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 October 22, 1999

Rules changing for the better in ownership of domain name

Partly thanks to a court case involving a company in Longmont, the rules concerning Internet domain-name ownership are changing – for the better, I believe.

This is not an issue that many people really cared about until 1995 or 1996, but the incredible boom we’ve seen on the Internet, and the commensurate increase in the registration of domain names, means that anyone who owns a small company, and even many individuals, are now playing the domain-name game in some form or other.

Many people now own their own domain names. I have several, for various purposes. TopFloor.com for my publishing business, PoorRichard.com to promote a series of books that the company publishes, BizBlast.com for an Internet start-up I founded and so on. (I foolishly didn’t attempt to register PeterKent.com until it was too late!)

Registering a domain name is cheap and easy. Go to www.NetworkSolutions.com or www.Register.com, fill in the required information, pay your $70 (perhaps less – rates going to drop dramatically pretty soon), and that’s it, you own a domain name.

Or do you? Until recently it was clear that you didn’t actually own the domain name – you could simply keep it until someone stronger than you decided to take it from you. The rules used by Network Solutions, the company running InterNIC and thus responsible for .com, .org, and .net domain names, state that if someone has a trademark that matches your domain name and wants that domain name, and if you haven’t already at least begun the trademark process, then you’re out of luck, you’ll have to hand the domain over.

These rules make little sense, of course, and were not always enforced. Take the example of the Prince.com domain, for instance. Prince plc, a British consulting company, had the domain name. But The Prince Sports Group wasn’t satisfied with PrinceTennis.com; it wanted Prince.com. It got a ruling from Network Solutions that it should have the domain, because it had the name “Prince” trademarked.

Never mind that there are hundreds of trademarks for that word.

The Prince Sports Group had trademarked the name Prince in the context of tennis rackets – nobody else can create tennis rackets and use the name Prince to describe them. But trademarks don’t limit the use of a word, they limit the use of the word in a particular context. Thus other companies have trademarked the word “Prince” in different contexts. So what would happen when another company came along and decided that it wanted the domain name?

Well things didn’t get that far. The Prince Sports Group sent a letter to Prince plc threatening legal action if it didn’t give up the name. Because under trademark law the use of Prince.com isn’t a trademark infringement, and because in Britain it’s unlawful for a trademark owner to make unjustified threats of legal action, Prince plc was able to obtain an injunction and damages against The Prince Sports Group. InterNIC then backed off and took no further action.

That was two years ago, and Prince plc. still has the domain name.

Network Solutions’ rules made no sense and were in the long term untenable. And finally we’re seeing changes. A few weeks ago ICANN, the Internet Corporation for Assigned Names and Numbers, endorsed a new policy under which arbitration would be used when one company or individual accused another of registering a name in “bad faith” (such as registering a name in order to resell it to a trademark holder).

The move is intended to make it cheaper and quicker to resolve disputes and make it harder for large companies to pressure small ones or individuals to give up names.

Unfortunately the arbitration won’t be binding, so large companies would still be able to club small companies and individuals with the threat of lawsuits even if they lose in the arbitration process.

But a federal judge recently ruled that possessing a trademark does not entitle the owner to a matching domain name. Clue Computing, in Longmont, was using the domain Clue.com. Three years ago Hasbro, the publisher of the game named Clue, decided that it should have the domain name. But U.S. District Judge Douglas Woodlock of Boston rejected Hasbro’s claim. He stated that there is no overlap between what Clue Computing and Hasbro do – they’re different businesses.

He found that there was little reason for consumers to be confused and think that somehow the Clue.com domain was related to the game Clue. And he also found that Clue Computing was not “cybersquatting,” registering a domain in order to sell it to a trademark holder or otherwise benefit from the fact that the name matched another company’s trademark.

“Holders of a famous mark,” he said, “are not automatically entitled to use that mark as their domain name; trademark law does not support such a monopoly.”

Network Solutions, by the way, almost suspended Clue Computing’s domain name in 1996, but were stopped from doing so by a court order. Presumably Network Solutions will now have to reconsider its policies in light of this new precedent.

Don’t think that all this allows you to go ahead and register whatever domain name you want, in the hopes that you can then sell the name to the owner of a company that really needs the name. That’s happened in the past, but it’s coming to an end. Everybody seems united here.

The courts have said that registering domain names in order to “extort” money from a trademark holder is a form of trademark violation. And Wendy’s International, owner of the Wendy’s fast-food chain, recently filed suit against a company that registered Wendys.org, WendysRestaurant.com, WendysRestaurants.com, and others, then tried to sell them to Wendy’s International.

And clearly ICANN is aiming to put a stop to this sort of thing. It’s arbitration program is intended to decide whether a registrant has a good reason to use the domain or is just trying to speculate on a valuable name.

It’s taken too long to get this far, but at least things are moving in the right direction. There’s no reason that a large company that didn’t have the foresight to register a domain it needs, should beat up a small company that needs the domain name but was a little more perceptive and in tune with this new Internet economy.

The third in the Poor Richard’s series is now available! “Poor Richard’s E-mail Publishing,” by Lockergnome publisher Chris Pirillo. Visit http://PoorRichard.com/email/ for sample chapters, Table of Contents, and more. The same sort of commonsense advice that made Poor Richard’s Web Site so popular … applied to e-mail newsletters, discussion groups, and more!

Partly thanks to a court case involving a company in Longmont, the rules concerning Internet domain-name ownership are changing – for the better, I believe.

This is not an issue that many people really cared about until 1995 or 1996, but the incredible boom we’ve seen on the Internet, and the commensurate increase in the registration of domain names, means that anyone who owns a small company, and even many individuals, are now playing the domain-name game in some form or other.

Many people now own their own domain names. I have several, for various purposes. TopFloor.com for my publishing business,…

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