Domain Name Disputes — Avenues to Address Disputes — the American Perspective  

The article covers in brief the various avenues available to address domain name disputes.

Domain names are internet addresses. They are unique in that no two domain name holders can have the same domain name, that is, identical top-level domain (‘TLD’) and second-level domain (‘SLD’) names. As such, domain names have come to be regarded as a form of intellectual property. The prevailing view today is that domain names can act as trademarks and are therefore entitled to protection under trademark laws. As suggested by a host of cases, domain names can act as identifiers and indicators as well as repositories of corporate goodwill.

Uniform Dispute Resolution Policy (‘UDRP’)

The Uniform Dispute Resolution Policy, commonly referred to as the UDRP, was approved by the Internet Corporation for Assigned Names and Numbers (‘ICANN’) in October 1999. The first case was decided in December 1999, case number WIPO D1999-0001, involving the domain name ‘www.worldwrestlingfederation.com’. The case was decided in favour of the complainant.

Under the UDRP, domain name registrants are required to submit to a mandatory administrative proceeding if a third party files a complaint with a dispute resolution service provider approved by ICANN.

Since the first case in 1999, the UDRP has been used and interpreted in various ways. Prior to the UDRP coming into place, litigation has always been the avenue taken to address domain name disputes. According to the information available on the ICANN website (www.icann.org) over 8,000 cases have been rendered decisions via the UDRP. The remaining almost 1,500 cases have not had decisions rendered, for various reasons such as ‘pending’ status, or there was a suspension at the complainant’s request, dismissals or settlements. Looking at these figures, one would think the UDRP has certainly relieved the legal system and the courts of a tremendous burden.

The UDRP applies to the generic top level domain names (gTLD’s) and requires a showing of the following:

• a registered or unregistered mark is being infringed by a domain name which is identical or confusingly similar to the mark;
• the registrant has no legitimate interest in the domain name; and
• the domain name was registered in bad faith.

The registrant has the available defence that the domain name was registered in connection with a bona fide offering of goods and services or for a legitimate non-commercial or fair use without intent for commercial gain, consumer confusion or dilution of the complainant’s mark. The registrant is also able to argue that it is commonly known by the domain name. The remedies available under the UDRP are limited to a cancellation or transfer of the domain name. Therefore, if the complainant is seeking damages for misuse of the domain name, then legal action in the courts will have to be taken.

Litigation

Many respondents and complainants, parties in a UDRP, are of the impression that once a decision is rendered, it is final. This is wrong as it is clearly stated in the UDRP that the decision is not implemented until after a time frame of 10 days has passed. During this time, the losing party may initiate a court proceeding in an attempt to overturn the decision.

Paragraph 4K of the UDRP provides this avenue to the parties:

Availability of court proceedings. The mandatory administrative proceeding requirements set forth in Paragraph 4 shall not prevent either you or the complainant from submitting the dispute to a court of competent jurisdiction for independent resolution before such mandatory administrative proceeding is commenced or after such proceeding is concluded. If an Administrative Panel decides that your domain name registration should be cancelled or transferred, we will wait ten (10) business days (as observed in the location of our principal office) after we are informed by the applicable Provider of the Administrative Panel’s decision before implementing that decision. We will then implement the decision unless we have received from you during that ten (10) business day period official documentation (such as a copy of a complaint, file-stamped by the clerk of the court) that you have commenced a lawsuit against the complainant in a jurisdiction to which the complainant has submitted under Paragraph 3(b)(xiii) of the Rules of Procedure. If we receive such documentation within the ten (10) business day period, we will not implement the Administrative Panel’s decision, and we will take no further action, until we receive (i) evidence satisfactory to us of a resolution between the parties; (ii) evidence satisfactory to us that your lawsuit has been dismissed or withdrawn; or (iii) a copy of an order from such court dismissing your lawsuit or ordering that you do not have the right to continue to use your domain name.

US Perspective — the Different Legislation

The US had initially defended trademarks against the attacks by domain names, via the traditional actions of infringement and unfair competition. Section 32(1) of the Lanham Act, first enacted in 1958, applies to federally registered marks and provides in pertinent:

Any person who shall without the consent of the registrant:

1. use in commerce any reproduction, counterfeit, copy or colour of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive ... shall be liable in a civil action by the registrant for the remedies hereinafter provided.

