Legal Issues Surrounding Domain Names, Part 1

But for the most part the domain names that we deal with, every domain name has a potential use, it's how you use a domain name that can potentially get you into trouble. Obviously we have the trademark infringement concerns but there is also dilution issues with dealing with famous individuals, you got publicity rights when you are incorporating names of individuals into a domain name, but then you also have unfair competition and some other common law that aren't really on the books and easy to identify but are always out there as a remedy for companies that thinks they are being harassed somehow. In the US specifically we have the anti cyber squatting and protection act which is basically the UDRP on steroids the big difference being the penalties can be severe, the statutory damages alone can be up to $100,000 alone. It was enacted specifically with domain names in mind. To tackle trademarks first, we need to understand what trademarks were designed to do and what they were not designed to do.

Trademarks are not a monopoly on a word. No matter what a company might tell you or however they might try to position themselves. Nike does not have a monopoly on the word Nike. Apple does not have a monopoly on the word apple. It's how those trademarks are used that limits the scope of protection. One key thing with trademarks is that trademarks need to be distinct able in identifying the company or the source of goods. Unlike other rights like IP rights or patents, trademarks are not designed to protect the holder. Trademarks were designed to protect the consumer. And that is the big difference when people talk about ip rights and lump trademarks in with patents that is a very important distinction there, it is not designed to protect the company, it is designed to protect the consumers. And part of the reason limitations are built into it around this idea of protecting consumers is that you can't have a trademark that is inherently descriptive of the products you sell. If you sell bicycles you can't have a trademark on the term bicycles or else how can anybody else compete with you, they can't even sell competing products if they can't even describe the products they sell. Unfortunately when you get into this realm of suggestive trademarks there are things that sound descriptive but for whatever reason the trademark lords or courts might say that it's just suggestive enough that it's not really descriptive. If you think of consumer goods like clothing detergents or things like that that have names that kind of evoke the qualities of it, I am trying to think of a good one, like 'spring fresh' or something like that for dryer sheets. They smell like a scent of spring fresh so they are somewhat descriptive but they are not so descriptive that they are denied protection. But if you look at this spectrum of protection you can see that when you get towards the generic and descriptive side there is no trademark rights. You have to invest so heavily into the trademark that it gets what's called secondary meaning in the minds of consumers so much so that they don't identify it as a descriptive word anymore but rather they identify it as your company. Toys R Us is one example. Toys R Us is a big toy chain here in the US. Toys R Us is about a descriptive name as you can possibly have. For the good majority that the trademark existed, it didn't even have any protection rights. It wasn't until it became sufficiently famous and distinctive in the minds of the consumers that it had this secondary meaning and it was finally granted trademark protection. So say for the first 10-15 years of that companies existence, competitors could have opened a store right next door called Toys R Us and that would not have been trademark infringement. Because they sell toys, so how can they not say Toys R Us.

The strongest trademarks are going to be the arbitrary or fanciful ones. Sometimes it can be a dictionary word but then have nothing to do with what the company sells. Apple computers is a great example of that as the fruit has nothing to do with what they do. So it's a very powerful trademark in relation to computers and consumer goods. If they ever were to go into selling fruit, that trademark wouldn't be so strong. They are branching out in so many different directions these days, who knows what they might do next. When we think about it from an international perspective you need to take into account that there are different trademark regimes around the world. And granting of protection in the US, Canada, and the UK for the large part, is based on first to use. So the first company to use a trademark has the senior priority rights to use that trademark. Whereas in the EU and most civil law countries it's just the opposite, its first to file. You could have been using it for 10 years but if you never registered it someone else could come in and register it and be the senior user.

One thing that is universal in trademark law and this has been codified in different international treaties, one of the biggest ones being the WTO trips agreement that basically outlines most intellectual property laws under the WTO regime and they create some standards of trademark use. One of the big standards is scope of protection and limitations based on related goods and services. There is this thing called the Nice classifications, and it's this big long list of goods and services and they have little codes next to them so whenever you file a trademark registration whether in a national trademark registry say for example the US Patent and Trademark Office or if you use the Madrid protocol which is a single application that applies to as many countries as you choose as long as they are part of the Madrid convention they all use these nice classifications. So it's actually one area of trademark law that has been somewhat harmonized around the world. And most trademark regimes use these same classifications. So when you have a trademark that trademark is limited to the goods and services that its registered for. To use the Apple example again, that Apple trademark is only in relation to the goods/services of computers and consumer goods in which they registered the trademark for or sell. In some countries the US, Canada, UK since the rights come with first to use, it's basically whatever goods you use it on is where your protection goes.

But you also have a lot of 'fair use' protections that are built into trademark law that try to protect consumers and public domain from overreaching trademark owners. Basically preventing the monopoly theory. One of the big distinctions of this fair use defenses is the commercial applicability. Commercial use of a trademark is much less likely to be seen as a fair use than as a non commercial use. If its commentary, if it's a parody, if it's just using the word for its descriptive purposes, those are all fair uses. But if it's a commercial use that overlaps with trademark and related goods and services there is not going to be much for a fair use defense there. Once you get into famous trademarks everything kind of escalates and this is another thing that is harmonizing around the world, this concept of famous trademarks VS run of the mill trademarks. Once a trademark becomes famous you enter into the world of dilution remedies and tarnish remedies. And that basically is saying that even if the competing use of the trademark has nothing to do with the related goods/services that the senior holder uses it for, it's so famous that anybody using it for any purpose is going to dilute the trademark to identify the company. So if we use Apple again, Apple is such a famous powerful brand that if somebody was to come up with say, apple running shoes their lawyers would run to court and say no. By using this trademark even on shoes, it's going to confuse customers and dilute the trademark's ability to identify us.