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Published: Fri, 02 Feb 2018
The legal nature of domain names
The Legal Nature Of Domain Names And Trademarks Under US And UK Jurisdictions
In recent times Domain Names have acquired significant global attention. Volumes of academic papers have been written concerning legal issues surrounding the use of Internet Domain Names. A Domain Name is a human-friendly, easily understood internet address such as < www.amazon.com > whereas the internet protocol (IP address) for the recognition of a domain name and other computer devices connected to the internet, consists of a string of four sets of numbers up to three digits from 0 to 255, for example 18.104.22.168., thereby making the domain name difficult to recognize.
Domain names play a significant role in e-commerce in that technology provides an easy method to access information in cyberspace; it is the world of commerce, social interaction, legal, economic, educational and technological information. Some domain names have attracted great economic value because they are easily recognizable and represent trade names and trademarks.
This then raises the question of legal protection for domain names which could be put at risk by activists determined to destroy a particular brand name by registering confusingly similar domain names in order to denigrate by propaganda, cyber-squatters who sit on a domain name hoping that the trademark owner will offer to buy it, and typo-squatters who register similar domain names with a view to scamming unwary internet users.
Legal Protection Under Us And Uk Jurisdictions
At the time of writing there is no law which governs domain names. As yet there is no global consensus on whether domain names are part of other intellectual property rights and therefore protected by specified law.
From a purely technical perspective, a domain name is an Internet address identifying a computer site connected to the Internet in the same way that a telephone number uniquely identifies a telephone line connected to the global telephone network. Therefore a domain name is no more than data, a reference point in a computer database. No two organizations can have the same domain name and no two people can have the same telephone number. However, from a legal perspective, it is not yet clear what a domain name is? Broadly speaking, the rights over a domain name arise from either the domain name registration agreement, contractual agreement with the registrar or from the property right interest over the name itself. The registry of domain names is operated by a “registry operator” or “sponsor” under an agreement with the Internet Corporation for Assigned Names and Numbers (ICANN).
The majority of domain name disputes seem to involve trademarks. Although, it is submitted that disputes may also arise when the registration or use of the domain name infringes any legally recognized rights, such as trademark rights, common law right in passing off, or any other right.
Article 15 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) defines a trademark as;
“any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks…”
Word marks are the only form of trademarks capable of being used as a domain name.
Trademarks serve a variety of important economic functions, including the identification and differentiation of products and services (origin); they indicate consistency of source and quality that measure up to customer expectations (quality
and guarantee); and they also facilitate advertising and sales (advertising or investment functions). The creation of trademark rights is dependent upon certain requirements being met such as functionality, identity, use, and registration. Trademark law was legislated to protect the public. When someone purchases a product bearing a particular trademark, that person can be confident that the product is genuine and protected from appropriation by criminals.
The growth of the World Wide Web (www) has fuelled the boom in business growth on the internet with many businesses establishing internet storefronts. Due to this commercialization there is a relationship between domain names and trademark law.
It would seem reasonable that as many domain names reflect trademarks, that domain names are capable of being protected under trademark law.
The conflict between trademarks and domain names is far broader than the problem of cyber-squatting. The domain name system presents a series of conflicts within the basic principles of global trademark law. Conflicts between trademark rights and domain name registrants occur in a number of situations including cyber-squatting which has been criminalized in many countries throughout the world; genuine disputes which occur when two or more parties with independent and legitimate rights for the same trademark in different lines of business or jurisdictions seek the same domain name; and the final type of dispute arises when an individual “hijacks” a company’s trademark by obtaining a domain name identical to that mark before the holder of the trademark.
The question arises as to whether trademark law is a truly applicable model for the protection of domain names. Although there are considerable differences and similarities between the trademark law model, and domain names; domain name literature suggests that trademark law is not fully applicable to domain names disputes because trademark law is limited by geography and open by classification. Hence trademarks are attached to specific jurisdictions and specific goods or services.
The same does not apply to the domain name system because any name has to be absolutely unique and not shared by anyone else across the globe in the Top Level Domains (TLD). There can only be one “amazon.com”. Another registration issue is that most registries implement a “first come – first served” policy. This practice provides another incentive for cyber-squatters to register the trademark before the rightful owner of the trademark and then offer it for sale later at a substantial price.