Section 42(a)(1) of the same Act applies to both registered and unregistered trademarks, and it is usually referred to as the ‘unfair competition’ ground, although not strictly referred to in the strict legislative sense:

Any person who, on or in connection with any goods or services ... uses in commerce any word, term, name, symbol or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading description of fact, or false or misleading representation of fact, which (A) is likely to cause confusion, or to cause mistake, or as to the origin, sponsorship, or approval of his of her goods, services, or commercial activities by another person ... shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

On 16 January 1996, President Clinton made into law the ‘Federal Trademark Dilution Act of 1995’. It is now codified as s 43(c) of the Lanham Act, in order to provide a national remedy for dilution of famous marks. In the internet context, the new Federal Dilution Act has been quite effective to thwart two types of activities: (i) using a famous mark on a website to market sexually explicit merchandise or activities (tarnishment), and (ii) registering a famous mark as a domain name, with the intent of later selling the domain name registration to the owner of the famous mark (neither tarnishment nor blurring, but nonetheless dilution under the statute) as it provides:

The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person’s commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark.

On 29 November 1999, President Clinton signed into law the Anticybersquatting Consumer Protection Act (also commonly known as the ‘ACPA’). This act expressly created a civil cause of action for a mark owner to assert against those who, in bad faith:

Register, traffic in or use a domain name that is identical or confusingly similar to the mark owner’s distinctive or famous mark; or dilutive of its famous mark, or a mark, word or name specifically protected by federal statute.

The ACPA provides for a civil ‘in personam’ action against offending domain name holders and protects against the unauthorised use of trademarks as domain names by targeting:

• those registering a domain name that is identical or confusingly similar to the mark owner’s distinctive or famous mark, dilutive of its famous mark, or identical to a mark specifically protected by federal statute;
• those registrants or their licensees operating under such a domain name; and
• those who ‘traffic in’ the domain name by selling or otherwise exchanging it for consideration.

The word ‘traffic’ refers to transactions that include, but are not limited to, sales, purchases, loans, pledges, licences, exchanges of currency and any other transfer for consideration or receipt in exchange for consideration.

The beauty of the ACPA is that under s 1125(d)(2)(A) the owner of a mark has the recourse to file a civil action ‘in rem’ against a domain name in the judicial district in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name is located. This particular section covers a situation in which a trademark owner is allowed to bring an action against the domain name itself, if an ‘in personam’ action cannot be brought against the registrant (the respondent) or where he has successfully eluded the plaintiff by providing incorrect contact details. The ‘rem’ is deemed to be located in the federal judicial district in which the authority that registered or assigned the domain name is located and the action may be brought in that federal judicial district.

Advantages of Initiating a Lawsuit in Virginia, US

You can initiate a lawsuit in Virginia to obtain any .com or .net domain name or to overturn a UDRP decision, which has not yet been rendered in your or your client’s favour.

The Virginia courts are popular because the Registry, Network Solutions/Verisign, for all domain names ending with a generic top level extension such as the .com and the .net is located in Virginia. The Registry maintains the database for all of the registrars. The following are some of the major advantages of initiating a lawsuit in Virginia:

• The Virginia courts have jurisdiction over all domain names despite the geographical location of the registrant as a result of the ‘in rem’ jurisdiction of the ACPA since it allows the courts to have jurisdiction over the subject matter ie the domain name itself.
• The Federal Courts in Virginia are the most expeditious courts in the country as most cases are completed within nine months. Continuances in court proceedings are not always welcome or rather seldom granted, which places the initiator of the lawsuit at a huge advantage. The defendant, in these circumstances, is quite often caught by surprise and would need to very quickly find a lawyer licensed to defend its case in the Virginia courts, pay a retainer fee and work with the lawyer to prepare a response. In addition, the time frame for the defendant to work within is not generous for the submission of the response and other filings. The initiator is also attracted to bring proceedings before the Virginia courts because of the low cost of litigating since the courts are very expeditious and, thus, the costs are much lower.
• Judges in the Virginia courts are experienced and familiar with domain name disputes and trademark issues since the courts are the favourite litigating forum for these types of cases. As a result, the decisions are also expectedly reasonable and fairly predictable. Since the decisions are also subject to appeal, there is a methodology for resolving different opinions held by different judges (unlike the UDRP process).

