LITIGATION ALERT: Top-Level Domain Names: A New Frontier

By Michael A. Logan and Caroline C. Pace

First, think back to October 2013—the federal government had just experienced a 16-day shutdown and the internet only had 22 generic Top-Level Domains ("gTLDs").  Of these 22 gTLDs, there were less than a handful of gTLDs which were unrestricted and available for use for any purpose: namely, .COM, .NET, .ORG and .INFO.  Each of these gTLDs was managed by a domain name registrar who maintained a registry of all of the domain names and who collected periodic fees for each domain name registration.

Because the suffixes of the alphanumeric strings that made up the domain names were limited to these non-descriptive gTLDs, i.e., .COM, .NET, .ORG and .INFO, companies used the content of the secondary level—the location to the left of the gTLDs, to incorporate a trademark or service mark (collectively, "trademark") and distinguish their websites.  For example, Apple, Inc. developed <apple.com> and the Wikimedia Foundation, Inc. developed <wikipedia.org >.

Then, on October 23, 2013, the Internet Corporation for Assigned Names and Numbers ("ICANN") began delegating new gTLDs on a rolling basis.[1]  ICANN allowed entities to apply for new gTLDs and to become the respective domain name registrar for a fee of $185,000 and the obligation to maintain and operate the registry.  During the next few years, the number of gTLDs is expected to grow from 22 gTLDs to 1,300 gTLDs with a handful of new gTLDs being released each week.[2]  To date, 319 new gTLDs have been delegated. [3]

While the .COM, .NET, .ORG and .INFO gTLDs do not provide any indicia of the services or products associated with a website, the new gTLDs may consist of a specific brand, a general term or a geographical community.  In fact, companies with the following trademarks have already submitted applications for the following gTLDs: .AMAZON, .APPLE, .SHELL, .STATOIL, .NATIONWIDE, .ALLSTATE, .CAPITALONE, .PRUDENTIAL, .BMW, .NFL and .XBOX.

To appreciate why these companies are making significant capital investments in purchasing, operating and maintaining a gTLD registry, we will illustrate how one of these companies might develop and protect its online brand with the potential domain names that it will soon have at its disposal.  Apple, Inc. has applied for .APPLE.  When ICANN delegates .APPLE, Apple, Inc. can create: <computers.apple>, <iphone.apple>, <christmas.apple>, <sale.apple>, <customerservice.apple>, <investors.apple>, <news.apple>, <employees.apple>, <stores.apple>, <careers.apple>,…etc.  Thus, Apple, Inc. can ensure that internet users can quickly find the information desired in the increasing morass of information available on the internet.  Perhaps more important in the eyes of Apple, Inc., by purchasing the .APPLE gTLD, Apple, Inc. prevented another company from obtaining the gTLD for .APPLE.  In the United States Trademark Patent & Trademark Office, there are almost 1,000 trademark registrations which include the word "apple."  For example, Apple Rubber Products, Inc. owns the trademark APPLE in connection with o-rings, gaskets and non-metallic seals; R.J. Reynolds Tobacco Company Corporation owns the trademark APPLE for use with smoking and chewing tobacco; Scholastics, Inc. owns the trademark APPLE for use with books prepared for developing reading skills; and Westgate Chevrolet, Inc. owns the trademark APPLE for use with providing automobile dealership and repair services.

Trademark rights are territorial in nature.  The aforementioned companies were just a few of the companies that own a U.S. trademark registration for the trademark APPLE for use with their goods or services in U.S. commerce.  Most likely, there are companies in other countries who own the trademark APPLE in connection with their goods or services.  Any company worldwide who owns the trademark APPLE could have applied for the .APPLE gTLD registry.  If multiple entities had applied for the .APPLE gTLD and they also had rights in the APPLE trademark, ownership would have been resolved through an auction process.[4]

By virtue of obtaining the .APPLE gTLD, Apple, Inc.: (1) can establish the rules and price for those wanting to register a domain name in the .APPLE gTLD; (2) can apply security measures to its gTLD registry that provide limited access in order to enhance protection for the online users of its domain names; (3) can promote its trademark by creating user-friendly domain names that suggest where desired content is located online; (4) will likely enhance its search engine optimization and ensured that its domain name will not be buried by competitive search-engine results; and (5) has prevented others from obtaining the .APPLE gTLD and thereby prevented potential confusion and dilution of its APPLE trademark.

