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Trademarks in Electronic Commerce

This article was written for a Massachusetts Continuing Legal Education Seminar entitled “Electronic Commerce” which was held in Boston in November 1998.

The explosion of commercial activity on the Internet has generated new issues involving trademark use and misuse, some of which can be addressed through traditional trademark law and some of which may require changes in trademark law in order to be effectively resolved.


A. Trademark and Service Mark Defined .

U.S. trademark law has its origins in the common law, which has been codified into the Lanham Act on Trademarks and Unfair Competition. Under the Lanham Act, a trademark is generally defined as “any word, name, symbol, or device, or any combination thereof . . . used by a person . . . to identify and distinguish his or her goods . . . from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.” (15 U.S.C. Section 1127). A service mark, used to identify and distinguish the source of services, is also protected by statute and can be federally registered. (15 U.S.C. Section 1053). Although trademarks or service marks usually consist of words or designs, any source indicator can act as a trademark including: colors, smells, sounds, product design and packaging, and design schemes. In recent years, trademark lawyers have taken these concepts to new extremes, such as Harley-Davidson’s effort to assert ownership of the characteristic exhaust sound of its motorcycles.

B. Rights Derived From Trademark Use .

The historical bases of trademark and unfair competition law are the common law actions of fraud and deceit. As stated by the Supreme Court, “[t]he law of unfair competition has its roots in the common-law tort of deceit: its general concern is with protecting consumers from confusion as to source. While that concern may result in the creation of ‘quasi-property rights’ in communicative symbols, the focus is on the protection of consumers, not the protection of producers as an incentive to product innovation.” Bonito Boats, Inc. v. Thunder Craft Boats, Inc. , 489 U.S. 141, 103 L. Ed. 2d 118, 109 S.Ct. 971, 9 U.S.P.Q.2d 1847 (1989).

The exclusive right to a trademark at common law is derived from use and not from its mere adoption. As soon as a mark is used in commerce, trademark rights are established. These rights are protected by common law, state statutes on unfair competition, and the Lanham Act, which protects unregistered, as well as registered marks. Among the amendments to the Lanham Act enacted in 1988 were major revisions to Section 43(a), in which Congress affirmed the case law interpretation of the previous version of the Act enacted in 1946 (15 U.S.C. Section 1125). Thus, Section 43(a) was codified to permit the assertion of claims for the infringement of unregistered trademarks, service marks, trade names, and trade dress, as well as the assertion of statutory remedies for claims for infringement of unregistered marks.

Use in commerce for a trademark involves selling a product with the mark affixed or, in certain cases, simply moving the product (bearing the mark) in interstate commerce for a trade show or other form of “demonstration.” Advertising or promoting services under the mark such as on marketing brochures or business cards constitutes use for a service mark, provided that the services are actually being offered. Common law protection may be limited to the locale in which the mark has been used or has become known, such as through advertising. The owner of such a mark may prevent only those users of the identical or nearly identical mark from using it on the same or similar goods or services within the area. The owner of an unregistered mark used in a particular area will not be able to prevent others from using the mark in other states or regions within the U.S. While the protection afforded to a common law trademark owner may expand as the goods on which the mark is used become more widely distributed, the trademark owner’s ability to expand nationwide may be limited if others have established conflicting rights in other regions.

For example, if a trademark owner in New England delays in filing for federal trademark registration, and another party innocently commences use of the mark on the West Coast after the New England use, but before the senior user files for federal trademark registration, the senior user’s rights to enforce his claim to exclusive use in the mark may be limited so as to exclude the area in which the junior user has used the mark in good faith. Due to the delay in filing for registration, the New England trademark owner forfeits his claim to exclusive nationwide ownership of the mark, and the junior user can prevent the senior user, the owner of the registered mark, from selling his goods on the West Coast under the registered mark. As a result, the registered owner of the mark must repackage his goods under a different trademark if he wishes to distribute his product nationwide. The costs associated with the clearing of new trademarks and with multiple packaging and advertising campaigns could be prohibitive, especially for a small company.

C. Rights Derived From Federal Registration .

An application for trademark registration may be filed with the U.S. Patent and Trademark Office (USPTO) when the applicant has actually used the mark in commerce, or, under a 1989 Amendment to the Lanham Act, has a bona fide intent to use the mark in commerce. (15 U.S.C. Section 1051). An application based on use must describe the manner in which the mark is used on the product, such as on product labels, packaging or on the goods themselves. In addition, the applicant must submit three specimens showing the mark as used in commerce.

An intent to use application (ITU) may be filed with the USPTO before the mark has been used in commerce, as long as the applicant attests to having a bona fide intent to use the mark. After the USPTO accepts the application by issuing a Notice of Allowance, the applicant has six months in which to put the mark into use and submit a Statement of Use, declaring the date of first use. The applicant may request extensions of up to a total of three years in which the file the appropriate specimens, as long as the applicant continues to have a bona fide intent to use the mark.

The primary benefit of an ITU application is that upon registration of the mark, the registrant’s rights in the mark relate back to the date of filing. Thus, since a year or so may elapse between the filing of an application and the USPTO’s issuance of a Notice of Allowance, a registrant may have rights in the mark that predate registrant’s actual use of the mark by as much as four years. The registrant may use this “grace” period to conduct R&D, perform market research, acquire capital, and other activities necessary to launch its product successfully.

D. Trademark Clearance

In view of the rapid increase in commercial activity on the Internet, the traditional methods of trademark clearance searches are no longer sufficient. Companies marketing products on the Internet are often not advertised in print media or listed in the standard databases used in trademark searching. Because the use of a mark on the Internet may create enforceable rights nationally and internationally, failure to utilize the research tools available on the Internet may result in infringement problems.

