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Kenny 1 Mark Kenny Dr.

Pat Dooley COMM 630 14 April 2009

The Overextension of Trademark Law in Domain Name Disputes At the crossroads of time, law and technology often clash. In the 1990s trademark law clashed with a new technology the Internet, and more specifically, the domain name system (DNS). Since then the courts have extended traditional trademark laws in an attempt to properly apply them to the new technology. However, this overextension has been both unsuccessful and inappropriate. Todays trademark laws cannot appropriately address the challenges presented by the domain name system and the courts overextension of the law in domain name cases subsequently fails to accomplish the main purpose of trademark law: to avoid confusion and deception in the marketplace. Where there is no confusion or deception, there should be no enforcement of trademark law, yet the courts continually extend the power of trademark law in domain name cases beyond the boundaries they have established in traditional cases. History of the Domain Name System The Internet did not use domain names when it was first developed. It used numbers to identify computers on the network. The suggestion to use domain names was first made in 1971. A decade later, over 400 domain names were being used. Jon Postel, the same man who suggested the use of domain names, introduced the idea of using top-level domains (TLDs) along with sub-level domains in 1983. This is the same system we use today. For example, in the domain name gowichita.com, gowichita is the sub-level and .com is the TLD. Domain

Kenny 2 names were granted on a first-come, first-served basis in 1984, but they were still not available for commercial use, because the Internet was still used exclusively by academics, scientists and government. Domain names had not been thought of as property, because the domain name system was designed for engineers to meet their computer networking needs, not by lawyers for our needs (Agin). In the early 1990s, Network Solutions, Inc. (NSI) became the exclusive operator of the domain name registry for the .com, .net, .org, .mil, .gov and .org TLDs. In 1998, the Internet Corporation for Assigned Names and Numbers (ICANN) replaced NSI as the registry responsible for managing the domain name system. While a domain registry maintains IP address records (the numbers that represent computers on the Internet) that correspond to domain names, it is registrars that actually sell them and maintain records of the owners (Agin). Although domains were not developed to be property, their exclusive nature creates financial value that propels them to be treated as such: 1999 witnessed a purchaser pay $ 7.5 million for the Internet address business.com" (Ramirez). Sheila Rizzo points out the fact that the internet [sic] generates more sales revenue than any land-based operation makes domain name registration even more valuable than the traditional trademark registration (Rizzo). In Kremen v. Cohen, Judge Kozinski determined that a domain name is, indeed, a form of intangible personal property, and the courts have followed suit (Vona). The struggle for virtual real estate has created many disputes between trademark holders and entrepreneurs. The most common is cybersquatting. In Cyberethics: Morality and Law in Cyberspace, Richard Spinello defines cybersquatting as registering, trafficking in, or using domain names that are identical or confusingly similar to trademarks with the bad-faith

Kenny 3 intent to profit from the goodwill of the trademark (119). Despite the extension of the law, entrepreneurs are still finding ways to capitalize on virtual real estate. Andrew Hazen, an Internet marketing executive states: These days savvy entrepreneurs can still purchase domain names and flip them or develop them into Web sites. The new strategy is to monetize domains (Clancy). One thing is certain. The laws developed to settle the conflicts between trademark holders and domain name owners have failed to accomplish their purpose. Trademark Law in the 1990s Prior to 1995, trademark holders who felt that their trademarks had been violated had to prove infringement, the criteria for which are outlined in the graphic below:

Trademark Infringement Courtesy of Washington University Journal of Law & Policy Copyright 2002 Washington University

Kenny 4 In 1995, Congress passed the Federal Trademark Dilution Act (FTDA), which extended protection to trademark holders by eliminating the requirement for a likelihood of confusion or competition. It is still required for infringement, but dilution provided extended protection under a new name. Although the original intent of trademark law is fundamentally summarized in this very requirement, legislators obviously felt that the extension was necessary and appropriate. They further solidified this sentiment in passing the Anticybersquatting Consumer Protection Act (ACPA) in 1999. This law targets cybersquatters by giving trademark holders another law by which they can pursue legal action if someone registers or uses a domain name similar to or dilutive of their trademark. Many laws and court decisions have extended protection to trademark holders since 1995, but it is important to remember that at the time of Panavision v. Toeppen, the ACPA did not exist and the FTDA had just been passed. This case is one of the landmark cases that extended the law through judicial review. Panavision v. Toeppen In December of 1995, Panavision attempted to register Panavision.com as their domain name. It had already been purchased and registered by Dennis Toeppen, who had already established a site to display photos of the City of Pana, Illinois. Panavision sent Toeppen a letter claiming the right to that domain and demanding he stop using their trademark and the domain name. In a mailed response, Toeppen claimed he had the right to use Panavision.com as his domain, but offered to sell it to the company for $13,000. Although this amount was likely substantially less than litigation costs, Panavision filed a suit against Toeppen in the District Court for the Central District of California (Panavision v. Toeppen).