Why the .APPLE illustration is important to your company.

In the immediate future, your company may not be affected by the applications for brand-specific gTLD.  However, your company's vigilance is important because the expansion of gTLDs is not stopping with the first round of applications, and someone may apply for a gTLD incorporating your company's trademark soon.  Although your company may have a U.S. trademark registration for your company name, another company in the U.S. may own the same trademark for use with different goods or services and companies in other countries also may have rights in the same trademark.  How will your company manage its online presence when the .APPLE illustration is applicable to your company?  Additionally, while your company may not want to get in the business of owning and operating a gTLD, your company will not be able to avoid the impact that the new gTLDs will have on online branding and online searches.

Moreover, your company may be impacted by the delegation of new descriptive gTLDs like .CONSTRUCTION, .ENERGY, .BANK, .RESTAURANT, .LAW, .GIFT, .BEER, .TODAY, .DOCTOR, .INSURANCE, .SINGLES, .GOLF, .CHRISTMAS…etc. or new geographical gTLDs, e.g., .NYC, .LONDON, .AFRICA and .MELBOURNE.  The soon-to-be owners of these descriptive gTLDs will likely sell registrations for domain names ending in each gTLD.  It may be advantageous to purchase a domain name in a relevant gTLD.  For example, Tuff As Nails Construction, LLC. may want to obtain the domain name <tuffasnails.construction>, More Money Bank, NA may want to obtain <moremoney.bank>, Five Oceans Insurance, Inc. may want to obtain <5oceans.insurance> and the author's employer may want to obtain <krcl.law>.  The acquisition of a domain name with a descriptive gTLD may (1) prevent another company from obtaining a domain that is confusingly similar to your company's trademark, (2) expand your company's online presence, and (3) ensure that your company's trademark obtains optimal search engine results.  After the acquisition, your company can create a new web page for the new domain name or direct traffic from the new domain name directly to your company's main webpage.

At the intersection of new gTLDs, cyber piracy and branding—the legal implications.

The release of new gTLDs will create opportunities for cyber-pirates to (1) extract excessive sums from trademark owners to purchase a desired domain name (aka cyber-squatting) and (2) divert an internet user from the desired site of the trademark owner to a site that sells competing products by creating a likelihood of confusion with the trademark (aka domain parking).

ICANN requires that all registrars of domain names follow the Uniform Domain-Name Dispute-Resolution Policy ("UDRP") which is incorporated by reference into the terms of all registration agreements for domain names.[5]  The UDRP provides the terms and conditions for resolving any dispute involving the use or registration of the domain name between a party and the person or entity who owns the domain name.[6]  Resolving disputes under the UDRP jurisprudence is not required, and, for reasons discussed infra, may not desirable.  Nevertheless, UDRP decisions are instructive.

The decision in Canyon Bicycles GmbH v. Domains by Proxy, LLC ("Canyon Bicycles") interprets the UDRP within the context of a new gTLDs and provide a reliable foundation for predicting the new legal landscape.  In Canyon Bicycles, the disputed domain name was <canyon.bike>, which is comprised of two generic terms.  The .BIKE gTLD was one of the first gTLDs delegated by ICANN.  When the .BIKE gTLD registry began taking registrations for domain names, the respondent immediately registered <canyon.bike>.  The respondent was generating revenue by using the disputed domain name as a parking page that featured pay-per-click links to websites sponsored by third parties.

In this case,the complainant was a German corporation which first used the trademark CANYON in connection with bicycles in 2001.[7]  The complainant claimed that it manufactures and distributes bicycles worldwide, and that it owns trademark registrations in many countries.

