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ARTICLES AND THINKPIECES

ARTICLES FROM THE EARLY YEARS OF THE WEB

An Article from February 1995, another lifetime!

 

WHO CAN STAKE A CLAIM IN CYBERSPACE?


By Michael Leventhal

In Romeo and Juliet, Shakespeare asked "What's in a name?" More and more the 20th Century answer to that question is money. Today in cyberspace, the name game is leading to some big bucks battles.

It is by now obvious to those in big business that the Internet will be the next great business opportunity -- perhaps even the beginning of a new economic order. It is also clear that the best way to truly establish a presence on the net is to stake out your own territory by creating your own domain.

Or is it obvious?

Recent research indicates that a significant portion of major world-wide corporations have not yet established Net sites, leaving pirates, competitors or even average cybercitizens to invade the property and take it for their own. In fact, in an informal survey conducted last August, the Hertz Corp., the Nasdaq stock market, Viacom Inc., Coca-Cola Co. and others admitted they were unaware that their names had been registered for Internet use by others.

To raise your flag on new territory in cyberspace, put your name (or the name you choose) on the "land." But whose land is it? Is the first person there the one with the right to claim it? Ask Washington Post Co.'s Kaplan Educational Centers, who recently won what appears to be the nation's first judicially determined decision on domain sites against arch-rival Princeton Review. (Both companies market SAT prep courses.) In order to grab a piece of Kaplan's market share, Princeton had registered the domain name Kaplan.com. Kaplan argued that the move violated laws of trademark infringement and constituted unfair competition, and got an arbitration panel to agree, deciding that Princeton Review must relinquish all rights to the "Kaplan.com" name, and transfer it to Kaplan.

To register a domain name, you must file an application with the Internet Network Information Center (InterNIC). InterNIC is a registration service that currently acts as a clearinghouse and little else. It does not have the resources to monitor registrations, but will cancel an illegitimate or malicious application if it sees one (see Sprint's registration of mci.com, revoked shortly thereafter). About two to six weeks after filing, if your name clears, you should receive notice that your application has been accepted and your name added to the thousands of internet land-owners.

The question becomes, who, if anyone, has a pre-ordained right to set up his or her cyber-residence at a particular address? What type of right is it -- trademark? Property? Joshua Quittner, whose only known connection to McDonalds is as a customer, writing in Wired Magazine's October, 1994 issue, took the bull by the horns when he registered McDonalds.com as his own address. For a while, he could be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. . Kaplan and Sprint are easy, but Quittner points to a potential sliding scale in the freedom to register. Who can have McDonalds.com if the Golden Arches have failed to get there first -- some guy named McDonald, some guy who likes the children's song, some guy who loves Big Macs? These issues have yet to be sorted out by the Courts, but rest assured they will give lawyers more opportunities to earn their fees in the future.

And Quittner? After McDonald's unsuccessfully attempted to obtain the domain name in court, Quittner named his price and McDonalds agreed. The hamburger giant contributed $3,500 to a public school in Brooklyn's Bedford Stuyvesant area for the purpose of setting up a high-speed internet connection at the school. The connection will be fast enough to run full-motion video. "One of the problems that everyone has identified is the information haves and the information have-nots," said Quittner. "Both McDonald's and P.S. 302 were have-nots. Now they are information-haves." In this case, everybody wins. As for future disputes, time will tell.

Then, the follow-up

 

STAKING A CLAIM IN CYBERSPACE: The Sequel


By Michael Leventhal

Back in the youthful days of early 1995, InterNIC existed largely for the purpose of clearing domain names. The article I wrote in February, 1995, on the subject of trademarks and domain names lays out the issues with which InterNIC has been grappling since: Who has the right to register for a particular domain name? Since the early days of the domain name gold rush, when Sprint registered "mci.com" and the Princeton Review registered "Kaplan.com," InterNIC has more and more often found itself in hot water. It has occasionally used its power to revoke a domain name, but has generally stayed clear of the fray by maintaining its position as a clearing house for domain names, with no position on the intellectual property issues swirling around it.
Ultimately, as money has poured onto the Net, and business entities have taken their storefront identities more seriously, not only has more litigation occurred over the issues of ownership, and rights to ownership, of domain names, but InterNIC and its sub-contractor on this task, Network Solutions, Inc. ("NSI") have found themselves party to such litigation.

