Domain
Names in the Realm of Trademark Law
Nathaly J. Vermette
I.
Introduction
Internet domain names – a recent
breed of commercial identifiers – have become so pervasive in the realm of
business that pressing questions have surfaced about their legal nature and
status. As businesses world-wide embrace
the new marketplace (i.e., “cyberspace”) and participate in e-commerce, the use
of domain names precipitates an ever-greater number of conflicts.
The fundamental question needing
response is complex, as might be expected: how should these domain names be
managed and which body of law should govern them? Since domain names are an instrument of
loosely-regulated private practices, they do not yet fall under a specified
body of law, with the exception of the Anticybersquatting Consumer Protection
Act, promulgated by the United States.[1]
Perhaps the most logical way to
approach this question would be to ascertain the most approximate legal
antecedent for domain names. Given that, for commercial purposes, the domain
name serves as both a computer address and a location identifier for products
or services, the most appropriate legal antecedent is the trademark. And, in
order to understand how domain names can fit into the realm of trademarks, it
is helpful to examine the origin and evolution of trademarks in British,
French, American and Canadian law.
Approached from this perspective, it is clear that when considered
internationally, the fundamental purpose of trademark law is the prevention of
confusion and dilution, all in the name of protecting the goodwill built by
commercial enterprises.
II.
Origins and
Evolution of Trademark Law
Few jurists
can identify the historical purpose of a trademark or how that purpose has
evolved. Originally, marks were placed
on objects to identify ownership and to deter would-be thieves.[2] Archaeologists have found such identifying
marks on various objects, such as on the walls of prehistoric caves, on breads
found in the Pompeii excavations, and on Babylonian and Roman bricks and
pottery.
During the Middle Ages, the use of
these marks expanded into the commercial realm.
As commerce and trade developed, these identifying marks began to appear
on market goods. However, the marks were
no longer used exclusively to identify the owner; they were also used to
identify the person who had placed the goods in the market. In certain jurisdictions, such as England,
marks began to serve a regulatory purpose in that they permitted consumers to
trace the origin of lesser-quality goods. In some cases, attempts to obtain
compensation for damages resulting from their use followed. As a result, marks became viewed as potential
commercial liabilities for businesses.
In fact, the idea that a mark could be viewed as a commercial asset is a
relatively new concept.[3]
To comprehend the transformation in
perception of the role of trademarks from commercial liability to that of
asset, it is useful to view the issue from a consumer’s perspective. When
purchasing goods or services, the consumer wishes to ensure a reasonable price
to quality ratio. How can the consumer
verify this? Some verification allows
for inspection of the goods or services, “trying them out” if possible. Another
method questions other consumers who have purchased the same goods or services
in order to assess their level of satisfaction.
These methods, however, can be time consuming and sometimes costly.
From the merchant’s point of view,
the investigative process delays the conduct of business. In order to simplify the procedure and close
transactions expeditiously, merchants sought to develop various tools that
readily supply such information to potential clients in a shorter period of
time. One of these tools was the
trademark.
The
trademark helped create an association between the visible and readily
discernable element of a transaction (the name of the merchant) and other not
so easily observed information (the quality of the goods or services as
disclosed by investigation). The
trademark, therefore, afforded consumers a vehicle by which to quickly credit a
merchant’s goods or services with a level of quality, without spending too much
time or effort in the process. Thus, the
trademark allowed for more efficient transactions, thereby stimulating commerce
and trade. The more well-known a trademark, the more confidence that trademark
inspired.[4]
As many have witnessed, merchants are
quick to emulate their competitors’ successes. Thus, over time, many merchants
sought to “borrow” those trademarks carrying reliable and well-respected
reputations. Of course, such “borrowing”
really appropriates the share of a market that the borrower has done little to
create. The owner of the trademark is thereby “robbed” of those very benefits
the tool was designed to create -- the goodwill of a merchant’s
enterprise. Not only is the trademark
owner’s client base diminished, that merchant also loses control of the quality
of the goods that are traded on the market and bear his mark. When goods of
lesser quality flood the market, the quality associated with the mark
necessarily diminishes. Such practices
hold the potential to seriously damage a business, and may also undermine the
public’s perception and confidence in the trademark itself. For these reasons, trademark holders have
sought to discover the means to protect trademarks and stop their illegal use.
At the turn of this millennium,
counsel are witness to the latest evolution of the trademark, with the
introduction of the internet and domain names.
