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
Wood Testimony
Testimony of John Wood, Senior Internet Consultant,
Prince plc
before the
Subcommittee on Courts and Intellectual Property
of the Judiciary U.S. House of Representatives
"Internet Domain Names Trademark Protection"
2226 Rayburn House Office Building, Washington, D.C.
Wednesday, November 5, 1997
Good Morning. Thank you, Mr. Chairman, and members of the Subcommittee, for the opportunity to testify today, and to provide a viewpoint which may be somewhat unique in regard to the role of Internet Domain Names and Trademarks from the other witnesses. My name is John Wood and I am senior Internet consultant from Prince plc a UK Information Technology (IT) service provider, specializing in desktop migration services and information technology skills development since 1985.
In addition to my oral statement, I have provided a more detailed written statement. Following my statement, I will be pleased to respond to questions.
In February of 1995, Prince plc obtained the domain name "PRINCE.COM" in the UK via its Internet Service Provider (ISP), Demon Internet Limited. Like many other IT companies in general, and those serving a global clientele in particular, Prince felt it was essential that it had a .COM domain name registration since by 1995 .COM had become associated with international commercial entities like itself. Currently, entities such as ourselves wishing to have a .COM domain name space obtain it from Network Solutions, Inc. of Herndon, Virginia, who operate the .COM registry under a contract from the National Science Foundation, and issue them on a first-come first-serve basis.
I will begin my testimony by outlining why Prince plc is concerned about these issues, and why we are working with others in industry to address the areas of concern. First, Prince plc is a small corporation, whose business is built in part on the Internet. While based in the UK, we provide consulting services to companies and organizations who wish to do business globally, often operating from very small bases and organizations, but desirous to compete successfully through the Internet and other advanced communications services.
Second, we believe that a secure, commercial grade Internet is an absolute requirement for the success of our business, and for the full growth of electronic commerce as it is envisioned both here in the U.S., in the UK, Europe, and elsewhere.
I will set the stage for my comments, with a brief background statement on the underlying infrastructure since often these discussions have the appearance and sound of alphabet soup. The accessing of Internet email and Web sites is done using an Internet address. Internet addresses are made up of a domain name (PRINCE.COM) that is the alphanumeric equivalent of its corresponding IP address (194.200.207.65) by which the Internet identifies every user.
The present system already has some areas of concern related to trademarks and domain names: first, hoarding of domain names by entities in anticipation that registered trademark holders will pay money for their corresponding domain name e.g. cybersquatting; second, the "collision" between domain names and trademarks, prompting the U.S. courts to subject domain names to trademark law and the challenges already arising to the NSI dispute resolution procedure; third, issues of how famous trademark holders rights might be recognized as a special category; and fourth, reverse hi-jacking, where a trademark holder pursues a domain name already in use.
Over time, domain names have become electronic brand names by which consumers identify the brand with the Internet address. Consequently, they have attained commercial value, leading to some of the problem areas noted above.
Now we are faced with additional challenges:
In particular, the proposed introduction of 7 new TLDs, now under consideration in the private sector led initiative known as the gTLD-MOU, is creating potential serious concerns for trademark holders who are already encountering serious challenges in policing their marks, and dealing with "cybersquatters". At present, WIPO has issued for comment by November 21, 1997, a set of proposed dispute resolution procedures, which many in the industry are undertaking to submit comments on. However, the guidelines, even with modification, cannot address all of the problems which we have outlined above and in fact, may exacerbate them.
The concern of many trademark holders is that multiple new gTLDS will create even more serious problems for trademark holders in "policing" their brand in an environment where there are untested processes and procedures thus adding to cost and confusion for end users.
In our view, the fundamental differences between domain names and trademark are such that no real long term resolution is currently in sight. Whereas, domain names are unique (there is only one PRINCE.COM) and global, trademarks are multiple (there are over 1,000 marks with reference to PRINCE) and enforced on a territorial basis (under U.S. federal or state law etc.). The situation is becoming all the more urgent because, with the rapid growth and popularity of the Internet, which we all hope will continue, "famous trademark holders" are being forced to dedicate increasing amounts of their resources to monitoring domain name registrations and where appropriate, litigating in far flung parts of the globe. Conversely, legitimate domain name holders have come under attack from trademark registrants encouraged by the dispute resolution policy into the belief that they are able to "reverse hijack" a domain name. This is what happened to my company.
