{1} When historians look back upon the late twentieth century, the development of the Internet may stand out as one of mankind's greatest technological achievements. The ability of the Internet to foster the exchange of information and ideas on a global scale may revolutionize the way people interact. The medium is uniquely suited to enable people around the globe to obtain massive amounts of information almost instantaneously, thereby spurring intellectual thought and encouraging the spread of information.
{2} If the Internet is a boon for the democratic exchange of ideas, it absolutely turns the world of commerce on its head! Using the Internet, a local or regional enterprise can cheaply and instantaneously reach out to the global marketplace and vend its wares. The Internet vanquishes the geographic boundaries which were previously natural barriers to competition. No longer will international commerce have to be dominated by large multi-national corporations. The Internet alters the rules of the game: multi-national corporations will now have to worry not just about other multi-national corporations invading their turf all over the globe, but also, about small regional and local producers as well. Thus, the Internet has the potential to equalize the balance of power between large multi-national corporations and small, local enterprises by reducing market entry costs.
{3} The Internet has risen from tiny beginnings. Initially a Defense Department research project, it is now the largest networked computer system on the planet. The growth of the Internet has been explosive; the number of Internet users has doubled approximately every year since 1983. [1] Estimates show that approximately forty to fifty million people are currently "on-line" around the world; of those users, about twenty-two million reside in the United States. [2] It is estimated that by the year 2000, there will be approximately 200 million Internet users.[3] Corporations, seeking to use the Internet as a marketing tool to take advantage of this massive market, are tripping over themselves trying to establish their own unique Internet presence.
{4} A corporation's marketing effort is much more effective if it can target those consumers who actually have a need for the product it sells. While television advertising can reach millions of consumers at once, not every viewer reached will be interested in the product being advertised. [4] Television allows marketers to target shows which have the same audience demographics as the typical purchaser of the product. However, because not all viewers of a specific show are predisposed to purchase that particular product, there is a great deal of wasted advertising effort. The Internet has the potential to become a much more effective and efficient advertising medium than television, even if the computer does not penetrate the household market to the same degree that television currently does. [5] The Internet allows a company to focus its marketing efforts, selectively targeting those consumers who may have an interest in the company's product based on similar desires, not mere demographics, thus making the marketing effort much more effective. [6]
{5} The Internet's unique ability to allow a company's marketing message to have a global reach and selectively target those consumers already predisposed toward actual purchase of the product, has spurred a rush among corporations both large and small, to set up shop on the Internet. [7] This paper will focus upon how the current race to establish an Internet presence, has created numerous disputes over the use, the ownership, and the registration of domain names, as well as increased the potential for liability for possible infringement of corporate trademarks. The purpose of this paper is to shed some light on how current policies regarding Internet domain name registration impairs certain trademark holders and effectively prevents them from using the Internet as a global communication medium. This paper has four parts: section one details the history of the Internet, and the structure of both domain names and the Internet; section two discusses trademark law and how it applies to and effects domain name usage; section three analyzes the inherent conflict between trademark law and the domain name structure; and section four recommends various solutions to the current domain name problem and why they are better than the current system.
{6} Even though the terms "cyberspace", "Internet", "networks", "electronic commerce", and "domain names" are now common vernacular, the Internet is still a mystery to millions. Simply put, the Internet is a worldwide network which connects thousands of independent computer networks together. A computer network is a number of independent proprietary computers that are linked to each other. [8] This "link" allows these computers to "talk" with one another and exchange information stored in their independent databases. [9] The Internet's purpose is to link independent networks together, effectively allowing any computer in the world to communicate with any other computer linked to the Internet. [10] Today, the Internet connects millions of users across the globe, providing an efficient, high-speed, and powerful communications medium through which individuals can access, share, exchange, and transmit a vast array of electronic information and services.
{7} Although currently used as a means to exchange information and conduct electronic commerce, the Internet [11] was not originally designed for entirely peaceful purposes. In 1969, research scientists working for the Department of Defense (DOD) developed the Internet. [12] The project's initial purpose was to provide a reliable global communications apparatus for the military's networked computer communications system in case of enemy attack. [13] The solution was to link each computer network to every other computer network using the numerous redundant pathways of the telephone system, through a technique called dynamic rerouting. [14] Since telephone communications can be routed from point to point using numerous alternative routes, the theory was that if ever enemy attack severed some of the phone links, the integrity of the network would be preserved by automatically rerouting traffic on the net to other unsevered phone lines. [15]
{8} Although no longer a military project, the dynamic rerouting principal is still at the heart of the Internet. From its military beginnings, the Internet has grown to become "the first global forum, the first global library, and the first global marketplace." [16] The Internet is now peacefully used as a global communications medium through which digitized information such as data, voice, or video is transmitted from one computer to another.
Administration of the Internet
{9} During its early years, the Internet was primarily funded and managed by an independent agency of the US government, the National Science Foundation ("NSF"). [17] The NSF initially prohibited the commercialization of cyberspace. [18] However, as the Internet grew, the NSF handed over various oversight responsibilities to different private organizations, [19] thereby impairing its ability to control its "vision" for the Internet. [20] Because no one single entity has the authority to create and enforce policies for the entire network, [21] it is extremely difficult to formulate a single plan to deal with the unique problems pertaining to trademarks and Internet domain names.