The question thus becomes, how must trademark legislation and common law[5]
adapt to account for this new commercial identifier? To this end, it remains to study the nature
and function of domain names, and the conflicts that have surfaced over
trademarks.
III.
Domain Names
On closer
examination, a paradox exists between domain names and trademarks. On the one hand, they perform a similar
identification function; on the other, they conflict with identification.
No matter how “high-tech” the
internet may be, it cannot escape the common denominator of any communication
system -- every system must have
designating coordinates that enable users to address a message to a given
recipient. To make the system practical,
these identifying coordinates must be easily remembered. On the internet, these identifying
coordinates are called “domain names.”
Domain names are the distinctive part
of an electronic address. They
correspond to a numeric address which computers can read and by which they
identify themselves. These addresses are
the gateways to internet sites; they allow cybernauts to visit a site with a
particular address. Each computer or
server has a unique identifying address.
Numeric addresses such as
“206.170.227.125” have no particular significance other than their function as
addresses. As a result, they are difficult to remember. To make the internet more user-friendly, a
word assignment system was superimposed on the numeric system. This allowed for the translation of numeric
addresses into “word” addresses that are much easier to remember, thus
eliminating the need to remember the numeric address. For example, the numeric address
“206.170.227.125” was transformed into “thefederation.org.”
For this translation system to work,
it was necessary to coordinate and organize the conversions of the numeric
addresses into names or words. A
registration and administration system was therefore created.[6] It is important to note that since each
computer has a unique numeric address, the attribution of a word corresponding
to such address must also be unique. At this point, the first sign of a
conflict with trademarks emerges.
The name attribution system is
structured according to a hierarchy. At
the summit are the generic top level domain names (“gTLD’s”) and the country
code top level domain names (“ccTLD’s”).
There are seven gTLD’s, and they are as follows:
.edu = educational institution .gov = U.S. government
office
.mil = U.S. military forces .com
= commercial organization
.net = internet service provider .org = non
profit organization
.int = international organization
Each country has its own code, and
the registration of names with these codes is relegated to an authority
appointed by each country. Some examples
of country codes include:
.au = Australia .ca = Canada .cc
= Cook Islands
.eg = Egypt .fm = Federal State of Micronesia .tv = Tuvalu
.gr = Germany .ie = Ireland .il
= Israel
.jp = Japan .nz = New Zealand .us
= United States
In this same
hierarchy, there also exist second-level and third-level domain names. The following diagram helps to illustrate the
different levels:
It is the third level, or the individual domain
name with up to twenty-two characters, that poses the most fundamental problem
with respect to trademarks, since it is this part of the domain name that is
arbitrarily chosen by the person who registers it.
Because each computer has a unique
numeric address, the name chosen to replace the numeric address must also be
unique. No one else can use that word in
the given top-level domain name. A
problem occurs when someone registers a word as a domain name that is also
someone else’s trademark. The trademark
holder is thereafter precluded from registering a domain name that corresponds
to the holder’s trademark.
This conflict occurs because the
choice and registration of domain names is not subject to any formal
regulation. The “right” to a domain name
is established on a first-come, first-served basis by means of a simple
registration process. Contrary to statutory trademarks, however, the mere
registration of a domain name does not vest the registrant with legal rights to
that name except, perhaps, common law rights.
As such, common law and statutory trademark rights are established
through use, though registration is necessary to create a presumption of use
and to obtain enhanced statutory protection in a given legislative territory.
Thus, the issue is posed whether use of a domain name constitutes use for the
purposes of trademark protection.
Conflicts between domain names and
pre-existing trademark rights arise from the combination of the similarities
and differences in their respective functions.
The similarities occur in that they are both a point of visibility for a
business entity; one in the physical world, the other in cyberspace.
When a trademark holder wishes to
establish him or herself on the internet, the holder is sometimes confronted
with the fact that someone has registered a domain name using the holder’s
mark. Sometimes the registration is
deliberate, in an effort to trade on established goodwill. Other times, the domain name holder has a legitimate
right and claim to the name.
A domain name holder will have a
legitimate claim either because he too holds or uses a similar mark for a
product or service in a completely different sector of business, and/or because
his mark is registered or used in a different legislative territory. The latter conflicts occur more frequently
within “international” or generic top level domains, especially the “.com” TLD,
which has no geographic limitations.
Hence, the holder of a U.S. trademark may confront the fact that his
valid American trademark has been registered as a “.com” domain name by the
holder of an equally valid Canadian trademark.