The registration requirements are one of the major issues in trademark law. The law of trademarks cannot be applicable as these differences make the trademark laws unsuitable as a remedy against trademark infringement.
The Resolution Of Legal Conflicts
Domain name disputes in the context of trademarks arguably can be decided within the legal structure of trademark law. The main role of the courts in addressing these disputes is to determine whether the use of a domain name infringes the trademark registered or used in that jurisdiction.
The Us Courts Approach
The early development of the internet has been attributed to the USA as the majority of domain name are registered there. Suffice to say that most disputes also emanate from the USA. The courts in the US have struggled to address the disputes of domain names in the context of trademarks law in light of two important polices of trademark law: (1) to prevent confusion among the public and (2) to protect the trademark owner’s investment in its mark.
It should be noted that the United States’ trademark system is uniquely a common law user-based system, combined with elective federal registration. Trademarks used in interstate commerce are protected under the Lanham Act, while those used locally are protected under common law. Nevertheless, both common law and federal law apply the same principles in protecting trademarks and resolving disputes.
Federally registered trademark owners can bring actions against the infringement of their trademark s 32(1) of the Lanham Act. Section 32(1) of the Act provides that an infringement occurs when someone uses a registered mark in business or commerce, or applies it to goods or services without the consent of the registered trademark owner, and that such use is likely to cause confusion.21 If a trademark infringement was established, then financial damages and/or injunctive relief could be granted. To succeed in an action under s 32(1), a plaintiff must prove that the defendant’s unauthorized use of a trademarked domain name has resulted in likely confusion regarding the origin of the goods and services. The touchstone of liability under this Act is that of confusion. However, given the technical aspects of the Internet, the plaintiff may also prevail if initial interest confusion occurs as a result of the defendant’s use of the trademark, via a domain or meta-tags.
The Lanham Act goes beyond trademark infringement and creates a federal statutory tort, which provides wide protection against various aspects of unfair competition. Causes of action for unfair competition can be brought under section 43(a) of the Lanham Act for all marks, registered or not, as well as trade names. Section 43(a) is often referred to as the Federal Unfair Competition Law and provides another channel to deal with domain name-trademarks disputes.
Trade Mark Dilution
The Federal Trade Mark Dilution Act of 1995 (FTDA), signed into law in 1996, amended the Lanham Act to create a federal cause of action for the dilution of famous marks. The Act affected domain name disputes, in that, famous marks were automatically protected, and unlike infringement or unfair competition claims, the likelihood of confusion is not a requirement.
Dilution of trademarks by domain name has been considered by the US courts and they have determined that there are three types of dilution; tarnishment, blurring, and disparagement. Dilution by blurring anticipates the “dilution of selling power and value” of an original mark by using a similar mark even if on dissimilar products or services and thereby conjuring up in the consumer’s mind a new association with the original mark. Dilution by tarnishment occurs when a mark is used by a third party in a manner that is inconsistent with the use of the mark by its original owner such that the goodwill associated with the original owner’s mark becomes degraded or tarnished. Although the FTDA has been applied in a number of domain name disputes because of its advantages, there are two principle weaknesses which constrain the FTDA’s resolve in domain name disputes. Firstly, the threshold that the mark must be famous is difficult to meet. The second limitation is the requirement of commercial use in commerce.
As to the first limitation, the FTDA lists eight non-exclusive factors for evaluating whether a mark is famous. The standard for fame is very high and the evaluation is often subjective. Federal courts have concluded that to be famous, under dilution a mark must be prominent and well known, and therefore most likely to be adversely affected by dilution. However, this limitation seems to have been ameliorated by a number of recent cases in which the courts have adopted a relatively lower threshold in favor of finding trademark dilution in the Internet context.
The commercial “use in commerce” requirement involves a two-step analysis; firstly, the defendant must meet the definition of “use in commerce”, that is use in the regular course of interstate trade. This means the domain name must be attached to some
form of commercial goods and/or services of the registrant. Secondly, the defendant’s use must be commercial, in that it proposes a commercial transaction. Mere registration of a domain name without more does not constitute commercial use. The non-commercial use of a domain name that hinders a trademark owner’s exploitation of the value of its trademark on the Internet will not cause dilution. Therefore, in cases where there are no goods or services sold or advertised on the Internet, the courts have to stretch the meaning of the statute so as to find commercial use and thus establish dilution. Moreover, if the cyber-squatter does not attempt to sell trademark-based domain names to the rightful trademark owner, but rather sits on it to curtail the trademark owner’s use, it seems that the cyber-squatter can avoid commercial use, and escape liability under dilution.
