Testimony of Anne Chasser
President, International Trademark Association
United States House of Representatives
Committee on the Judiciary
Subcommittee on Courts and Intellectual Property
July 28, 1999
Thank you, Mr. Chairman and Members of the Subcommittee, for this opportunity to offer the perspective of trademark owners on Internet domain names and intellectual property rights. The International Trademark Association ("INTA") welcomes the Subcommittee's oversight in this area, and looks forward to a productive and enlightening discussion here today.
INTA's objectives in the debate over the future of the domain name system ("DNS") are quite simple. First, we have sought to demonstrate that domain names can and often do function as trademarks, and that trademarks must be afforded the same protection in cyberspace as they have in all other media. Second, to accomplish this protection, INTA has consistently sought the following:
- establishment of specific minimum standards for domain name registration;
- a publicly accessible domain name database, which contains up-to-date and accurate contact information;
- a uniform and easy-to-use dispute resolution policy which renders administrative – not legal – decisions;
- a reasonable mechanism whereby exclusions can be obtained and enforced for famous marks;
- a "go-slow" approach on the addition of new generic top-level domains ("gTLDs"); and
- a voice for trademark owners in the formulation of domain name policy.
These goals have remained relatively unchanged since we became involved in the issue almost five years ago. Of course, a great deal has happened with regard to the DNS in that time. First, there was only Network Solutions, Inc. ("NSI"), acting as the registry and sole registrar for the popular gTLDs .com, .net, and .org. Next came the proposed plan by the International Ad Hoc Committee. ("IAHC"). After IAHC, the U.S. Government's "White Paper" process. Now, today, we are working with the Internet Corporation for Assigned Names and Numbers ("ICANN") and the multiple registrars that have arisen.
It appears to us, Mr. Chairman, that in all the debate, the alphabet soup of acronyms, and the politics concerning who controls the Internet, trademark protection in cyberspace has somehow been relegated to the "backburner". This will have serious consequences for electronic commerce (hereinafter referred to as "e-commerce") if it is not rectified in the immediate future.
E-Commerce: Why Trademarks Should Be Protected in Cyberspace
E-Commerce figures are steadily moving up and off the charts. A study by the University of Texas' Center for Research in Electronic Commerce, which was sponsored by Cisco Systems and cited by the Department of Commerce in its report entitled The Emerging Digital Economy II, indicates that 1998 total e-commerce (business-to-business plus business-to-consumer) was $102 billion. The Department of Commerce itself, has stated:
The Internet plays an important role in a much larger number of transactions than those completed online. In addition to the shoppers who choose items online, but pay for them off-line, the Internet is an important source of research that influences off-line ordering and purchasing, particularly for big ticket items such as autos.
Trademarks have been an integral part of this growth. With the "World Wide Web" becoming ever so tangled, consumers, researchers, and typical "Net surfers," need some type of assurance that they have reached their intended destination in cyberspace. That assurance, that sign, Mr. Chairman, is a trademark. Trademarks, in the form of domain names (i.e. www.oreo.com) are the street and house signs on the "information superhighway" and the awning of the "cyber-shop" as well.
Imagine, if you can, an Internet without protection for trademark interests. The results would be disastrous. Consumer confidence in the Internet would fade, while companies that own trademarks, faced with increased infringement and dilution, would be reluctant to advertise their goods and services on a medium where their investment in intellectual property is unprotected. I think we can all agree that nobody wants that to happen, not with millions of jobs and billions of dollars at stake. You see, Mr. Chairman, from a purely technical perspective it may be the rootservers and protocols that make the Internet work, but it is brand awareness -- the familiarity of a "name" by the average "Netcitizen" -- that has made the Internet a part of so many lives and the indispensable tool that it is today.
With so much at stake, we must place the necessary emphasis on trademark protection in cyberspace. This is not a matter of "big corporations and trademark holders" vs. the individual domain name holder, as some have characterized it. Rather, it is a matter of ensuring that the consumer knows that the goods and services he is viewing on the Internet are genuine, safe, and reliable and protecting the investment of a trademark owner in the same way it is protected in other forms of media, such as print, radio, and television.
Ensuring Trademark Protection in Cyberspace
So, how do we ensure trademark protection in cyberspace? This question is especially relevant in light of the formation of ICANN to administer the DNS and the release of a report by the World Intellectual Property Organization ("WIPO") titled The Management of Internet Names and Addresses: Intellectual Property Issues. The report by WIPO came at the request of the U.S. Government, and was preceded by a 10 month study, 15 public meetings held around the globe, and submissions by over 1,300 participants.
At the opening of my statement, I outlined six objectives that INTA believes when attained will safeguard trademark rights. I will now briefly discuss each objective and offer a perspective as to the manner in which they have been addressed by either the WIPO report, ICANN, or both.
