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Getting it Right from the Beginning

Materials prepared for the Continuing Legal Education Society of British Columbia seminar "Introductory Internet Law" held in Vancouver, B.C. on May 7, 1998.

Summary

After providing an over view of the Internet domain name space, with emphasis on the .CA (Canadian) top level domain, the paper (1) introduces legal issues relating to domain name allocation arising out of the failure to take into account national trade-mark laws when allocating domain names, and (2) provides an overview of selected trade-mark fundamentals in the context of use on the Internet.

The paper points out the control that U.S. interests have over the major top level domains (.COM, .NET, .ORG. and .EDU) and the applicability of U.S. laws to domain name allocation and retention. The paper predicts a decline in the popularity of the .COM domain, and encourages the use of the .CA domain by Canadian residents as a way of ensuring that domain name allocation and retention is governed by local trade-mark law.

The paper ends with several recommendations regarding choosing a domain name, including suggesting pre-clearing a domain name on at least the same basis that is required in Canada to obtain a federally approved corporate name.

The Domain Name Space

The Internet - A Brief History

The Internet is a network of networks connected to each other through national "backbones" and international trunklines.

The Internet started life in 1969 as a research project in networking known as ARPNET, funded by the U.S. Department of Defense. The first node on the network was at UCLA, and soon after that at Stanford Research Institute. By 1971 there were 23 hosts on the network. In 1973 the first international connection to ARPANET was made when England and Norway joined. In 1983 name server technology was developed at the University of Wisconsin, removing the need for users to know the exact path to other systems on the network. In 1986 NSFNET was created with a backbone speed of 56Kbps. As recently as 1989 (1) the number of hosts on the network exceeded 100,000 for the first time, (2) the NSFNET backbone was upgraded to T1 status (1.544Mbps), and (3) the first relays between a commercial electronic mail carrier and the Internet were made - MCI Mail through the Corporation for the National Research Initiative and CompuServe through Ohio State University. In 1992 the World-Wide Web standard was released by CERN - Tim Berners-Lee was the developer. In 1993 InterNIC was created by NSF to provide specific Internet services and the White House came on-line. In 1994, shopping malls arrived on the Internet. And the rest is history.

The Top Level Domains

The Internet domain name space is a structure of alphanumeric addresses which point to particular computers which are part of the Internet.

The major top level domains are .EDU, .NET, .ORG, and the most popular, the .COM domain. These domains are administered by Network Solutions Inc. (a U.S. corporation), which acts as the Registrar. In addition, each country has been assigned its' ISO two character country designation as a geographic top level domain. For a list by country, see http://www.internic.net/other.shtmll.

The Registrars of the respective domain name spaces have no legislative authority, and derive their power only through voluntary compliance. There are no technical or legal impediments to someone creating another top level domain name. For this reason, it may be difficult in the future to exert regulatory control over the domain name space.

Disputes relating to domain names administered by Network Solutions Inc. are subject to both court challenge and to administrative action provided for pursuant to Internic's Domain Name Dispute Resolution Policy. See http://www.internic.net/domain-info/nic-rev03.shtmll.

Given that Internic is subject to U.S. law, the enforceability of foreign judgements relating to the top level domain name allocation and retention is a serious concern. The international community also believes that U.S. interests dominate domain name allocation and retention.

The registry has not escaped the question of its' own legal liability in the process - see Academy of Motion Picture Arts and Sciences versus Network Solutions Inc.- 1997 U.S. Dist. LEXIS 20806 (C.D.Cal. decided 12/10/97).

The .CA (Canadian) Domain Name Space

The Internet Assigned Numbers Authority (IANA) has delegated to the .CA Domain Registrar the authority to issue top level domain names with the suffix ".CA".

John Demco of the Department of Computer Sciences at the University of British Columbia has been the Registrar for many years. Mr. Demco's position is unpaid, as are the services rendered by the committee members who assist him. This will change with the over haul of the .CA domain name space.

The Registrar has not delegated his power with respect to the management of any of the subdomains. This is in contrast to the USA, where the U.S. Registrar is willing to and has delegated the power to manage subdomains.