State Causes Of Action
Besides the federal law, there are basic state law causes of action available for domain name-trademark disputes including; common law trademark infringement; state anti-dilution statutes; unfair competition and deceptive trade practices under common law and state statutes; and claims under other state laws.
Anti-Cybers-Quatting Consumer Protection Act
In late 1999, the US congress enacted the Anti-cyber-squatting Consumer Protection Act (ACPA). The legal remedies available for victims of cyber-squatting before the enactment of the ACPA were viewed by the Congress as expensive and uncertain. The ACPA amends the trademark act of 1946, creating specific federal remedies for cyber-squatting.
In the case of Sporty’s Farm v Sportsman’s Market, the second circuit court outlined a five-step process for the ACPA analysis. The first issue before the court is the applicability of the ACPA to the case in question and whether the court can exercise personal jurisdiction over the defendant or if an in rem jurisdiction over the domain name itself can be obtained. Secondly, the court must decide whether the plaintiff’s trademark is famous or distinctive and thus entitled to the protection under ACPA. Thirdly, the court must determine whether the defendant’s domain name is identical or confusingly similar to the plaintiff s trademark. The fourth step is to identify whether the defendant has acted with bad faith intent to profit at the time of registration; and finally, the court must determine a proper remedy.
The Uk Courts Approach
There have only been a handful of cases in relation to domain name and trademark disputes that have appeared before the courts in the UK. In comparison with the US courts, UK courts have fewer opportunities then their counterparts in the US, in developing the approach of resolving trademark issues in the context of cyberspace.
There are three possible legal grounds on which the courts in the UK may rely on in addressing domain name/trademark disputes: the law of registered trademarks, passing off, and common law conspiracy.
There is no simple answer to the question as to whether the registration of a domain name incorporating a registered trademark amounts to trademark infringement under The Trade Marks Act 1994 (TMA). The outcome may well depend upon the intended use of the domain name.
Section 10(1) of the TMA states that;
“trademark infringement occurs if a person uses in the course of trade a sign that is Identical with the trademark in relation to goods or services which are identical with those for which it is registered”.
Accordingly, there is no likelihood of confusion requirement needed under this section. However, the relevant questions here are whether the domain name in question is identical to the registered trademark; whether the domain name is used in the course of trade; and whether such use is in relation to identical goods or services for which the trademark is registered.
Identical to the registered trademark means that in order to succeed under this provision, the domain name in question has to be identical to the trademark. However, it should be noted that the established principle is that identical does not necessarily mean absolutely identical.
In the Internet context, many questions remain unclear regarding use in the course of trade. Cyber-squatters usually do not make significant use of the domain name once it is registered. The law does not tell us whether mere registration of a domain name in the absence of a web site providing goods and services is sufficient to satisfy the test of use in the course of trade. However, the court of appeal made such a decision in the case of British telecommunications Plc and others v. one in a Million Ltd and others, where it was held that the use of a trademark-based domain name in the course of the business of a professional dealer for the purpose of making it more valuable and extracting money from the trademark owner amounts to use in the course of trade. In short, the cyber-squatter’s activity of offering to sell names to trademark owners constitutes use in the course of trade but it is still unclear whether the use in the course of trade would be found if the cyber-squatter does not actively offer to sell it.
Under section 10(1), it is also necessary to consider the essential content of the specification. The case referred to here is Avnet v Isoact, where the plaintiffs argued that the defendant’s activities of using the word “Avnet” in the domain name in relation to identical services amounted to trademark infringement under section 10(1) of the TMA and applied for summary judgment. It was decided that since the services provided by the defendants were quite different from those of the plaintiffs, there was no infringement of the trademark established under the Act.
Section 10(2) of the TMA states that;
“a person may infringe a registered trademark if he or she uses, in the course of trade, an identical or similar sign in relation to identical or similar goods or services which results in a likelihood of confusion on the part of the public, which includes the likelihood of association with the trademark”.
