When the organization responsible for assigning domain names announced several years ago that it would expand the generic top level domain name system from the previous 21 to an unlimited number, brand owners knew their legal budgets would have to be increased to protect their trademarks from cybersquatters in this new terrain. Brand owners lobbied against the change, but despite its non-profit status, ICANN couldn’t be dissuaded from the program, which brought in over $357 million dollars from 1,930 applications for new top level domain names. After taking into consideration overlapping applications and denied applications, it appears that approximately one thousand new top level domain names will roll out over the next few years. Among them is .sucks, operated by Canada-based Vox Populi Registry Inc.
The Threat of CyberSquatting
Back in the 90’s, geeks often beat traditional brick and mortar companies in the race to register trademarks as dot com domain names. One well-known example of this was Dennis Toeppen, who registered approximately 200 domain names in 1995, including panavision.com, deltaairlines.com, neimanmarcs.com and eddiebauer.com. Some companies bought the domain names from Mr. Toeppen but others filed lawsuits to force Mr. Toeppen to turn over the names. In 1999, federal law makers instituted anticyberpiracy laws and in 2000 ICANN adopted the Uniform Domain Resolution Procedure (“UDRP”) to give brand owners a manageable process for preventing the use of their trademarks as domain names. Eventually, existing disputes were resolved and as new products and services were launched, trademark owners learned to register the corresponding domain name before it was taken by someone attempting to divert their internet traffic.
The threat of cybersquatting has returned with the launch of these new top level domain names. When efforts to prevent the release of unlimited top level domain names failed, brand owners and their attorneys pushed hard for ICANN to establish trademark rights protection mechanisms to address the inevitable cybersquatting. One of those protections is the Trademark Clearinghouse, operated by Deloitte and IBM. The Clearinghouse allows brand owners to submit their trademark data into one centralized database. By submitting a trademark to the Trademark Clearinghouse, the owner can register a corresponding domain name during a pre-registration (or “Sunrise”) period. In other words, the owner has the opportunity to register domain names that match the trademark before the cybersquatters do. Also, if someone other than the trademark owner attempts to register a domain name that exactly matches that trademark, the registrant will receive notice that it matches a trademark in the Clearinghouse and trademark owner will get notice of the domain registration.
Uniform Rapid Suspension
Another protection mechanism put in place was Uniform Rapid Suspension, designed again for exact matches. URS is a form-driven, inexpensive procedure that results in suspension of the offending domain name. The URS procedure requires that (1) the registered domain name be identical or confusingly similar to a registered trademark; (2) the domain registrant has no legitimate right or interest to the domain name; and (3) the domain name was registered and is being used in bad faith.
In addition, trademark owners can use the traditional UDRP process, which also requires a showing of no legitimate right or interest to the domain name and bad faith. If the trademark owner is successful in a UDRP process, the domain name is transferred to the trademark owner. If it is successful in a URS proceeding, the domain name registration is only suspended.
The concern is that these protection mechanisms will be ineffective when someone decides to register yourbrand.sucks. This is a serious concern for megabrands, such as Apple and Microsoft. This is also a serious concern for controversial brands such as Walmart and Monsanto. Indeed, .sucks also potentially affects any brand owner that sometimes has unsatisfied customers, disgruntled former employees, or cut-throat competitors.
Registered Trademarks Offer Some Protection
One solution is to register your trademark with the Trademark Clearinghouse and register yourbrand.sucks when the sunrise period opens so that it is not available for others to register when it becomes available to the public. A word of caution though. Vox Populi Registry Inc.’s CEO, John Berard, was once quoted as saying that it planned to charge $25,000 for .sucks domain names. He later stated, however, that their prices would be “market prices.” Market price for .com domain names from the registry is typically under $25. Market prices in private sales, however, broadly range from a few hundred dollars to over a million dollars for highly desirable domain names such as sex.com. Until Vox Populi announces its prices, it is impossible to know whether this is a viable option for the average brand owner.
