In this section, we'll discuss
the basics of Trademark law, focusing especially upon infringement
and dilution.
THE PROBLEM OF SOVEREIGNTY IN
CYBERSPACE
An Example: Internet Domain Names and Legal Trademark Rights
In exploring the practical
and theoretical issues of structuring Internet institutions, it
is useful to consider the problem of domain names.[8] Domain names
are addresses. In fact, domain names are simply overlays for addresses-a
means by which the complexity of the Internet networking protocols
are separated from the user. Domain names require registration,
but that registration requirement developed from a need for coordination,
rather than a desire to limit the use of the "resource." Communication
could not take place-at least not without massive confusion-without
coordination to ensure that no two computers have the same address.
The "story" of domain names
can be described in evolutionary terms. When the Domain Name System
("DNS") was instituted in the early-to-mid 1980s, the Internet
was a non-commercial research and communication tool, originally
supported by DARPA and administered by a loose network of researchers
and academics. The original concept of the domain name system
was as a name-space commons, not as a system of property rights.[9]
As in all commons, the "first-come, first served" concept governed
use rights-in fact, this continues today, with "first-come, first-served"
being the registration policy for second-level domain names.[10]
The designers of the DNS were creating a method of administering
the name-space commons for the convenience of all, not a method
of selling names as private property.[11] It was not necessary
to give serious thought to rights or ownership, or even what might
happen if Joe tried to take Mary's domain name. Since Joe could
easily (and prior to 1994, freely) get his own domain name that
would, given noncommercial purposes, be as good as the one he
could take from Mary, there seemed to be enough and as good left
in common after Mary appropriated hers.
Demand for domain names
until the mid-1990s was comparatively low: Network Solutions International
("NSI"), the corporation presently charged with registering the
majority of domain names, reports that in October 1995, there
were 156,961 total domain names registered.[12] There was (and
is) little possibility of actually "stealing" a domain name: the
technological barriers of the DNS system precluded out-and-out
theft.[13] These technological and social circumstances meant
that enforceable property rights were not worth the price of implementing
them.
Then a few years passed,
and the world changed. The Internet came to be understood as a
commercial infrastructure of very great potential power. Individual
domain names started to look both scarce and very valuable. They
started to look scarce not because of the numbers of them available,
but because of the much smaller numbers of them that Internet
entrepreneurs came to deem desirable.[14] They started to look
very valuable because there is monetizable value in commercial
names in a way that there is not in noncommercial names.[15] Demand
mushroomed, as did registration.[16] As simple economics would
predict, a trade in names grew up; and the expenses of exclusion
became worthwhile. Conflicts developed over domain names.[17]
Businesses and individuals began advertising domain names for
sale; it was rumored that domain names changed hands for sums
on the order of $3 million.[18]
In these circumstances,
a clear property rights regime, with clear enforcement mechanisms,
seemed to be needed to avoid the costly free-for-alls economists
predict when non-commercial commons resources suddenly become
commercially very valuable. Cyberspace has developed its own form
of questionable speculation in the absence of clear property rights,
called "cybersquatting" or "domain name grabbing." Domain name
grabbing refers to the practice of registering a domain name that
the registrant speculates will be of value. The typical case involves
the registering of a domain name corresponding to a major corporation
or product (almost always a recognized trademark). The domain
name grabber, who can effectively block the corporation from the
domain name, then offers to sell the domain name to the corporation.[19]
In July 1995, NSI, in response
to several cases of domain name disputes leading to legal action
(including against NSI), promulgated the Domain Name Dispute Policy.
Broadly speaking, the Policy (which has been amended three times
since) allows trademark holders to file a complaint with NSI regarding
violations of "legal rights" by a domain name. After receiving
a proper complaint, NSI will encourage the domain-holder to relinquish
the domain name. The domain-holder then has the burden of proving
ownership of its own trademark corresponding to the domain name
within 30 days to avoid a "hold" status. If the disputing parties
cannot reach a resolution, NSI will place the domain name on "hold"
pending further action. When a lawsuit is filed over the allocation
of a domain name, the NSI will deliver allocation authority to
the court.[20] Whether the Policy is a good one is open to serious
question. The policy allows trademark registration from foreign
jurisdictions to trump senior use rights under U.S. law. It allows
trademark holders to get the equivalent of an injunction before
the merits have been heard. In practice, it may be making matters
worse rather than better.[21]
There has been a great
deal of debate about the merits or demerits of the Dispute Policy.