Standards for Domain Name Registration
As noted above, if consumers cannot trust the integrity of goods purchased over the Internet, e-commerce will suffer significantly. Accountability starts with identity. Under the current DNS, a domain name can be obtained and immediately utilized without verification of identifying information, which is unacceptable. We therefore advocate the establishment of specific minimum standards for domain name registration and renewal. Among these standards are:
- relevant, accurate, and up-to-date contact information, such as name, address, e-mail, phone, and fax numbers;
- dates for registration, renewal, and change of ownership;
- agreement to jurisdiction (at least in the jurisdiction of the registrar) in the event of litigation; and
- prepayment of the requisite application and renewal fees.
Status: WIPO included minimum standards in its report and ICANN has subsequently incorporated a number of WIPO's recommendations as part of their "Registrar Accreditation Agreement," noting that all new registrars should have the procedures in place when they come online.
Publicly Accessible Database
It is critical that there be a publicly accessible, centralized database established by each registry, and that accurate contact details be included in such a database. Access should be unrestricted and free of charge. Trademark and other intellectual property owners need complete and accessible information if they are to contact potential infringers at an early stage before consumer confusion occurs.
Status: In recent months, database accessibility has come into question. There is a debate over who precisely owns the data -- NSI or the public. From our previous comments, it is clear that INTA views this information as a public resource and not privately owned intellectual property. There is also a question of the establishment of a centralized database now that five new test-bed registrars have come online. As far as we know, there is none. Moreover, we have had no indication as to when ICANN intends to set one up.
Dispute Resolution
INTA believes that a reasonable administrative dispute resolution policy is an essential element of any plan for the administration of domain names on the Internet. Discretion for domain name policy should neither reside with the domain name registrars, nor with the registries. Any dispute policy needs to be consistent across the gTLD space. A lack of uniformity and specificity will only lead to confusion on the part of trademark and domain name holders, fundamental unfairness in the unequal treatment of rights in domain names and therefore inconsistent policies and precedent, chaos in the Internet community, and in the end, increased, rather than decreased transaction costs. The burden of these costs will ultimately be paid by consumers. If the goal is to create a system which is fair and predictable, and a relief to the current confusion and uncertainty, there can only be a single uniform system. There is no division among trademark holders on this point. A global marketplace and community requires a single set of global rules.
Accordingly, INTA believes that any dispute policy must be uniform across the open gTLD space and must avoid trying to resolve complex, fact-intensive trademark infringement disputes, which are more appropriately suited to judicial analysis and decision.
Therefore, any dispute resolution policy should be limited, at least during an appropriate interim period, to alleged instances of bad-faith activity by the domain name registrant.
Such a procedure, however, should not preclude a party from utilizing the national court systems as appropriate.
Status: WIPO agreed with INTA's recommendations for a uniform dispute resolution mechanism, which for an interim period, would be limited to alleged instances of bad-faith. ICANN subsequently accepted the call for uniformity, but questioned the recommendation that the dispute resolution procedures be limited to alleged bad-faith.
As of today's hearing, ICANN has not yet established a uniform policy. Until this is done, new registrars that are accredited by ICANN are requested, but not required to adhere to a uniform policy which they have been asked to work out among themselves. Separate dispute resolution policies amongst registrars is a recipe for disaster, Mr. Chairman. In particular, the registrars with the weakest intellectual property provisions will become havens for bad-faith actors. This type of forum shopping will only engender confusion, and preventing it should be one of ICANN's top priorities.
INTA supports the efforts of the registrars to develop a uniform policy, and we currently working with them and WIPO on an initiative. However, we note that there is no real timetable in place for the establishment of any uniform policy, and no procedure in place in place in the event that an agreement cannot be reached.
Exclusion Mechanism for Famous Marks
INTA supports the proposal that some type of clearing mechanism be applied for marks which would be deemed "famous" or "well-known". This would be beneficial, since famous marks are especially inviting to domain name pirates.
Status: The famous mark question was one which the U.S. Government specifically asked WIPO to address. In its report, WIPO did in fact recommend a clearance mechanism. However, it has met with criticism from those who believe that trademark owners do not have the right to reserve domain names, and that the proposal places individuals who own domain names at a significant disadvantage. INTA believes that a solution can be found, and intends to work with ICANN, WIPO, and others in the Internet community in developing a clearance mechanism.
"Go-Slow" Approach on New gTLDs
Should the Internet community, including trademark owners and technical personnel collectively, determine that the addition of new gTLDs is necessary, INTA strongly believes that any new gTLDs should only be added, if at all, one-at-a-time along with the appropriate safeguards in the form of i) improved domain name registration procedures; ii) implementation of speedy and effective dispute resolution procedures; and iii) adoption of a system for protecting famous trademarks across all gTLDs as well as suppressing the abusive registration of domain names in all gTLDs.
Status: WIPO indicated support for the "go-slow" approach. It appears that ICANN, at least for now, has no current plans to expand the number of gTLDs.
Trademark Representation in Internet Governance
The Internet is used by so many people, businesses, and organizations that it is difficult to categorize the various parties. Developing a membership structure for ICANN and ensuring that all of the interested groups are represented in a governance mechanism is an important task as we move to privatized management of the DNS.
