of a registered trademark can file a civil action under the United States trademark law (The Lanham Act including The Act) seeking injunctive relief (i.e., a court order halting the use of the domain), damages (both actual and statutory), attorneys’ fees and costs, and any profits obtained by a defendant from the unlawful use of the domain. There are some limits to these rights and remedies but, for the sake of simplicity, let me not deal with those limits in this article.

Secondly, there are several authorized arbitration bodies that have been set up to hear these disputes. Upon payment of a fee for the services of an arbitration panel, the arbitrator or arbitrators will determine the relative rights of the parties to the dispute. Among the differences between this hearing and a civil litigation is that the only remedies available in this hearing are the cancellation or transfer of the domain name should it be determined that it infringes upon the trademark and was registered in bad faith. Also, as noted above, the UDRP does not require the claimant to be the owner of a registered mark but merely to have trademark rights. This latter topic is explored in more detail in “Julia, Jimi and Cybersquatting: An Update” referred to above. As with litigation under The Act, there are limits and other wrinkles that are not essential for the purposes of this article.

There are, of course, advantages and disadvantages to the choice of forum which include costs, effectiveness of the remedies, resort to damages and other forms of relief, speed of the process, and jurisdictional issues.

Results of the Claim Under prior policies, upon presentment of a claim by a registered trademark owner showing a registration of a mark prior to the date of the registration of a domain, Network Solutions, Inc. (at one point, the sole registrar of domains) would put the domain “on hold” pending a resolution of the dispute between the parties. This had a significant impact upon the domain owner’s rights since it acted as sort of a non-judicial injunction.

As of January 1, 2000, NSI’s and the other registrars’ policy changed. Domains will no longer be put “on hold,” but the registrar will either cancel, transfer, or otherwise change a domain but only after it receives:

  1. A written authorization from the domain name owner;
  2. An order from a court of competent jurisdiction or from an arbitration panel requiring such changes; or
  3. A decision by the ICANN panel (different than the panel in 2 since it is not one set up by federal law) requiring changes.

There are procedural requirements for either presenting a claim and defending against such claims including provisions dealing with which party has the burden of proving either bad faith or lack thereof, all of which I have again eliminated from this summary article.

Impact on Trademark Owners

Federal trademark law mandates that trademark owners be assertive in legally protecting their rights in their marks. If a trademark owner allows others to infringe or dilute their marks, the owner runs the risk of losing the mark through abandonment or otherwise. Thus, it is up to the
trademark owner to prevent misuse of the mark. The area of domain disputes has placed a greater burden on mark owners because of the widespread adoption of the Net. With the coming adoption of seven additional top level domains mentioned above, it means that trademark owners will now face additional legal challenges to their rights since now the secondary level domain (the essence of the mark) can now be combined with seven other top level domains.
Among the proactive approaches trademark owners can take is to preemptively register all possible combinations of their marks including with the new top level domains.

Conclusion

Because the Internet has become the realm of big business, it is looking more and more like the real world of big business. Having spent many years practicing law exclusively in that “real world,” I know that legal remedies are often more effectively marshaled by those with deep pockets, with teams of attorneys to represent them. But it does little to bemoan the current reality, should that be among your responses. Instead, it is in your best interest to recognize the state of affairs and govern your conduct accordingly.

And if you are a Web designer or developer or client, you must adjust your written agreements with either your clients or your designers/developers to reflect the current state of these matters.

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