We had been operating, as most users of the Internet do, assuming that all was well in the operational and administrative underpinnings which make things happen: the assignment of domain names, and the mechanism for effective dispute resolutions, and the infrastructure by which data is sent from and received by servers and computers on the Internet, thus, delivering the millions and millions of packets of data which the Internet carries each day across the globe.
It was a shock to us to learn that our address on the Internet PRINCE.COM, was about to be yanked away from us, and literally, without warning of such a problem existing. My written statement provides the background to the situation, but my testimony here today is intended to paint the picture of the average user of the Internet for business purposes, and to provide a roadmap of the issues which we, at Prince, believe should be adequately discussed, and addressed, before implementation of significant new systems in the Internet.
While the current domain name system may have worked effectively in the past, it is increasingly in need of formalization and standardization as we move to a commercial grade Internet. Today, estimates are that over 60 million people use the Internet. By my last rough analysis, companies like AT&T and Bell Atlantic here in the U.S. have over 100 million consumers as customers. In the Europe, a similar picture exists. In short, as consumers increasingly use the Internet, the growth will be exponential; and we will move from 60 million users today to over 200 million, or more by the turn of the century. The current legal framework will not be able to cope.
The way ahead must be a global commercial solution. It must represent the conflicting interests and hold them accountable. It must also afford clear legal definition and redress, in order to provide a stable and secure commercial environment for the development of electronic commerce. In our view, in the long term, this will necessitate the need for parallel action through the international harmonization of the trademark law(s) and a searchable global database of registered marks.
In the near term, creation of a "famous trademark" database, which all registries, such as NSI, would search as part of the domain name registration process could be helpful. Further, a publication period (even a brief one) would be useful for both existing trademark holders and would-be domain name holders as it could help to reduce potential litigation down the road.
Finally it should be noted that currently NSI registers approximately 3,000 domain names a day, yet it is only involved in 34 litigation proceedings. It is clear that there are serious concerns, and that disputes between trademarks and domain names must be addressed in a thoughtful fashion, and that more work is needed, including the involvement of the U.S. Office of Patents and Trademarks and its counterparts in Europe and other parts of the world, and, of course, WIPO, along with a broad and representative group of private sector entities, both commercial and non-commercial in nature.
My purpose is not to criticize either today's system nor the proposed new approach under discussion via the WIPO comment process, but to note that a collision is underway, and one, which while we may not be able to avoid, can be managed and, through effective management and well through out structures, can help to avoid chaos in the marketplace. Our end goal should be to ensure that end users consumers and businesses -- who rely on the Internet to reach each other, to do business, and to obtain information, have a high degree of certainty that they know how to reach their intended destination and that the companies who serve them via the Internet have that same certainty.
1. Background
The domain name represents the alphanumeric equivalent of an Internet Protocol (IP) address. The IP address comprises four sets of number separated by dots, e.g. the PRINCE.COM domain name corresponds to the IP address 194.200.207.65. Domain names can contain letters A through Z and/or the numerical digits of 0 through 9 or other characters from the ASCII character set. In all, there can only be up to 24 characters in a domain name. The IP address and the domain name together constitute the Internet address of the computer or host that is connected to the Internet. The translation or resolution of the domain name to its corresponding IP address occurs ultimately on a root server via a configuration file or "root zone file". Addresses are needed so that users can find computers which contain information they want. Domain names are easier to remember for many users than a string of numbers, so they have become more popular. The domain name hierarchy is read from right to left within the domain name space. Levels are delineated by dots. Therefore, the top level domains (TLDs) - .EDU, .ORG., .NET, .COM, .GOV, .MIL, AND .INT, or the country code domains names based on ISO 3166 two letter extensions e.g., .DE, are found in the extreme right of the domain name space. It is to be pointed out that the requirements and standards for the administration and management of the TLDs varies from country to country. Thus, where the company designation appears in the string is dependent on the registration authority you use. To the immediate left is the second level domain, e.g. .CO, .UK.
The Internet Assigned Numbers Authority (IANA) has overall authority for IP addresses and domain names. The administration of the central database and directory containing all of the Internet addresses and domain names is carried out by the InterNIC (Internet Network Information Center). The TLDs including .COM since 1993 have been managed by Network Solutions, Inc. (NSI) based in Herndon, Virginia, under a five year Co-operative Agreement with the National Science Foundation (NSF). This agreement is due to expire on March 31, 1998. NSI administers domain names to would-be domain name holders on a first-come first-serve basis. Further, it is important to note that the domain name holder does not own the domain name, but merely has a right of use granted to it by the registrar, in this case NSI.
