SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY

COMMITTEE ON THE JUDICIARY

U.S. HOUSE OF REPRESENTATIVES

OVERSIGHT HEARING ON

THE INTERNET DOMAIN NAME TRADEMARK PROTECTION



Wednesday, November 5, 1997

Room 2226 Rayburn Building, 10:00 AM



Stimson Testimony

TESTIMONY

OF

DAVID STIMSON, PRESIDENT

INTERNATIONAL TRADEMARK ASSOCIATION

THE HOUSE COMMITTEE ON THE JUDICIARY
SUBCOMMITTEE ON COURTS AND INTELLECTUAL
PROPERTY

HEARING ON THE RELATIONSHIP BETWEEN
TRADEMARKS AND INTERNET DOMAIN NAMES

NOVEMBER 5, 1997

Introduction

Mr. Chairman, the International Trademark Association ("INTA") appreciates the opportunity to testify today in connection with the Subcommittee's investigation of the Internet domain name assignment system. The emergence of the Internet, and the problems of piracy, trademark infringement, and false advertising associated with its evolution, have made it clear that we must make every effort to preserve and protect trademarks on this new mode of communication. We therefore thank you Mr. Chairman for your willingness to conduct these hearings and offer the trademark community an opportunity to voice its opinion on this topic.

My name is David Stimson, and I currently serve as Chairperson of the Board of Directors and President of the International Trademark Association. I am employed by INTA member Eastman Kodak Company in Rochester, New York as Trademark Counsel. As with all INTA officers, board members and committee members, I serve on a voluntary basis.

INTA is a not-for-profit membership organization, which just recently celebrated its 119th anniversary at its annual meeting in San Antonio, Texas. Since its founding in 1878, membership has grown from twelve New York-based manufacturers to more than 3,400 members that are drawn from across the United States and from 119 additional countries.

Membership in INTA is open to trademark owners and those who serve trademark owners. Its members are corporations, advertising agencies, professional and trade associations, and law firms. INTA's membership is extremely diverse, crossing all industry lines and spanning a broad range of manufacturing, retail, and service operations. It is equally important to note that not all of INTA's members are large corporations. Many of the Association's members represent small businesses which are looking to expand operations and contribute to the domestic economy based on the strength of their trademarks. Nonetheless, all of INTA's members, regardless of their size or international scope, share a common interest in trademarks and a recognition of the importance of brand identity to their owners, to the general public, to the economy of the United States and the global marketplace. During the on-going international debate on the future of the domain name assignment system, INTA has served as the voice of trademark owners in the United States and around the globe, ensuring that their trademarks are protected.

Value of Trademarks

Trademarks are a subtle, yet fundamental element of our daily lives in the identification of products in the marketplace. They are a basic mode of communication, a means for a company to convey a message of quality, consistency, safety, and predictability to the consumer in an easy-to-understand form. Equally important, trademarks generate an economic ripple effect that starts even before a consumer buys a branded product. First, trademarks benefit the suppliers of raw materials and equipment needed to make the product. Then trademarks stimulate advertising oriented to the brand $174 billion for the U.S. in 1996 alone. Finally, when the consumer purchases the trademarked product, the manufacturer, distributor and retailer benefit as do their employees and shareholders. The consumer benefits by easily being able to recognize and select products or services.

For the reasons just discussed, trademark owners are eager to protect their products' names and distinguishing features in the real world, as well as cyberspace. There is no denying that a trademark is a tremendously valuable asset to a company and our economy. It is usually one of the most significant property assets of a company. Further, if we are successful in our efforts to protect trademarks here in the U.S., then there is greater assurance that their status in the global marketplace will be better protected against international counterfeiters, unfair foreign competition and others seeking to unjustly profit from the efforts and investment of the trademark owner.

The Structure, Assignment, and Global Nature of Domain Names

From a technological perspective, every computer connected to the Internet is assigned a numeric address, with which other computers on the network use to communicate. A typical numeric Internet address is a string of numbers, such as 189.45.231.67. Because these numeric addresses are difficult for people to remember, Internet authorities also assign alphanumeric addresses or "domain names." Examples of domain names are www.whitehouse.gov and www.saralee.com.

There are actually two parts to a domain name: the generic top level domain (gTLD) and the second level domain (SLD). Examples of gTLDs or root identifiers include: .edu, .gov, .com, .org, and .net (for entities which are educational, governmental, commercial, organizational, and network infrastructure in nature, respectively). The SLD's are the first part of a domain name - typically the familiar name or phrase (e.g. saralee, INTA, reebok, etc.) that describes the product, service or topic which the Web site addresses.