Communication Over the Internet: The importance of domain names
{10} Although the Internet creates one gigantic global computer network, individual users attached to the net must be distinguished from one another so that other users can locate them. [22] In order to distinguish individual users from one another, each individual computer or user is assigned an individual Internet Protocol Address (IP address). [23] In order to transmit information to a specific computer linked to the Internet, the user must know that computer's specific IP address. [24] Every computer/user connected to the Internet has his or her own unique IP address, which is merely a combination of numbers arranged in specific fields (such as 128.67.435.91). This numeric code is a map, with each numeric grouping indicating a particular place in "cyberspace", which the Internet uses to send a particular packet of information to its intended recipient.[25] The Internet is best viewed as a giant collection of mailboxes, whereby each user is assigned (at least) one mailbox designated by an individual IP address. While a user may be assigned more than one mailbox, no mailbox may be assigned more than one IP address. [26] Thus, only one, unique numeric IP address can be assigned to any single individual "place" on the Internet. [27]
{11} Generally, human beings have a hard time remembering numeric groupings such as those used on the Internet. [28] In order to make the Internet address system user-friendly, the numeric IP address system has been overlaid with a system of easily remembered mnemonic "domain names". Thus, when an Internet user enters an easy to remember mnemonic domain name, the computer converts the mnemonic domain name into the unique numeric address that corresponds to the relevant computer site and then uses that particular numeric address to seek out the relevant computer site. [29] However, just like the numeric Internet address system, there can only be one unique mnemonic domain name corresponding to any one particular numeric IP address. For corporations conducting business in the realm of cyberspace, having an easily recognizable mnemonic Internet domain name therefore may mean the difference between success or failure.
{12} In order to make the Internet more user friendly, numeric IP addresses have easy-to-remember corresponding alphanumeric domain names. Every alphanumeric address on the Internet has two parts: a user-ID and a domain name. [30] The user-ID refers to a particular user connected to the Internet at that site, [31] while the domain name identifies a specific network on the Internet. [32] For example, breaking down the Internet address "billgates@microsoft.com" reveals that the user-ID is "billgates" and the domain name is "microsoft.com". Thus, this Internet address refers to an individual user who employs the user-ID "billgates" located on the independent "microsoft" network, which is connected to the Internet at the "microsoft.com" site.
{13} Domain names themselves consist of two separate parts or levels: a top-level domain name and a second level domain name. [33] For example, the domain name "microsoft.com" consists of the top level domain name ".com" and a second level domain name "microsoft". Top-level domain names try to identify the type of entity that operates the individual network attached to the Internet at that particular site. [34] Second level domain names identify what site on the Internet a user is visiting. [35] Second level domain names are limited to twenty-two alphanumeric characters in length. [36] While a domain name holder can stratify its specific Internet domain name into multiple levels, [37] consumers are unlikely to know offhand the exact stratification of a company's domain name, which therefore, may lead to missed communication opportunities.
{14} According to Internet experts, "for a business to communicate effectively on the Internet, it is essential that they have a unique "address" that is easily recognizable to their actual [or potential] customers." [38] Many Internet domain names contain identical top level domain name segments because the top-level domain name is merely a generic term used to identify the site operator. Since all identical site operators must use the same top-level domain name, merely looking at the top-level domain name would not help consumers distinguish one mnemonic IP address from another. Thus, top-level domain names provide little assistance to consumers who wish to find a specific corporation's Internet site.
{15} Since top-level domain names are indistinguishable, the power of using a domain name as a corporate marketing tool, therefore, lies in the individualized second level domain name. "Using a familiar or popular word, [or the name of a company or its product], as a domain name...provides a corporation with a valuable asset, because individuals seeking to access a site have a memorable key word to use to enter the corporation's virtual storefront." [39] For example, if McDonald's Hamburger Corporation were to establish a web site on the Internet, the company may use mnemonic addresses such as "mcdonald's.com", "ronaldmcdonald.com", or "bigmac.com". These names would be likely choices because consumers easily identify these names with the company, and therefore, would probably think to use them when searching for the company's Internet site. However, using the mnemonic address "fluffy.com" would probably not be a good choice for McDonald's Internet domain name address since there is no obvious connection or association in the minds of consumers between the term "fluffy" and the McDonald's Hamburger Corporation.