If the trademark owner opts to not register its own trademark on the dot sucks registry, and if someone else obtains the registration, options include a lawsuit under the federal antipiracy law, the UDRP procedure and the URS procedure. All three options require a showing of bad faith,The federal statute identifies nine nonexclusive factors for courts to consider in determining whether a person has acted with bad faith intent:
(I) the trademark or other intellectual property rights of the person, if any, in the domain name;
(II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person;
(III) the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
(IV) the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name;
(V) the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;
(VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct;
(VII) the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct;
(VIII) the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and
(IX) the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of this section.
15 U.S.C. § 1125(d)(1)(B)(i).
This bad faith requirement works well for most cybersquatting arising out of registration of new top level domain names, but may not be well-suited for the dot sucks situation. As an illustration, the owner of acmeauto.sucks may make a persuasive argument that she has a legitimate interest in launching a website to tell the world how her Acme car exploded in a rear end collision causing her second degree burns. Her First Amendment right to free speech is not likely to be found to be bad faith if she makes truthful statements and offers protected opinions on the acmeauto.sucks website.
The First Amendment Argument
Existing federal case law makes clear that the First Amendment may trump trademark rights in similar situations. For instance, the federal Ninth Circuit in Bosley Medical Institute, Inc. v. Kremer, held that it was not a trademark infringement for a former customer of Bosley to register the domain name Bosleymedical.com and use it to operate a website critical of Bosley. The court reasoned that Kremer’s website was a non-commercial use of the trademark, thus it was not infringement under the applicable federal law. The Court noted that Kremer earned no revenue from the website, no goods or services were sold on the website, and there were no links to any of Bosley’s competitors’ websites. The Ninth Circuit states, “As a matter of First Amendment law, commercial speech may be regulated in ways that would be impermissible if the same regulation were applied to noncommercial expressions.” However, the Bosley Court also held “An infringement lawsuit by a trademark owner over a defendant’s unauthorized use of the mark as his domain name does not necessarily impair the defendant’s free speech rights.”
While the Bosley case was resolved between the parties before there was final court determination on the cybersquatting claim, other courts determined that bad faith was lacking where a domain name matching a trademark was being used to complain about the trademark owner’s products or services.
In the Sixth Circuit, a consumer prevailed against a landscaping company when she registered its trademark as a domain name and used the website to express her displeasure with the landscape services. Lucas Nursery & Landscaping, Inc. v. Grosse, 359 F.3d 806, 807-08 (6th Cir. 2004)
In the Fifth Circuit, a home builder was unable to convince a court that its disgruntled customer acted in bad faith when he registered its trademark as a domain name after being unhappy with the home he purchased. The website contained the homeowner’s story of his dispute with the builder, along with a disclaimer at the top of the home page indicating that it was not the home builder’s website TMI, Inc. v. Maxwell, 368 F.3d 433, 435 (5th Cir. 2004).
As both the Fifth and Sixth Circuit Courts point out, the disgruntled customer who opens a “gripe site” under the domain name of a business that is complained about is not a “cybersquatter” and is not violating acting in bad faith. This is a valid exercise of free speech rights, and not the type of harm that the cyberpiracy laws were designed to protect. Cleary Bldg. Corp. v. David A. Dame, Inc., 674 F. Supp. 2d 1257, 1265 (D. Colo. 2009)
As noted by the Second Circuit Courts, “[d]omain names ․ per se are neither automatically entitled to nor excluded from the protections of the First Amendment, and the appropriate inquiry is one that fully addresses particular circumstances presented with respect to each domain name.” Name.Space, Inc. v. Network Solutions, Inc., 202 F.3d 573, 585 (2d Cir.2000).
None of these Courts were considering a .suck domain name, which did not even exist when these cases were decided, and still have not launched. There is no reason to believe that dot sucks will be treated any differently though. In all likelihood, the Courts will treat cybersquatters who register .sucks domain names consisting of trademarks for the purpose of profiting from them differently than those who register a .sucks name to create a noncommercial forum for speech.
Like it or not, dot sucks is coming soon. Smart brand owners will develop a strategy for addressing registrations on the .sucks registry as well as on any of the other thousand new registries that have implications to their brand and industry.