A trademark clearance search should begin with a “knock-out” search for identical or nearly identical marks in the federal and state trademark databases. The federal database contains applications for registration and issued registrations. The state databases contain only registrations. This type of preliminary search can be conducted online through a number of sources, the cost of which varies from company to company. Domain names should be searched, particularly in light of the common practice of obtaining a domain name before filing a trademark application. In addition, uses of the mark on the Web should be searched for, using an Internet search engine, as use of a mark alone can create enforceable trademark rights in the U.S. and in other countries.

If no identical marks are disclosed during the preliminary search, a full search report from an organization such as Thomson & Thomson (http://www.thomson-thomson.com ). should be ordered. This type of comprehensive search discloses common law uses of marks that may not otherwise be revealed. Recent court decisions have held that there may be a duty imposed on companies to search common law uses as well as the federal trademark registry. Failure to obtain a full search report may result in a finding of bad faith or even willful infringement if legal counsel’s advice to obtain a full search report is ignored. International Star Class Yacht Racing v. Tommy Hilfiger U.S.A. , 38 U.S.P.Q.2d 1369 (2 nd Cir. 1996).

E. Trademark Registration

Once a mark has been cleared, a trademark or service mark application should be filed as soon as possible to avoid the possibility of another party either filing an trademark application or putting the mark into use. Application forms for U.S. trademark registrations can be downloaded from the USPTO ‘s Web site ( http://www.uspto.gov ). The application itself is quite simple on its face, but this conceals a host of technical issues that can be fatal to an application (See James E. Hawes, Trademark Registration Practice (2 nd ed. 1997)). The applicant must identify the mark for which registration is sought, the applicant’s identity (individual or corporation) and citizenship, and a description of the goods or services which will be offered under the mark. In the case of a mark that has already been used in commerce, the applicant must state the date the mark was first used and must submit three specimens showing the mark in use, such as on packaging material for a trademark application or on marketing brochures for a service mark application. Upon submission of a completed application and the correct filing fee of $245.00 per class, the USPTO will assign a serial number for the application, and the mark is entered into the federal database.

The United States has adopted the International Class system which assigns a class number for the goods and services covered under each registration. For example, International Class 9 is the designated class for computer software, and Class 42 is the designated class for computer services, such as computer consultation services. The increased use of the Web for business has caused some confusion as to the classification of certain goods and services. Newsletters, magazines, and other publications, when in print format, must be filed in Class 16. These same goods, when offered online, must be filed in Class 42 under a computer services description such as “computer services, namely, providing online magazines in the field of [specify field].” Further modifications to the U.S. trademark classification policy were instituted on January 1, 1997, when the seventh edition of the Nice Agreement, to which many countries are signatories, became effective. Notable among these changes are the transfer of computer game programs downloadable from the Internet from International Class 42 to International Class 9. These revisions have been included in the newly revised Trademark Acceptable Identification of Goods and Services Manual, which can be accessed that the USPTO’s Web site located at  http://www.uspto.gov/web/offices/tac/doc/gsmanual . Hard copy versions of the revised manual can be ordered from the U.S. Government Printing Office (202-512-1800).

Due to the increased commercial activity on the Internet, the USPTO has begun to accept applications for trademarks and service marks as used on Web sites. The marks must actually be used as trademarks or service marks, that is, used as an identifier of source of origin for a product or service. Printouts of Web pages will be accepted by the USPTO as specimens if the pages clearly show the mark associated with the goods or services offered under the mark. If the Web pages do not identify the goods or services offered under the mark, the specimens will be rejected. Fortunately, the cost of revising a Web page to reflect proper trademark or service mark use can be much lower than that of a new production run of packaging materials.

Once a mark is used, either in traditional commercial activities or on the Internet, the mark must be policed to identify potential infringing uses, and to guard against dilution, or the conversion of the mark into a “generic” term, through misuse. (See “Loss of Rights” below). Trademark owners have generally policed their marks through the use of routinely scheduled trademark searches or through watching services which report on newly filed or newly published applications and common law uses of the mark. These traditional methods, however, will not disclose use of a mark on the Internet. To police marks on the Internet, trademark owners now must search the Web at regular intervals themselves or employ one of the new commercial services such as MarkWatch ( http://www.markwatch.com ).

F. Duration of Registration .

Each federal trademark registration issued after November 16, 1989 is valid for a period of ten years from the date of registration, with ten year renewal terms thereafter upon payment of the appropriate fees and the submission of an affidavit stating that the mark is currently in use in commerce. (15 U.S.C. Section 1058, 1059). The original registration term for trademarks registered prior to November 16, 1989 was twenty years, with ten year renewal terms.

Between the fifth and sixth year of the original registration, the registrant must file either an affidavit of continued use and submit a specimen showing current use of the mark in commerce, or an affidavit explaining the special circumstance which excuse non-use of the mark. (15 U.S.C. Section 1058). Failure to file this affidavit will result in cancellation of the registration. The continuous use requirement ensures that marks are not “stabled,” that is, maintained on the Principal Register to tie up the marks without actual use of the marks in commerce. See also “Incontestability” under the section “Advantages of Trademark Registration on the Principal Register” below.

G. Loss of Rights .

In addition to cancellation by the USPTO for failure to file an affidavit of continuing use, trademark registrations may also be canceled upon petition by an interested party due to abandonment or generic use of a mark. (15 U.S.C. Section 1064). To prove abandonment, the petitioner must show non-use of the mark plus an intent to abandon the mark. Three years of non-use is presumptive evidence of abandonment, but abandonment may also be demonstrated through “naked” licensing of a trademark, which occurs when the owner of a trademark licenses the mark without exercising quality control of the goods produced by licensee. A trademark also becomes susceptible to cancellation when it loses its ability to identify the origin of goods when the public uses the mark in a generic manner. “ASPIRIN” and “ESCALATOR” are former trademarks that lost their trademark significance when the public began using the mark to identify the product itself, not the manufacturer of the product. Thus, policing trademark usage by third parties is essential to maintaining a valid trademark registration.