{16} While corporations can use whatever second level mnemonic domain name they wish, the choice should be carefully researched and thought-out. An effective corporate Internet site depends on whether or not it is visited by cyber-consumers, which hinges upon whether or not consumers can find the site. Thus, it is imperative that a company uses a mnemonic address that consumers would associate with the company when thinking about the company or its products. Therefore, for obvious reasons, most companies choose to use as a second level domain name either their corporate name, or the name of a "signature" product. [40]
{17} Having a known or easily deducible domain name is very important to companies which use the Internet as a means of electronic commerce. [41] Internet domain name choice must be conducted with an understanding that consumers are unlikely to conduct an in-depth search to discover a company's Internet domain name that does not readily jump into their mind. Further exacerbating this problem is the issue that consumers are unlikely to know about, or even be able to deduce a randomly generated mnemonic Internet domain name. Thus, to make corporate communication with Internet users as effective as possible, corporations frequently register as a second level domain name their corporate name, or the name of one of the company's popular trademarked products.[42]
{18} Currently there are seven established top-level domain names. [43] The seven top level domain names are: ".com" which corresponds to for-profit commercial organizations; ".edu" which corresponds to educational institutions; ".gov" which corresponds to government bodies and departments; ".int" which corresponds to international organizations (mostly NATO and the UN); ".mil" which corresponds to military sites; ".net" which corresponds to networking organizations; and ".org" which corresponds to all other organizations, such as professional societies or other non-profit entities that do not fit in the previous six top level domain names. [44] However, the Internet Assigned Numbers Authority ("IANA"), which oversees the technical management of the Internet can establish more top-level domain names as necessary. [45] The NSF established a government department called InterNIC, which was tasked with the express purpose of keeping track of and registering domain names. [46] InterNIC granted Network Solutions, Inc. ("NSI"), a private corporation, sole responsibility to develop and operate the InterNIC Registration Service (the "Registry"), which provides domain name registration and recording of second level domain names. [47] Thus, NSI is the only entity in the world currently able to assign domain names to individuals and corporations. [48]
{19} Although the Internet is a commercial entity, the various organizations that control the management of the Internet want to make the "Internet experience" available to everyone, and thus, they do not charge for people to use the Internet itself. [49] Originally, NSI in keeping with the Internet's free use structure did not charge entities that sought to register their Internet domain name. However, as the Internet grew, NSI altered its policy; it currently charges entities that wish to register domain names and furthermore, requires payment of a "maintenance fee" in order to keep the domain name active.[50] Some observers have noted that NSI is getting rich off the fees it generates from registering domain names, and that the InterNIC grant to NSI is, in effect, a license to reap windfall profits.[51]
{20} NSI's primary purpose is to ensure that every Internet domain name is unique and that the name chosen has not already been previously registered. [52] Current NSI policy regarding registration of second level domain names is relatively simple: first-come, first-serve. [53] According to NSI's Dispute Policy, NSI does not "determine the validity of the registrant to use that particular domain name or otherwise evaluate whether the registration or use of the name may infringe upon the rights of third parties". [54] NSI merely requires domain name applicants to represent that the name "to the best of Registrant's knowledge, does not interfere with, or infringe upon the rights of any third party".[55] NSI does not subject a submitted name to a substantive examination procedure to determine whether the applicant has a valid right to use that particular name, or whether there is a likelihood of consumer confusion between the submitted name and a currently registered trademark. The failure of NSI to not examine the legitimacy of the representation, the policy, in effect, puts all applicants on the honor system. Thus, under NSI’s current registration policy, it may unwittingly grant a request for a domain name to a registrant even though that registrant is not entitled to use that particular trademarked name.
{21} Although NSI does not conduct examinations of actual or potential trademark infringement by domain names submitted by registrants, it does provide a procedure by which third parties can challenge a registrant's use of a specific domain name. [56] If a valid trademark holder provides NSI with evidence that it owns the rights to an already assigned domain name, then the current registrant has 30 days in which to show that he or she also has valid rights to use the particular domain name in question. [57] If the current user cannot show proof that it is entitled to use that name, NSI will place the domain name on hold until the dispute is settled. [58] When it freezes the domain name, NSI also absolves itself of the dispute, thereby forcing the parties to litigate in court which one of them is entitled to use the particular name in question.
{22} Although courts have been dealing with trademark disputes for centuries, it is only within the last three years that trademark law has been applied to domain names. This recent advance of trademark law into the realm of cyberspace is probably due to NSI's lax registration policy which has allowed a person to claim an interest in a particular name by registering it as a domain name, even though the registrant is not entitled to use that particular trademarked name without permission of the proper trademark owner.
{23} Trademarks, are names and symbols that a company uses to identify a good or service in the marketplace. [59] Trademarks are the law's recognition of the psychological function of symbols. [60] Trademarks can consist of a logo, a company name, a unique packaging style (trade dress), or some combination thereof. [61] Trademarks serve several useful functions. Not only do they identify the source of a product, but they also serve a communicative/psychological function, in that they help indicate the quality of a product or service. [62] Thus, the ultimate purpose of trademark law is two-fold. [63] First, trademark law prevents consumer confusion as to the source of a particular good or service by prohibiting a subsequent competing business from using an identical or extremely similar product name or symbol as the previous competitor. [64] Second, trademark law also protects a mark owner's investment in the particular mark and the mark's inherent goodwill value. [65] Trademark law protects this "value" by preventing another entity from misrepresenting their goods or services as that of the trademark owner's, thereby forestalling a diminution in the value of the mark as an indicator of trademark owner's product quality. By granting trademark rights in a specific mark, the law hopes to accomplish two objectives: (1) lowering consumer search costs and making the market more competitive by indicating the source of the goods; and (2) protecting a company's goodwill by having the mark serve as an indicator of the product's quality, thereby fostering the maintenance of consistent quality standards.
