draft statement on domain name tasting

Robin Gross robin at IPJUSTICE.ORG
Thu Dec 6 00:00:02 CET 2007


Below is a draft of the constituency statement on domain name  
tasting.  Please let me know if you have any comments.  Thanks!

- Robin







Statement

of the

Non-Commercial Users Constituency (NCUC)

on

Domain Name Tasting

5 December 2007




The Final Outcomes Report[1] of the ad hoc group on domain name  
tasting suggests a growing trend of registrants exploiting ICANN’s  
Add Grace Period (the “AGP”) to receive a full refund on the cost of  
registration by canceling their domain name registrations within five  
days.  The AGP may have been adopted upon the assumption that all  
commercial uses of a domain name would require registration for a  
period longer than five days.  Certain registrants, however, have  
discovered that they can profit from repeated use of extremely short- 
term registrations through the use of pay-per-click advertising,  
phishing, or pharming.  A coordinated response by ICANN may be  
appropriate to close this loophole.  This response, however, should  
not be disproportionate to the problem nor stem from any  
misconception of the issue.

Insofar as some registrants are exploiting the AGP to operate without  
paying any registrations costs, they are effectively forcing the  
registries to subsidize them.  This was clearly not the intended use  
of the AGP, and action by ICANN may be appropriate to counter this  
growing practice.  It may, however, be excessive to remove the AGP  
entirely.  As the ad hoc group reports indicates, the AGP provides a  
number of other benefits to both registrants and registrars,  
including the correction of typographical errors, the ability to  
temporarily reserve a domain for a prospective registrant, mitigation  
of consumer fraud, facilitation of the development and improvement of  
internal systems, a means to address “buyer's remorse,” and a means  
for perspective registrants to evaluate domains before committing to  
purchase.  To completely eliminate the AGP risks eliminating these  
benefits as well.

The preferable approach may be similar that adopted by the Public  
Interest Registries (PIR) — the imposition of a modest ‘excess  
deletion’ fee.  This approach would penalize those registrars with  
heavy deletions, thus forcing them to adopt policies that prevent  
registrants from exploiting the AGP.  Since registrants looking to  
avoid paying registration costs will naturally flock to those  
registrars least vigilant against this abuse, registrars would have a  
substantial incentive to be vigilant against creative disguises of  
these practices.  Yet unlike directly imposing a fee on all short- 
term registrations, this approach gives registrars significant  
flexibility to adopt effective practices tailored to their customer  
base and business model, and preserves the other advantages of the AGP.


Intellectual Property Issues


The intellectual property issues discussed in the ad-hoc group's  
final report warrant special attention.  In this context,  
“intellectual property” refers almost exclusively to trade and  
service marks, which are often referred to collectively as  
“trademarks.”  The vast majority of the respondents to the RFI  
identified themselves as either intellectual property rights owners  
(37.93%) or representatives of intellectual property rights owners  
(51.23%).  Consequently, intellectual property rights feature  
prominently in the responses.

The problem which domain tasting presents to trademark holders is not  
that the AGP creates a loophole which makes otherwise infringing  
activity legal.  If a registrant makes use of a trademark in a manner  
that constitutes infringement, the holder of that trademark is  
protected through international treaty, the laws of various nations,  
and through ICANN's own Uniform Dispute Resolution Policy.  These  
protections still apply even if the period of registration is very  
brief.  The problem is instead one of enforcement.

This distinction should be kept in mind by the GNSO and by any  
subsequent working group established to tackle this issue.  Many of  
the responses to the RFI listed problems such as “erosion of brand  
names,” “erosion of reputation” and “loss of revenues [through]  
diversion of traffic” as disadvantages to domain tasting.  These are  
problems with infringement, not with domain tasting.  While it may be  
appropriate for ICANN to consider whether its policies unduly  
encourage infringement or impede enforcement of intellectual property  
rights, it would be a mistake to assume that a revised policy on  
domain tasting will stamp out short term infringement or that all  
domain tasting necessarily infringes.

Insofar as the AGP allows a registrant to use a domain for a very  
short time at no cost it does provide an incentive to a prospective  
infringer to operate in a manner that frustrates enforcement of  
trademark rights.  This incentive can be removed by implementing a  
modest restocking fee where no corrective motive can be shown for the  
deletion.  Because the bulk of deletions come from a handful of  
registrars and because registration fees are only likely to deter an  
infringer who operates a large number of sites, the approach adopted  
by PIR (option “C” on the RFI), is particularly worth further  
consideration.

The Sample Zone File Data Study


ICANN should be particularly careful in crafting any test to identify  
infringing activity.  One proposal in the ad hoc group's report was  
to determine the percentage of domain tasting that infringed upon  
trademarks by comparing a sample of deletions to a list of trademarks  
registered with the United States Patent and Trademark Office (the  
“USPTO”).  This method was termed the “sample zone file data study.”   
This method would result in erroneous and excessive findings of  
infringement because it stems from a fundamental misconception of  
trademark law.  Specifically, it relies upon an erroneous assumption  
that any unauthorized use of a registered trademark is unlawful.