2. The Collision.
With time domain names have become more than mere Internet addresses. They have become electronic brand names associated with products, services, even new movies. e.g., WWW.MICROSOFT.COM, WWW.KISSTHEGIRLS.COM. Consequently, in the 1995 MTV case the U.S. courts subjected domain names to trademark law. In Hasbro, domain names became subject to the federal dilution statute. However, Domain names and trademarks have made for unhappy bedfellows.
This collision is exacerbated by the fact that trademarks are territorial (state or federal) and multiple (from any of 42 classes), while domain names are global and unique. Thus, in the realm of domain names, there is no co-existence of identical names related to dissimilar goods and services as is the case with trademark law. This reality has led to a phenomenon called "cybersquatting" or domain name piracy, whereby domain names were being registered by a party other than the corresponding trademark registrant with the intent of selling the domain name to the latter for a profit.
With regard to the designation of origin characteristic of a trademark, when it is applied to an ISO country code domain, the ability to know the country of origin is normally self evident. However, the non-country specific TLDs - .COM, .NET, .ORG, give no hint of the geographic location of the domain name holder. Nor do domain names necessarily identify the goods or services to which they relate e.g., CANDYLAND.COM. It is also difficult to see how goodwill could attach to what is essentially an Internet address. However, the greater challenge is to create a legal framework that allows for global enablement and enforcement of trademark rights in general and famous marks in particular that relate to domain names. At the heart of the challenge is a way to resolve the thorny issues revolving around venue and jurisdiction determinations.
3. Case Study: PRINCE.COM
Prince plc, is a UK Information Technology (IT) service provider, specializing in desktop migration services and information technology skills development since 1985. In February of 1995 Prince plc obtained via its Internet Service Provider (ISP), Demon Internet Limited, the domain name "PRINCE.COM". Like many other IT companies in general, and those serving a global clientele in particular, Prince felt it was essential that it got a .COM domain name registration, because by 1995 .COM had become associated with international commercial entities like itself.
After almost two years of unopposed use of the domain name PRINCE.COM, on January 16, 1997, Prince Sports Group, Inc. (a New Jersey Corporation) through its U.S. Counsel, Sughrue, Mion, Zinn, Macpeak & Seas wrote Prince a letter asserting that Prince's use and registration of the Internet domain name PRINCE.COM was an infringement, an act of unfair competition and dilution of its US trademarks. Accordingly, to avoid legal action in the U.S. it requested that Prince assign the domain name to it. Why should we, Prince retorted? How could an IT business in the UK be confused with a tennis racket manufacturer in the US? Besides, we had got there first, and thus played by the rules in place in February of 1995. In the real world, we could of co-existed Prince Sports Group in classes 9 and 28 (for tennis rackets) and Prince plc in class 41 (for computer training services. But not in cyberspace.
For Prince Sports Group, its salvation appeared to exist in the Revised Dispute Resolution Policy (September, 1996) of Network Solutions, Inc. The policy seemed to focus on protecting Federal or Foreign Trademark Registrations (albeit to the detriment of State trademark registrations and common law rights, see article 5) from pirate domain name holders and/or infringement of their trademark rights. Further, it appeared to assert trademarks rights with a lower burden of proof than required by the courts, by requiring only the furnishing of a certified copy of trademark registration and a warning letter to get the process rolling. Once the certified copy of the registration and warning letter had been produced to NSI it would trigger an NSI notification letter to the domain name holder. Depending on the response, the domain name may first be put "on hold", then later be given to the complainant. The "on hold" status in effect meant an injunction against the domain name holder's use of the domain name. Thus, the domain name holder loses any value the Web site may have accrued and all that it has invested in it .
Unlike a trademark application, there is no waiting/publication period nor search undertaken by the registry body before a domain name is granted. Thus, the domain name holder is unaware that there might be a conflict over its domain name registration. We certainly were oblivious to our predicament. Interestingly, Prince plc learned after its registration of PRINCE.COM that in fact there are some 53 domain names registered containing the word "prince", and over 1000 trademarks, service marks etc. with the word "prince" in them.