Kenny 5 Panavision argued that Toeppen made commercial use of their trademark and that this diluted their trademark according to the Federal Trademark Dilution Act of 1995. Toeppen argued that his use of Panavision.com to display the city of Pana, Illinois, did not constitute commercial use, nor dilute the trademark, and thus did not violate the FTDA. The court affirmed the district courts summary judgment in Panavisions favor according to the FTDA, claiming that Toeppens offer to sell the domain name to the rightful trademark holder constituted commercial use, and that his use of the mark in his domain name inhibited the ability of Panavision to clearly identify and distinguish their product on the Internet. Panavision must establish four requirements to prove violation of the FTDA. First, the Panavision mark must be determined to be famous. On this point Toeppen concedes that the mark is famous. I agree. Second, the court must determine if Toeppen made commercial use of the mark. Both Panavision and the court claim he did. Toeppen argued this, as will I. Third, it must be determined whether Toeppens use began after the mark was famous. Again, Toeppen concedes this point and so do I. His use did, in fact, begin after the mark was famous. Finally, Panavision must show that Toeppens use dilutes the quality of the mark by diminishing the capacity of the mark to identify and distinguish Panavisions goods and services. Toeppen argued this point, as well, and I will also. The first issue is whether Toeppens use constitutes commercial use. The court claims that Toeppens offer to sell the domain name establishes this, but I disagree. To begin with, Toeppen did not approach Panavision. Panavision approached him claiming that they had the rights to a domain name that he had purchased under a first-come, first-served basis.

Kenny 6 Panavision had the same opportunity to purchase the domain name, but did not determine the value of the acquisition until Toeppen had already purchased it and established a site there. Toeppens site displayed photos of a city named Pana. It was not created for commercial purposes. Circuit Judge David R. Thompson states: It does not matter that he did not attach the marks to a product (Panavision v. Toeppen). I completely disagree. It not only matters, but it is the original intent of the lawmakers: to protect consumers and businesses from confusion and deception in the marketplace. Toeppen was not soliciting goods or services on the site. Even assuming it was created for the ultimate purpose of selling it to the trademark holder, is that unfair if the trademark holder had the same opportunity to purchase that domain? The FTDA states: Registration of a trademark as a domain name, without more, is not a commercial use of the trademark and therefore is not within the prohibitions of the Federal Trademark Dilution Act (Federal Trademark Dilution Act of 1995). In the majority opinion, Circuit Judge David R. Thompson writes that Toeppen registered those names as part of a scheme to obtain money from Panavision (Panavision v. Toeppen). Is it a scheme when real estate developers purchase land under the same first-come, first-served basis that provides equal opportunity to all and then sell it at a substantial markup when the property is in high demand? No. Would McDonalds be obligated to purchase a lot on a busy corner if you owned it and offered to sell it at a high markup? No. Would it be a better location for them? Sure. That is what drives the valuation up. Could McDonalds decline your offer and establish their presence at an alternative location? Sure. It has been argued that the price was too high of a markup and therefore is extortion. The cost of simply registering a domain name, not including site design or hosting, was $100. Toeppen offered to sell it to

Kenny 7 Panavision for $13,000. That is a 1300% markup. It sounds like a lot, but according to Vera Gibbons of CBSs Early Show, the average markup for popcorn in theaters is 1,300 percent (Gibbons). Has anyone claimed in a court of law that this is a scheme? This happens in the very industry that Panavision trades its goods. Neither Toeppens site, nor his offer to sell the site, should have ever been determined to constitute commercial use. The second issue is whether Toeppens use dilutes the quality of the Panavision mark by diminishing the capacity of the mark to identify and distinguish Panavisions goods and services from those of competitors. This should be very simple. Toeppen isnt selling any goods or services, so there cannot be dilution. It is ridiculous to conclude that any reasonable viewer would mistake a site containing photos of the city Pana, Illinois, for a manufacturer of professional film recording equipment. If someone looking for Panavisions Web site instead found Toeppens site, it would be immediately obvious that they arrived at the wrong site. At that point, they could easily do a search on Yahoo, or todays Google, and find the companys site rather easily. Circuit Judge David R. Thompson writes that a domain name is the simplest way of locating a web site (Panavision v. Toeppen). This is absolutely wrong. Even in 1995, Yahoo provided a very powerful search engine. Today, search engines provide a more reliable connection between a user looking for a companys site and the site they are looking for. Not many people simply type in the companys name as a domain name. By doing so, if you are wrong, you must re-type the name again with a different domain name, which you again guess. In a search engine like Google, you simply type in the keywords of the company name and several results appear in order of popularity and many other complex criteria that effectively