H. Supplemental Register .

Certain marks are ineligible for registration on the Principal Register because they are currently incapable of distinguishing the applicant’s goods or services from those of others, but are capable of acquiring that characteristic. These include marks that are merely descriptive of the goods or services on which they are used, are geographically descriptive, or are surnames. These marks may be registered on the Supplemental Register. (15 U.S.C. Section 1091). While a Supplemental Registration does not provide any of the benefits afforded to a registration on the Principal Register, it does provide the registrant with an opportunity to acquire secondary meaning or distinctiveness through use in commerce and satisfies the domestic registration requirement required by some countries for obtaining a foreign registration. Marks which are generic or otherwise statutorily ineligible for registration on the Principal Register under 15 U.S.C. Section 1052 cannot be registered on the Supplemental Register.

Registration on the Supplemental Register does not preclude later registration on the Principal Register if the mark meets the requirements for such registration. Five years of registration on the Supplemental Register creates a use presumption that enables the registrant to prove acquired distinctiveness, thereby allowing for the possibility of registering the mark on the Principal Register. (15 U.S.C. Section 1052(f)).

1. Advantages of Trademark Registration on the Principal Register .

Trademarks are important assets of a company, and complications in a merger or acquisition may arise if the marks are not registered. The key benefits from Federal registration are:

1. Use of the “7 ” symbol or of the phrases “Registered in U.S. Patent Office” or “U. S. Pat. Off.” to denote Federal registration . These notices warn the public that trademark rights are claimed, and can be of particular value in protecting marks that others may consider descriptive, generic, or merely descriptive. A registered mark is prima facie valid and enjoys various other evidentiary presumptions such as ownership, and may facilitate settlement when used against an alleged infringer.

Failure to use one of these notices in connection with a registered mark will mean that actual notice of the registration will need to be given to an infringer before the owner’s rights to recover profits or damages for such an infringement begin to accrue. (15 U.S.C. Section 1111). Since a court has discretion to award treble damages in certain cases of deliberate infringement of a registered mark, the use of a registration symbol can prove quite valuable if infringement is proven.

2. Nationwide Protection . Once a mark is federally registered, the registrant’s trademark rights relate back to the date of the trademark application, in the case of an intent to use application, and, in a use application, the rights relate back to the date of first use, not the date of filing. The concept of constructive notice gives the registrant priority against a party adopting the same or similar mark for the same or similar goods after the date of the registrant’s application. In the event that a third party commences use of a mark after an applicant has filed an intent to use application, but prior to the applicant putting the mark into use, the third party cannot enjoin the applicant from using the mark and proceeding with the registration process. Warnervision Entertainment Inc. v. Empire of Carolina, Inc . (Docket No. 96-7380 (S.D.N.Y. 1996).

If the mark is left unregistered, common law protection may be limited to those geographic areas in which the mark had actually been in use or become known. Moreover, if registrant does not apply for registration immediately upon use in commerce (or does not file an intent-to-use application), and another user innocently adopts a similar mark following registrant’s use, but prior to registrant’s application, the registrant’s entitlement to use the mark in the entire United States maybe limited by the area of use in which the other user in good faith exploited the mark prior to registrant’s application.

3. In Terrorem Effect . A registered mark can easily be discovered in trademark clearance searches of the Patent and Trademark Office’s database, so other parties will be dissuaded from adopting a mark confusingly similar to a registered mark. Perhaps more important from a practical perspective, however, is that under the Hilfiger and other recent decisions, the courts have found a duty to conduct trademark clearance searches under certain circumstances. ( Hilfiger , supra ). Failure to clear a trademark before putting it into use can lead to a significant award of damages for infringement.

4. Incontestability . If a registered mark is used continuously for five years, then upon filing of an affidavit to that effect with the USPTO, the mark will become incontestable. (15 U.S.C. Section 1065). This means that certain defenses often used by alleged infringers are no longer available, and that the registrant has the absolute right to use the mark (subject to certain limited exceptions such as abandonment and fraud).

5. Barring imports and protection against counterfeiting . Products manufactured abroad bearing infringing marks may be blocked by U.S. Customs, provided that the registrant is a U.S. citizen, and is not related in certain ways to the producer of the imported goods. (15 U.S.C. Section 1124). In addition, importation of any goods marked or labeled in a manner that is likely to cause confusion or mistake as to the source of origin, sponsorship or misrepresents facts may also be blocked by U.S. Customs. (15 U.S.C. Section 1125(b).

I. International Registration

In addition to registering trademarks and service marks (including domain names) in the U.S., a trademark owner should file for registration in those countries in which the company anticipates having significant sales.

Many companies have been prevented from protecting their marks through registration in Europe, despite significant sales, due to the expense and complexity involved in pursuing multiple registrations. With the advent of the Community Trademark (CTM), however, it is now possible to file one application, which upon maturation into registration, will be enforceable in fifteen countries, including Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the U.K. For the cost of registration in three individual countries, trademark protection may be obtained fifteen countries. In the event that there is an objection from the owner of a prior registration for an identical mark for identical goods or services in one of the member countries, the applicant can convert the CTM application into individual country applications, while preserving the priority date established by the CTM filing.