Compared with s 10(1), this type of infringement extends to similar goods or services, which may be likely to confuse the public. Applying this section to trademark-based domain name disputes involves four steps. The first step is to determine if the domain name is identical or similar to the registered trademark, then secondly, if so, is it used in the course of trade. The third step is to consider whether the goods or services provided under the domain name are identical or similarto those undertakings specified in trademark registration. If not, no infringement will be established under this section. If the similarity is found, the final step is to examine whether the public is likely to be confused.
Where a trademark has a reputation in the UK, Section 10(3) states;
“it is an infringement for a person to use in the course of trade an identical or similar sign for dissimilar goods or services, where the use of the sign, being without due cause, takes unfair advantages of, or is detrimental to, the distinctive character or the repute of the trademark.”
This section introduces into English trademark law the concept of dilution that has been pioneered in the US. The fundamental prerequisite is the reputation of the trademark. Whether s 10(3) is breached or not depends heavily on this requirement. In Harrods case, it was clear that Harrods marks have a reputation in the UK. Since the registered mark is the name itself, the reputation attached to the name also extends to the marks. The defendants were guilty of misrepresentation when they registered the domain name. The intention was to make profit on the back of the well-known name Harrods. Further, the use would harm the distinctive character of the mark because it would dilute the strength of the Harrods mark. This would result in a third party presenting itself to the world under the Harrods sign. Consequently, Harrods would be prevented from using the domain name itself.
If the party claiming ownership of the domain name does not have a registered trademark, he may turn to the common law tort of passing off. The classic trinity of passing off is goodwill of the plaintiff, misrepresentation by the defendant and consequent damage. In judgments, courts usually look at the five essential elements enumerated by Lord Diplock in Erven Warnink BV v J. Townsend & Sons (Hull) Ltd which states;
“there must be a misrepresentation; the misrepresentation must be made by a trader in the course of trade; the misrepresentation must be made to prospective customers of his or ultimate consumers of goods or services supplied by him; the misrepresentation must be calculated to injure the business or goodwill of another trader; and the misrepresentation must cause actual damage to a business or goodwill of the trader by whom the action is brought or will probably do so”.
An early case in relation to domain name disputes and passing off is Pitman Training Limited and PTC Oxford v. Nominet UK Ltd and Person Professional Ltd. Since neither party had a registered trademark, this dispute was addressed under the common law tort of passing off. Pitman Training Limited and Pearson Plc were the legitimate owners of the same trade name, Pitman in the UK within their respective classes of business. Pearson Plc was the first to register the domain name “pitman.co.uk”
Unfortunately, this domain name was reallocated in error by the registrar, Nominet, to Pitman Training Limited. As a result, Pearson Plc was deprived of its registration. After discovering the error, Pearson Plc complained to Nominet and made Nominet reallocate the domain name to it. Pitman Training’s argument that the reversion of the domain name to Pearson Plc would constitute passing off was rejected by the court. It was held that there was no evidence to show that the general public had associated the domain name with PTC Oxford since Pitman Training Limited had only received two emails during the previous ten months of operation. Though this case highlights the importance of early registration in situations of competing legitimate rights, the ruling does not mean that passing off will never succeed against someone who registered the name first in time but has no connection with or real interest in the domain name.
Passing off in its traditional form arguably has limits in addressing domain name disputes of cyber-squatting if the cyber-squatter does not threaten to use or to permit others to use the domain name in a manner that is misleading and would cause damage to the business or goodwill of the plaintiff. The issue of whether or not the requirements of passing off can be adapted so as to provide a proper remedy against cyber-squatting has significant implications.
The landmark case in the evolution of tort of passing off against cyber-squatting is British Telecommunications Plc and Others v One in a Million Ltd and Others. The defendants registered many famous trademarks of British companies as domain names, such as marksandspencer.com, burger-king.com, britishtele.com and others. It attempted to sell them to the plaintiffs. There was no direct infringing use of the trademarks in association with the plaintiff’s goods and services. The plaintiff sought injunctive relief, alleging passing off and infringement of their trademarks and applied for summary judgment. The court granted injunctive relief against the defendant on the basis of passing off, because the motive of the defendants was to use the plaintiff’s goodwill, the defendants made explicit threats to sell the domain name to others who might use it for passing off, and any future use of a domain name which was similar or identical to household names would inevitably amount to passing off.