Trademark law does not categorically ban use of a trademark without  
the permission of the owner.  Instead, it prohibits uses of a  
trademark which deceive or confuse the consumer about the origin of a  
good or service.  Where there is no confusion, there is no  
infringement.  Thus, trademark law does not prohibit the use of the  
same name or symbol by companies in different fields of commerce, or  
who are so geographically distant that confusion is unlikely to  
occur.  Therefore a test for infringement based solely on the  
presence of a word that has been registered with any trademark office  
would erroneously conclude that many lawful business uses are  
infringing.

This is easily illustrated by examining one registered trademark.   
The USPTO lists 125 live registered wordmarks which contain the word  
“Acme.”[2]  Many of these are simply the word “Acme” with little or  
no graphical embellishment.  Yet hundreds of Corporations, Limited  
Partnerships, and Limited Liability Companies with names containing  
the word “Acme” have been registered with the California Secretary of  
State,[3] to say nothing of General Partnerships or unincorporated  
Sole Proprietorships in California or business entities in other  
jurisdictions.  While a few of these businesses may be infringing  
upon the trademarks of others, the vast majority are undoubtedly  
operating without any consumer confusion.  Moreover, any person is  
free to start a business that incorporates the word “Acme” so long as  
this causes no confusion as to the origin of their goods or  
services.  Under the sample zone data file study, however, any domain  
incorporating the word “Acme” would be inferred to be infringing  
merely because this word has been registered with the USPTO.

More significantly, non-commercial uses of a registered trademark  
would also be determined to be infringing under the test proposed.   
Under U.S. Law, non-commercial use is particularly unlikely to be  
found to infringe because there is little chance of confusion.  Thus  
a website critical of Jerry Falwell which used a common misspelling  
of his domain name (“Fallwell.com” for “Falwell.com”) was ruled to  
not infringe upon his trademark because the creator intended “only to  
provide a forum to criticize ideas, not to steal customers.”[4]   
Since on-line critics of businesses frequently incorporate the name  
of the criticized business into their domain names (e.g.  
“paypalsucks.com,” “microsoftsucks.org,” etc.) false findings of  
infringement are particularly likely under the sample zone file data  
study discussed in the report.

To be sure, an argument can be made that non-infringing domains are  
less likely to be deleted during the AGP.  If that is the case, then  
it is less likely that these legal uses of registered trademarks  
would significantly skew the sample zone file data study's  
conclusions.  It would be a mistake, however, to use that argument to  
justify the proposed test.  This test is intended to determine  
whether infringing use predominates in the practice of domain  
tasting.  To argue that a use of a trademark is probably infringing  
because it is deleted during the AGP is to assume the outcome the  
test is intended to determine—a logical fallacy known as “begging the  
question.”

More importantly, ICANN should be careful not to establish a  
precedent that this fundamentally flawed test establishes  
infringement.  Given the difficulties inherent in enforcing trademark  
rights against domain tasters, it is possibly that some sort of  
mechanism to screen-out infringing use will be discussed during the  
policy development process.  The test proposed for the sample zone  
file data study would be manifestly inadequate for this purpose in  
that it would prevent a great deal of legitimate use.

This last point is particularly significant in light of the fact that  
trademark law is still adapting to commerce over the Internet.  For  
example, while some U.S. Courts have held that a bad faith intent to  
make money from a domain containing a famous trademark is sufficient  
to establish infringement, others have held that such a use must be  
in connection with some form of goods or service.[5]  ICANN should  
not take it upon itself to decide these issues for the courts and  
legislatures of every country.  The delicate balance of competing  
public policies inherent in intellectual property law should instead  
be left to the courts and political processes to work out.

Conclusion



Of the proposed responses to the growing practice of domain name  
tasting, the most appropriate may be the imposition of a modest  
excess deletion fee.  This would force registrars to adopt policies  
discouraging domain tasting, but preserve the other benefits of the  
AGP and give registrars the flexibility to devise their own  
approaches to this issue.  As the GNSO takes the next step in dealing  
with this problem it must be careful to ensure that the issue remains  
properly framed rather than assuming than ICANN is responsible for or  
capable of preventing all short-term trademark infringement on the  
web.  Moreover, while further investigation, discussion, and action  
is warranted at this point, the proposed sample zone file data study  
should not be undertaken because it relies on a fundamental  
misunderstanding of trademark law and sets a dangerous precedent as  
to what ICANN will consider to be infringing use.

[1] Final Outcomes Report available at: http://gnso.icann.org/drafts/ 
gnso-domain-tasting-adhoc-outcomes-report-final.pdf

[2] See http://www.uspto.gov
[3] See http://kepler.sos.ca.gov/list.html
[4] See Lamparello v. Falwell, 420 F.3d 309 (5th Cir. 2005) at 315.
[5] Compare Ford Motor Co. v. Greatdomains.Com, Inc., 177 F.Supp.2d  
635 (E.D.Mich. 2001) with Intermatic Inc. v. Toeppen, 947 F.Supp 1227 
(N.D.Ill. 1996).


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IP JUSTICE
Robin Gross, Executive Director
1192 Haight Street, San Francisco, CA  94117  USA
p: +1-415-553-6261    f: +1-415-462-6451
w: http://www.ipjustice.org     e: robin at ipjustice.org


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