Moreover, if the company owns a domain name registration, but not a trademark registration for the identical domain name, registration in a foreign jurisdiction should be considered as a strategy to protect the domain name registration. Jurisdictions such as Benelux and Tunisia issue trademark registrations within a few months, whereas a U.S. registration may not issue for a year or more. A valid foreign trademark registration can, under certain circumstances, protect a domain name registration from attack from another trademark registrant. See “Protection of Domain Names” below.

J. Infringement

Trademark infringement occurs when: “any person who, on or in connection with any goods or services . . .uses in commerce any word, term, name, symbol, or device . . . which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection or association of such person with another person, or as to the origin, sponsorship or approval of his or her goods, services . . .by another person, or . . . misrepresents the nature, characteristics, qualities, or geographic original of his or her or another person’s goods, services or commercial activities.” (15 U.S.C. Section 1125).

The basic test for proving infringement involves an analysis of the likelihood of confusion between the marks in the minds of the buying public. If the consuming public would consider the goods and services offered under similar or identical marks as originating from the same source, then infringement will be found.


While trademarks and service marks permit potential customers to identify the source and quality of a given product or service, “famous” marks can actually increase the sale of goods or services, due simply to the high recognition value of the mark. Examples of famous marks include XEROX, TIFFANY, and POLAROID, as well as advertising slogans as “G.E. – WE BRING GOOD THINGS TO LIFE” and “COKE – IT’S THE REAL THING.”

A famous mark can be diluted, that is, its distinctiveness as a trademark can be “whittled away.” Dilution can occur through “tarnishment” or through “blurring.” Tarnishment occurs when the unauthorized use of a famous mark disparages or denigrates the quality or where the unauthorized use creates a negative association in the minds of the general public, such as using the mark “TIFFANY” for toilets. Blurring occurs when a famous mark is used on non-competing goods or services such that the mark no longer serves as a unique identifier of the owner’s goods, resulting in a diminishment of its value.

Marks can also lose their value when they become so popular buyers use the mark “generically” to refer to the product itself, not its manufacturer. Evidence of generic use of a mark can be raised as a defense in an infringement action and also can result in a party petitioning to cancel a mark based on the loss of ownership rights in the mark. Xerox Corporation, among others, has expended considerable resources policing its mark in order to prevent XEROX from becoming a generic term for copies and copiers.

A number of states, in the absence of federal protection of distinctive marks, enacted anti-dilution statutes which protected mark owners from the diminution in value of their marks through overuse or misuse by competitors or other commercial entities. The level of distinctiveness that a mark must acquire in order to receive such protection varies from state to state, but this cause of action can provide injunctive relief when infringement cannot be proven.

Federal Anti-Dilution Act

The Federal Anti-Dilution Act of 1995, based on many of the state anti-dilution statutes, became effective on January 1, 1996 and provides a federal claim for trademark dilution. (15 U.S.C. Section1125(c). Dilution is defined as the “lessening of the capacity of a famous mark to identify and distinguish goods and services, regardless of the presence or absence of: (1) competition between the owner of the famous mark and the other parties, or (2) likelihood of confusion, mistake or deception.” (15 U.S.C. Section 1127). Under this statute, the owner of a famous mark does not have to prove likelihood of confusion between its mark and that of another user of the same or similar mark, even if the mark is used on dissimilar goods and services; a successful plaintiff need only show commercial use of the mark in commerce where the junior user commenced use after the mark has become famous, such that the effect is to dilute the distinctive quality of the mark. (15 U.S.C. Section 1125(c)(1)).

The Federal Anti-Dilution Act weights eight factors in determining whether a mark is “famous.” These include:

(A) the degree of inherent or acquired distinctiveness in the mark;

(B) the duration and extent of use of the mark in connection with the goods or services on which the mark is used;

(C) the duration and extent of advertising and publicity of the mark;

(D) the geographical extent of the trading area in which the mark is used;

(E) the channels of trade for the goods or services with which the mark is used;

(F) the degree of recognition of the mark in the trading areas and channels of trade used by the marks’ owner and the person against whom the injunction is sought;

(G) the nature and extent of use of the same or similar marks by third parties; and

(H) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

(15 U.S.C. Section 1125(c)(1)(A)-(H)).

Not all uses of a famous mark are actionable, however. Fair use of a famous mark includes use in comparative advertising, noncommercial use, and all forms of news reporting and commentary. (15 U.S.C. Section 1125(c)(4).

The Federal Anti-Dilution statute already has been tested in several domain name disputes. In Hasbro v. Internet Entertainment Group Ltd. (Docket No. C96-130 (W.D. Wash.))
( http://www.leepfrog.com/E-law/cases/hasbro_v_IEG.html   ), Hasbro successfully enjoined the defendant from using the domain name “candyland.com,” arguing that the defendant’s use of Hasbro’s registered trademark for a children’s board game for defendant’s Web site featuring adult entertainment diluted Hasbro’s famous mark.

When clearing a new mark, it is now important to consider not only pre-existing marks that may be infringed, but also pre-existing marks whose owners could raise a dilution claim.



As the Internet continues to grow as a business forum across the world, traditional laws designed to protect trademarks are no longer sufficient for that purpose, and the interplay between trademarks and domain names has become increasingly complex and contentious. Trademarks are not unique; domain names are. To understand the legal issues that have arisen, it is necessary to understand the process by which domain names are issued.

A. Current System

Each computer that interfaces with the Internet is assigned a series of numbers known as an Internet Protocol (IP) address, which, like a serial number, identifies a specific piece of equipment. For example, the IP address 305.421.5.111 permits the computer to send and receive communications addressed to that specific address. A domain name, such as “microsoft.com” is an alphanumeric translation of the IP address that is easier to remember than the long string of numbers that denotes the actual IP address.

