The business which does not have a web location is already operating at a disadvantage in the business world of today and this trend will become all pervasive over the next five years. A web site is becoming equivalent to signage on your business entrance...or the ad in the yellow pages.
But a web page has one particular difference to the previous types of business advertisements...you are dealing with the entire world and if anyone in the world has already registered your name, you may find yourself confronting a claim to possess your name on the web even if you have used that name in your locale for decades! While many businesses have registered their trade names and logos with various state or federal agencies over the years, many more are discovering that the Internet and Web sites have a different procedure for protection of trade names and to their shock discover that some other entity, often half way around the world, has already "reserved" their name.
What can be done? What rights pertain? As with so much dealing with high tech, myths and misconceptions abound. As discussed below, the rights of a company to its domain name follow its rights to the trade name and the various entities set up to organize access to web names are NOT the entities who control legal rights. Perhaps a recent example of one of our client’s confrontation with a claim to its name on the web will best illustrate the current state of the law.
The reader is invited to review the article on Intellectual Property on our Articles page of our website for an introduction to the law concerning such intellectual property.
Now, let us apply that basic law to an actual fact situation and see what steps are available for protection. One of our clients, who we shall call "DOOBIE DOO Corp." (not its real name) was a long standing California corporation which discovered, when they sought to apply for a website using one of the United States registration services (see our article on Intellectual Property), that someone in Texas had already reserved their name on the web, Doobie Doo.com Our client had a registered trademark for the mark " Doobie Doo" and had asked us what its rights are, if any, regarding the use by the Texas company of Doobie Doo as a domain name.
Research was conducted regarding the identity of the entity that reserved the domain name. It was discovered that there was a Texas corporation with the corporate name Doobie Doo which was incorporated on February 4, 1969, over thirty years ago, and apparently was the entity which reserved the domain name. The address of the company was in El Paso, Texas. A call to the company indicated that it manufactured products similar but not identical to our clients’ but had never engaged in business in California or, indeed, outside of Texas. Our client was a long standing California corporation with the name "Doobie Doo, Inc." and had existed for over twenty years.
The Doobie Doo domain name was registered by the Texas company about six months before our client attempted to do so and the Texas company registered with register.com. Although registered, the Texas company had not yet actually created a website at this domain name which actually offered services or products. We assumed that they would do so in the immediate future. Register.com , the registrar in the instant case, is one of the accredited and currently operational registrars listed by ICANN (The Internet Corporation For Assigned Names and Numbers). ICANN was officially recognized by the U.S. Department of Commerce on November 25, 1998 and, according to McCarthy On Trademarks section 25:73.1, they act "...as the global, non-profit consensus organization designated to carry on administration of the Internet name and address system, also known as the Domain Name System.
Ok, so we have two long standing companies both have the same name, both operating in different states for decades without conflict, and the Texas one had registered the name six months before ours. Are we out of luck? No. Luckily, our client had registered its trade name first, not with the Internet registration company, but with the appropriate governmental agencies...and that makes all the difference.
The questions presented had surprising answers.
- What rights does a registered trademark owner have if an entity reserves a domain name that is identical to its registered trademark?
- What rights, if any, does a registered trademark owner have if an entity is using its trademark as a corporate name?
- In order to allege infringement of our trademark by a domain name must infringement by the corporate trade name also be alleged?
- The holder of a trademark registration for a mark that is identical to a domain name/website of another entity has the same rights regarding infringement of the mark on the Internet or World Wide Web as it does in other commercial arenas and the same tests for infringement apply. ( See website article on Intellectual Property.)
The major remedies available to our client are 1) attempting to resolve the dispute by sending a demand letter to the infringing entity that the domain name be relinquished and transferred to out client; 2) arbitrating the dispute with one of the approved ICANN dispute resolution providers; or 3) filing an infringement/ injunction action in court under the Lanham Act.
1. McCarthy in McCARTHY ON TRADEMARKS AND UNFAIR COMPETITION at §25:73.2 discusses the difference between reserving a domain name and registering a trademark and states " ‘Reserving’ a domain name from NSI (or any other NIC) does not (contrary to popular, non-legal, folklore) give the user any ‘official’ right to use that domain name free from legal claims. NSI is a registry, not an adjudicative body. Local entities that reserve global or local domain names are not empowered to immunize a user of a domain name from committing trademark infringement by causing confusion or dilution with respect to the trademark owned by another......Somehow, Internet folklore has created the mis-impression among some users that once one obtains an ‘officially registered’ domain name from a local domain name bureau then that name can thereafter be used in any way without legal consequences. This is an unfortunate bit of misinformation. A network information center that reserves domain names cannot license a domain name user to commit the tort of trademark infringement or unfair competition. Thus, a ‘first-come-first served’ policy of a domain name bureau ‘cannot trump federal [trademark ] law. "[emphasis added]
The courts have held that mere reservation of a designation as a domain name with intent to use it commercially does not establish "use" of the designation as a trademark in order to establish priority over a rival [ See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1052, 50 USPQ2d 1545, 1555 (9th Cir. 1999)] It is important McCarthy concludes to distinguish between registration (which is merely a reservation according to McCarthy) of a domain name and registration of trademark rights with a governmental entity such as the U.S. Patent and Trademark Office .