UDRP panels have generally disregarded the gTLD suffix in determining whether a disputed domain name is identical or confusingly similar to a complainant's trademark.[8]  In the past, the likelihood of confusion is determined by a visual and aural comparison of the secondary level of the disputed domain and the trademark and not the content of the disputed website.[9]  Additionally, UDRP panels have held that the addition of descriptive words to a domain name is usually insufficient to avoid a finding of likelihood of confusion.[10]

Canyon Bicycles panel was the first case to apply the likelihood of confusion test to a domain name with a descriptive term comprising the gTLD suffix.  The Canyon Bicycles panel stated that the new gTLDs may be used to determine whether the disputed domain name is confusingly similar to the complainant's trademark.[11]  Foreseeably, a new gTLD will be used to determine likelihood of confusion when the gTLD is a brand-specific gTLD (e.g., .CAPITALONE, .BMW, or .NFL) or the gTLD is a descriptive term (e.g., .BIKE, .INSURANCE or .BANK) that describes the nature of the trademark owner's goods or services.  Further, it is foreseeable that new gTLDs will not be used to determine the likelihood of confusion.   For example, gTLDs that use universally descriptive terms like .HOT, .DEALS, or .NEWS or that use geographic terms like .AFRICA or .BOSTON. will not likely be used to determine the likelihood of confusion.[12]  Companies may consider evaluating their opportunities to acquire domain names and to police third-party usage of domain names accordingly and may consider the following:

Considerations for the New Domain.

• Trademark owners can pick the gTLDs that best describe the nature of their goods or services and pre-order a domain name under that gTLD registry;
• The UDRP provides an easy means to obtain jurisdiction over a registrar, and it is typically less expensive than filing a lawsuit.
• Compared to litigation under the Anti-Cybersquatting Consumer Protection Act ("ACPA"), the UDRP has some undesirable features: namely, due to UDRP's evidentiary limitations, the UDRP is only useful for clear-cut cases of cybersquatting; the UDRP requires the complainant (i.e., the movant) to provide prima facie evidence of the respondent's bad faith use and registration of the domain name, whereas the ACPA requires proof of use or registration; the USRP requires the complainant to provide prima facie evidence that respondent has no legitimate right to the domain name whereas the ACPA does not so require; and the UDRP does not provide a means to recover monetary damages;
• Trademark owners can register their trademark in ICANN's Trademark Clearinghouse ("TMCH") database.  Doing so will give owners an opportunity to pre-register their trademark in new gTLD registries.  The registration of a trademark in the TMCH will also provide owners notice if others attempt to register a new gTLD that exactly matches their trademark; and
• Trademark owners can hire services that will monitor new gTLDs for domain names that are confusingly similar to their trademarks.

[1] See https://www.icann.org/resources/press-material/release-2013-10-23-en.

[2] See New gTLD Fast Facts, http://newgtlds.icann.org/en/program.

[3] See http://newgtlds.icann.org/en/program-status/statistics.

[4] See http://newgtlds.icann.org/en/applicants/auctions.

[5] See https://www.icann.org/resources/pages/udrp-2012-02-25-en

[6] See https://www.icann.org/resources/pages/policy-2012-02-25-en

[7] See Canyon Bicycles GmbH v. Domains by Proxy, LLC, WIPO Case No. 2014-2006 (Mar. 14, 2014).

[8] See Mobile's Republic v. Kwangpyo Kim, WIPO Case No. D2014-0089 (Apr. 23, 2014).

[9] See Paragraph 1.9 of the WIPO Overview 2.0, http://www.wipo.int/amc/en/domains/search/overview2.0/.

[10] Id.

[11] Id.

[12] See Web-Adviso v. Trump, 927 F. Supp. 2d 32, 40-41 (E.D.N.Y. 2013) (holding that <trumpbeijing.com>, <trumpindia.com>, <trumpmunbai.com> and <trumpabudhabi.com> are confusingly similar to Donald Trumps' TRUMP trademark).

mlogan