Kenny 8 helps users find their destination. You dont have to keep re-typing or guessing, you can simply check the next link in the list and so on, until you find the right site. It will be noted that you can also bookmark the page on most browsers now, as well. It is a gross overextension of the law to determine that Toeppens use of Panavision.com diluted the quality of the Panavision mark by diminishing the capacity of the mark to identify and distinguish Panavisions goods and services from those of competitors. Trademark rights were never meant to restrain expressive, noncommercial speech, or to confer a monopoly right in words or symbols (Barrett). As Keith Blackman says: It would be better to heed the words of Justice Oliver Wendell Holmes and remember that a trademark is not a copyright. When a trademark is used in a way that does not deceive the public, society should not prevent the public from using the trademark (Blackman). Furthermore, Toeppen argues that a domain name is simply an address used to locate a web page (Panavision v. Toeppen). Judge Kozinskis ruled in Kremen v. Cohen that a domain name is personal property (Vona). Picture a domain name as virtual real estate. How absurd would it be for McDonalds to sue you claiming that they had the rights to land you purchased just because it would be the best location for them to solicit their goods? Their trademark does not protect the location of a McDonalds, so why should an Internet location be protected? Even if you merely purchased the land to resell because you had the foresight to determine its value in the future, is it fair to be forced to relinquish your purchase, especially if you developed it, to someone who had the same opportunity to purchase it, but did not? I dont think it is. As Toeppen argued, a domain is not associated with information on a page other than a location window which displays the domain name (Panavision v. Toeppen). His

Kenny 9 argument is that Panavision does not have to accept his offer to sell. They can choose another domain name to establish their site on. If they value that particular domain, then the registered owner should be able to set the price on that domain and I think the price Toeppen set was perfectly acceptable. I do not believe this is a fair determination by the court. Deprivations of constitutional freedoms do not come in large chunks; they whittle away slowly until nothing is left to defend (Smith). This is happening in the statutory extensions and the case law involving domain names in relation to trademark law. Fifteen years ago, the law was simple and aimed to avoid confusion and deception in the marketplace. Several laws and countless court cases have extended the protection of trademark holders rights since that time. The Fifth Amendment of the U.S. Constitution states: "[N]or shall private property be taken for public use, without just compensation." Domain names have been declared personal property and this constitutional protection should apply to domain names as equally as it does to real estate. As Brian C. Smith states in Private Property for Public use: The Federal Trademark Dilution Act and Anticybersquatting Consumer Protection Act as Violations of the Fifth Amendment Takings Clause: domain name transfers or cancellations take property from those who own them the registrant is deprived of their ownership... Just compensation is due, no matter how big or small (Smith). Conclusion Applying traditional trademark laws to domain names presents several problems. There are essentially three approaches to solving these problems: the DNS can be modified to conform to trademark laws; trademark laws can be modified to conform to the DNS; or the

Kenny 10 courts can determine that use of a domain name does not constitute use of a trademark, thereby ending all disputes regarding registration and the DNS. First, the DNS could conduct a trademark search for every domain name registration application, in the same way the U.S. Patent and Trademark Office (USPTO) conducts a trademark search for each trademark applicant. Furthermore, the DNS would have to establish TLDs to represent each classification developed by the USPTO to allow for exclusive ownership of trademarks within a particular industry. Then each mark owner could claim the name within the appropriate TLD, avoiding disputes between holders of the same marks. Courts could instead choose to make owners that share a common trademark, share a common welcome page that directs traffic to the company they are seeking. This option eliminates confusion by equally presenting all owners of a particular mark on one, logical domain. The welcome page will clearly identify each mark owner by name, industry and products or goods offered (Ramirez). Second, the courts could conform to the first-come, first-served approach used by the DNS. This would be a simple adjustment, although it can be argued that a likelihood of confusion still exists. If a well-known mark holder is not first to register a domain, visitors to the domain with that marks name could mistake the sites products or goods as the mark owners. This argument is becoming weaker as search engines have become more complex and provide an easy way to find a company without having to know the domain name. If someone looking for United Van Lines went to united.com and discovered United Airlines, there would most likely be no confusion. It is obvious that it is a company that offers different goods and

