Although there’s a whole host of reasons why one particular web site
might triumph over another in the long term, the importance of choosing
the right address cannot be underestimated. Often embodying a brand’s core
proposition on the internet, a memorable and familiar domain name is
possibly the single most valuable asset an online business has.
So when an established offline company decides to set up on the web only
to find that someone has already registered their brand name, or one
nearly identical, it’s little wonder all hell breaks loose. Although there
are measures in place to ensure that a company cannot trade under an
identical name in the offline world, the law is not so clear cut when it
comes to branding rights on the web.
Mark Owen, a partner at solicitors Harbottle & Lewis, admits there are
significant problems facing established businesses trying to secure a
domain name. ”It’s a huge problem, despite the stacks of cases there have
been upholding brand-owners’ rights,” he says. ”It’s just too cheap to
register domains, so every brand-owner has countless people registering
and trying to use or sell similar domains to their brand. Most of our
clients have been affected, regardless of how big their brand is.”
Offering one of the first online dispute-resolution services, law firm
Eversheds last month set up dotcomresolution.com
(www.dotcomresolution.com), developed in response to the steadily
increasing number of domain name disputes.
Andy Gold, the service’s head of contentious intellectual property,
explains that although dotcomresolution was initially geared towards
providing start-ups with legal advice, as interest in the web grew it
became apparent that it was needed by an increasing number of blue-chip
clients.
”We tended to advise our clients that, when setting up, they should bag
their domain name first. But while we were setting up
dotcomresolution.com, we found there were all sorts of variations to the
problem. Large businesses which, six months ago, thought the net wasn’t
relevant to them have found that their name has gone after they realised
the net was a valuable channel after all.”
According to Ian De Freitas, partner at City law firm Paisner & Co, UK law
tends to lean in favour of the company which has originally brought a
complaint against a cyber-squatter.
”Being registered as the domain name owner does not necessarily secure the
right to use the name,” he says. The law recognises two types of right to
use a name - registered trade marks and unregistered ones. If the name is
a registered trade mark, this is the best form of protection for the
holder. However, companies also have the right for a name to be recognised
in law because they have developed goodwill in it. So you can stop other
people using that name or a similar one if you can show that they are
causing confusion by using it, otherwise known as ’passing off’.
One example of how a cyber-squatter was successfully ’evicted’ from an
established brand’s web address is the high-profile ’One in a Million’
court case from 1998. The company had registered domain names for a number
of well-known companies, such as Marks & Spencer, Virgin and Sainsbury’s,
and intended to sell them back to each of those companies. Instead of
paying up, the companies succeeded in getting an order from an English
court, and eventually the Court of Appeal, for the domain names to be
returned to them. As De Freitas explains: ”The law is firmly on the side
of the legal rights holders, not the domain name holder.”
Although the law is clear when relating to users registering a domain name
to gain financial reward from an established UK company’s brand online,
procedures are not so straightforward when a dispute involves a more
generic domain name. US-based efax.com, which sends faxes as emails,
attempted to sue a similar UK-based company called efax.co.uk. It
failed.
”The court wasn’t interested in whatever reputation it had built up in the
US,” says Owen. ”It regarded the name as descriptive - it ignored the ’e’
prefix, as so many names now have these that it has become meaningless in
trade mark terms, and said that ’fax’ was not at all distinctive.”
The rules which cause most confusion are those that relate to the
legitimacy of trademarks between countries. For traditional businesses, a
trademark can be applied to different companies as long as they trade in
different countries and operate in different sectors. The web, being the
global medium that it is, dashes that concept, so it’s worth remembering
that a US dotcom might call during your European expansion and contest
your domain name.
”Rights for names are usually territorial. This is a historical throwback
to times when people did not do much business internationally,” says De
Freitas. ”There are some old cases which allowed very well-known
foreign-based businesses to stop UK businesses using their names in the
UK, but the law needs to do some catching up here.”
It works both ways, however. According to De Freitas, your business might
be in the right, despite operating under the same name as a foreign
competitor.
”In theory, a US company with a certain name coming here when a UK
business is already established under that name, could find itself on the
end of an action by the UK company,” he points out. ”It’s important to be
aware this is not just about the US company physically coming to the UK to
do business, however. If the web site is in the US and it is accessible in
the UK, arguably that is enough for infringement of the UK company’s trade
mark. In contests such as these, it is often the case that the company
infringing the copyright agrees to cease all marketing and e-commerce
activities within that country.”
Dotcomresolution.com’s Gold provides some comfort for UK start-ups by
noting that the majority of international lawsuits rarely go ahead,
instead being handled by the US-based non-profit organisation ICANN
(Internet Corporation for Assigned Names and Numbers), which is itself
recognised by the Internet Assigned Numbers Authority (IANA).
”The real issues which vex clients arise where you’ve got foreign parties
involved. It would have to be a real dispute for a company to launch
litigation abroad - costs have been a major deterrent,” says Gold.
By resolving a dispute through ICANN, costs can be greatly reduced.