{24} A trademark symbol serves as a merchandising short-cut, a frame of reference which the consumer can use to subjectively judge the quality of an item by informing the consumer of the producer's identity. [66] This "subjective desirability judgement" that occurs in the consumer's mind during the purchasing process is known as the mark's "goodwill value". A trademark's goodwill value depends on the mark's length of use, its advertising, and its consistent product quality. [67] Trademarks that are used for a long time, that are heavily advertised, and that have consistent, although not exceptional, quality have tremendous goodwill value. The court, in Scandia Down Corp. v. Euorquilt, Inc,[68] described how trademarks have inherent value was can be gained or lost:
The value of a trademark is in a sense a "hostage" of consumers; if the seller disappoints the consumer by placing an inferior product on the market, consumers respond by devaluing the trademark. The fear of having a trademark devalued in the mind of the consumer is an ample incentive for a producer to develop and market goods with the inherent quality that the consumer expects and demands. [69]
{25} Due to the fact that it takes so long to create goodwill in the mind of the consumer, the incentive to create goodwill would be severely undermined if competitors, merely by using confusingly similar marks, could freely associate their inferior products with other products that have already developed significant goodwill value.[70]
{26} In 1947, Congress under the auspices of its power to regulate commerce, enacted the Lanham Act which serves as the backbone of current trademark law. [71] The Lanham Act grants federal protection for certain types of marks. [72] The Act defines trademark to be, "any word, name, symbol, device, or any combination thereof" that a manufacturer uses (or intends to use) "to identify and distinguish goods produced by that party from those goods manufactured or sold by another". [73] The Act defines a service mark to be, "a name or symbol used to market a service"; [74] the Act also defines a trade name to be "the formal name of a business". [75]
{27} The purpose of trademark law is not to establish a right to use a specific word or symbol, but rather, to permit the original user to exclude other entities from adopting a similar mark. [76] Anyone may create a right to appropriate ownership in a specific mark, merely by adopting that mark and using it in commerce. [77] Thus, the Lanham Act seeks to create a procedure for granting a prior user exclusive rights in a specific mark, thereby helping to eliminate consumer confusion, and a depreciation of the mark's inherent goodwill value.
{28} The Lanham Act provides a that the Patent and Trademark Office ("PTO") create a federal registry and register those marks that are "used" in commerce. [78] Although the Act creates a body of federal law and a registry of federal trademarks, individual states also have their own trademark registries and infringement laws which protect those marks that are used exclusively within the borders of that particular state. [79] While federal registration will normally prevent subsequent state registration of that mark by another user, prior state registration will generally not prevent subsequent federal registration by a separate entity wishing to use that same mark. [80] Usually large national or multinational corporations file federal trademarks, while businesses conducting merely local or purely intrastate operations file at the state level. A mark owner who registers his mark on the Federal Register is entitled to certain benefits versus those marks that are merely filed on state registers. [81] The two most important rights granted to trademark owners who federally register their mark are: (1) the right to have an infringement case heard in the federal court regardless of the amount of damage claimed or whether there is diversity of citizenship between the parties; and (2) the right to use the mark nationally without having to register the mark in every state.
{29} In order to prevail on a trademark infringement claim, the claimant must show that: (1) the mark is protectable under the Lanham Act; (2) the defendant is using the same or similar mark; and (3) the defendant's use is likely to cause consumer confusion regarding the origin of the goods. [82] Although the first two issues are necessary to a finding of infringement, the central inquiry in any infringement case is whether there is a substantial likelihood of consumer confusion due to the similarity between the two marks. [83] It is important to note that the degree of similarity between two marks is not the sole factor that determines the existence of consumer confusion. [84] In Polaroid Corp. v. Polarad Electronics Corp., the appellate court concluded that the existence of consumer confusion should be determined by weighing several factors.[85]
{30} While each circuit has developed its own criteria for judging whether or not consumer confusion exists, the circuits tend to use basically the same factors. In Scott Paper Co. v. Scott's Liquid Gold, the Third Circuit Court of Appeals announced a ten factor test for determining the possibility of consumer confusion: (1) the strength of the prior mark; (2) the degree of similarity between the two marks; (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase; (4) the length of time the defendant used the mark without evidence of actual confusion arising; (5) the intent of the defendant in adopting the mark; (6) evidence of actual confusion; (7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media; (8) the extent to which the two companies marketing efforts target the same consumers; (9) the relationship of the goods in the minds of consumers because of their similarity of function; and (10) other factors showing that the consuming public might expect future expansion by the prior mark owner into the defendant's market. [86] Under the test for consumer confusion, two companies may be able to use identical marks, since after weighing all the factors, their distinctive product categories maybe so unrelated to one another that there is little chance for consumer confusion. In such a case, the trademarks of both corporations are viable and useable, even though they are identical.
Concurrent Ownership and Use of a Mark
{31} Generally, trademark law states that the first entity to adopt and use a mark owns that mark and thus, that entity can prevent others from using it. But what happens when there is a conflict involving an initial user of a mark and a subsequent adopter who has no knowledge of the prior use? While trademark law seeks to protect the mark's indication of origin and its goodwill value, this protection is limited. Although the Lanham Act permits national use of a federally registered mark, the act does not confer absolute ownership rights to the entity that registers the mark. [87] Since the mark owner does not get exclusive ownership rights, it is therefore possible for another entity to use a previously existing mark in certain circumstances. [88] Adoption and use of identical marks by two separate, independent parties is known as concurrent ownership.