At least it is evident from an evolutionary point of view that
some such policy would be expected to come into existence when
it did. It is also important to bear in mind that evolution doesn't
stop. This point is logically anterior to arguing the pros and
cons of the NSI approach. History could move on from here, changing
the social, technological and economic parameters, and cause the
perceived need for property rights in domain names to subside.
One thing that seems likely
to happen is that domain names are going to become relatively
less valuable. The demand for them could ease: more TLDs could
be formed,[22] and/or competitors to NSI could become viable.[23]
Or the importance of domain names could subside: sophisticated
search engines, "smart browsers," agent applications, or other
technological innovations may perhaps render them largely irrelevant.[24]
It has been tempting for
the various players in the commercial transformation of the Internet
to consider domain names a species of mutant trademark. A domain
name that matches a trademark does have at least one similar function:
to identify the service or product of the owner. And it can have
value to the owner in the same way that the goodwill attaching
to any other commercial name can have value: the value is the
commodified propensity of customers to choose the named product
over competing products. Moreover, trademarks are in a sense appropriated
out of the commons of language just as domain names are appropriated
out of domain name space.[25] An additional advantage of a domain
name is that it can be valuable both in the sense of trademark-type
"recognition" (conceptual location) and address implementation
(operational location). The consumer can choose products based
on the value of the mark, and use the mark to find information
about the product.
Trademarks in the U.S.
traditionally have been territorially-based, meaning that the
property right is only good in the territory in which the user's
rights have been established, so owners located in different territories
could use the same mark. Moreover, trademarks in the U.S. traditionally
have been compartmentalized, meaning that the property right is
only good in the industry in which the user's rights have been
established, so that owners engaged in different lines of business
could use the same mark. But fully-qualified domain names are
unique: there is only one Internet, one ".com" TLD, and one IP
address corresponding to any given name in that domain. Therefore,
under the current regime, different companies in different places
cannot share the same name.[26] Domain names are unterritorialized
and non-compartmentalized. If Apple Computer is the first to claim
"apple.com," then Apple Records must yield.
Additionally, trademark
law expressly reserves large portion of the commons of language-it
does not allow the registration of "merely descriptive" terms.[27]
"Computer" cannot be a registered mark for a computer product.
In contrast, domain name space has no such limitations-therefore,
the most valuable domain names are clearly the most generic.[28]
Moreover, trademarks that become generic can lapse back into commons,
but an appropriated domain name (as long as the servers supporting
it are maintained) cannot.
Traditional trademark law
is in flux right now. There is pressure to "unterritorialize"
it-harmonize national regimes and make it possible to have worldwide
rights. At the same time there is pressure to "decompartmentalize"
it-eliminate industry compartmentalization and make it possible
to have comprehensive rights over a name for all products.[29]
Because the concept of dilution tends towards unterritorialization,
it is no accident that many domain names cases in this country
so far have relied on the new federal anti-dilution statute, the
Federal Trademark Dilution Act of 1995.[30] This statute does
decompartmentalize, but only for "famous" trademarks.[31] The
Act thus creates a hierarchy: "famous" marks can exclude all others
from duplicating their names, whereas others can exclude only
those in their own and related product markets. Owners of "famous"
marks can use this statute to capture the domain name they want,
even if someone else got it first, but owners of non-famous marks
seem to be out of luck.[32]
If trademark law were to
go all the way toward unterritorialization and de-compartmentalization,
then it would clearly be less procrustean for application to domain
names. It's unlikely, however, that this could happen. It would
require both unterritorialized scope of validity of trademarks
and an unterritorialized background legal system to enforce them.
That, of course, brings us back to the question of sovereignty.
Read the following cases applying
Federal Trademark Law to domain name disputes:
List for yourself the theories upon which the claims
of trademark infringement are predicated. Do any seem especially
applicable or inapplicable to the online world? Are any likely to
have adverse policy effects?