Appointing a panel of up to three experts to look into your domain name
complaint costs a maximum of $3,000 - a figure significantly lower than
even the smallest international lawsuit. Following the findings of the
ICANN panel, a process which takes around 45 days, the organisation can
order the transfer of domains with the suffix ’.com’, ’.org’ and ’.net’ to
the complainant.
Although an appeal with ICANN can mean the end of a matter, it cannot
award damages.
Nominet is the national registry for domain names which end with
’.uk’.
Like ICANN, Nominet is recognised as the registry of ’.uk’ domain names by
IANA and provides a dispute resolution service. It also has the power to
suspend a domain name if an investigation finds a company or individual
acting in bad faith.
James Ghani, managing director of web agency Wax New Media, describes his
own experiences of domain name conflict. A little while ago, he was
approached by a record company which questioned his intentions in
purchasing a domain name.
”I bought the Embrace domain name four years ago because we liked the
band,” he says. ”When they got famous, we received a phone call from their
record company demanding we give up the web site. We said okay, no problem
- as simple as that. People asked why we just handed it over, but I don’t
see why people don’t do that more often. It meant nothing to us.
Everyone’s going to be shagged anyway when all the suffixes change in a
few years.”
The reaction Ghani prompted from both friends and colleagues when he
simply handed the site over without a fee reveals quite a lot about the
mentality of many in the industry. But the other issue he raises has long
been talked about in the industry - the introduction of new domain-name
suffixes, or ’top-level’ domains.
Potentially killing two birds with one stone, developments in the US might
lead to the implementation of more domain names, which would effectively
provide more options for new business and provide some much needed
categorisation in the industry. Currently debating whether to go ahead
with the implementation of suffixes such as ’.firm’, ’.store’, ’.law’, and
’.arts’, ICANN has conducted research which shows that although the
industry acknowledges that such a move would help to provide it with
clearer segmentation, it might expose it to yet more trademark
infringement, cyber-squatting and cyber-piracy. It’s also been talking
about it for so long, few people believe it will ever happen.
Harbottle & Lewis’s Owen is sceptical. He reiterates the difficulty of
protecting generic-type domain names, and is dubious about the value of
the proposed, and much talked-about, ’.eu’ domain suffix. ”When, and if,
the .eu suffix becomes reality, ownership of ’television.com’ will never
stop someone else getting ’television.eu’,” he says. ”Even descriptive
domains which have become truly valuable by becoming associated with a
good product, such as CNET’s ”news.com”, have limited rights and could
probably not stop a news.eu.”
Concerns over the use of domain names are not solely prompted by the
actions of those groups or individuals who buy names motivated by the
possibility of selling them on at a higher price. Looking closely at
recent disputes between UK-based ventures and rival online companies
suggests that there is potential for gaining a prize more valuable than
the sale of a domain name - the acquisition of a competitor’s
customers.
Although the matter has been resolved, a six-month domain name dispute
between the health sites ThinkNatural and ClickMango caught the industry’s
attention, as it posed some interesting questions about domain name
ownership rights (see panel, p37). After weeks of negotiation, ClickMango
sent out a press release stating that it had ’agreed to sell the domain
names ThinkNatural.net and ThinkNatural.org to ThinkNatural.com in an
amicable arrangement’.
According to Carol Dukes of ThinkNatural, no money was actually exchanged
for the names, except to cover legal fees. ”There were small legal bills
with a bit of time and energy. It was just a minor irritation,” she
says.
Gold, however, emphasises how a minor irritation can escalate into an
expensive dispute. ”Cost is generally a major issue. If you are a company
like M&S, and someone has taken your domain name, you’ll no doubt have the
financial backing and a strong brand,” says Gold. ”But if you’re a
start-up and someone takes a domain you are after, you’ve got to balance
the cost of legal action with the costs of changing your brand name. Any
business has to check the cost-effectiveness.”
The growing drought of web site names is another reason why the ICANN
organisation is currently exploring the creation of additional domain name
suffixes.
Michael Ross, chief executive officer of easyshop.co.uk, outlines the
potential problem facing new online ventures. ”The names of the moment
appear to be a colour juxtaposed to a fruit, vegetable or animal. One
would, of course, ideally like to use just the fruit or vegetable on their
own, but all these are taken. Imagine the scene at 1am, checking such
names as BlueYam, RedYam, BlueMango, MangoBlue, YamYam. And they are all
taken.
It’s a truly ridiculous situation.”
Although Ross might appear a little over-fussy in his choice of web name -
this is the wacky internet, after all - his concerns have a concrete
foundation. As he points out, many venture capitalists will not invest in
companies if they don’t like the name. We might also be at the stage where
there are very few viable domain names left. ”We are already there,” says
Ross. ”The world does not need another BigGreenChicken.com.”
A recent news story in Revolution (17 May, p6) examined the problems
arising from the mass-purchase of domain names by companies offering
customers free email services. John Boulton, managing director of Glenburn
Ventures, pointed out that one of his projects, Sheerheaven, lost its
planned domain name through the actions of one such company, another.com.
