Domain names, and conflicts over domain name ownership, have created a further set of complications to existing US and international trademark law systems.

It is crucial to examine a prospective or existing domain name for the same two issues which are of concern for trademarks:

  • Will our use of the domain name infringe on another party’s domain name or trademark or service mark rights?
  • Is there a party out there who may be conflicting with our domain name rights that we will need to stop — and will state and/or federal trademark registration or business name registration be possible, and of some benefit?

We have a domain name that we want to protect. Why is trademark law important?
Because many customers in the marketplace invariably associate domain names in any top-level domain with the goods or services of various trademark holders, domain names frequently cause “likelihood of confusion” with existing trademarks.

While the state, federal, common-law, and international trademark law systems recognize that different owners can each have trademark rights in the same identical mark with no “likelihood of confusion” or other conflict (because the uses pertain to different goods or services), the domain name system only allows use by a single owner for any one name.

This critical difference creates a number of difficult conflicts between domain name administration and governance and existing US and international trademark laws.

Due to the extremely rapid growth of the Internet and the failure of the original architects of the domain name system to address these concerns adequately, domain name legal conflicts are poorly addressed in existing statutes, cases, arbitration panel decisions, and regulatory contracts. Outcomes of these conflicts are heavily weighed in favor of existing US federal trademark registration owners.

What kind of rights do we have in our domain name?
Domain name rights are contract rights, similar to your rights in a telephone number when you have a contract for telephone service. When you register a domain name, you have to agree to a contract with a registrar. Each registrar requires your agreement to its standard terms of registration before any domain name will be assigned.

Under these contracts, the domain name applicant must state that he or she knows of no existing trademark registrations or other trademark ownership rights that would conflict with the requested domain name. Further, these contracts typically contain terms that provide that trademark uses of a domain name take precedence over use not based on a trademark, so the applicant agrees in the domain name registration contract that the domain name may be revoked or transferred in the case of a conflict.

What happens if there is a dispute between a domain name owner and another party, over the ownership of the domain name?
Conflicts in domain name registrations are subject to the specific terms of the registrar’s contract. Each registrar’s contract includes the terms of the Internet Corporation for Assigned Names and Numbers (ICANN) Uniform Dispute Resolution Policy (UDRP), effective January 3, 2000. The UDRP requires arbitration of disputes concerning a domain name before an ICANN-certified domain arbitration panel.

Under US federal, state, and common-law trademark laws alone, conflicts involving domain names would be decided based on priority of use regardless of the existence of any registration. However — under these domain dispute policies, and ACPA, the US Anti-Cybersquatting Consumer Protection Act — any conflict is almost always decided in favor of a registered US federal trademark owner.

What is cybersquatting? Are we a cybersquatter?
Does your company own one or more domain names which are not based on a traditional trademark use? If so, chances are that you are the type of domain name owner which was targeted by Congress in the Anti-Cybersquatting Consumer Protection Act of 1999 (ACPA), which became law on November 29, 1999. ACPA was passed in response to complaints from celebrities and large corporations who were unhappy about the large number of domain names which were registered in bulk by speculators, “squatted on” without use, and then offered to trademark owners for extremely high prices. ACPA adds a further layer of complexity to domain-trademark disputes.

What can happen to a domain name owner under the Anti-cybersquatting Act?
ACPA provides civil liability for the registration or use of a domain name which is identical or confusingly similar, or which is merely “dilutive” of a registered trademark or service mark.

Under ACPA, if the owner of an existing US federal trademark or service mark can prove that the domain name holder has a ‘bad faith’ intent to profit from the domain name and that the domain name registrant is a person who “registers, ‘traffics’ in, or uses a domain name” in a way that could harm a trademark owner’s commercial interests, then the trademark owner can get a court to award attorneys fees, statutory damages, and the transfer or cancellation of the domain name. In the case of a non-famous registered trademark, the trademark owner must show that the domain name is “identical or confusingly similar” to its mark. In the case of a “famous” mark, the owner need only show that the domain name is “dilutive” of its registration.

How could a domain name owner become liable under ACPA?
Under ACPA, courts and arbitration panels will consider a number of factors to determine whether there is ‘bad faith’ by a domain name owner. These “ACPA factors” include:

  • any supporting trademark rights based on use or registration held by the domain name owner and whether the domain name is the legal name or other name of the domain name owner;
  • prior use of the domain name in connection with the offering and sale of goods or services;
  • noncommercial or fair use of a mark in a website found at the domain name;
  • any evidence of intent to divert customers from a mark owner’s online location in a manner which would harm the goodwill in the registered mark, either for commercial gain or with intent to tarnish or disparage;
  • offers to sell the domain name for more than the registration fee;
  • providing false or misleading contact information, or a history of doing so, in domain name registrations, or failure to maintain accurate contact information;
  • acquiring or registering multiple domain names which are ‘known to be’ confusingly similar or identical to existing trademark registrations.