The current domain name system is organized in a series of levels. The generic top-level domains (gTLD) are three letter suffixes that indicate whether the party using the domain is an educational institution (.edu), miscellaneous organizations, including non-profit entities (.org), government (.gov), Internet-related (.net), military (.mil), international (.int), or, most commonly, commercial (.com). These gTLDs are international in scope, so there can be only one microsoft.com. In addition to these gTLDs, there are also two character geographic identifiers that serve to identify the country in which an overseas domain name is registered, such as .uk for the United Kingdom, .de for Germany, and .fr for France. Registration of such geographic names is made through an established registry in each country. Thus, it may be possible to have similar domain name registrations such as microsoft.com, microsoft.com.uk, and microsoft.com.de owned by the same company or by different companies. Many companies outside the U.S. have bypassed registering geographic domain names in their own countries in favor of registering the gTLD “.com” which has global application and because the shorter the domain name, the easier it is for Internet users to guess the correct URL of any company doing business on the Web.

The second level of domain names, the focus of numerous disputes and increasing litigation, are made up of up to twenty-two characters, including letters, numbers, and marks, such as hyphens. To illustrate, in the domain name “domain.com”, “domain” is the second level domain, and “.com” is the gTLD that indicates that the registrant is a commercial entity.

The administration of the domain name system is also multi-tiered. The Internet Assigned Numbers Authority (IANA) establishes the technical standards for the Domain Name System (DNS) and controls its administration. The DNS serves as the interface that translates IP addresses into domain names. The Internet Network Information Center (Internic), established by the National Science Foundation (NSF), is responsible for processing new domain names and for updating existing registrations. On January 1, 1993, NSF contracted with Network Solutions, Inc. (NSI) a private, for-profit corporation, to run InterNIC and register non-military top-level domain names. NSI’s contract with the NSF, and its monopoly over domain name registration of the “.com,” “.org,” and “.net” categories, will expire in March, 1998.

B. Proposed New System

To deal with the explosion of domain name registrations and domain name conflicts arising therefrom, IANA, through the Internet Society, created the International Ad Hoc Committee (IAHC) to study proposals for improving the current gTLD system. The IAHC plan, announced in February, 1997, proposed expanding the current system by adding seven new gTLDs, including:

.firm, for businesses or firms;

.web, for entities emphasizing World Wide Web activities;

.arts, for entities involving cultural and entertainment activities;

.rec, for entities emphasizing recreational entertainment;

.store, for business entities offering goods for sale;

.info, for entities offering information services; and

.nom, for those wishing individual or personal nomenclature.

The IAHC plan was formalized in a Memorandum of Understanding (MoU) signed in Geneva on May 1, 1997. More than one hundred and seventy companies and organizations, including Internet access providers, telecommunications providers, and numerous governmental entities, including Digital Equipment Corp., MCI Communications, and the International Trademark Association have signed onto the plan as of November, 1997. The MoU is available online at
http://www.gtld-mou.org/gTLD-MoU.html , as is a list of signatories at
http://www.itu.int/net-itu/gtld-mou/signat.htm .

The IAHC was voluntarily dissolved after the MoU was signed. The new gTLD administration and management will be comprised of multiple internationally competing registrars, under a Council of Registrars (CORE) established by a Memorandum of Understanding (CORE-MoU) which was signed by the registrars. The CORE-MoU is available online at
http://www.gtld-mou.org/docs/core-mou.htm . CORE will be responsible for providing common services among the various registrars, including managing a shared database for the gTLD registries. An interim gTLD DNS Policy Oversight Committee (iPOC) has been established to develop the CORE, and, once the system is operational, a permanent POC will oversee the administration of the gTLD system.

The IAHC plan enables more trademark owners to register domain names that correspond to the field of use of their trademarks, thereby reflecting U.S. trademark law which permits concurrent use of identical trademarks in different fields. For example, the new system should allow Internet users to differentiate between THE GAP, owned by the U.S. based for the jeans retailer (thegap.store) and THE GAP, used by the The Genesis Project Ltd, the first commercial Internet service in Northern Ireland, as a acronym for its Internet service name “the genesis access point” (thegap.web).

The IAHC plan requires that an applicant for a domain name under the new gTLDs provide substantially more detailed information about its proposed use of the domain name than is required by NSI. Further, the applicant must agree to submit to jurisdiction in the country in which the registry is located. All new domain name applications will be published online to provide trademark owners an opportunity to oppose any applications that would violate valid trademark rights. The IAHC plan also provides for an administrative challenge process to deal with the assignment of domain names that allegedly violate internationally known trademarks.

These additional gTLDs do not create a perfect system and will not end domain name disputes. Owners of famous marks will likely be required to register under each new gTLD to prevent dilution of their marks and to prevent “cybersquatters,” parties who register other companies’ famous marks as domain names, from demanding “ransom” for the names. In addition, the new gTLDs may not be diverse enough to deal with business realities of many multinational corporations, as companies like Disney and Sony could conceivably register in all of the new TLDs, with the exception of .nom, as their business interests include entertainment, merchandising, Web activities, etc. Thus instead of freeing up domain names to permit concurrent use of identical domain names for divergent goods and services and discouraging cybersquatters, the new gTLDs may continue to encourage domain name disputes and piracy.