Kenny 11 services. The person searching can easily use Google to search United Van Lines and find the appropriate domain name (Ramirez). Third, the courts can eliminate all disputes by determining that a domain name itself does not constitute a trademark. This option avoids the costly overhaul of the DNS or trademark laws, which will still leave room for disputes. The DNS operates on a first-come, first-served basis, so trademark owners have equal rights to register their domain names. If they fail to do so before someone else does, then they must either find a new domain name or buy out the owner of the domain they want. Regardless of the solution that the courts choose, it is evident that a change is needed to reconcile two very different institutions.

Kenny 12 Works Cited Law Journal Sources (and/or other peer-reviewed journal articles): Barrett, Margreth. Domain Names, Trademarks and the First Amendment: Searching for Meaningful Boundaries. Connecticut Law Review 39 (2007). LexisNexis. Web. 4 November 2009. Blackman, Keith. "The Uniform Domain Name Dispute Resolution Policy: A Cheaper Way to Hijack Domain Names and Suppress Critics." Harvard Journal of Law and Technology 15 (2001). LexisNexis. Web. 4 November 2009. Ramirez, Natalia. "Will the Anticybersquatting Consumer Protection Act create more problems than it solves?" Washington University Journal of Law & Policy 8 (2002): 395-418. LexisNexis. Web. 4 November 2009. Rizzo, Sheila D. Does the Lanham Act Lose Meaning For Companies That Operate Exclusively Over the Internet? Journal of Intellectual Property Law 10 (2002). LexisNexis. Web. 4 November 2009. Smith, Brian C. "Private Property for Public use: The Federal Trademark Dilution Act and Anticybersquatting Consumer Protection Act as Violations of the Fifth Amendment Takings Clause." Journal of Intellectual Property Law 11 (2003). LexisNexis. Web. 4 November 2009. Vona, George. "Sex in the Courts: Kremen v. Cohen and the Emergence of Property Rights in Domain Names." Intellectual Property Journal. 19.2 (2006): 393-425. ABI/INFORM Global, ProQuest. Web. 4 November 2009.

Books/book chapters/articles, etc.: Agin, Warren E. "Domain Names as Collateral. " Business Law Today. 1 Sep. 2008: ABI/ INFORM Global, ProQuest. Web. 4 November 2009. Clancy, Ambrose. "Long Island internet marketer is master of domain names. " Long Island Business News. 16 Oct. 2009: ABI/INFORM Dateline, ProQuest. Web. 4 November 2009. Gibbons, Vera. Five Leading Retail Rip-Offs. The Early Show 30 March 2009. http:// www.cbsnews.com/stories/2009/03/30/earlyshow/living/ConsumerWatch/ main4902625.shtml Web. 17 November 2009.

Kenny 13 Mitchell, Robert L. Domain-name Wars: Rise of the Cybersquatters. Computerworld. 25 June 2009: ABI/INFORM Global, ProQuest. Web. 4 November 2009. Spinello, Richard A. Cyberethics: Morality and Law in Cyberspace. Sudbury, Mass: Jones and Bartlett Publishers, 2006.

Legal Materials: (case documentation, legal measures, and other legal references): The Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. 1125(d) Federal Trademark Dilution Act of 1995, Pub. L. No. 104-98, 109 Stat. 985, amending the Trademark Act of 1946, codified at 15 U.S.C. 1125 et seq. The Lanham Trademark Act, 15 USC 1114-27 Panavision v. Toeppen. No. 97-55467. US Court of Appeals for the Ninth Circuit. 17 April 1998. United States Constitution, Fifth Amendment

Additional Documentation (encyclopedias, videos, photographs, etc.): "Cyberlaw." Wikipedia, The Free Encyclopedia. 11 Oct 2009, 06:59 UTC. 4 November 2009 <http://en.wikipedia.org/w/index.php?title=Cyberlaw&oldid=319184897>. http://www.icann.org/ http://www.uspto.gov/