Use of a domain name in a way that causes confusion or dilution may be infringement under the Lanham Act, but the user i.e. the Texas corporation must use the challenged designation in some commercial sense or its use may not be actionable. According to McCarthy supra at §25:76 "mere reservation of a domain name without use in connection with any commercial enterprise, does not trigger infringement by confusion or dilution under the Lanham Act" and cites Lockheed Martin Corp. v. Network Solutions, Inc. 985 F.Supp. 949, 44 UO.S.P.Q2d 1865 (C.D. Cal 1997). In Data Concepts, Inc. v. Digital Consulting, Inc., 150 F.3d 620, 47 U.S.P.Q.2d 1672 (6th Cir. 1998) the court further held that "When a domain name is used only to indicate an address on the Internet and not to identify the source of specific goods and services, the name is not functioning as a trademark."
McCarthy does point out that the court "may overlook legal niceties and enjoin use of the domain name even though defendant has as yet no web site identified by the domain name" and cites Green Products Co. v. Independence Corn By-Products Co., 992 F.Supp. 1070 (N.D. Iowa 1997) in which the court granted a preliminary injunction ordering the defendant to transfer to its competitor Green Products Co. the domain name greenproducts.com even though defendant had not yet opened a web page under the name. The court found that either when defendant opened a web site it would be deceptive or that just the existence of the domain name itself could cause confusion "about the corporate status of Green Products."
Another element in the analysis of infringement action involving a domain name is the likelihood of confusion test. Therefore, even if the accused domain name is identical to the senior user’s mark, if the goods or services advertised at the web site are sufficiently distinct from those identified by the mark, there will be no likelihood of confusion. In the instant case the Texas company manufactures similar products and thus would probably not meet the test of sufficiently distinct.
Although it appears in the instant case that infringement under the Lanham Act has not yet occurred since the domain name has merely been reserved without the requisite commercial use, there are several different remedies available to our client which are discussed below.
The first remedy which is also the simplest and least expensive is to obtain an agreement from the Texas company to transfer use of the domain name to our client. This first step in this process would be sending a demand letter to the Texas company which sets forth our client’s trademark registration rights and indicates that our client will vigorously pursue enforcement of these rights in Court unless the domain name is transferred to our client. If the Texas company agrees to transfer the domain name, the procedure for transferring a domain name is provided at the register.com website. According to the ICANN rules, a domain name registration will be canceled, transferred or other changes made..." upon receipt of written or appropriate electronic instructions from you (i.e. Texas company) or your authorized agent to take such action."
If an agreement cannot be reached with the Texas company regarding transfer of the domain name, the second possible approach for our client is to file a complaint with one of the administrative dispute resolution service providers listed at the ICANN website. The ICANN Uniform Domain Name Dispute Resolution Policy is applicable to all domain name holders with domain names ending in .com, .net, and .org and requires a domain name holder to submit to a mandatory administrative proceeding if a "complainant" i.e. our client asserts that ..."1) your domain name is identical or confusing similar to a trademark or service mark in which the complainant has rights; and 2) you have no rights or legitimate interests in respect of the domain name; and 3) your domain name has been registered and is being used in bad faith." According to the ICANN rules the complainant must prove that each of these three elements is present. The fees for a one person panel range from approximately $750 to $2,000. Upon receipt of a decision in an administrative proceeding conducted under ICANN will take the required action after waiting 10 business days to allow for notification that a lawsuit seeking to overturn the decision of ICANN has been filed. The only remedies available to the parties from the mandatory administrative proceeding is the cancellation of the domain name or the transfer of the domain name registration to the complainant.
The third and final remedy available to our client is filing of a lawsuit under the Lanham Act. This is a United States Federal Court action to seek to protect a registered trade mark or logo. This remedy is the most expensive and time consuming. The lawsuit could be filed in lieu of the mandatory administrative proceeding or following the mandatory administrative proceeding if the decision did not require transfer of the domain name. Before deciding to pursue this remedy a careful cost benefit analysis must be conducted.
The Texas company has made the common mistake of assuming that the governmental agencies would be superseded by the "newer" and "high tech" registration services and has failed to check with the trade mark office to see if it could extend its name, effectively, world wide by entering the World Wide Web. They are lucky in that they have not spent the tens of thousands of dollars normally required to create a website since once we make contact with them, sooner or later, they will have to abandon their name, at least on the web, and, if we wish, in Texas itself. It is in the Patent and Trade mark office that one protects trade names, not on the registration service.
If this matter had been international, much would depend on what registration occurred abroad in the foreign locales, but assuming, as here, that registration on the web was all that our "adversary" had accomplished, the same result would probably have applied.