Whether the IAHC plan will be instituted as it is currently drafted remains in question. The House Subcommittee on Basic Technology held the first of a series of congressional hearings on the Internet domain name assignment system on September 25 and 30, 1997.
( http://www.house.gov/science/hearing.htm#Technology   ). Although the agenda included the history and status of the current domain name system and the relationship between the NSF and NSI, the primary focus of the hearing was the IAHC plan to expand the domain name assignment system and the role of the federal government system in the domain name assignment system. The principal arguments against the adoption of the IAHC plan are that the administration of the proposed system is not adequately democratic or representative of the Internet community, which has governed the Internet by consensus. Several witnesses at the hearing testified that because the IAHC plan does not provide for accountability to the Internet community, the plan should not be adopted without amendments reflecting concerns about the governance of dispute resolutions and trademark rights. As there is also a dispute over the fundamental issue of whether the Internet (an outgrowth of the U.S. government-funded ARPANET), is a U.S., rather than a global asset, implementation of the IAHC plan or any alternative proposal for the transition of the domain name assignment system to the private sector remains in question.



A. Clearance .

The first step in registering a domain name is to determine whether a given domain is already in use. There are several sites on the Internet which allow one to determine whether a domain name is available for appropriation. For example, free domain name searches are available at the InterNIC site which can be accessed at  http://rs.internic.net/cgi-bin/whois   , as well as by using various search engines such as HotBot, which permits users to search for domain name registrations
( http://www.hotbot.com   ). Thomson and Thomson, one of the leading trademark clearance services, allows subscribers to perform no-cost domain name clearance services at its site
( http://www.saegis.com   ).

B. Registration .

Registration of a new domain name is a simple process easily completed online through the completion of templates at the InterNIC site (http://rs.internic.net   ). NSI does not screen domain name applications for possible trademark infringement; that burden is borne by the applicant. Further, each applicant must represent that the use or registration of the domain name does not infringe any third party’s trademark, service mark, or other intellectual property right, and that the domain name registration is not sought for any unlawful purpose. After receiving the completed request, InterNIC acknowledges the registration request and assigns it a tracking number. If the template is completed correctly, then the registrant will be notified of its acceptance by return e-mail and will be billed for the appropriate registration fee. In the event that the template contains errors, is incomplete, or the domain name requested is already taken, the InterNIC will return the request to the registrant and will attempt to assist the registrant in resolving the errors. The cost of registering a domain name with NSI is $100.00 for the first year, and $50.00 per year thereafter.



Trademark law has been forced to adapt to the surge in electronic commerce conducted over the Internet, as domain names have become subject to trademark protection by means of a new technological “use” of marks. Like a trademark that appears on product packaging or a service mark that appears in advertising and promotional materials, a domain name may function as an identifier of source depending on its appearance and usage. Simply using a domain name, however, does not confer trademark or service mark rights. By analogy, under U.S. trademark law, trade names by themselves cannot be registered, although, a trade name may be registered if it is also used as a trademark or as a service mark. Thus in order for a trade name or a domain name to qualify as a trademark or service mark, it must identify and distinguish the products or services of one person from the services of others, even if that source is unknown.

The USPTO has acknowledged the analogy between domain names and mnemonic telephone numbers (such as 1-800-COLLECT or 1-800-CALL-ATT) in its statement, Registration of Domain Names in the Trademark Office . Although this statement is under revision, a copy of the February, 1996 statement may be viewed at
http://www.uspto.gov/web/offices/tac/domain/tmdomain.htm . Like the “800” part of mnemonic telephone number applications, the USPTO has been treating the “.com” portion of the mark as having no trademark significance. As long as the connecting term is arbitrary or suggestive, the mark has a whole can be registered. For example, Amazon.Com, Inc. holds two registrations in International Class 42 for the marks AMAZON.COM and AMAZON.COM BOOKS, both for “computerized online ordering service featuring the wholesale and retail distribution of books,” as well as a pending application for AMAZON.COM in Class 35 for a “computerized online search and ordering services featuring the wholesale and retail distribution of books, music, motion pictures, multimedia products, computer software . . . and direct digital transmission.” Class 42 is the “catch-all” category for miscellaneous services; class 35 is the designation for advertising and business services.

The key to obtaining a trademark or service mark registration for a domain name is the specimens submitted in support of the application. The USPTO requires that specimens submitted in support of trademark and service mark applications must show a direct association between the mark and the goods or services offered under the mark. In other words, the specimen must identify both the mark and the goods or services offered under the mark. The domain name, therefore, must appear prominently on the Web pages, and not merely in the URL line at the top or bottom of the screen. In the case of AMAZON.COM, the domain name is prominently displayed in a larger font size than the surrounding text and the company’s services, online book sales, is clearly associated with the mark.



The commercial value of having an easy to recall (or guess) domain name can be considerable. Registering a domain name as close to a company’s trade name is essential in order to make it easier for potential customers to find your site. Cross-link the company’s product Web sites to the company’s primary Web site and vice versa. It is also advisable to obtain domain names containing common misspellings of the company’s trade name in order to prevent its competitors from registering these names and stealing potential customers who are keyboard-challenged. For example, American International Facsimile Products (AIFP) obtained the domain name “tuebner.com,” a common misspelling of Teubner & Associates, Inc., a high-technology software company which was one of its direct competitors. AIFP also registered the domain name “faxgate.com,” the name of Teubner’s product that directly competes with AIFP’s HOSTFAX product. Teubner’s lawyers issued a cease and desist letter, and the grabbed” domain names now link to Teubner’s home page.

In addition to registering the company’s domain name, trademark or service mark applications for the domain name itself should be filed.


