CyberTimes

November 21, 1997


Ruling on Trademarks Is Called
‘Watershed’ For Domain Disputes

By JERI CLAUSING Bio

WASHINGTON — The company that registers top-level domain names for the Internet is not liable in trademark disputes, according to a recent federal court ruling, and that decision could prove crucial as people scramble for the rights to popular names and trademarks when the registration process is changed next year.

"It's a good ruling," said David H. Maher, a trademark lawyer with the firm of Sonnenschein, Nath & Rosenthal in Chicago and a member of the Interim Policy Oversight Committee, an international body that is overseeing plans to add the new top-level domains and open registration to competition.

"We've set up procedures with the World Intellectual Property Organization — mediation, arbitration and administrative challenge panels — which we are hoping will provide an outlet for people to take their disputes and get a fair judgment without going to court," he said. "Of course there is always the possibility that people will go to court anyway, so to the extent that the judge ruled that registrars are immune from liability for trademarks, I am very pleased."

Although more than 30 trademark dispute lawsuits have been filed against Network Solutions Inc. (NSI), the company that is the sole registrar of the top-level domains ".org," ".net" and ".com," the ruling this week from Judge Dean Pregerson of federal district court in Los Angeles is the first decisive order giving the Herndon, Va., company immunity from liability.

“The bottom line is that Network Solutions is not an Internet gatekeeper, police officer or sentry for trademark owners.”
Ed Poplawski, lead lawyer for Network Solutions


The suit was brought by Lockheed Martin last year after Network Solutions awarded more than a dozen domain names containing variations of the name "Skunk Works," which is what Lockheed calls its high-security research and development division in California. Lockheed maintained that Network Solutions had a duty to screen applicants and that its failure to do so infringed on its trademark rights.

Network Solutions argued that trademark law makes no such requirement, and that because it registers more than 100,000 sites each month, such a requirement would hinder the growth of the Internet.

The 45-page decision said that the registration of domain names has no connection to trademark use.

"By accepting registrations of domain names containing the words 'skunk works,' NSI is not using the Skunk Works mark in connection with the sale, distribution, or advertising of goods and services," Pregerson wrote. "NSI merely uses domain names to designate host computers on the Internet."

Ed Poplawski, Network Solutions's lead lawyer, said Thursday: "This is a watershed ruling that indicated that Network Solution's involvement with potential trademark infringement is so peripheral that it could not conceivably be held accountable for a domain registrants infringement. The bottom line is that Network Solutions is not an Internet gatekeeper, police officer or sentry for trademark owners."

Poplawski, of the Los Angeles law firm of Pretty, Schroeder & Poplawski, said the decision may also help provide immunity for Internet service providers who are sued for content they are transmitting and could help protect new domain registries after Network Solutions loses its monopoly status next year.

"This should be very good news for new registries, and in fact may end up prompting new registries to come into existence," Poplawski said. "Whether that will be good for the Internet is another question."

Network Solutions, under an agreement with the National Science Foundation, currently is the sole registrar for top-level domains. But that contract expires next year and the Clinton Administration has said that it wants out of the Internet business. Under an international plan for opening the process to competition, 85 new registrars have been certified to begin assigning addresses when seven new top level domains are added early next year. The new domains are:

  • ".firm" for business firms.
  • ".store" for businesses that advertise goods for sale.
  • ".web" for organizations emphasizing activities related to the Web.
  • ".arts" for sites dealing primarily with cultural and entertainment activities.
  • ".rec" for sites dealing primarily with recreational and entertainment activities.
  • ".info" for providers of information services.
  • ".nom" for individuals.

The Clinton Administration has not yet endorsed the plan, but Maher and others involved in its development insist that it will be carried out with or without the administration's blessing. A report on how best to move from a lone registrar to international competition is due any day from the Commerce Department.

John Gilmore, with one of the new registrars, the Melbourne, Australia-based Top Level Registries, and a member of the Council of Registrars, or CORE, said Pregerson's ruling "basically means, as I understand it, that we don't have to put in delays for prescreening of trademarks."


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This further ensures, he said, that registrars can type in applications and in a matter of seconds "it comes back and says, 'You've got the name' as opposed to us having to say, 'Wait, let us check with our lawyers.' "

Some newly organized registrars are already taking applications, and if recent registrations under two country codes are any indication, speculators will be in line to snap up popular words and names. Each country has its own domain, e.g., ".uk" for the United Kingdom. Registries for 64 of those countries, however, will take applications from anyone, not just people and companies within their country.

In the ".nu" domain, assigned to the tiny Polynesian island nation of Niue, near Tonga, these names already have been snapped up: "aol.nu," "nba.nu," "sprint.nu," "nascar.nu," "msnbc.nu," "mci.nu," "playboy.nu," "whitehouse.nu," "kraft.nu," "internic.nu," "intel.nu," "ibm.nu," "excite.nu" and "espn.nu." Under Tonga's ".to" domain, the domain names "sony.to," "olympicgames.to," "bmw.to," "cnn.to" and "earthlink.to" have already been assigned.

Gilmore said that under the international plan for expanding the registry process, trademark holders of globally recognized names like IBM have automatic rights to those names in all of the domains.

"There are not more than a few hundred of globally famous names," he said. "But that should eliminate a large fraction of the idiots trying to scam or make a quick buck."

The disputes, Gilmore said, will arise among companies with common names like "Johnson."

"My guess is the courts will be sane about it, that they will say, 'No, you don't have the right to every word in this context,' " he said. "So my guess is each will have to settle on one. One will get 'johnson.web,' one will get 'johnson.firm' and so on."

Most disputes, Gilmore predicted, will go to arbitration and mediation overseen by the World Intellectual Property Organization.

"There is a whole streamlined procedure being set up through WIPO that provides what they call administrative challenge panels that will operate by e-mail basically, not a formal court that takes months to rule," Gilmore said.

Registrars, he said, are bound to follow the challenge panel ruling.

"Now, if the two parties involved, if either isn't satisfied with the results, they can go off and sue," he said. "But we expect that a large number of people will abide by [arbitration], particularly those who are just trying to make a fast buck."

Pregerson, in his opinion, mentioned a solution that Poplawski has been advocating: directories and shared Web sites.

An example he cited is a squabble between the Mattel and Hasbro toy companies over the domain for Scrabble. Hasbro has the trademark rights to the name in the United States and Canada. Mattel has the rights to the name in the rest of the world. Mattel sued Hasbro after it obtained "scrabble.com." To settle the case, Poplawski said, in about a month surfers who go to "scrabble.com," will find links to both Hasbro and Mattel sites.

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Jeri Clausing at jeri@nytimes.com welcomes your comments and suggestions.

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