{32} The legislative history of the Lanham Act indicates an intent to confer a limited right to exclude others from using an identical mark, but only insofar as that mark is applied to similar classes of goods and services. [89] Concurrent ownership and registration of similar marks may occur under two instances: if lawful adoption and use of the mark by the second party began prior to subsequent filing by the original party; or the Patent & Trademark Office (PTO) determines that consumer confusion is not likely to occur, because use of the mark is limited to unrelated product categories. [90] In Gray v. Daffy Dan's Bargaintown, the court stated that the central inquiry for concurrent use of a prior mark is whether or not there will be a likelihood of consumer confusion due to both entities using the same or similar marks. [91] The rights of a trademark owner are limited, and the mark owner can only assert such rights as to prevent the mark's subsequent use on identical goods, goods of the same product category, or those goods into which the business might naturally extend. [92] Thus, trademark law prohibits a later adopter from using a mark identical to that of a prior user on competing goods or services within the same product category, or goods or services that the original owner would naturally be expected to enter.
{33} Registration of a mark does not confer a total ban on using that mark, since various court decisions have permitted subsequent entities to take pre-existing [federally registered] names or marks and use them on a different product in a different market in a manner that does not cause consumer confusion as to the source of the goods. [93] Furthermore, if a court deems the later use of the mark lawful, the company may obtain federal trademark registration granting a concurrent right to use this identical mark in that good's specific product category. [94] Such dual registration of a single mark of the Federal register is known in trademark law as concurrent registration. Concurrent registration is permitted under the Lanham Act, so long as the use occurs in a completely separate and unrelated line of business and no likelihood of consumer confusion arises. [95] For example, THRIFTY drug stores, THRIFTY gas stations, and THRIFTY car rental can all coexist with exactly the same corporate mark because each company operates in a completely different line of business and there is little, if any, likelihood of consumer confusion.
{34} Concurrent ownership may also be a factor concerning state and federal trademark registration and the rights conferred by such registration. Normally, federal registration confers nationwide rights to use that particular mark. However, if there is a prior use of an identical mark in a specific locale, or there is prior state registration of an identical mark by another competitor, trademark law allows the local owner to block the national holder of the mark from asserting rights to that particular mark in that specific locale. [96] Thus, an entity that obtains federal registration will be precluded from using that particular mark in that state where that specific mark was previously registered by another competitor, or previously used in a local market (assuming the mark was not registered in that state), before the federal registration occurred. [97] If the local entity uses the mark in the exact same product category as the federal registrant prior to the federal registrant's use, the restriction on the federal owner's right to national use of a specific mark occurs without a consumer confusion inquiry made by the PTO.
Trademark Protection Applies to Domain Names
{35} Case law has established that trademark protection does apply to cyberspace in the same manner and form as in all other media. [98] Domain names can be infringing or infringed upon, diluting or diluted, just as with any other type of mark. The courts have moved with remarkable speed in trying to bring order and predictability to the lawlessness of the Internet.
{36} In Playboy Enterprises v. Frena, the court determined that trademark law did apply to the posting and distribution over the Internet of nude photographs taken by Frena bearing the Playboy and Playmate trademark. [99] The court found that Frena's unauthorized use of the "bunny" trademark may lead to consumer confusion, and thus, his actions infringed upon Playboy's registered trademark. [100] The court thought the consumer may unwittingly think that Playboy was the source of the photographs when in fact it was not, based on two factors: (1) the service provided was nearly identical to Playboy's (the display of nude photographs); and (2) the symbol appearing on Frena's nude photographs was identical to that of Playboy's.[101]
{37} In one of the early domain name arbitration cases, Princeton Review v. Kaplan, Princeton Review registered with Network Solutions Inc. (NSI), its own domain name "princeton.com", and also the name "kaplan.com". [102] Princeton Review partook in the registration ostensibly to annoy its major rival in the business of preparing students for standardized tests, Stanley Kaplan Educational Services, Inc. [103] Princeton Review created a corporate web site under its own domain name in order to promote its own services; under the "kaplan.com" address, Princeton Review created a web site that had phony comparison charts of the two testing services, which ultimately recommended that people enroll in the Princeton Review course, not the Kaplan course. An arbitration panel found that Princeton Review had obtained the domain name in bad faith, with the ultimate objective of confusing consumers and harming Kaplan's business reputation. [104] Therefore, the panel ordered Princeton Review to relinquish the "kaplan.com" site to Kaplan. [105]
{38} In MTV Networks v. Curry, the defendant, who worked for MTV, registered the domain name "MTV.com" and developed a music website with the permission of MTV Networks. [106] Upon his termination, Curry claimed to own the web site and refused to relinquish the domain name to MTV. [107] The court reasoned that Internet domain names are similar to mnemonic alphanumeric telephone numbers, since both make it easier for consumers to locate specific businesses by overlapping hard to remember numbers with catchy, easy to remember words. [108] The court concluded that since trademark protection does apply to mnemonic numeric telephone numbers, it therefore, should also apply to Internet domain names. [109] Thus, MTV Networks and its progeny, clearly show that trademark protection is applicable in the realm of cyberspace.
{39} Although the finding in Kaplan is not a court order, it is apparent from the case that predatory domain name snatching is an improper business practice, which results in the forfeiture of the illegally taken domain name. Registering a name in order to prevent a rival from legitimately using their corporate identity on the Internet is not a legitimate interest in, or purpose for, claiming that particular name. Thus, in order to register and keep a domain name, a corporation must show that it has a legitimate interest in that name.