Remedies Available Through Litigation

Trademark owners filing a cause of action under the ACPA may request financial relief including profits, damages, costs and, in exceptional cases, attorney fees. Trademark owners can also elect to receive an award of statutory damages from between US$1,000 to US$100,000 per domain name. Statutory damages are only available for domain names that were registered on or after 29 November 1999.

For proceedings based on ‘in rem’, remedies are limited to a court order for either forfeiture or cancellation of the domain name or the transfer of the domain name to the trademark owner.

Comparison between litigating via the ACPA and the UDRP:

• The main difference between an ACPA proceeding and a UDRP proceeding is that the ACPA is a civil proceeding, which must be the basis of a Federal Court action, and the UDRP procedure is an administrative arbitration proceeding that is not binding on Federal Courts.
• The main advantage of the UDRP administrative procedure is that it is a more efficient and cost-effective way to resolve a dispute regarding the abuse of registration and use of an internet domain name.
• The UDRP procedure is much less formal than litigation and the decision-makers are experts in such areas as international trademark law, domain-name issues, electronic commerce, online commerce, and dispute resolution.
• The UDRP procedure is also international in scope and provides a single mechanism for resolving a domain-name dispute regardless of the location of the registrar, the domain-name holder, or the complainant.
• Unlike litigation, there is no mechanism for conducting discovery in a UDRP action, the trademark owner must state and establish all necessary facts in the initial complaint. Therefore, this forum is effective only for complainants with clear-cut cases who seek only to have a domain name transferred or cancelled. For more complex cases, or where the element of bad faith must be proven by facts that may be contested, an action under the ACPA is more effective.
• A trademark owner usually sues under the ACPA when the trademark owner wishes to seek a financial remedy in addition to cancelling or transferring the domain name.
• In addition, using the ACPA may lead to the avoidance of time and expense of a UDRP action, particularly when the trademark owner suspects the respondent would more likely than not intend to proceed further with the unfavourable decision rendered via the UDRP. The respondent usually has 10 days to work within, to bring a lawsuit to prevent the transfer or cancellation of the domain name. In this regard, if the trademark owner feels there is a high probability that the respondent will pursue the adverse decision, then it would be much wiser to proceed directly to the courts.
• Although the UDRP and ACPA have generally proven helpful to trademark owners, traditional trademark infringement and unfair competition principles have generally not been helpful to the trademark owner faced with ‘fan’ or ‘gripe’ websites and associated derogatory domain names. Such trademark owners must show that use of the domain name or site would cause likelihood of confusion of source or sponsorship. This is frequently difficult, because such domain name or website owners do not make use of the domain name to identify any goods or services. The ACPA is a bit more helpful in addressing fan or gripe websites and derogatory domain names. Pre-ACPA case law held that the use of a company name or mark in a domain name or on a website used solely to criticise the goods or policies of a company is a fair use that does not constitute infringement. The ACPA’s ‘safe harbour’ element somewhat affirms this principle and tends to permit the use of another’s mark in a domain name where the use is solely in the exercise of valid free-speech rights to criticise a target product or company symbolised by the mark, ie fair use in the English sense. US Congress specifically noted that the ACPA gives courts the flexibility to weigh appropriate factors in determining whether the name was registered and/or used in bad faith, and it recognises that one such factor may be the use the domain-name registrant makes of the trademark.

It is imperative that brand/trademark owners aggressively monitor and address domain name infringements online. Trademark and brand owners bear a responsibility to the brand and the investment incurred in having built the brand’s goodwill over a period of time. It does not always mean that unless derogatory domain names are linked to a site conducting activity against which the trademark owner would normally take action, or bad faith can be established, trademark owners must simply tolerate such use. Many companies realise that no person looking for a legitimate website would expect to find it through any such derogatory domain names and therefore avoid taking action against such domain names and/or fan or gripe sites. Trademark owners do have a number of avenues to address domain name disputes in general and they should carefully weigh the pros and cons before subjecting themselves to any particular avenue.

Unfortunately in Singapore, the lack of case law makes the litigious path a precarious one. The UDRP on the other hand, having resolved many disputes in this area, is definitely a useful method of settling these disagreements. In my opinion, complicated cases are best dealt with via litigation, especially those with multiple legitimate claimants. In any case, trademark/brand owners should take note that it is not the end of the world when a UDRP decision is rendered unfavourably as there is always the alternative route of the courts being open to address the matter.

Samantha Frida
Brand Capital Management Limited
E-mail: samantha.frida@bcmbiz.com