As good as it gets? An appraisal of the uniform domain name dispute resolution policy.(Domain Names)

In October 1999, the Internet Corporation for Assigned Names and Numbers (ICANN) implemented the Uniform Domain Name Dispute Resolution Policy (UDRP), establishing a uniform system for trademark owners to challenge cybersquatting, which occurs when Internet domain names are abusively registered. (1) Approximately four years after its implementation, it is important to examine the UDRP to determine whether it is achieving its intended result of providing a quick, inexpensive method for resolving domain name disputes fairly and accurately.

The Problem

Domain Name Fundamentals

Domain names are easy-to-remember combinations of letters and numbers (e.g., www.collectivemed.com) that facilitate the receipt and transmission of data over the Internet. Domain names were developed in the mid1980s to make referring to Internet Protocol (IP) addresses (numerical strings like "98.37.241.30" that uniquely identify Internet computers and enable Internet communication) simpler and easier for human computer users. (2) Domain names, IP addresses, and the communications protocols that manage how data are sent over the Internet comprise the domain name system (DNS). The DNS is constructed as a hierarchy of top-level domains (TLDs) and sub-level domains. (3) A "root" server sits at the top of the hierarchy, maintaining a directory of all the servers that hold top-level domain directories. (4) These servers, in turn, catalogue domain names registered under one of the more than 240 national, or country-code, TLDs (ccTLDs) (5) or one of the generic top-level domains (gTLDs) including <.com>, <.net>, <.org>, <.edu>, <.gov>, <.mil>, <.int>, <.name>, <.info>, <.biz>, <.pro>, <.coop>, <.museum>, or <.aero>. (6)

Like IP addresses, domain names must be unique; otherwise, computers would be unable to accurately send and receive data over the Internet. This design limitation seems trivial, because a large number of variations exist for any given term an Internet user might wish to use as a domain name. There is no question, however, that United Airlines finds www.utsted.com preferable to www.ual.com, so it is not surprising that many individuals are reluctant to settle for such variations. Therefore, the domain name registration process plays an important role in the domain name system by establishing the rules under which Internet users compete for prized domain names.

Domain Name Registration

Since the mid-1980s, most domain names have been registered on a first-come, first-served basis. This laissez-faire approach remains in effect today for the three most popular TLDs: <.com>, <.net>, and <.org>. (7) Registering a domain name in an unrestricted domain (e.g., <.com>) involves the following process: using the online WHOIS directory provided on domain name registrars' Web sites, would-be registrants check the availability of a particular domain name, select an unregistered name, and complete an online form by providing contact and payment information. Within several days, the registrar establishes the new domain name by affiliating the name with an IP address and adding the domain name to the proper TLD directory servers. (8) The notable aspect of this process is that anyone is free to register arty domain name. The only prerequisite is being first in time to register.

The Rise of Cybersquatting

While the unrestricted domain name registration process worked fine for academics and government personnel in the 1970s and 1980s, it quickly generated controversy after 1992, when commercial entities were allowed to begin using the <.com>, <.org>, and <.net> Internet domains. (9) Soon afterwards, it became apparent that trademark law and the domain name registration process were in conflict; multiple non-competing users of trademarks who had previously shared the same mark to sell different goods and services suddenly found themselves competing to use a single www. trademark. TLD domain name. (10) With only three TLDs available for use by the general public, certain domain names suddenly became scarce. Many trademark owners were slow to appreciate the importance of the Internet for their businesses and discovered too late that someone else had registered some or all of the domain names that were identical or similar to their trademarks. (11) Although a virtually endless supply of domain names reflecting variations on trademarked terms were available to these latecomers, such alternatives were unsatisfactory to many trademark owners, particularly those who had invested considerable sums of advertising dollars in their trademarks to make them famous. (12) For businesses with established trademarks like Vail Resorts, the prospect of settling for a second-best domain name like www.snow.com in place of www.vail.com was a bitter pill to swallow. (13) Therefore, trademark owners began asserting that they were entitled to obtain the domain names that reflected their trademarks and that anyone who registered the domains before them was simply an unauthorized cybersquatter. (14)

Some domain name registrants arguably deserved to be called cybersquatters because they used domain names to engage in trademark infringement and dilution, activities that are clearly barred by the Lanham Act. (15) Other domain name registrants arguably did not deserv1e to be labeled cybersquatters because their uses of domain names were not illegal according to then-existing law. (16) These uses included "cyberspeculation," which entailed registering well-known trademarks as Web sites to warehouse and resell them; "cybergriping," which described a broad category of Web sites used to comment on, criticize, or applaud trademark owners' goods and services; and registration for legitimate private uses of domain names that happened to coincide with trademarked terms. (17) With respect to these categories of domain name registrants, the allegation that one was a cybersquatter represented little more than a policy argument that the registrant was benefiting unfairly from the strength of the trademark owner's mark and should therefore surrender it.

Ineffective Legal Remedies

Trademark owners tried several different legal strategies for wresting control of contested domain names from their registrants, only to discover that then-current law largely failed to support their claims. (18)Virtually all lawsuits against alleged cybersquatters were brought directly or indirectly as trademark infringement suits under the Lanham Act. (19) To succeed on an infringement claim, the trademark owner was required to show rights in the trademark and establish that unauthorized use of the trademark by the cybersquatter was causing consumer confusion, deception, or mistake. (20)

To determine infringement, courts usually applied a likelihood-of-confusion test like the one developed in Polaroid Corp. v. Polarad Electronics Corp., (21) and refined by the Ninth Circuit in AMF Inc. v. Sleekcraft Boats. (22) Such tests evaluate:"(1) the strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant's intent in selecting the mark; and (8) likelihood of expansion of the product lines. (23) The application of tests such as this one produced inconsistent results for trademark owners because many domain name registrants were not engaging in trademark infringement, as they were not offering products or services similar to the trademark owners'. (24) Furthermore, the Lanham Act features a use-in-commerce requirement to maintain an infringement claim, and many domain name registrants were able to convince courts that their uses of the domain names in question did not constitute such a commercial use. (25)

Domain name registrants relied on these loopholes in the current law to persuasively argue that there was nothing wrong with registering domain names that reflected trademarked terms if the domain names were not used to infringe or dilute the marks. After all, they argued, they were nothing more than good faith opportunists participating in the high-tech equivalent of the 19th century land rushes. (26) Because it was well established that trademark owners did not possess a monopoly right to fence off any use of a mark or to block every possible combination of letters bearing any similarity to a protected mark, (27) courts tended to reluctantly agree with this assessment. (28)

Sensing that the courts would not provide the relief that they desired, trademark owners attempted to recover domain names from cybersquatters by using other devices such as the dispute resolution process offered by Network Solutions, Inc. (NSI). NSI's dispute resolution process commenced when a trademark owner presented NSI with a certified copy of its trademark registration documents and proof of written notice of the existence of the trademark to the domain name registrant.> If the domain name was identical to the trademark and the domain had been registered after the trademark was granted, NSI would place the domain name on hold until the parties settled their dispute or a court issued a final ruling in the case. (30) Despite the appearance of providing an alternative to litigation, it soon became apparent that NSI's process afforded trademark owners the same protection as the Lanham Act, because the entire process depended on existing trademark law" for its rules of decision. (31)

With the passage of the Federal Trademark Dilution Act (FTDA) (32) in 1995, trademark owners obtained a new basis for bringing suit against alleged cybersquatters. The FTDA created a cause of action for lessening the …