At the date of this paper, fundamental changes (the "proposal") are being contemplated to the .CA domain name space - see www.canarie.ca/cdncc/comments for links to the proposal and comments on it. The target date for implementation is May 1, 1998, but this is unlikely.

Name Approval

The geographic structure of the .CA domain name space will disappear with the over haul of the domain name space.

For the present, guidelines for name approval can be found with the application form for a domain name. To qualify for the ".ca" suffix, the highest level name in this domain, one must be incorporated federally, have a registered trademark in Canada, or have offices or points of presence in more than one province. To qualify for the provincial level (.bc.ca), one must have offices or points of presence in more than one location in the province, or be an government, educational institution, or hospital. The balance of names will be granted in the municipal sub domain (for example, vancouver.bc.ca). Proof of qualification is required for all names other than at the municipal level. The proposal does not provide for a transitional period to allow migration from the provincial or municipal levels to the top level.

The Registrar will only permit an organization to register one name. It is difficult to change this name later. The proposal will remove this limitation. In keeping with the desire that domain names bear a close connection to an organization's name, two character "names" are also closely looked at before they are approved.

Geographic place names have been reserved by the Registrar, as have all one letter names. There is nothing in the Registrar's policies to prevent a name from being granted in the .CA domain which is identical to another name in one of the other top level domains (except for the suffix), provided that it meets the criteria for registration in Canada.

To assist in searching for existing names, a list of existing names organized by owner is available at ftp://ftp.cdnnet.ca/ca-domain/index-by-organization. A directory by domain name is available to http://www.zid.com/webhosting/CA-domain-search.shtml. It is recommended that a trademark search be performed prior to proceeding with a domain name registration. The Registrar does not perform this search. At the date of this paper, the proposal does not contemplate that a trade-mark search will be required prior to registering a domain name.

The proposal has been criticized for facilitating people to claim domain names with the express purpose of selling them to others ("squatters").

Application Procedure

The application form for a .CA domain name is available at ftp://ftp.cdnnet.ca/ca-domain/application-form.

The proposal requires that applicants, in most cases, use the services of an agent appointed by the .CA domain authority.

The proposal contemplates both a five year period before renewal is required and a minimal application fee, which will encourage squatting.

Dispute Resolution

Currently, the Registrar in his policies makes it clear that no rights are conferred by the granting of a domain name.

There is no policy in place regarding conflicts over domain names, nor is one contemplated by the proposal. This is viewed by many as a serious inadequacy in the proposal, and one will encourage litigation.

If a dispute arises, the Registrar's policy is to look to the parties to resolve it directly, or through the courts.

Contrasting Domain Names to Trade-marks

By their very nature, domain names are also trade-mark like in nature. Since the recognition of the Internet’s importance to business, Internet addresses are increasingly viewed by business as a key component of corporate identification. As a result of this, a collision between the allocation of domain names and national trade-mark law was inevitable.

The conflict between national trade-mark regimes and domain name allocation can be divided into two categories - domain name allocation/entitlement and trade-mark enforcement.

Registration of a domain name is an inexpensive administrative procedure, without regard to the trade-mark regime of Canada, the U.S. or any other country. Trade-mark applications go through a thorough and tested process on a national basis before approval. Anyone can apply for a domain name. Only qualified trade-marks can be applied for, with the exception of trade-marks based on "proposed use". There are no requirements regarding the composition of domain names.

While the same name can be registered as a trade-mark with respect to more than one product or service by different owners, a domain name is only available once in a given domain name space. The effect of this can be to prevent a trade-mark owner from having a domain name which is the same as her trade-mark.

The corollary of this is that it is possible to obtain a domain which differs from another by only one character. The negative result of this is a significant increase in the potential for trade-mark like "confusion" between two domain names, and for an infringer to adopt a domain name almost identical to a registered trade-mark.

This situation is particularly acute in the .COM domain, currently the most popular domain name space. Generally, the policy of the respective registrars is to avoid any role that would require them to adjudicate between trade-mark holders and applicants/holders of domain names. Consequently, most disputes inevitably end up in court, and there has been a significant amount of trade-mark litigation over the right to particular domain names.

