SAN FRANCISCO (04/11/2000) - What's in a name? If it's an Internet domain name, maybe millions of U.S. dollars -- or maybe a trip to court.
Memorable domain names are in short supply, and the prices of sought-after ones are skyrocketing. Late last year, for example, the name "business.com" sold for a record US$7.5 million.
While mere mortals may scratch their heads over the price, at least that deal was legitimate.
But the name shortage has also led to a practice called cybersquatting -- registering someone else's brand name and then attempting to profit from it.
In January, the United Nations' World Intellectual Property Organization (WIPO), which acts as an arbiter in domain disputes, ruled that Worldwrestlingfederation.com should be transferred to its namesake. WIPO ruled that the original registrant, an individual in California, had no legitimate interest in the name and had acted in bad faith. Last month, WIPO decided an individual from Arizona had no rights to the name alcoholicsanonymous.net, which was transferred to AA, the trademark holder of the name since 1939.
Cases like these prompted Congress to enact the Anti-Cybersquatting Consumer Protection Act, which allows businesses to seek damages of up to $100,000 from those who knowingly register a trademarked name that they do not own.
One of the first companies to test the law in court was Teen Magazine.
When Teen Magazine Editor Tommi Lewis realized her magazine's name was registered by another business, she was understandably upset. The magazine has published under the trademarked name since 1957. But the real problem was the site's content, which went up around the Christmas holiday.
"The first screen you hit was hardcore pornography," Lewis says. "It was shocking. I can't even imagine what a young girl would think. It was so contrary to the reputation that Teen has fought to build."
Teen's next move? Call the lawyers. Teen's attorney took the registrant, Blue Gravity Communications, to court.
Tom Krwawecy, chief executive officer of Blue Gravity, says he sold the domain name for "a couple grand" but didn't realize the company he was selling to would publish adult content. "Cybersquatting is where you approach a company and try to sell their name to them," Krwawecy argues. "We never contacted (Teen Magazine). It was just one big headache."
Teen recently got the name back, but the company is still fighting for control of other domains that are confusingly similar or otherwise dilute the trademark.
What's Good Faith?
Cybersquatters are catching heat from the federal government and from the agency that oversees the registration of domain names, the White House-appointed Internet Corporation for Assigned Names and Numbers (ICANN).
The shortage of names has led ICANN to consider the addition of new top-level domain names, and the organization is expected to take action to expand the domain name structure at its July meetings in Yokohama, Japan.
"If you look around the world, cybersquatting has been the source of a lot of grief in the domain registration system," says ICANN President Michael Roberts.
"The question of your rights to a name is a legal question under U.S. trademark law."
ICANN's domain dispute policy, which new registrars must agree to before becoming accredited, allows a complainant to choose an ICANN-approved dispute resolution service provider. There are currently three providers, including the UN's WIPO.
Any person or company worldwide can file a domain name complaint using the ICANN domain dispute policy. If the parties aren't satisfied with the arbitration, they can still go to court to fight for the name.
How do you determine who has the rights to a domain name? ICANN's policy says that an administrative panel can transfer the name based on "bad faith": for instance, if the name obviously violates a trademark, or if the name was registered primarily to disrupt the business of a competitor. The name must also "be identical or confusingly similar to a trademark," and the holder must have no legitimate interest in the name.
The blistering growth of the Net makes for a lot of gray area in establishing the right to domain names, says Kevin Goering, an Internet law specialist at the New York firm Coudert Brothers.
"If a company is in a very different type of business and it's likely that no one would confuse the two, there would probably not be a finding of bad faith or a violation of trademark law at all," says Goering.
Jim Anderson knows first-hand about domain disputes. Automobile manufacturer Volkswagen questioned his right to use the domain vw.net and sent a cease-and-desist letter to Anderson's Virginia-based networking company, Virtual Works Incorporated.
"When we registered our name, it was understood that .net was a network service provider," says Anderson. "We had to jump through loopholes to get the name. We were very happy it was available."
Anderson tried at one point to sell the name to Volkswagen, then sued the automobile maker for trying to have the name vw.net canceled.
In late February, however, a U.S. District Court in Virginia ruled that Volkswagen had the right to the name, saying vw.net diluted Volkswagen's trademark the way that "Buick aspirin" or "Kodak pianos" would. The court ordered the transfer of the name to Volkswagen, which recently put up its content at vw.net. Virtual Works is appealing the decision.
"They've never done business as VW," says Volkswagen's attorney, Gregory Phillips. "VW is a famous trademark, and Internet users would intuitively think that VW belongs to Volkswagen. I think eventually all famous trademark owners will want their .net and .org names."
Guarding Your Rights
Insuring your name from a potential domain dispute isn't easy or cheap. Since most cases involve trademark legislation, you should run a trademark search and make sure you have the right to the name you plan to register.
Teen Magazine counsel David Jacobs says one relatively inexpensive lesson he's learned is that, in addition to registering your trademark, you should register ones that are similar.
If you find someone using a name you consider an infringement, run a trademark search, then send a letter demanding the registrant stop using the domain name, says Net law specialist Goering.
If you find yourself in the opposite situation, and you receive a cease and desist letter, keep in mind that "not infrequently people threaten lawsuits but don't follow through with them, because lawsuits are expensive and the results are always uncertain," Goering says. Then look up a good intellectual property lawyer.
"We have all these informal notions about how we're entitled to control our own names," says ICANN President Michael Roberts. "If you intend to make commercial use of a name, make sure you have the legal right to establish and protect your name."
Since the domain registration process is constantly changing and new registrars are being added, the loss of your name can happen unexpectedly. Even if your trademark is secured, you should continue to check with the registrar to make sure your information is up to date.
A recent search for the name "contact.com" gave its owner an unwelcome surprise. The name was apparently transferred to a German software company with little warning. A clerical error occurred somewhere in the registration process when a new domain entry, concat.com, was mistyped.
The automatic transfer shocked the employees of the small California-based startup, which produces an online address book.
"It was a total fluke that someone at our company checked to see who owned it," says Michael Surkan, a product marketing manager for Contact Networks. "All of our services are provided around the name. We're financed with millions of dollars that could go up in smoke."