The current NSI Domain Name Dispute Policy, attached in these materials and available at
http://rs.internic.net/domain-infor/internic-domain-6.txt , allows a domain name owner to retain its domain name in the face of a competing claim by the holder of a registration for a trademark that is identical to the second level of the domain name, as long as the domain name was registered prior to the issuance of the trademark registration or the first use claimed under the registration. This policy encourages businesses to register domain names as soon as possible, even if they are not prepared to “use” the domain by conducting business online. Obtaining domain name registration allows a company to reserve a domain name and construct a temporary Web site until it becomes operationally viable to put the domain name into actual commercial use. If another entity acquires a trademark registration for the identical mark after the domain name was registered, that entity cannot force NSI to place the domain name on hold. This policy resembles U.S. trademark law in that use of a mark establishes rights in the mark. It could be argued, however, that this NSI policy encourages the kind of “warehousing” of marks that is anathema to U.S. trademark law.

On the other hand, NSI’s dispute policy also encourages domain name registrants to obtain trademark or service mark registrations, as a trademark owner may challenge another’s use of a domain name simply by holding a valid trademark registration that was issued before the domain name was obtained. The concept of concurrent use of identical marks in different fields of use, clearly established in trademark law, does not apply in domain name disputes. In this respect, NSI’s current domain name dispute policy mirrors the Federal Anti-Dilution Act, which has become the preferred mechanism for enjoining use of contested domain names, in that a trademark owner need not prove trademark infringement in order to obtain relief. For example, the owner of a trademark for children’s toys may prevail in an NSI domain name dispute over an Internet service provider using the same mark for its services if the ISP has obtained a valid service mark registration but its domain name registration post-dates the toy maker’s trademark registration. The toy maker may prevail, even though it would be unlikely to win a trademark infringement action against the ISP in court.

Trademark Registrant’s Actions under the NSI Policy

If the owner of a valid trademark registration wishes to challenge a domain name that is identical to the trademark owner’s valid foreign or U.S. trademark registration (common law, state trademark registrations and registrations on the Supplemental Register are not sufficient to initiate the NSI dispute policy), the trademark registrant must first send notice to the domain name registrant that the use and registration of the domain name violates the trademark owner’s legal rights. To initiate the NSI dispute policy, the trademark owner must provide NSI with a copy of the notice sent to the domain name registrant and a certified copy of the trademark registration. If the copy of the trademark registration is not certified or is more than six months old, NSI will not take any action.

Upon receipt of the challenge notification and supporting documents, NSI will determine whether the domain name activation date is before the earlier of the date of first use claimed in the registration or the effective date of the registration. If domain name was activated before the trademark owner’s first use date or registration date, or, if the domain name registrant produces evidence of a trademark registration for a mark identical to the domain name registration within thirty days, then NSI will take no action against the domain name holder, as long as the domain owner’s registration was valid prior to the earlier of NSI’s request for evidence of ownership or notification of challenge by the trademark registrant. Under the current policy, NSI will not require the domain name holder to post a bond to protect NSI against any claim related to the domain name registration. The challenging trademark owner must then file suit against the domain name holder in an attempt to resolve the dispute if the domain name holder refuses to voluntarily relinquish the domain name registration.

Filing suit against the domain name holder will not prevent it from continuing to use the domain name. If the trademark owner files suit against the domain name holder and provides NSI with a copy of the file-stamped complaint, NSI will not place the domain name on hold, but rather will transfer control of the domain name to the court pending a temporary or final decision.

If the domain name activation date is after the date of first use claimed by the trademark owner or the effective date of its registration, NSI will give the domain name registrant thirty days in which to either relinquish the domain name or provide evidence of its ownership of a trademark registration for the identical mark valid prior to the earlier of the trademark owner’s notice to the domain name registrant or NSI’s request for proof of trademark ownership.

If the domain name registrant agrees to relinquish its domain name, NSI, upon request, will assist the domain name registrant in acquiring a new domain name and will allow the domain name registrant to use both domain names concurrently for ninety days. If, however, the domain name holder refuses to relinquish the name or to provide NSI with proof of its trademark registration within thirty days of NSI’s dispute notification letter, then NSI will place the domain name on “hold,” rendering the domain unavailable for use by any party. The trademark owner then would be forced to sue the domain name holder.

Domain Name Holder’s Actions under the NSI Policy

The actions of a domain name holder whose rights in the domain name are challenged are limited under the NSI dispute policy, which favors trademark registrations over common law trademark rights. If the domain name holder has a valid U.S. or foreign trademark registration, then upon receipt of an NSI dispute letter, it can submit evidence of the registration to NSI in the form of a certified copy. As long as the trademark registration was issued prior to the earlier of the issuance of NSI’s dispute letter or the challenger’s notification to the domain name holder, NSI will not place the domain name on “hold.” The challenger would be forced to bring suit against the domain name holder in order to acquire the domain name. If, however, the domain name holder either does not have a trademark registration identical to its domain name or the registration was issued after the domain name holder was informed of the challenge, the domain name holder will lose its right to the domain name under the NSI policy. The domain name holder can continue to use the domain name for a period of ninety days if it submits an explicit written request for assistance in obtaining a new domain name. Failure to supply NSI with either evidence of a valid trademark registration or a request for assistance in obtaining a new domain name within thirty days of NSI’s request will result in the domain name being placed on “hold.”

In any domain name dispute, NSI will reinstate a domain name registration after receiving either evidence of a resolution between the parties or an authenticated court order from a U.S. federal or state court. In the event that NSI is named as a party to a suit, it reserves the right to raise any and all defenses to the action it deems appropriate. Further, any failure by the domain name holder to abide by any provision under the policy may be considered a material breach, allowing NSI to revoke the domain name registration if the domain name holder cannot produce evidence satisfactory to NSI that no material breach has occurred.