Those responsible for the Internet domain name spaces have been slow to consider harmonizing the domain name space with the trade-mark regime.

Selected Overview of Canadian Trade-mark Law

Statutory

A trade-mark is a statutory right conferred by the Government of Canada, based on use, to the exclusive use of a word, symbol, or combination of both, with respect to specified products or services. The purpose of a trade-mark is to distinguish products or services or both from those of others by creating a limited monopoly. In Canada, trade-marks are renewable every fifteen years, in perpetuity, assuming continuing use and distinctiveness.

Section 19 of the Trade-marks Act grants the owner of a trade-mark the exclusive right to "use" the exact mark in respect of the described wares or services throughout Canada. Section 20 of the Trade-marks Act prohibits the use of a confusing trade-mark with the advertising, sale or distribution of any goods or services unless the use does not depreciate the good-will of a registered trade-mark. Section 22 of the Trade-marks Act prohibits the use of a trade-mark in any way that is likely to depreciate the goodwill associated with a registered trade-mark.

Additional provisions found in Canadian legislation, such as the Competition Act, also restrict passing off, misleading statements, dishonesty, or a depreciation in goodwill relating to trade-marks.

"Use" differs for Products and Services

Section 4 of the Trade-marks Act defines when a trade-mark has been used - important both to qualify a trademark initially and to restrain others from using it.

In Canada, trade-marks relating to services enjoy a greater degree of protection than do trade-marks relating to wares/products. Subsection 4(2) deems use to occur whenever a trade-mark is used or displayed in conjunction with the performance or advertisement of a service.

In order to constitute deemed use with respect to products, the trade-mark must either (1) be used in association with the products at the time of the transfer of either the property rights or the physical possession of the products, or (2) marked on the products themselves or on the packages in which they are distributed -subsection 4(1).

This also means that in Canada, one cannot use a third party’s trade-mark on the packaging of goods, or at all in conjunction with services, without permission, because this would constitute use - for example, this is how Microsoft Corporation restricts the use of the "Windows95" logo on software packaging.

"Use" in an Internet Context

As with corporate names, the mere use of a domain name does not result in "use" for purposes of trade-mark entitlement.

Proof of use on the Internet with respect to products, as contrasted with services, raises technical difficulties in creating a trade-mark. The difficulties are not as great for digital products as they are with hard goods.

For example, in Internet based transactions, it is not hard to imagine title to products passing at the time of the transaction. This is consistent with the instantaneous payment possible in such a transaction. Additionally, it is conceivable that possession might also pass in the case of digital products. The trade-mark must be in "use" at this point to qualify for registration, or to constitute an act of infringement. In either of these circumstances, it is possible to imbed the trademark in the electronic goods to constitute marking and use for purposes of the act. See BMB Compuscience Canada Ltd. v. Bramalea Ltd.(1989) 22 C.P.R. (3d) 561 (F.C.T.D.).

If neither possession (particularly with respect to hard goods) or title passes at the time the contract is entered into, the trade-mark must be in use at the time either of these events subsequently take place.

In order to qualify a domain name as a trade-mark, the domain name must be in "use" at one of the two relevant times. This will effect (1) whether one acquires the right, by use, to a particular domain name by virtue of trade-mark law, and (2) whether a domain name is in fact being used in contravention of the exclusive rights of the owner of a trade-mark.

Whether the combination of the display of a trademark and the link to another site displaying goods or services similar to those protected by the trademark would constitute use remains to be seen. In the U.S., instances involving linking, framing and the use of metatags have been held to constitute trade-mark "use", and consequently infringement.

Jurisdictional issues arising out of Internet use will also result in uncertainty for the conceivable future. For example, it remains to be seen how the legal system will respond when a trademark is lawfully used in the jurisdiction where it was granted, but is alleged to be unlawfully used electronically in another jurisdiction.

It has been speculated that changes in technology will relegate many domain names to relative obscurity. This is happening to a degree already with the use of index services, such as Yahoo, and the search engines, such as Lycos, which provide links and descriptions to other sites in a way that diminishes name prominence.