Another possible form of conflict is
the registration of an internationally recognized trademark as a domain name in
a number of top level domains such as “saturn.ca,” a “software and digital
media manufacturer” and “saturn.com,” a General Motors product and trademark,
or “saturn.tv,” which was still up for lease when this article was penned. In cases like this, practical business
solutions must be devised since the law provides none. The only legal solution that currently holds
promise relates to the notion of the “famous trademark” found in the
international trademark protection treaties and anti-dilution legislation, or
found in common law principles. If a mark is famous, other countries who are
party to the treaty agree to prevent registration or use of the mark in their
jurisdictions. This solution, however, is dependent upon an international
consensus about what constitutes a famous mark.
Furthermore, since there likewise exists no uniform standard for
sanctions and remedies, this notion is of little help at the moment.
As noted, the conflicts between
trademarks and domain names began with the first-come, first-served
registration process for domain names.
There was not, and still is not, a formal international pre-registration
verification process for domain names. In light of several much-publicized
cases,[7]
the principals have sometimes assumed control. Internet registrars have adopted
their own dispute resolution policies.[8] In addition, cyber-arbitration tribunals[9]
have begun to appear on the web, and international committees[10]
have convened to address these issues, all in a bid to resolve the rapidly
escalating problems.
The fact that the legal status of
domain names has not yet been clearly established is a contributing factor to
the malaise. This uncertainty has been
exploited by individuals who seek to make their fortune on the internet by
using established trademarks as domain names. These persons are otherwise
denominated, “cybersquatters.”
An important difference between
trademarks and domain names, and the most difficult to reconcile at the moment,
is the scope of their reach. Because
domain names have an instantaneous transnational presence, and since trademark
law is but national in scope,[11]
the effectiveness of any law over domain names held by individuals established
outside a given legislative territory may be lost. Nonetheless, the United States has taken
steps to curb the intentional misappropriation of domain names that mirror
trademarks. The American
Anticybersquatting Consumer Protection Act[12]
potentially addresses these cases involving the intentional appropriation of
U.S. trademarks as domain names.
Nevertheless, jurisdictional challenges will be levied against this law
which purports to overreach its territorial boundaries by providing for the
transfer or cancellation of the registration of a domain name that conflicts
with a registered trademark. Especially
concerned are those domain name holders with legitimate claims who wish to use
common law trademark rules to protect their domain names. Concerns have also surfaced about domain
names registered in other legislative territories. At these junctures,
international law, trademark legislation and applicable common law will
challenge the reach of this new American law.
Instead, the Common Law concepts of “zone of use” and “zone of
commercial expansion” may be avenues worth exploring to expand the reach of
trademark protection.
IV.
Traditional
Trademark Protection
Statutory and common law trademark
protection is based on use[13]
of marks, a system that generally requires registration. Registration creates a presumption of prior
use in a given sector of business and provides protection throughout the
legislative territory. Contrary to
domain name registration, trademark registration must follow rigorous
procedures involving conflict as well as name searches and the establishment of
prior use or intent to use.
By way of historical perspective,
both American and Canadian statutory trademark protection evolved from British
legislation and the Common Law principles of passing-off and unfair
competition. It should be noted that the
statutory protection of trademarks does not exclude application of the common
law in a given jurisdiction and vice
versa. When the statutory
requirements are met, common law protection is simply an additional element of
protection. If the trademark does not fall within the purview of statutory
protection because it need not be registered under state or national law, it is
the common law that governs. For the
United States and Canada (excluding Quebec), the Common Law concepts of “passing-off”
and “unfair competition” become particularly operative.
In Quebec,[14]
the applicable common law rules of infringement of unregistered trademarks are
found in the civil liability provisions of the Quebec Civil Code. The more specific notion of “concurrence déloyale,” a sub-regime thereof,
is applicable as follows:
Art. 1457. Every person has the duty to
abide by the rules of conduct which lie upon him, according to the
circumstances, usage or law, so as not to cause injury to another.
Where
he is endowed with reason and fails in this duty, he is responsible for any
injury he causes to another person and is liable to reparation for the injury,
whether it be bodily, moral or material in nature.
He
is also liable, in certain cases, to reparation for injury caused to another by
the act or fault of another person or by the act of things in his custody.[15]
A closer look at Quebec civil law
reveals that the concept of civil responsibility found in the foregoing section
has a larger scope than the Common Law notion of passing-off.[16] Hence, it may afford a wider base of
protection. Nevertheless, certain
aspects of the Common Law notion of passing-off, such as the zone of use, also
offer an interesting range of protection.