On February 25, 1997, NSI sent Prince a dispute notification letter giving Prince plc 30 days to respond in one of three ways 1) provide proof of the existence of a corresponding trademark registration to its domain name; or 2) evidence of litigation in a court of competent jurisdiction in the United States; or 3) an indication of a willingness to be assigned another domain name. At the same time, we received from NSI our renewal notice for the domain name. We were therefore placed in a catch 22 situation, if we did not agree to renewal, we would lose the domain name, if we agreed to the renewal we would be contracting to comply with the dispute resolution policy which was not in place when we obtained the domain name in February 1995. The original dispute resolution policy did not in fact get implemented until July 1995.
Prince was therefore faced with a 30 day period in which to act or lose its name. At that point the process seemed to be a victory for reverse hijacking. Namely, trademark registrants taking away domain names from bona fide domain name holders. Further, NSI's private dispute resolution policy appeared to be in effect a mechanism for the adjudication of Prince's legal rights. Finally, the scope of the impact of NSI's dispute resolution policy is such that it forces foreign non -U. S. domain name holders at great cost to fight for their rights in the U. S. or lose their domain name.
However, nothing is ever what it seems. We discovered that NSI interpreted its Article 7's reference to "competent jurisdiction" to mean any jurisdiction recognized as being competent by U.S. Courts. Thus, in the Harrods case it had allowed Harrods to defend its name in a UK court. Further our counsel Willoughby and Partners concluded that the letter of January 16, 1995 was designed to comport with Article 5 (b) of NSI's guidelines. That is to say the threat of proceedings was designed to act as a trigger mechanism by which under the dispute resolution policy it could attain the domain name. Accordingly, a cause of action existed under section 21(1) ( C ) of the 1994 UK Trademarks Act against abusive use of a trademark by virtue of it being used as a threat. A complaint was filed on April 28, 1997 including this cause of action. The court agreed with Prince arguments and issued a decision in similar terms on July 18, 1997. NSI for its part, on the basis of the suit did not place the domain name on hold. Consequently, Prince Sports Group filed an action on July 18, 1997 in U.S. District court for New Jersey alleging with regard to Prince plc, federal unfair competition common law unfair competition and Federal Trademark Dilution. It made NSI a co-defendant alleging breach of contract. Prince filed in response on September 17, 1997, a motion to dismiss for lack of jurisdiction. The pivotal issue for Prince plc was whether contact with a state based only on having a web site was sufficient enough to grant jurisdiction and venue over the foreign party. Due to the fact that Prince Sports Group withdrew its action on October 15, 1997 we will never know the answers in this case. Also Prince plc argued for a summary dismissal on the merits, because Prince plc's computer services were so completely unrelated to Prince Sports Groups tennis racquets that as a matter of law no consumer confusion was likely. However, in Bensusan Restaurant Corp. V King , 937 F. Supp. 295 (S.D.N.Y. 1996); aff'd U.S. Court of Appeals for the second circuit at 1997 WL 560048, Civ.A. No. 96-9344, the court held that a Web site that advertises a defendant's services, standing alone, does not constitute sufficient contacts. However, as electronic commerce becomes more and more significant the pressure to afford jurisdiction and venue over a party will grow.
If the case had gone to trial it would have focused on two significant issues i.e. famous marks and the scope of the dilution statute. Currently, major trademark holders are being forced into devoting increasingly large amounts of their resources to monitor domain name registrations around the world and where necessary file actions in protection of their famous marks. On the other hand it should be pointed out that the tendency to enter the litigation arena in the U.S. is buoyed by the Hasbro decision, which subjected domain names to the dilution doctrine and enabled the plaintiff to stop a domain name holder using its domain name or registering a "similar" domain name where dilution was found to exist. Due to the wide scope of the decision it could have a chilling effect on those with a legitimate right to a domain name, but who are not the holders of a famous mark. A solution might be the creation of a famous mark database which registries would have to consult to avoid a conflict.
4. Conclusion
Although the issues are multiple and the complexities great, the size of the problem and thus the ability to secure a solution is manageable at this juncture. Currently, NSI registers approximately 3,000 domain names a day, but it is only involved in 34 active litigations and cited in perhaps no more than 300 related litigations. However, the problem is only going to grow with time. So the time to act is sooner rather than later. But only after careful consideration of all the issues and upon the creation of a comprehensive legal framework.