"Making known" as an Alternative to "use"

Section 5 of the Trade-marks Act provides that in limited circumstances a trade-mark will qualify for registration in Canada as a result of having become "well known". The principal qualifying media is print and radio advertising or broadcasting.

This section does not contemplate technological advances, and it is arguable as to whether Internet advertising or distribution will meet the requirements of this section. Whether Internet distribution qualifies as a "broadcast" is even more uncertain.

This section can also be relied on by a foreign trade-mark holder to commence an infringement action in Canada.

Trade-marks and Confusion

When considering whether a trade-mark is confusing with an other trade-mark, the courts have established that consideration must be given to all surrounding circumstances, including:

(1) inherent distinctiveness of the trade-mark and the extent to which the trade-mark has become know;

(2) the length of time each has been in use;

(3) the nature of the wares or services;

(4) the nature of the trade;

(5) the degree of resemblance.

There is a growing awareness in Canada of the possibility for confusing domain names. The prudent, but expensive and time consuming, course of action is to obtain a domain name in all of the name spaces that one qualifies for. For a business, this conceivably would include ".com", ".ca", "org" and ".net" plus other relevant geographic domain name spaces.

Unregistered (Common law) Trade-marks

Canada also has a common law trade-mark regime recognizing unregistered trade-marks. The ability to prevent a competitor from pretending that her goods, business or services are those of another is continually changing.

This right is closely related to s. 7 of the Trade-marks Act. The section has been challenged on constitutional grounds, and the enforceability of it is open to question.

Section 7(b) (confusion as to wares, services or business) has been challenged on constitutional grounds, but it has been decided that the section applies at least to unregistered and registered trade-marks. The plaintiff must prove (1) conduct directing public attention to the defendant’s wares or services, (2) in such a way as to cause confusion in Canada (3) at the time the defendant started to direct attention to the goods or services.

Specifically dealing with the question of imitation of names, PEINET Inc. V. O’Brien (1995), 61 C.P.R. 334 (P.E.I. Supr. Ct.) considered the potential for confusion between an Internet domain name (pei.net) and the plaintiff’s corporate name. The court was persuaded that the use of lower case letters and a period to separate the domain name into two parts was sufficient to avoid confusion. This decision makes it very difficult to prove passing off in this context.

Passing off

Reckitt & Coleman Products Limited v. Borden Inc. & Ors [1990] R.P.C. 341 established the three requirements required at common law of (1) recognition of goodwill by the public, (2) misrepresentation to the public leading to or likely to lead the public to believe that the goods or services are authorized by the plaintiff, and (3) actual or likely damage to the plaintiff. Goodwill can be of a local nature for either national or international claimants. Intent on the part of the defendant is immaterial. Proof of (1) and (2) can give rise to a presumption of damages.

Direct Infringement

To quote Hughes on Trade marks, (Butterworths Canada Ltd., 1984-1996) at 586,

"The extent of the exclusive right given by s. 19 of the Trade-marks Act is defined by the mark as registered; the ambit of protection for it is expanded by s. 20 when what is done by another is likely to cause confusion and by s. 22 when what is done is likely to depreciate the value of the goodwill attached to the trade marks."

Whether the mere use of a domain name constitutes "use', creates confusion or depreciates the goodwill of a trade-mark depends heavily on the facts of each individual case. CITV of Edmonton, Alberta, through its parent WIC Television Ltd. claimed infringement of the trade-mark CITV - WIC Television Ltd. v. ITV Technologies Inc. (Fed. Crt. T1459-97) . The Federal Court of Canada issued a temporary injunction in November, 1997 ordering ITV Technologies Inc. to stop operating a web site with the Internet address itv.net. It remains to be seen if "use" will be found when the case is ultimately decided. The case has been appealed (Fed. Crt. A926-97).

The result of an action based on a claim of trade-mark infringement is generally an order that the infringer cease and desist from the particular conduct. On occasion, the court may also order the impoundment and destruction of the goods. Nothing in the Trade-marks Act contemplates the infringer delivering up its property - in this case the domain name. This has not held back U.S. courts in similar circumstances from ordering a defendant to give up a domain name.

