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The New Generic Top-Level Domain (gTLD) Program instituted by ICANN was pegged to be a fundamental change in the Internet. While that remains to be seen, many trademark holders are concerned about this fundamental change because an open season on TLDs brings about the risk of an entity appropriating someone else’s registered trademark. Thus, some feel compelled to register their mark defensively as a TLD string even though they would not of their own accord do so.
There are two issues: the first is cybersquatting—the registration and trafficking of Internet domain names with the bad-faith intent to benefit from another’s trademark—and the issue has long worried trademark owners (ACPA was passed in 1999 and cybersquatting concern pre-dated its passage). However, under ICANN’s program, there are so many barriers to entry that actual cybersquatting is unlikely. The Association of National Advertisers argued that cybersquatters are not without resources—however, one needs more than just resources; there is an extensive application process requiring time, perhaps extra money on top of the $185,000 fee including cost of an auction, many levels of review, and operating a registry or paying someone to do so. Assuming the ANA is even remotely correct, the chances of a cybersquatter getting through the entire process unscathed is very unlikely, especially given that mark owners can object along the way. Therefore, mark owners should be less worried about cybersquatters at the TLD level. (Second-level domain cybersquatting is a significant problem, as discussed in this paper, but I will not address it here.)
The second, and the core issue here, is for owners of marks that are descriptive, common, or are registered in other fields or by others internationally. Under trademark law, similar trademarks are allowed if they signify the source of different or unrelated goods or services (thus Delta Airlines and Delta Faucets can both own Delta as a trademark for different goods/services). To make matters worse, trademarks are not international in nature, but the Internet itself is very much a global marketplace. When one entity applies for and is given a TLD comprising its mark, but is also similar to another mark, it gains a significant advantage because any other entities with similar marks are precluded from owning the same TLD. Thus, the following types of mark owners may feel obligated to register a defensive TLD string to maintain maximum control over its mark: 1) owners of similar marks that are registered by another entity for different goods or services; 2) owners of marks that are registered by another entity in other countries; or 3) owners of descriptive marks at risk of being registered because of their descriptive nature. The problem of defensive registration is an issue of the inconsistency of trademarks between countries, the lack of global trademark marketplace, and the seeming lack of protections for descriptive marks.
While rights holders have objection mechanisms built into the ICANN system, companies are still upset. ICANN held a public comment on this issue, and received a number of responses that argue both sides of most issues. In this post, I will discuss some of the arguments and solutions put forth by those commenters, and will conclude by saying a clear solution is unlikely given our current system of trademarks.
What Are Markowners Saying (PDF)?
A variety of markholders advocate for increased protections that would reduce the need or the barriers to registering defensively. The first argument is for a transparent application process. This argument is simple: if ICANN released names of parties and applied-for strings immediately after receiving the applications, companies could monitor more effectively and only register their mark as a TLD if someone else does, rather than applying and taking the risk that no one else will. Thus, the argument goes, transparency would save money, time, and at least provide a partial solution to the defensive registration problem.
However, mere transparency is simply a baby step to a more comprehensive solution. It may be problematic that companies do not know when they have to file defensively, but even if they do know and the other applicant(s) has a right to the string, the dispute will likely be solved through the objection/contention process (including potential auction) if no amicable solution can be found. Transparency only solves the signaling problem: markholders will know decisively and with ease when to apply for their trademark as a TLD string. But, the defensive registrant will still need to spend the money in the end. (This also ignores the fact that new applicants cannot sign up for the ICANN’s application system past March 29, and the fee for merely signing up is $5,000.)
Another potential solution is an extra window of time within which a company could withdraw its application for a higher refund. Currently, that tactic will net a $130,000 refund. Microsoft argues that the refund should be increased to $162,000, and the International Trademark Association (among others) argues for a full $180,000 refund during this window.
Increasing the refund is another temporary solution similar to transparency; it is designed simply to reduce risk to trademark owners. If Delta Airlines applies against its business interests, and Delta Faucets does not apply, then perhaps Delta Airlines should get a significant, if not complete, refund when it withdraws. This, however, sounds like a lot of administrative hassle and inconvenience for Delta Airlines as well as ICANN itself. Such a solution would likely vastly increase the number of applications ICANN receives, and thus, must administer. This might be why Microsoft argued for a $162,000 refund rather than a full refund, to compensate ICANN for its work.
In order to help alleviate the extra burden, the American Intellectual Property Law Association and others argued for a “blocking” application and a “Do Not Register” list for famous brands. A blocking application would require only a limited amount of application material, just enough so that ICANN will know that the company filing the application would like to block others from registering that string. A “Do Not Register” list would consist of a list of famous brands that would not be allowed to be registered. ICANN has a similar list comprising certain strings such as ICANN, IANA, and others.
The blocking application and Do Not Register (DNR) list are extremely troubling. First, who can apply to have their name blocked or added to the DNR list? Second, what kind of procedures and substantive requirements would be necessary? Third, this solution does not take into account the real problem here: trademarks are simply not global in nature, and the Internet is.
Allowing a company in the United States to preclude other trademark owners from owning the mark as a TLD string impermissibly extends national trademark protection to an international arena. The blocking application/DNR solutions would allow one trademark-owning entity in (potentially) one country to control the ability of all other companies globally to register a similar TLD string, even if those companies have equal trademark rights in other countries or contexts. If I own a mark in Singapore, and it is very similar to the mark and product of another company in the United States, I might be precluded from owning my mark as a TLD string simply because the company in the U.S. filed a blocking application or managed to get onto the DNR list. That does not seem very fair. The U.S. company should have to go through the same procedures as others; that is, it should go through the ICANN objection procedures.
The solutions suggested in the public comment period are incomplete because of a failure to understand the true issue: there is no such thing as a trademark right that permeates the globe. Once that is truly understood, one can see that there is no easily instituted solution. I argue that, without allowing for a global trademark list, the New gTLD program will never be able to make all trademark owners happy. Whatever ICANN chooses to do, it will likely favor one particular sect of trademark owners: either owners in a certain country, of a certain size, or having some other characteristic. ICANN has done its best with the inconsistent and sometimes incoherent system of trademark law that plagues our current global system (for instance, ICANN refers to “use” of a trademark as a pre-requisite for registration under the Clearinghouse and other programs, but “use” is not defined by ICANN and is defined quite differently in many countries). Because there is no coherent way to synergize national trademark law with the international nature of the Domain Name System, the procedures currently implemented by ICANN will have to suffice.
– Eric Null
Eric Null is a third year law student at Cardozo Law School in New York City. He is passionate about intellectual property law, including technology and telecommunications policy. Follow him @ericnull, or check out his papers.