Study: Domain Name Law Favoring Big Business

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June 25, 1998 (5:16 PM EDT)

Study: Domain Name Law Favoring Big Business

By John Borland,

Domain name disputes are being linked too closely to trademark law, and judges are handing too much power to big trademark holders online, according to a study out of Syracuse University.

While some disputes over domain names belong in trademark court, most cases don't fit the legal guidelines, concludes the study by Milton Mueller, director of Syracuse's Graduate Program in Telecommunications and Network Management. The result has been a shift of legal power toward big corporations with broad legal resources and an expansion of trademark rights online, Mueller said.

"Our conclusion is that judges are frequently misapplying the law, because of an imperfect understanding of domain names and their economic and technical characteristics," Mueller said in an e-mail interview with TechWeb. "Another problem is that the trademark owners tend to be large, powerful, and have major legal resources at hand, whereas their defendants are small, inexperienced, and relatively poor."

Trademark disputes over who owns a domain name come up frequently, and many companies work hard to protect their trademarks across all top-level domains. Big trademark interests have lobbied the U.S. government and international organizations to keep the number of new, top-level domains down as the domain name system moves into the private sector.

Mueller studied 121 domain name fights that had reached the courts. He distinguished between actual trademark infringement, name speculation or "cybersquatting," conflicts between companies with the same name, and other disputes such as Net parodies or political speech.

Almost half the cases Mueller studied turned out to be conflicts between companies with the same names, such as Prince PLC, a British Net services firm, and Prince, the sports equipment manufacturer. A small majority of these were decided in favor of the first company to register the name, he said, while several "unjustly" favored the larger competitor.

Only 12 percent of the study's sample turned out to be traditional trademark infringement, in which there was actual confusion between products or a genuine "dilution" of the trademark holder's brand, Mueller said.

About 35 percent of the domain name cases were sparked by domain name speculators, in which a business had registered the names of other companies in hopes of selling the names back to the trademark holder. Courts had universally ruled against cybersquatters in these cases, Mueller said, stretching traditional trademark law in sometimes "spurious" ways to cover the situations.

"Trademark owners have been able to claim property rights in Internet domain names that go far beyond the rights they have under existing legislation and case law governing trademarks," Mueller's study says.

Trademark attorneys differ on the significance of this expansion of trademark rights online.

Courts have expanded trademark holders' rights, particularly in the case of well-known brands, said Sally Abel, a Fenwick and West trademark attorney and vice chair of the International Trademark Association's Issues and Policy Committee.

"Courts are bending over backwards to find marks famous," Abel said. "I think that far exceeds the scope and intention of [recent trademark] legislation."

"I don't think trademark law is being expanded in an improper way," said Sheldon Klein, a trademark attorney with the Washington firm of Arent, Fox, Kinter Plotkin and Klein. He compared the case of cybersquatters to an individual blocking a business' expansion by registering its corporate names in other states.

"There's still harm to trademark owners," Klein said. "You've got someone else profiting for no other reason than because they're doing something with the trademark."