{40} Although NSI operates on the first-come, first-served, principal, case law suggests that while NSI currently does not verify the sufficiency of the applicant's claim to rights in the mark, the courts will conduct such a search. Case law shows that the courts require a domain name applicant or domain name owner if a domain name has already been issued by NSI, to demonstrate that it has a legitimate right to use that particular mark in order to keep that using that mark as an Internet domain name. Furthermore, court decisions clearly demonstrate that if the registrant does not have a legitimate purpose or interest in the disputed mark, then the registrant will be forced to relinquish the rights to that particular domain name, even though it registered the domain name before any other entity. [110]
{41} A recent amendment to the Lanham Act may have huge implications for the efficacy of trademarks used as domain names on the Internet. [111] The Federal Trademark Dilution Act of 1995, provides that owners of famous marks are able to enjoin another's commercial use of that mark even if the mark is used in a non-competing market and there is no chance of consumer confusion, if such use first begins after the mark has already become famous and causes dilution of the distinctive quality of the mark. [112] The statute states that a finding of dilution does not need to be predicated upon a finding of consumer confusion. [113] Thus, in certain instances, the amendment does not require the court to make a finding of consumer confusion in order to prohibit use of the particular mark in question. [114]
{42} The Federal Dilution Act of 1995 provides that "the owner of a famous mark shall be entitled...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...." [115] The act defines dilution [116] and excludes certain conduct from its coverage. [117] Dilution is "the lessening of the capacity of a famous mark to identify and distinguish goods or services" regardless of whether the owner of the mark and the other party are in competition with each other, or if there is an likelihood of confusion. [118] The Act also sets forth various factors for determining whether a mark is "famous" including: (1) the degree of distinctiveness; (2) the duration and extent of use of the mark for particular goods or services; (3) the duration and extent of advertising and publicity; (4) the geographical extent of use of the mark; (5) the channels of trade in which the mark is used; (6) the degree of recognition of the mark in trading areas used by the person against whom the injunction is sought; (7) the nature and extent of use of the same or similar marks by other parties; and (8) whether the mark was registered. [119]
{43} While the Dilution Act seems to undermine the notion of concurrent use, concurrent use is still an option, although limited to certain circumstances. Concurrent use is still a viable option because the definition of dilution clearly states that before dilution can occur, the mark in question must be famous. Simply using a mark in commerce does not make a mark famous. Rather, extensive use or notoriety is required for a mark to be considered "famous" for purposes of dilution. Therefore, unless a court finds that a particular mark is extensively used or has obtained wide-spread notoriety, before a concurrent user begins to use that particular mark in commerce, dilution has not occurred and the concurrent use is permissible. Thus, the Act only affects concurrent use to the extent that a mark is famous prior to its initial adoption and use in commerce by second party.
{44} In Panavision International v. Toppen, the court found that the defendant had registered the trademarked names of the plaintiff in violation of the Federal Trademark Dilution Act of 1995. [120] Toppen submitted to NSI the domain name "panavision.com" and "panaflex.com", which NSI registered in Toppen's name. [121] Using the domain name "panavision.com" as an Internet address, Toppen created a web site that featured aerial views of Pana, Illinois; [122] using the domain name "panaflex.com" Toppen created a web site that merely stated "HELLO". [123] The court noted the current NSI policy in effect when Toppen applied for domain name registration and found that he never used the web sites in connection with any goods or services. [124]
{45} The court determined that the marks were famous, and therefore, entitled to protection under the act. [125] Furthermore, the court stated that Toppen's registration of the marks as domain names constituted a commercial use of the mark which allowed the action to fall under the auspices of the Dilution Act. [126] The court reasoned that Toppen's "business" was to register trademarks as domain names and then try to resell those domain names to the proper owners of the trademark, and that such trading, was in fact, commercial use of the name and therefore, Toppen's actions placed the name in commerce.[127]
{46} The court also determined that the Congressional intent behind the Dilution Act was to prevent the tarnishing a famous trademark, or the blurring its distinctiveness. [128] The court found that Toppen's conduct "prevented the mark's proper owner from using the mark in a new and important business medium," thereby diluting its value. [129] Thus, Panavision makes clear that "domain name poaching," which involves registering trademarks that one does not own in hopes of selling the name to the mark's proper owner at a later time, is prohibited under the Dilution Act.
{47} However, while domain name poaching is prohibited, the courts have yet to answer the difficult question of who should prevail if two companies with concurrent federal trademark registrations seek to register their identical trademarks as domain names. [130] The underlying purpose of the Dilution Act is to prevent the diminution in value of a particular mark whether the loss in value is due to tarnishment, blurring, disparagement, or diminishment. [131] It is possible to argue that due to the "single use" structure of mnemonic domain names on the Internet, a mark's value may be diminished. Given the "single-use" structure of the Internet, a later registrant can not use its concurrently owned mark as a communications device on the Internet, under NSI's current first-come, first-served policy. This first-come, first-serve policy seems to dilute the inherent value of a concurrent mark to a later registrant vis-à-vis the owner of a concurrently owned mark who is permitted to use the mark on the Internet. Such structurally imposed nonuse tarnishes the selling power and goodwill associated with that mark within the Internet medium. Thus, one could argue that NSI's first-come, first served policy inherently whittles away the value of a particular name for concurrent mark owners, in effect, causing a form of reverse dilution. [132]
ANALYSIS OF THE INHERENT CONFLICT
{48} While trademark law allows multiple parties to use the same mark so long as those entities are using the mark in non-competing and unrelated areas of the marketplace, [133] the current design and structure of the Internet only allows one entity to use a specific mark as a domain name address. This discrepancy has the potential to deter others from using a concurrently owned mark as a location beacon on the Internet. Thus, the single use structure of the Internet undermines the Lanham Act's limited grant of exclusive rights in a mark. Due to the global structure of the Internet, companies which could previously legally coexist using the same identical trademark in different markets have suddenly discovered that they are unable to use their trademarks as domain names if someone else has beaten them to the punch. The current Internet structure gives the first person to register the mark as a domain name exclusive rights to use that particular mark as a location beacon on the Internet. That is not the same as the limited grant notion which prevent others from unauthorized use of a mark intended by trademark law. The inherent conflict between trademark law's concurrent use and the Internet's single use structure has raised serious problems for companies trying to market their wares on the Internet using multiple-ownership trademarks as Internet domain names.
