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Securing and Protecting Your Business Identity in the Age of the Internet

July 1996

Historically, trademark law has provided businesses with a road map for planning marketing strategies, and afforded a reasonably predictable means for resolving conflicts over rights to names and designs. However, the Internet as a mainstream medium of commerce has resulted in the emergence of a new key element of a business identity — the Internet domain name — where traditional principles of trademark law cannot easily be applied. Numerous conflicts have arisen between users of Internet domain names and owners of trademarks, and neither current trademark laws nor existing policies governing use and registration of domain names provide adequate means for resolution.

An Internet domain name is an “electronic address” on the Internet. In the United States, domain names are obtained through a non-profit agency called InterNIC, which is administered by Network Solutions, Inc. (“NSI”). NSI assigns domain names on a first-come, first-served basis, and does not independently verify the applicant’s right to use its chosen domain name.

The mad grab for domain names has resulted in an extraordinary number of disputes over rights to these names. In most, if not all, of these cases, at least one of the parties has claimed that it is entitled to the domain name based upon trademark rights. Although in many ways domain names resemble trademarks, trademark law appears to be an inappropriate vehicle for resolving these disputes for two reasons. First, under trademark law, there can be numerous rightful owners of a trademark (e.g., Pioneer Financial and Pioneer Electronics), while the Internet can only accommodate one owner of a domain name in each “top-level” domain (there can only be one “pioneer.com”). Second, while the Internet operates without regard to geographic boundaries, each country has its own unique set of trademark laws.

NSI’s Domain Name Dispute Policy (“Dispute Policy”) has similarly proven ill-suited for resolving these conflicts. Under the Dispute Policy, a domain name registrant can be forced to give up its rights to the domain name if: (i) the domain name is identical to the U.S. or foreign trademark registration of another party; (ii) the other party’s trademark registration pre-dates the domain name registration; and (iii) the domain name holder does not have a trademark registration for the domain name. Although the Dispute Policy was created to allow NSI to adjudicate only what it considers to be the most clear-cut cases, even this seemingly safe approach has proven generally unworkable, getting NSI into hot water with trademark owners and domain name registrants alike. The Dispute Policy so clearly favors the trademark owner — it allows the trademark owner to obtain the equivalent of an injunction against the domain name holder without having to prove, as it would in a court, that it is entitled to such relief — that NSI has essentially scrapped it, agreeing not to invoke the policy against the domain name holder in exchange for not being named as a party in the lawsuit. Further, the Dispute Policy offers no mechanism for resolving a dispute between parties that each own federal registrations for the same mark (but for different goods or services, or in different countries). Nor does the Dispute Policy contain procedures for resolving disputes involving marks that are similar but not identical.

In the last few months, courts have begun to address the issue of domain name disputes. In Computer Examiner Agency v. Juris Inc. , decided by a California Federal District Court in April 1996, a court ruled, for the first time, that use of an Internet domain name can infringe a trademark. In another case, Hasbro, Inc. v. IEG, Ltd. , decided by a Washington Federal District Court in January 1996, the court enjoined IEG from using the domain name “candyland.com” for its adult-oriented web site, agreeing with Hasbro that such use tarnished and diluted Hasbro’s famous Candy Land mark used for the well-known children’s board game.

To date, no federal or state legislation has been passed regarding domain name disputes, and none seems to be forthcoming.

The lack of any definitive laws or policies governing domain name disputes has left businesses wondering how to best protect this increasingly important property right. Although the rules are in flux, businesses should consider taking the following steps.

Proactive Steps. First, immediately seek domain name registration of your company name, and perhaps certain important other trademarks and service marks such as product names. Some companies, such as Kraft and Proctor and Gamble, have registered hundreds of domain names, including not only company and product names, but also slight spelling variations of these names. It may also be advisable to obtain domain names on foreign domain name registries.

Second, seek federal registration of all unregistered trademarks and service marks. Federal registration of a mark will allow the owner to more effectively enforce rights in the mark, and will also serve to put others on notice that a mark is already “taken”. Again, foreign trademark registrations should be considered.

Defensive Steps. Monitor use of similar trademarks and domain names by others. Trademark search firms can arrange a “watching service” which will give notice to owners of trademarks and domain names of third party use or attempts to register marks or domain names which are similar to those of the owner.

In all likelihood, a system will be developed to more equitably allocate rights to domain names. Until that time, businesses would be wise to seek all available protections for these valuable assets.