Given that obtaining a U.S. trademark or service mark registration now takes over a year, some businesses may consider acquiring a trademark registration in a foreign jurisdiction where the processing time is faster. For example, a trademark registration in Benelux may be had in as little as a couple of months. The NSI dispute policy does not require a U.S. registration; any valid national registration is sufficient to challenge another party’s domain name. Such a foreign registration, while costly in the short term, could prove to be invaluable in the long term if another entity challenges the registrant’s domain name registration.



Types of Disputes

Domain name disputes generally arise in three circumstances. The first is the typical cybersquatter scenario, in which a party registers another’s famous mark as a domain name in the hopes of selling the registration back to the trademark owner. One of the first cases in this category of disputes was Intermatic v. Toeppen , 947 F.Supp. 1227 (N.D. Ill. 1996), in which the defendant registered over two hundred domain names including neiman-marcus.com, deltaairlines.com, as well as a domain name containing the plaintiff’s registered trademark, intermatic.com. The court held that although Toeppen had ceased use of the domain name intermatic.com prior to the date the Federal Trademark Dilution Act became effective, his intent to arbitrage the domain name was sufficient “commercial use” to grant Intermatic’s motion for summary judgment on the federal dilution claim. Other domain names that have fallen prey to cybersquatters are mtv.com, avon.com, and mcdonalds.com.

“Reverse grabbing” occurs when a domain name has been registered for use in a legitimate business context in which there is no intent to benefit from another party’s well-known trademark, and the owner of the trademark seeks to wrest the domain name away. For example, Roadrunner Computer Systems, Inc., a New Mexico-based ISP whose name is derived from the New Mexico State Bird, registered the domain name roadrunner.com in May, 1994. Warner Bros. Obtained a federal trademark registration for the mark ROAD RUNNER in August, 1995 for “toys, namely, plush dolls, and Halloween masks and costumes”. In December, 1995, Warner Bros. challenged Roadrunner’s domain name registration with NSI, resulting in Roadrunner filing suit against NSI to protect its domain name registration and the e-mail services provided to thousands of its customers under roadrunner.com. Although the suit was ultimately resolved when Warner Bros. obtained a domain name registration for road_runner.com, Roadrunner was a legitimate user of a domain name that was not infringing upon a third party’s trademark, and had registered its domain name priorto the issuance of Warner Bros. federal trademark registration. This dispute exemplifies the problem inherent in NSI’s dispute policy: NSI uses trademark registrations in resolving domain name disputes, without consideration of the likelihood of confusion analysis for infringement.

To add to Roadrunner’s injury, NSI retroactively applied its 1995 dispute policy to Roadrunner, requiring it to produce a trademark registration within thirty days of the Warner Bros. challenge. At the time Roadrunner obtained its domain name registrations, domain names were issued on a first-come, first-served basis. Registered trademark owners were not given special consideration over common law trademark owners. As a result of this and other similar disputes, NSI issued its current dispute policy that requires that a challenger must hold a trademark registration prior to the registration of the domain name in order to benefit from NSI’s dispute resolution proceedings.

There are some domain name disputes that generate traditional trademark infringement claims. In such a case, the traditional test of likelihood of confusion determines who will own the contested domain name. The first dispute of this nature, The Comp Examiner Agency, Inc. dba 25 th Century Internet Publishers v. Juris, Inc ., No. 96-0213-WMB, 1996 U.S. Dist. LEXIS 20259 (C.D. Cal. 1996), involved Juris, Inc., the owner of a federal trademark registration for the mark JURIS for its legal time and billing software packages. Juris Inc. was forced to use the domain name jurisinc.com after learning that juris.com had been issued to The Comp Examiner Agency, Inc. (“Comp Examiner”), which used the domain name for a legal information site. Juris accused Comp Examiner of infringement, in response to which Comp Examiner sought to cancel Juris’ trademark registration on the grounds that JURIS was generic. Juris counterclaimed for trademark infringement and dilution, and the court granted a preliminary injunction that enjoined Comp Examiner from using juris.com, juris, or any other confusingly similar domain for its Web site.

Non- U.S. Disputes

Courts in other countries are dealing with domain name disputes, facing the same type of disputes as discussed above. The Harrods department store was the victim of a domain name grabber that registered the domain name harrods.com. The Chancery Division of the High Court of Justice enjoined the domain name “grabbing” defendants as well as their ISP provider, UK Network Services Limited, from infringing the Harrods name and ordered the release of the domain name. Harrods Limited v. UK Network Services Limited, et al , 1996 H 5453 (December 9, 1996). Similarly, the court of Landgericht Mannheim held that the domain name registration heidelberg.de to a private party infringed upon the City of Heidelberg’s rights in the city name.

C. Jurisdiction Issues

As litigation over the use of trademarks as domain names has proliferated, the issue of where jurisdiction is proper has been disputed, but not resolved. Moreover, given that the Internet is accessible worldwide, companies need to consider the possibility that their business activities may subject them to jurisdiction not only in the United States, but also in foreign countries as every country has its own trademark laws, and each will enforce its laws within its boundaries. For example, a German court recently held that use of the domain names concertconcept.com, concerconcept.de, concert-concept.com, and concert-concept.de by a U.S. corporation located in Kansas violated German trademark law, and enjoined the U.S. company from using the domain names. Jurisdiction was proper as the company’s site was accessible in Germany. See the discussion by Lee Gesmer, Esq. of Internet jurisdiction cases presented elsewhere in these materials for further analysis.



Because NSI’s current domain name dispute policy will suspend the registration only of a domain name identical to a registered trademark, it may be advisable to register a number of domain names similar, but not identical to the company’s registered mark. Registering as many variations of a mark as possible will prevent competitors from acquiring these domain names and benefiting from the goodwill the company has established in the name. For example, if XYZ is a registered trademark, it may be prudent to r