The present system for assigning domain names was established by several private and government organizations working together, including the National Science Foundation (NSF), the Internet Society (ISOC), and the Internet Assigned Numbers Authority (IANA), among others. Together they established InterNIC (Internet Network Information Center) to provide services in the United States. InterNIC, through NSF contracted with Network Solutions, Inc. (NSI) a private company, to register domains with the gTLDs .org, .net, and .com.

NSI, like most registries, assigns domain names on a first-come, first served basis. By the end of 1995, the number of .com domain names exceeded 200,000; by the end of 1996, the number of .com domain names exceeded 600,000. Through July 1997, over 1.4 million domain names had been registered in the .com gTLD. As a result, domain names including the .com suffix now form the overwhelming majority of names on the Internet and the longer one waits to apply to NSI for a .com, the greater the chance that one's choice will not be available.

Just as trademark owners register their trademarks abroad in different national trademark offices, it is also possible to register domain names in over 200 national and quasi-national registries using two-letter country code TLDs such as .de for Germany and .ca for Canada. These registries are totally independent from NSI, just as, for example, the United Kingdom's Patent Office is independent from the U.S. Patent and Trademark Office. In certain countries, there are also sub-domains, e.g. .co.uk for United Kingdom Commercial and .ac.uk for United Kingdom academic, so there are over 400 distinct domain name registration possibilities. An example of a domain name using a two-letter country code would be www.acme.co.uk.

Numerous trademark owners utilize the country code domains in the local marketing, with locally-oriented Web sites in the local language, ostensibly to emphasize the local presence of their company.

The Connection Between Trademarks and Domain Names

Short, simple, distinctive, and indicative of origin. These are the essential qualities which trademarks and domain names share. Just like trademarks, people use domain names as "shorthand" reference tools to locate specific information concerning a particular product and learn about the company which is offering the product for sale. The important thing to remember is that domain names can function as trademarks. Both serve to educate and reassure the consuming public that they are in the right place and that they are purchasing the right product for their particular needs. When a "Web surfer" logs-on to www.kodak.com, he/she should expect information about Eastman Kodak Company, not some unrelated or possibly slanderous subject. That is why it is essential for companies to have some mechanism to ensure that their trademarks and the use of those marks as domain names are safeguarded in the new world of online commerce.

Conflicts Between Trademarks and Domain Names

Most domain name registries, including NSI, maintain that domain names have no legal significance, but are used only as addresses of various sites in cyberspace. Further, NSI states that its only purpose is to register domain names, not to perform trademark searches or arbitrate trademark rights. NSI contends that it is not equipped or funded to perform such searches, nor should it be responsible for any infringement that takes place involving the domain names it registers. As a result, a number of problems for trademark owners have arisen.

First, the current domain name registration policy of NSI is inadequate to combat "cybersquatters" - online pirates who routinely register domain names in bulk, without regard for the rights of trademark owners and with no other purpose than to ransom the names off to the highest bidder. The most famous "cybersquatter" is Dennis Toeppen, who up until he was enjoined by a federal district court, had obtained 240 domain names, including:

www.aircanada.com, www.anaheimstadium.com, www.australia.com,

www.deltaairlines.com, www.eddiebauer.com, www.neimanmarcus.com, and www.ussteel.com.

Second, NSI procedures are also not properly equipped to handle cases where two companies own the same name or mark. Take for example, the name UNITED. Which corporate entity has the right to own www.united.com: United Airlines or United Van Lines? Both have used the name extensively in commerce and both equally deserve to use it in cyberspace. However, under the current system, only one company can use UNITED in the .com gTLD.

Third, NSI's procedures permit the registration of confusingly similar domain names. So long as the name being sought is not precisely identical to one which is already registered to another party, the applicant may obtain it. For example, while the owners of the fictitious Acme Company, famous makers of widgets, may have registered www.acmewidgets.com, another party, with no relation whatsoever to Acme, can register www.acme-widgets.com, www.acme.widgets.com, or www.acme_widgets.com and place any form of content it so desires on the Web site even material which is slanderous towards the legitimate Acme company. This can lead to consumer confusion and customer dissatisfaction.