Thus the systematic registration of well-known trademarks as domain names with a view to blocking true owners’ registration and then threatening to sell them to others was sufficient to convince the court that the conditions required to establish passing off were met. Rochow argues that the court’s statement recognizing the flexibility of passing off indicates a welcome message that passing off may develop to provide remedies in disputes in relation to alleged misappropriation of reputation without exactly meeting Lord Diplock’s five requirements and the court’s decision may lay the foundation for the modification of the requirement of passing off that a risk of misrepresentation to consumers and damage to a plaintiff’s business or goodwill would suffice.
As admitted by Aldous L.J. the ambit of passing off set out in the Avocaat case and Jif lemon case was expanded in order to reach the decision. He argued that the five characteristics set by Lord Diplock should not be used to improperly constrain the action, but rather must be developed so as to tackle changes in methods of trade and communication. He stressed the concept of the registration of a domain name being an instrument of fraud and that the court had the right to infer this form of evidence. However, Gordon-Pullar submits that it is difficult to see how registering a domain name would become the instrument of deception and consequently the legal reasoning behind the case in finding that passing off may be doubtful. There is also suspicion that the results of the case was arrived at because of a policy consideration due to commercial pressure rather than a straight application of the law of passing off.
Despite the controversies, the decision of the court of appeal demonstrates that the UK courts will not condone the practice of cyber-squatting and it brings English law into line with the international position on the war against cyber-squatters. The court did whatever it could to stop the cyber-squatters from sitting on registered domain names incorporating famous marks or names with the intention of offering those domain names for sale at a premium. However, it should be noted that not every registration of a domain name would constitute a fraudulent act. Further, by reference to the judgment in Glaxo Plc v. Glaxowellcome limited, judge Sumption pointed out that mere registration of a deceptive Internet domain name does not constitute passing off. Thus, the outcome depends on the facts of the particular case. For the courts to follow the “One in a Million” scenario in assessing the establishment of passing off, the goodwill, the similarity of the names, the intention of the defendant, the type of trade and all the other surrounding circumstances should be taken into consideration.
Common Law Conspiracy
The common law conspiracy may be a peripheral action available for domain name disputes as raised in the Harrods case. Lonrho v Fayed sets forth the conditions for conspiracy as a tort in civil law. Two distinct forms are actionable; firstly, it constitutes a civil tort if there is an agreement between two or more persons to carry out an illegitimate act, which caused harm to the plaintiff and secondly, it also suffices if there is an agreement between two or more persons to carry out an act which in itself is legitimate but the primary purpose is to injure the plaintiff.
In Harrods’ case, Harrods argued that the purpose of the agreement between the defendants to register the name was either to extract financial payment for its return or allow unrelated third parties to operate the website using Harrods name, both of which were intended to harm Harrods. However, since the defendants did not appear in court, no judgment was given in the case. Whether common law conspiracy would be an appropriate action for a trademark owner in domain name disputes remains to be seen.
One of the major issues examined here is whether the current legal scheme in the United Kingdom and the United States provides adequate protection for Internet domain names in the context of trademarks. It shows that in certain domain name cases, an effective remedy can be obtained through the UK and US courts. However, examining the legislation in these two jurisdictions, it is suggested that certain aspects of domain names have very little protection and in some cases no protection at all. It was also suggested that because of the significant differences between trademark law and domain names, how these aspects lie beyond the reach of trademark law.
To protect domain names more adequately and accurately, it should be noted that just as no one single type of dispute exists, there is no one single model to resolve the issues. It may be naïve and impractical to conceive a single dispute resolution for all kinds of domain name and trademark disputes because of the numerous technical, legal and factual issues involved. Due to their corresponding strengths and weakness, I am of the opinion that the court system and the regulatory system should cooperate with each other in dealing with these disputes. A combination of reshaping the domain name system, further developing international trademark law, enacting specific legislation and improving current alternative dispute resolution proceedings are key requisites to achieving positive results. But even this, has to be implemented carefully; for example, changing the nature of the domain name registration system would probably eliminate part of the cyber-squatting problem. However, Spyros Maniates, stresses that changing the nature of the domain name system may cause distortion to the nature of the Internet as the cost of registration will rise accordingly.
It is also believed that a global domain name convention, through a universal body such as the UN would partly achieve this purpose. This global convention will simply ensure that member states offer ‘basic’ domain name protection. However, implementation of that protection will remain a matter of national law, and there is wide disagreement over the appropriate scope of protection for domain names.
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