How much liability can a domain name owner be exposed to for violating ACPA?
Legal liability under ACPA is expensive. The remedies provided for include paying the complaining party’s attorneys fees and can include statutory damages in an amount of $1,000 to $100,000 per domain name, at the court’s discretion.

How are trademarks enforced against domain name owners under ACPA? Will we be notified if there is a court action?
Maybe not. Under ACPA, a complaining party can choose to sue a domain name registrant in either a court proceeding or an ICANN-certified arbitration procedure. Either way, there is no guarantee that the court proceeding will be in a convenient location to your company. Recent court decisions have upheld a practice where the complaining trademark owner files a lawsuit where the trademark owner is located. Further, under another section of ACPA, a complaining trademark owner may use an “in rem” action and proceed in court against the domain name alone, in its status as an asset. Where could this court proceeding be? Anywhere — because the domain name is considered to be “located” anywhere the registrar says it is.

How is domain name UDRP dispute arbitration different from domain name litigation under ACPA?
The ICANN UDRP provides a similar test and similar liabilities. Under the UDRP, if a complaining party proves that (1) that the domain name is identical or confusingly similar to a trademark or service mark in which the mark owner has rights; (2) that the domain name owner has no ‘legitimate interests’; and (3) that the domain name has been registered and used in ‘bad faith,’ then the arbitrator may require the domain name to be cancelled or transferred.

A handful of certified arbitration panels have been operating since January 1, 2000 to resolve domain disputes, and have issued thousands of decisions. Unfortunately, many of these decisions further confuse the issues — and the worst plainly disregard trademark law.

We already have a US federal trademark. We want the domain name that is identical to our trademark registration, but it’s not available. Someone else who also has a US federal trademark has already registered it. What can we do?
Particularly difficult conflicts arise between trademark law and domain name policy when two registered trademark owners with different services and products, each with a valid trademark registration, want the same domain name. Neither the existing dispute policies, nor the existing cases, address this issue or effectively predict a likely outcome. Results are even more unpredictable when the domain name owner does not have a trademark registration at all, but has been making a trademark-like common law use, while there are existing trademark registrations, in any field of commerce in any country, for the domain name. At least one arbitration panel (NAF) has found in this situation that while the domain name owner is doing nothing wrong and while the trademark owner has no proof of bad faith, the domain name will still be cancelled (americanvintage.com).

When will this legal nightmare be resolved? Will the new ICANN name extensions (.biz, .firm, .name) be of any help?
Probably not. The conflict is between a one-to-many system and a unique one-to-one system. More domain name extensions just means more names which are otherwise identical, and potentially confusion.

The high amount of uncertainty and rapid speed of developments in this area of law and policy make advising the domain name owner especially difficult. Any client’s domain name situation needs to analyzed very carefully by an experienced Internet attorney.

DOs and DONTs

As much of a mess as this is, the following rules of thumb and strategies to protect domain names and avoid liability for domain names, are not specific to any situation, and are extremely clear:

  1. Domain name owners should order a professional trademark search for trademark registrations which are identical to the domain name, and should not proceed to use if registrations exist.
  2. Domain name applicants should never provide false, incomplete, or inaccurate information to the domain name registrar, or by not updating it.
  3. Existing domain name owners who are contacted by a party claiming to be a trademark rights holder or third party should never make an offer to sell the domain name.
  4. Domain names should be supported by a federal trademark registration and business name registrations — so as to present the best case under the ACPA and UDRP factors. In some cases federal trademark registration may not be possible and the domain name may remain at risk.
  5. Domain names should never sit registered and unused. It may be necessary to prove bona fide commercial or non-profit use through the offering of goods or services via the domain name. The best form of proof is an existing website at the domain name, no matter how modest. Proof that the domain name and/or website is advertised by the domain name owner is likely to be the strongest proof of an intent to use in commerce.

Copyright 1999 – 2007 Carol Ruth Shepherd.

If you have issues concerning domain names and/or trademarks and domain name registration or ownership, and you need to consult an experienced domain name and trademark attorney, you can reach Carol at (734) 668-4646.