A.
Passing-off
The first recorded case of
passing-off dates back to England in 1590.
A fabric weaver, having established a good reputation based on the
quality of his fabric by using a particular mark to identify the goods he
produced, complained that another merchant was using the same mark to identify
goods of a lesser quality, thus causing harm to his establishment. The Common Law court, based on this “fraud,”
ruled in his favour.[17] This early case set the stage for the
evolution of the protection of goodwill against confusion and dilution through
the tarnishing and blurring of a mark.
British passing-off evolved
simultaneously through both the Common Law and the Equity courts until their
amalgamation in 1873. With respect to
passing-off, Common Law courts required proof of fraud committed on the public. As a result of the heavy burden of proof and
the fact that the only available remedy was damages, many passing-off victims
turned to the Equity courts where no proof of fraud was required and
injunctions could issue to stop the damaging practice. In 1880, the Singer v. Loog[18]
case established that passing-off was premised on false representations,
whether innocent or fraudulent.
In the meantime, American Common Law
had begun to evolve in a slightly different direction. In 1874, the New York State Court of Appeal in
Glen and Hall Manufacturing Co. v. Hall,[19] followed later by the United States
Supreme Court in Menendez v. Holt,[20]
adopted the British definition of goodwill earlier established in Churton v. Douglas.[21] With the case of Metropolitan Bank v. St.Louis
Dispatch Co.,[22]
the United States Supreme Court completed the definition in 1892, adopting
Justice Story’s version of goodwill: “‘the advantage or benefit which is
acquired by an establishment, beyond the mere value of the capital, stock,
funds or property employed therein.’”
Back in England, additional cases
followed and refined the then-existing basis of passing-off. In 1915, another important step was taken to
clarify the concept. The Spalding (A.G.) & Bros. v. A.W. Gamage Ltd.[23] decision confirmed that passing-off was
a “tort” of false representation; that case introduced as well the idea that
goodwill was a form of property worthy of protection by the courts. With the protection of goodwill thus fully
established, issues surfaced regarding the applicability of notions of unfair
competition.
B.
Unfair Competition
The British Advocaat case[24]
explained that unfair competition can take many different forms, such as
conspiracy or denigration, as well as passing-off. The court there concluded that passing-off
was only a specific element of a much broader and more generalized notion of
unfair competition. As such, modern
British law does not consider unfair competition to be a prima facie tort; rather, it is considered a general legal
notion. Modern British law also excludes
the tort of misappropriation or an abuse of economic power.
Canadian trademark Common Law has
followed the British lead and does not include specific trademark recourse
within unfair competition. Under
Canadian Common Law, an action in passing-off is the only viable remedy
available to stop an unscrupulous competitor from unfairly appropriating the
goodwill of another by creating confusion in the public’s mind through its use
of an established common law trademark.[25] Some, including this author, have concluded
that Quebec civil law affords more effective protection, since there exists a
general provision as well as a specific sub-regime that covers such acts.
Since American courts were much
quicker to adopt the notion of property with respect to the goodwill of an
enterprise, focus shifted from the idea of trademark protection to protecting
the goodwill behind the mark, the latter being but a symbol of goodwill. The courts stated that the “simplest means of
depriving another of the trade he has built up is to copy the marks he places
on his merchandise.”[26] American Common Law protection of trademarks
thus fell within the much larger scope of unfair competition.[27] However, three major distinctions are made
between American trademark law and unfair competition.
First, unfair competition does not
necessarily involve exclusive rights to a word, name or symbol. A word, incapable of registration as a
trademark, may be used in such a way as to constitute unfair competition.[28]
A second difference concerns the
proof of intent. In trademark law,
confusion and dilution play a central role in determining infringement, and
fraudulent intent is presumed. Under laws affecting unfair competition, it is
not necessary to prove the confusion or deception resulting from the unfair
conduct.
Finally, the third distinction to be
made between trademark law and unfair competition relates to the remedies. In trademark law, it is the use of the mark
that is enjoined; in unfair competition, it is the fraudulent conduct itself.
With the introduction of domain names
and their association to trademarks, the concepts of passing-off and unfair
competition can apply as well to trademarks in order to protect them against
encroaching domain names. Although
domain names are newcomers in the realm of commercial identifiers, it seems
logical that these concepts would apply as well to domain names. To some
extent, the conflict with trademarks emanates from the perception that domain
names are invading the territory of trademarks without the need to survive
those formalities that otherwise govern
recognition and protection. It can also
be argued that domain names do not correspond to a trademark by definition
because the trademark does not necessarily identify a product or a service.
