In a matter of a few years, billions of dollars worth of value has been created through a system of naming conventions designed by authors who never envisaged the revolutionary implications of their creations. If current trends continue, we will be witnessing nothing less than the creation of a brand new category of legal property that has a unique quality: uniform application throughout the world.
What is most remarkable is the short period of time over which all of this is happening.
The naming convention that uses the extensions “.org”, “.net”, “.edu” and, most importantly, “.com”, was originally based on ad hoc arrangements made at the outset by the U.S. government in cooperation with academic institutions. The .com extension was designed for business users, while the .org, .net, and .edu extensions were reserved for governments, communications networks and educational institutions. These original extensions are now administered by The Internet Corporation for Assigned Names and Numbers (ICANN).
At the same time, individual countries were franchised to award names based on country identifier extensions, such as “.uk” for Great Britain, “.au” for Australia and “.ca” for Canada.
In Canada, the newly formed Canadian Internet Registration Authority (CIRA) has assumed control of the .ca registry from the University of British Columbia. The CIRA appoints commercial enterprises to act as certified registrars; the certified registrars in turn deal directly with the public in connection with registration applications. The CIRA is responsible for setting the rules for listings, transfers and dispute resolution.
Some countries have commercialized their franchises by allowing others to act as administrators. The tiny island country of Tuvalu recently announced the sale for a significant amount of its rights to the “.tv” extension. When the short-form country acronyms were adopted by the UN, long before the creation of the Internet, Tuvalu would theoretically have been entitled to the extension “.tu”. But as luck would have it, Turkey was ahead in the alphabet and Tuvalu got “.tv”.
As the appetite for more focused domain names grows, ICANN has proposed the creation of new top-level domain names, such as “.bi”, “.info”, “.pro”, “.name”, “.museum”, “.aero” and “.coop”.
The legal issue in play with these new developments involves trademark.
Trademark law, which is applied on a country-to-country basis, provides for exclusive rights to the use of specific trademarks with reference to specific names and services. The same trademark may be allotted in one country to two or more businesses, so long as those businesses do not compete. At the same time, the same trademark may be owned by two different people in two different countries. Domain names, or at least those with the same extension (for example, .com). are by definition and for global purposes unique. They cannot be apportioned to legitimate trademark owners in non-competing businesses. When they are, this reality has led to lawsuits between trademark owners. The action in the United States between Volkswagen and Virtual Works in one example.
The challenge of enforcement is formidable when you consider the nature of the Internet and the look of a central registry of domain name owners. Take for example the predicament of the Porsche car company. It identified 128 different infringing .com names, the owners of which it could not identify. In the end, Porsche took the unusual step of suing the .com names themselves as defendants, and the company asked that the court force the owners (whoever they were) to come forward or lose their registrations.
Some quickly saw the advantages to being the first to register domain names for obvious valuable trademarks. Some, at least in the early days, were paid handsomely for the domain names by the legitimate trademark owners. In response, the United States has enacted the Anti Cybersquatting Consumer Protection Act. That statute made bad-faith registration or trafficking in domain names illegal. The Act provides for fines against offenders and also allows a U.S. court to force the removal of an offending domain name even if the owner cannot be brought in front of the court. The World Trade Organization (WTO) is also jumping in with its own rules for dispute resolution. As these laws and rules are developed, there is an obvious danger of forum shopping, or of the United States applying its laws outside of its own territory.
In the interim, the good news is that owners of trademarks have a forum for complaint and that increasingly significant penalties are being assessed against cybersquatters. In a recent Pennsylvania court case, the court ordered the registrant of a “misspelled” domain name belonging to EB World.com to pay a $500,000 fine.
Gabe Takach is a partner at the Toronto law firm of Tory Tory, where he heads up the firm’s technology contracting practice. He can be reached at [email protected]