It is undecided as to the extent to which third parties, whose only role is to facilitate use of a trade-mark, can be found liable for contributory or vicarious infringement. See also Raciot, Hayes, Szibbo and Trudel, "A study of the Issues of Liability for Content Circulating on the Internet", 1997 (http://strategis.ic.gc.ca/SSG/it03117e_pr115.sgml).

The combination of Canadian legislative provisions appear to bestow similar rights in Canada as those conferred in the U.S.. Having said that, Canada has not adopted the approach of the U.S. in permitting limited trade mark use by third parties in the context of encouraging freedom of speech. Nor does Canada have the extent of remedies available in the U.S. for different types of infringement - such as the Federal Trade-mark Anti-Dilution Act and the Lanham Act.

The U.S. Experience

Robert Cumbow of Seattle, Washington maintains and has generously posted a list of Internet Law Cases, many of which relate to trade-marks and domain names, which can be located at his firm’s web site - http://www.perkinscoie.com/.

Recommendations

Prior to Choosing a Domain Name

Prudence recommends that searches, analogous to those made prior to adopting a trade-mark, be performed prior to adopting a domain name.

Choosing the Domain Name Space

d Unless a way is found to reconcile the inability of the domain name space to grant multiple domain names with the ability of the trade-mark regime to do so, it is inevitable that other domain name spaces such as the .CA domain will become popular. In addition, the applicability of U.S. law to the .COM domain name space is a disincentive to persons not residing in the U.S. to choosing .COM for their domain name space.

Doing Business in Other Jurisdictions

When products or services are supplied into other jurisdictions, trade-mark rights owned by others in that jurisdiction should be considered. In particular, consideration should be given to whether the domain name is being used as a trade-mark pursuant to the relevant legislation in the foreign jurisdiction.

Trade-Marking the Domain Name

In order to trade-mark a domain name, it is necessary that the name has been "used" as a trade-mark in the manner contemplated by the Trade-mark Act. Even if the domain name is not trade-marked, careful consideration should be given as to whether the domain name is being "used as a trade-mark.

In addition to conferring trade-mark rights on the applicant, a registered trade-mark will also prevent the administrator of the .COM domain (and related top level domains) from putting the domain name on hold as contemplated by section 9 of the Domain Name Dispute Policy (Rev 03) effective February 25, 1998.

What the Future Holds

The following points are not meant as predictions of upcoming change, but rather as examples of what might be done to reduce the level of legal disputes in the Domain Name Space. For a discussion of the issues, refer to the World Intellectual Property Organization (WIPO) material at http://www.wipo.org/eng/internet/domains/, and in particular the Memorandum on Trademarks and Internet Domain Names arising out of the meetings of WIPO consultants of February, 1997 - http://www.wipo.org/eng/internet/domains/tdnmci1.shtml.

Universal Directory

There is no universal directory of domain names which, when coupled with the current need to use one of the top level domain suffixes, has motivated users to congregate in one domain - the .COM domain. If a technical mechanism is developed or a custom of use arises which allows all trade-mark owners to have a domain name the same their trade-mark, the allocation problem will disappear.

Use of other Domains

Two domains that are currently enjoying some attention are the .TV (Tuvalu) and the .TM (Turkmenistan) domains! The Registration service for the .TM domain name is found at www.nic.tm.

Relaxation of Mandatory Obligation to Enforce Trade-mark rights

Many legal regimes require trade-mark owners to enforce trade-mark rights or be deemed to have abandoned their trade-mark. A relaxation of this obligation may result in fewer companies feeling that they have to restrain trade-mark like domain names in other domains.

About Gary Dunn

Gary Dunn is a graduate of the University of Alberta Law School (1975). His practise focuses on intellectual property and related business law issues relating to computers, information technology and multi-media for all industries. Mr. Dunn is also a frequent speaker on intellectual property and business, particularly relating to electronic commerce, contracting, copyright, trade-marks, content acquisition and the Internet.

Disclaimer
The foregoing is not intended to constitute legal advice. You should contact your legal advisor about your specific legal problem. You may make copies of this provided that the copy is for non-commercial purposes and repeats this disclaimer and the following notice of copyright.

© 1998 Gary Dunn