It is true that the internet has
aggressively transformed the way business is conducted. In a matter of a few
years, the market place has exploded into cyberspace. It would be difficult to argue that domain
names do not have the status of a trade-name, since the traditional trade-name
has been traded in or upgraded for the domain name.
As domain names begin to assume
greater significance in the market place, common law increasingly must fill the
statutory void and “come to the rescue.”
Since passing-off and unfair competition apply not only to trademarks,
but to trade-names, it is fair to deduce that these Common Law concepts also
must be applied to domain names in order to protect them against trademark
holders and/or other domain name holders.
V.
Zone Of
Protection
Contrary to Common Law, statutory
trademark protection is limited to the territorial scope of any given
legislation. Common Law protection is
based on use of the mark as well as the territory in which the use can be associated
to the good or services of the trademark holder.[29] Theoretically, protection of a common law
trademark may cross national borders by virtue of the Common Law principles of
“zones of use.” If the holder of a
common law trademark can establish prior use in a given territory, the “senior”
user will retain the exclusive right to use the given mark. This territory is defined as the “Zone of
Actual Goodwill.” Exclusive use of the
mark is awarded to the user who can establish: (1) an association between the
mark and the goods or services, and (2) that the market penetration is
sufficiently important that use of the mark by any third party is likely to
cause confusion among the clients in that given territory.
Not only is the Common Law trademark
protected within the “Zone of Actual Goodwill,” it is also protected within the
“Zone of Potential Goodwill.” This
notion of “potential goodwill” is supported by the Natural Expansion Doctrine,
which provides protection for a trademark in a territory where one can
reasonably and logically foresee market penetration.[30] It will be interesting to follow the
application of this Common Law doctrine to the internet as concerns the
protection of trademarks and domain names. Whether mere advertising on the
internet or substantial business in various places is necessary to constitute
use and to expand the geographical zone of goodwill poses significant
issues. With the lack of boundaries on
the internet, how are “zones” for domain names established? What about conflicts between “junior”
federally registered trademarks and “senior” domain name holders who seek
protection as common law trademarks? What territories will the courts “carve
out” for the user of a “senior” domain name mark? An interesting idea which begins to emerge
from the courts, but exceeds the scope of this paper (though worthy of
mention), is the use of personal jurisdiction principles[31]
to expand these zones of market penetration.
As noted earlier in this article,
domain names constitute an extension of traditional trademarks and trade-names
in that they perform a similar function in identifying products and services
and/or manufactures and retailers over a given territory. Conflicts arise from the difference in their
natures and territorial scope. Regardless of the origins of trademark
protection or the limitations thereof, however, the underlying principles of
preventing confusion and dilution by the use of a commercial identifier, in
order to profit from another’s work and goodwill, apply to domain names.
VI.
The
Challenge
The courts now face the challenge of
bringing this new extension of commercial identifiers under the wing of
trademark law. This is a challenge for
three reasons. First, there is the
international nature of domain names, for which it is always difficult to
obtain consensus for commercial purposes.
Second, technology never ceases to
evolve. Solutions found tomorrow for
today’s problems may already be outdated, much like a computer is outdated the
day it is purchased. These two precipitate the third major component of the
challenge: the nature of business in general.
The business world requires expeditious solutions to these difficulties
or opportunities arising from the use of trade tools. Moreover, such solutions
should not interfere with the ever-accelerating rate of business
transactions. Otherwise, business will
develop its own solutions that will likely circumvent the legal process. Under such circumstances, there could result
a jagged body of law lacking in uniformity.
Just as today’s trademark law embodies the codification of private
commercial practices, there is a need to codify this new variant of business
practices.
Jurists are witnessing the birth of a
new legal subject within an existing body of law which has evolved and worked
fairly well over the past few centuries. The evolution of trademark law,
however, has occurred on fresh and unexplored terrain. This is not the case for domain names. They are in fact a new strain of trademarks
with distinct properties that confront the traditional world of trademarks.
This new breed of trademarks must be included within the existing
framework. To do so, the framework may
require modification, but fundamental principles of trademark law need not be
shattered and rebuilt in the process.
The foundations of trademark law are
the protection of goodwill through the prevention of confusion and dilution.
These principles must evolve on an international stage. The result should be a
truly international body of law governing trademarks.
ENDNOTES