As a result, NSI instituted the following changes in procedure, for the purposes of slowing the practice of "prospecting" and minimizing its own exposure.

1. They now charge a higher fee ($50.00). This will deter some of the prospectors who previously set out to register everything, wait until someone with a need for that domain name came along, and then charge what they could get away with to the unfortunate who didn't think of it first. It will also put extra cash in the accounts of NSI, in theory, to defend against the extra liability it has taken on.

2. NSI will now request that all applicants confirm that they have the legal right to the name they are registering, and that the applicant will be using the name for appropriate reasons (e.g. not for an unlawful purpose). While not determinative of any dispute over ownership rights to a domain name, the new InterNIC policy is to view trademarks as quantifiable evidence relevant to domain name disputes.

3. The applicant will now agree to "defend, indemnify and hold harmless" NSI and all conceivable related entities and individuals for any damage, including attorney's fees "arising out of or related to the use or registration of the Domain Name . . ." [All quotes herein from the November 23, 1995 InterNIC policy statement]. If the Applicant does not honor this obligation, its domain name will be withdrawn. There is an exception for educational or governmental entities which are not able to indemnify NSI.

4. NSI gives itself the right to withdraw the domain name from use and registration upon notice from a United States court or arbitration panel agreed upon by the parties to the dispute, ruling that the domain name "rightfully belongs to a third party."

5. NSI also gives itself the power to request that the applicant relinquish the domain name if the applicant is in breach of any obligations to NSI, and also gives itself the ultimate right to terminate the use and registration of the name.

6. With regard to disputes brought by allegedly damaged parties, NSI divides the claims into two categories: (1) claims brought by third parties who own a Federal trademark or servicemark in and to the disputed domain name, and (2) claims brought by third parties that do not. A properly registered state trademark or servicemark is not sufficient for a claimant to land in category number 1.

(a) When the dispute falls into category (1), the analysis goes to the next level, which is whether or not the applicant's use of the domain name predates either the use or registration of the Federal or foreign mark. If the applicant's use of the domain name is prior to the third party challenger's use or registration, NSI will allow the applicant to continue to use the name "unless and until a court order or arbitrator's judgment to the contrary is received by NSI . . ." Where the applicant can show neither a registered trademark nor prior use, NSI will, if requested to do so, assist the applicant in changing domain names, with the applicant being allowed to use both names for a period of up to ninety days to allow for an orderly transition. After that time, NSI will put the name on hold pending resolution of the dispute. If the applicant does not agree to this procedure, NSI will simply put the domain name on hold until the resolution of the dispute.

(b) In a situation in which the challenger has the Federal trademark or servicemark, but the applicant can present documentation that is satisfactory to NSI, NSI will allow the applicant to continue to use the domain name, if the applicant will further indemnify NSI with regard to the dispute.

(c) In category number 2 cases, where the challenger does not have a valid foreign or United States trademark or servicemark, the applicant will be allowed to continue to use the domain name "unless and until a court order or arbitrator's judgment to the contrary is received by NSI."

The immediate result of the changes in policy was to significantly cut back the number of applications for domain names. First among the factors was undoubtedly the price hike, which raised the cost of prospecting five-fold. Second was most likely the requirement that applicants represent and warrant that they have a bona fide intention to use the domain name on a regular basis on the Internet.

So this is the state of this issue on the Internet as of April, 1996. Stay tuned for further changes, coming from all sources. Will we see more adjustments from business? Will Congress get involved and rewrite the relevant trademark statutes? Will international intellectual property conventions attempt to intervene? Will the states step in? The answers to these questions are not fully known yet, but look for each jurisdiction or entity to have an opinion. In what is possibly a sign of things to come, California has jumped into the fray. California SB Bill 1533, introduced February 14, 1996, would make the unauthorized use of a trademark over the Internet an act of unfair competition and would be grounds for injunction, $1,000 in damages and attorney's fees. It also provides that the sysop may remove infringing marks if based on good faith and in reliance upon credible information.

No doubt we'll be writing about this one again.