In developing a structure for tomorrow, we should not forget the past -- in particular, the impact that trademarks have had in making the Internet a powerful commercial tool. If the Internet is to serve the needs of international commerce, such as maintaining brand equity, and consumers' interests in relying on such brand equity, the trademark community must have a significant voice in domain name policy. Otherwise, a governing body weighted heavily toward the Internet technical community or registries/registrars may not fully understand or appreciate the relevance of trademark concerns to business and consumers.
Status: At present, there are no members of the ICANN Board with identified experience in trademark law. INTA is indeed hopeful that this oversight will be corrected either through the intellectual property community's participation in the Domain Name Supporting Organization ("DNSO"), an ICANN subsidiary, or perhaps through a realignment of the ICANN membership structure. Either way, for the reasons stated above, it is critical that there be trademark expertise on the ICANN Board.
Cybersquatting: The Danger of Doing Nothing
I have just described six measures for ensuring trademark protection in cyberspace, which will lead to continued growth in e-commerce. I also said that if we do not act, there may be serious consequences to online commercial activity. Actually, we are already witnessing a glimpse of what may come if action is not taken. The threat I speak of, Mr. Chairman, is "cybersquatting."
Cybersquatting can be referred to generally as the registration and trafficking in Internet domain names with the bad-faith intent to benefit from another's trademark. Cybersquatters seek to capitalize on the investment made by trademark owners and the goodwill associated with the trademark. In the words of Francis Gurry, Assistant Director General for the World Intellectual Property Organization ("WIPO"), cybersquatting is "an abusive practice" that undermines "consumer confidence."
INTA has found that "cybersquatting" takes place for a number of reasons, including the following:
To extract payment from the rightful owner of the mark. These are the most prevalent cases, since it takes only $70 to register a domain name with Network Solutions, Inc. (the registration authority for .com, .net, and .org), and the potential financial windfall (should a trademark owner opt to purchase the domain) is much greater.
- Warner Bros. was offered warner-records.com; warner-bros-records.com; warner-pictures.com; warner-bros-pictures.com; and warnerpictures.com for the selling price of $350,000. Another cybersquatter offered to sell to Warner Bros. 15 domain names, including bugsbunny.net and daffyduck.net.
To offer the domain name for sale publicly to third parties.
- The University of California at Los Angeles (commonly referred to as "UCLA"), took action against a cybersquatter who registered www.ucla.com and then put up a "for sale" sign with a number to call. Shortly after counsel for UCLA sent a letter to the cybersquatter, it became a pornographic site. The party operating the pornographic site was found to have several addresses and phone numbers, none of which were legitimate.
To use famous marks as domain names for pornographic sites or otherwise capitalizes on customer confusion.
- The Mobil Oil Corporation reports that its trademark, MOBIL 1, was used in a domain name to direct Web surfers to a pornographic site. The domain name was mobil1.com.
To engage in consumer fraud, including counterfeiting activities.
- AT&T reports that a cybersquatter registered the domain names attphonecard.com and attcallingcard.com and established a Web site soliciting credit card information from consumers. AT&T was concerned because its brand name was being used to lure consumers to a Web site that might be used fraudulently to obtain financial information from unsuspecting consumers.
Some cybersquatters have taken the necessary precautions to insulate themselves from the "use in commerce" requirement under U.S. trademark law. Cybersquatters register famous trademarks in bulk, but in most cases, do not post an active Web site. This activity is traditionally referred to as "warehousing." In addition, cybersquatters are now careful to no longer offer the domain name for sale in any manner that could result in liability under current case law.
Finally, some cybersquatters provide false and misleading contact information, as a consequence, many courts have been unable to provide assistance to trademark owners.
The recommendations put forth in the WIPO report will help to stem the tide of cybersquatting. However, as indicated above, it is unclear as to when or if the proposals by WIPO will be adopted. As a result, in recent weeks, there has been talk of national anti-cybersquatting legislation. The provisions of this legislation would compliment any administrative mechanisms that are eventually put in place.
INTA supports effective, yet even-handed anti-cybersquatting legislation. We believe that such legislation, should, at a minimum, include the following:
- Provisions that explicitly prohibit cybersquatting, specifically, the registration and trafficking of an Internet domain name with the bad-faith intent to benefit from another's trademark.
- Clear remedies for trademark holders, including the availability of injunctive relief and the ability to recover actual or statutory damages.
- Protection of the public interest, including allowing for legitimate uses of domain names that meet fair use/freedom of expression standards.
We anticipate that the dialogue concerning anti-cybersquatting will be ongoing, and remain open to suggestions as to specific provisions for the legislation.
Conclusion
Thank you again, Mr. Chairman, for this opportunity. For the last five years, INTA has served as the voice of trademark owners during the debate over the future of the Internet. Over that time, the Association has committed itself to the privatization of the DNS and supports efforts to create a stable, representative organization which can meet the needs of e-commerce in the 21st Century. There are, however, hurdles which we must overcome before we reach this goal. In particular, the establishment of a centralized, publicly accessible database, the creation of a uniform dispute resolution system, and the presence of cybersquatters.
We welcome your continued oversight and active participation in this issue, Mr. Chairman, and look forward to working with you and others to establish sound mechanisms for trademark protection in cyberspace.