{49} On the Internet, the first entity to adopt and use a mark as a particular mnemonic domain name is the only entity that has ownership rights to that specific mark, regardless of what trademark law says. Unfortunately, the theory of concurrent use effectively permits multiple ownership of a single mark. Thus, concurrent ownership of a single trademark creates an insurmountable hurdle as it pertains to Internet domain names. The current structure of the Internet does not permit multiple uses of a specific mark, while current trademark law allows multiple uses. Therein lies the dilemma. To solve this problem, either the courts will have to create an exception to the notion of the concurrent ownership of a mark with the exception narrowly applying only to marks used as domain names on the Internet, or the structure of the Internet itself will have to change.
The Conflict Between NSI's Dispute Policy and Trademark Law
{50} NSI recognizes that predatory domain name snatching occurs, and thus, has established a dispute procedure to determine the validity of a registrant's right to use a particular domain name. [134] However, NSI's dispute procedure is woefully inadequate to protect the validity and ownership of many types of trademarks. NSI's refusal to verify that an applicant does in fact own the mark they seek to register as a domain name before NSI actually issues that particular domain name, causes unnecessary delay and increases the cost of doing business on the Internet. [135] Legitimate trademark owners who wish to reclaim their domain name from a cyber-squatter must either: (1) buy the name from the cyber-squatter (which may be costly); or (2) go to court and have the court order the cyber-squatter to relinquish its rights in that particular name (which can be costly and time-consuming). Unfortunately, NSI's current policy of not verifying mark ownership inherently increases, the opportunity for cyber-squatting and domain name poaching.
{51} The second major problem with NSI's dispute policy is that the policy refuses to recognize trademarks that are not recorded on the Principal Register of the United States.[136] Thus, trademarks that are state-issued, granted under common law, or registered in another country are not recognized as valid trademarks in the eyes of NSI, even though courts of law recognize that the owners of these types of marks have legitimate rights in such marks. The policy casts doubt on local legitimacy of a mark, because NSI necessarily requires federal registration of a mark in order to use that mark as a domain name. The failure of NSI to recognize non-federally registered marks makes many of these marks useless as location beacons on the Internet. Under NSI's current domain name dispute policy, the owner of a local or state-registered mark would not even have standing to challenge a cyber-squatter who illegitimately registered that particular mark with NSI. Thus, the current policy shows a clear disregard of both trademark law and the goodwill value that purely local marks may obtain in a particular market.
{52} Furthermore, NSI's policy does not even consider the possibility that there could be two identical federally registered domain names. Although the first-come, first-served policy is easy to administer, NSI's policy necessarily usurps and undermines federal trademark policy. Denying a trademark domain name because another entity was first to legitimately register with NSI, destroys the concurrent ownership exception that is a bedrock principal of federal trademark law. NSI's denial of a concurrent trademark owner's request to use its trademark as a location beacon on the crowded Internet inherently lessens and dilutes the commercial value of that mark.
{53} NSI's policy may dilute the value of a mark in that it lessens the goodwill value of the mark not just as an indicator of quality, but also, the policy diminishes the value of the mark's ability to serve as an indication device. Since consumers only entertain a limited number of choices in their buying decision, (those marks that are easily recalled in the consumer's mind) the mark may lose some of its "purchase decision" value if the mark can not be used by the consumer to locate the product or producer on the Internet. If due to prior legitimate registration by another party, a producer can not use its concurrently owned mark as a location beacon with which to communicate with consumers, the market value of that particular mark as it pertains to that particular producer may diminish. During the all-important buying decision process, a consumer may not know that a product which uses a concurrent mark is a possible choice among others in that particular product category, due to the inability of the mark owner to use the mark as a domain name, and thus, the producer may lose the opportunity to register a potential sale. On the whole, this lost opportunity affects total sales of the product, thereby decreasing the market value of the mark itself, since the market value or strength of the mark is based to some degree on the amount of total product sales.
IV. RECOMMENDATIONS TO FIX THE PROBLEM
{54} There are many changes that NSI could implement to make domain name registration easier for the proper owner of the mark while still protecting the value of every mark holder, not just those fortunate enough to have their mark recorded on the federal register. Unfortunately, NSI's current policy of not verifying mark ownership inherently increases, the opportunity for cyber-squatting and domain name poaching. It would stand to reason therefore, that the responsible approach would be for NSI to require proof of domain name ownership before it grants any domain name, not after the damage has already been done.