However, Graham Goodkind, another.com’s co-founder and managing director,
denies any wrongdoing by companies who indulge in bulk registration.
”We’ve gone out and bought 10,000 domain names, but we don’t use company
names. We don’t offer names for sale and we don’t use them as domain
names,” he says. ”For example, we bought ’ilovechelsea.com’ but we don’t
have ’chelsea.com’ as that should be with the football club.”
As well as variations on football club names, the site also owns
www.oneinamillion.co.uk - an address which automatically re-directs users
to another.com’s site when typed in.
Offering a similar free service, the yet-to-launch streetnames.co.uk will
offer users an email account with the domain names of well known London
streets. Chief executive Steven Marks says that the company’s purchase of
such well-known domain names will ultimately benefit the user.
”The truth is that Streetnames will help small and medium-sized companies
to get over this. If you are Joe Bloggs Plumbing and you want to set up on
the web, you probably can’t because someone’s already sitting on it,” he
says. ”By using the service, you address the shortage of names and
capitalise on an industry which is a minefield for the uninitiated.”
Marks is also adamant that the industry must regulate itself. ”Everything
is so embryonic at the moment, it’s hard to say what will happen in the
future,” he says, claiming, ”any attempt to regulate the market will end
in disaster”.
Despite his scepticism about the present state of play, Harbottle &
Lewis’s Owen is positive about the future of the domain name. Indeed, as
technology moves on, he believes that advances in customer profiling and
personalisation will enable companies to target potential customers so
well that there will be no need to wait for customers to come to them.
”I hope it’ll all be a short-term phenomenon. It’s just a technical device
and, like all technology, it will be overtaken by progress. In this case,
intelligent search engines and browsers that profile you, the user, so
they know what you are looking for, might all but do away with domain
names,” he says.
”The loons that run the domain name system might still manage to fan the
flames for a couple of years, as new domains continue to be proposed and
that, in turn, launches a new gold-rush. But brands will remain
important.”
Gold takes a more sceptical view of technology, however, as it sustains
the web’s ability to develop faster than any proposed legislation. ”There
will always be new ways in which internet or trade mark names will be
abused with the growth of technology and access points, and new technology
will always be ahead of the law,” he says. ”There will always be a way of
infringing someone’s copyright. Some of these devices are so new that the
existing law won’t necessarily address it directly.”
A SMALL DISPUTE, BUT THIS WAS FULL OF SOUND AND FURY
As domain name disputes go, the rivalry between health sites ThinkNatural
and ClickMango was as unpleasant as many, but played itself out without
wrecking either company.
Carol Dukes, ThinkNatural’s chief executive officer, says: ”We acquired
our name last September. ClickMango then discovered it, and decided to
register ’.net’ and ’.org’ suffixes.”
Quoted in a news article in Revolution on October 13 1999, ClickMango
co-founder Robert Norton played down reports about this, and the
management of ThinkNatural decided not to react, believing that little
traffic would come from users typing in the other suffixes. It wasn’t
until ThinkNatural decided to secure its brand as a recognised trademark
that the relationship worsened between the sites.
”We weren’t that exercised about it, until we registered the name for a UK
trademark and found it had been registered as an EU trademark,” said
Dukes.
ClickMango’s grip on the brand had moved into the realms of traditional
business regulation, and the decision was taken to begin legal
proceedings.
The response was unexpected, however.
”When we instructed our lawyers to write to them about anti-competitive
practices, they then demanded #10,000 for the sites. Rob Norton said in an
interview that it was normal practice to get your competitor’s domain
name.”
Following negotiations, communications broke down in March. ClickMango
sent out a press release which indicated that the two companies had come
to a mutual agreement and agreed to sell the domain names to
ThinkNatural.
According to Dukes, no such arrangement or payment was made. ”It all caved
in and no money has been exchanged.” In the event, both parties have been
spared a potentially damaging legal battle - which would have hit both
their finances and credibility.
Clickmango has refused to comment on the incident.
TURNING THE TIDE FOR BRAND OWNERS
Ian De Freitas, partner at City law firm Paisner & Co, explains the
significance of one of the industry’s most notorious domain-name
disputes.
”The best example is a case where the English courts said the purchase of
a domain name was illegitimate. The defendant, a company called One in a
Million, had registered domain names for famous companies such as Marks &
Spencer and Virgin, and intended to sell them back to those
companies.”
The case was a landmark victory for the industry following a Court of
Appeal ruling in 1998. Having registered ’virgin.co.uk’,
’burgerking.co.uk’ and ’marksandspencer.com’, One in a Million then tried
to sell each domain name for #25,000 to each company.
Despite being the first to register the domain names, the court ruled that
it had registered the sites in bad faith, and ordered it to pay #65,000
costs and to transfer the domain names to their proper owners.
In an interesting twist to the ruling, although One in a Million had not
actually traded under any of the domain names, which meant that it would
not be liable for trademark infringement, the court held that the company
intended to pass off or pose as each brand on the web.
”The law is firmly on the side of the holder of the legal rights, not the
domain name holder,” says De Freitas.
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