In addition to the problems posed by NSI's procedures, trademark owners are faced with the difficulty of learning the rules and regulations established by the various two-letter country code registries. These rules are often complicated to the novice. For example, most countries in the developed world have a requirement that the domain name applicant must have residence in the country (e.g. a subsidiary), but numerous countries have no such requirement, and register domains, like the U.S. on a first-come, first served basis. In addition, each registry is entitled to have its own dispute resolution policy. Finally, the rules change often, and foreign domains can be expensive to register and to maintain.

An Alternative to the Existing System: The IAHC Plan

Both the trademark community and the Internet community recognized that there was a need for change. Given that INTA's membership is representative of much of the corporate world, the Association was one of seven organizations (and the only organization representing the trademark community) chosen to be on the International Ad Hoc Committee (IAHC), a group charged by ISOC and IANA, with charting the future of the Internet -- a future that takes trademark rights into consideration.

After pouring over the needs of several competing and divergent interests, including the trademark community and the Internet engineering community, and studying public comment, the final IAHC plan was released on February 4, 1997. Due to the participation of INTA, the IAHC plan includes a number of trademark related provisions which seek to achieve a balance among the competing interests. These include:

(1)A detailed application procedure requiring an applicant to provide specific information

regarding its intended use of the domain and to submit to the jurisdiction of the
appropriate court (this is intended to alleviate the often complicated problem of
obtaining jurisdiction over a challenged domain);

(2) Publication of domain name applications on a public Web site, with full particulars of

the domain name applicant, enabling trademark owners to monitor potential
infringements of their trademarks;

(3)An alternative dispute mechanism, including an online challenge process that will

permit a trademark owner to contest the granting of a particular domain name
(It is important to note that neither this online challenge process, nor
other alternatives in the plan in any way whatsoever preclude a party
from seeking relief in a national court.); and

(4)An initial limit of new generic top level domain names to seven ( one prior initiative

contemplated immediate activation of an unlimited number).

For the above reasons, INTA supports the IAHC plan and has signed a Memorandum of Understanding (MoU) to that effect. Thus far, this initiative is the best and only real alternative for trademark owners. If the trademark community is to realize true relief from infringement, then the IAHC plan, or a similar initiative which addresses trademark concerns, must be given a fair chance to operate.

NSI has put forth an alternative plan which calls for an unlimited number of generic top level domain names. This is a direction which the trademark community opposes. During deliberations of the IAHC, INTA fought hard to minimize the number of generic top level domain names, since such additions would exacerbate the policing problems already being experienced by trademark owners. For example, at present, Eastman Kodak Company must not only monitor for infringement in the .com registry, but also be wary for cases in the up to 200 two-letter country codes that exist around the world. Imagine how difficult it would be for a trademark owner to monitor hundreds, if not thousands of additional gTLDs for possible infringements. The amount of time and money it would take is staggering to even think about. INTA believes that it is imperative, if trademark rights are to be protected, that a deliberative approach, such as that proposed by the IAHC, be taken on the addition of new generic top level domain names.

Conclusion

Mr. Chairman, I would like to thank you once again for the privilege of appearing before the Subcommittee today to discuss the intersection of trademarks and domain names. A more thorough discussion of the issues surrounding this highly complex and dynamic subject can be found in INTA White Paper: The Intersection of Trademarks and Domain Names, a document which has been prepared by INTA's Internet Subcommittee. I have brought with me today copies for each member of the Subcommittee and I ask that these be distributed so that the Subcommittee members may benefit from the information that it contains.

In conclusion, I want to re-emphasize the important role trademarks play in the domestic economy of the U.S., the global marketplace, and in cyberspace. INTA supports the IAHC plan, because it is the only plan to date which contains realistic protective measures for trademark owners. There may, in the future, be other proposals. INTA remains available to the U.S. government to assist and cooperate in exploring and considering other approaches that recognize the rights of trademark owners in the new and ever-changing world of the Internet, should they become available.

House Rule XI Disclosure

Pursuant to House Rule XI, clause 2(g) (4), the Subcommittee is hereby informed that the International Trademark Association has received no federal grant, contract, or subcontract in the current and preceding two fiscal years.

Curriculum Vitae

David Stimson

I have been a lawyer on the Trademark, Advertising and Copyright Legal Staff of the Legal Division of Eastman Kodak Company in Rochester, New York since May 1986. I am responsible for the worldwide trademarks and copyrighs of the Consumer Imaging, Kodak professional and Entertainment Imaging Divisions of the company.

Prior to joining Kodak, I was a partner in the law firm of Rogers, Hoge & Hills in New York City.

I was born in Cincinnati, Ohio. I received my BA from Hamilton College in Clinton, New York and my JD from the University of Cincinnati College of Law.