{55} First, NSI should alter its domain name registration policy and require domain name applicants to submit proof that they, in fact, do have rights to use that particular name prior to actually going through the process of registering the name with NSI. Proof of ownership would require the applicants to submit evidence of either prior use of the mark in commerce or some form of prior registration for the mark. NSI refuses to require domain name ownership proof prior to issuance, because it wishes to stay out of the sticky situation of having to determine trademark rights. However, requiring pre-registration proof of ownership would eliminate a majority of the current "sticky" domain name disputes by taking away the ability of most cyber-squatters to poach a particular domain name merely to sell it to the proper owner of the mark later on.
{56} Second, NSI should require that all domain name applicants submit to having an NSI staff member make determinations pertaining to proper use and ownership of particular marks. NSI justifies its current policy by arguing that it does not have the expertise to determine trademark proof issues, and that making such determinations would necessarily expose the company to potential tort liability due to erroneous trademark determinations. [137] But, by hiring staffers who are knowledgeable in trademark law, NSI would quickly gain the necessary knowledge to make proper trademark ownership decisions. Furthermore, it is unlikely that such liability would result since NSI is not a court of law, and therefore, its decisions would not be binding on a court of law, nor would the decision have any determinative weight whatsoever outside the domain name arena.
{57} While NSI is not a expert in trademark ownership issues, it could require, as part of its registration application, that the registrant agree to binding arbitration and sign a hold harmless clause for erroneous trademark determinations if the registrant later chooses to dispute any aspect of NSI's determination of mark ownership. A person who has expertise in the area of trademark ownership would run the arbitration hearing, and thus, they would be able to weigh the evidence and determine who is the proper owner of the mark. This binding arbitration would alleviate NSI's fear of being engulfed in litigation disputing its findings as to ownership of a specific mark, as well as allowing a competent fact-finder to determine the truly "close" calls. The liability waiver would serve to help alleviate NSI's fears of large expensive tort claims due to erroneous mark ownership decisions made by non-expert NSI staffers.
{58} Third, NSI must alter its policy of only recognizing federally registered trademarks. While this policy is designed for ease of administration in settling disputes, it invariably lowers the value of trademarks granted under common law or those merely listed on state rolls. By not recognizing state issued marks, NSI undermines the value of the Internet to competitors who wish to communicate more effectively or efficiently with customers in their state. Furthermore, the policy undermines the value of the Internet as a global communications medium through which a local competitor can compete for business against large global enterprises.
{59} In order to prevent the whittling away or tarnishing of value of trademarks that have multiple legal concurrent users, NSI should develop a cover page system for those concurrent marks that are actually used as domain names. In situations where there are multiple concurrent users of a particular mark that wish to use that mark as a domain name, a cover page system should be employed. A consumer, upon entering that mark as an Internet address, would be sent to a cover page listing and describing all the entities (both for-profit and non-profit) that use that particular mark. This cover page could even be expanded to include on it various non-commercial groups that wish to use the particular mark as an Internet domain name denoting a site devoted to discussion about particular subject matter. This cover page idea is a radical change from the current Internet system which only allows one entity to use a particular domain name. In effect, the cover page would put ownership of the domain name corresponding to a particular concurrently owned mark in the hands of the public, since every concurrent owner of the mark would be entitled to be listed on the page. The cover page would contain a list of the names for every entity that uses the mark, along with a description of services each entity provides or products they offer. [138] The consumer could then click on the name of the company or non-commercial entity they wished to visit based on the product/service description listed on the cover page. Choosing a particular company from the cover page would activate that company's numerical address on the Internet address system, and thus, the user would be sent to where that particular company is located on the Internet.
{60} Since consumers have difficulty remembering the numeric address of a particular company, such a cover page system would preserve the goodwill a concurrent user has built into its particular mark and at the same time, preserve the current structure of the Internet as a medium for global communications. Because the Internet's current design structure only allows a single entity to use a particular domain name, a cover page listing all authorized concurrent users would prevent dilution of the mark, and it would also allow multiple entities to continue to use their particular marks' as locator beacons in cyberspace without interfering or diminishing the rights of others to use that same mark.
{61} Domain names, like trademarks, are valuable pieces of property that should be protected. Permitting the NSI to enforce an easily managed system which inherently destroys the value of one's property simply because a particular company was the second entity to register the particular mark, or because the company did not have federal registration, is a completely inequitable result. The Internet is a global communications medium that seeks to allow everyone equal access to the consumer and also, equal opportunity to succeed. However, the current NSI policy stacks the deck in favor of the early riser, thereby destroying the rights of several other entities that also have valid claims to use that same particular mark as an address on the Internet. The author feels that NSI should alter its application procedure so that federal mark holders are not favored over everyone else, and thus, every mark owner is able to realize the value of his or her mark to serve as a location beacon on the Internet. Furthermore, NSI should develop a cover page system that would accommodate the needs of multiple, authorized concurrent trademark owners that are currently prevented from using their particular mark as an Internet domain name. The cover page system would preserve the current design structure of the Internet, and also allow every company to use its recognizable name as an Internet address without destroying the particular mark's market value, thereby preventing dilution and still allowing the consumer to identify which company they wish to visit in cyberspace.