The Legal Nature of Domain Names and Trademarks

under US and UK jurisdictions.

1. INTRODUCTION
In recent times Domain Names have acquired significant global attention. Volumes of academic
papers have been written concerning legal issues surrounding the use of Internet Domain Names. A
Domain Name is a human-friendly, easily understood internet address such as < www.amazon.com
> whereas the internet protocol (IP address) for the recognition of a domain name and other
computer devices connected to the internet, consists of a string of four sets of numbers up to three
digits from 0 to 255, for example 207.91.131.30., thereby making the domain name difficult to
recognize.[1]

Domain names play a significant role in e-commerce in that technology provides an easy method to
access information in cyberspace; it is the world of commerce, social interaction, legal, economic,
educational and technological information. Some domain names have attracted great economic
value because they are easily recognizable and represent trade names and trademarks.[2]
This then raises the question of legal protection for domain names which could be put at risk by
activists determined to destroy a particular brand name by registering confusingly similar domain
names in order to denigrate by propaganda, cyber-squatters who sit on a domain name hoping that
the trademark owner will offer to buy it, and typo-squatters who register similar domain names with a
view to scamming unwary internet users.

2. LEGAL PROTECTION UNDER US AND UK

JURISDICTIONS
At the time of writing there is no law which governs domain names. As yet there is no global
consensus on whether domain names are part of other intellectual property rights and therefore
protected by specified law.

From a purely technical perspective, a domain name is an Internet address identifying a computer
site connected to the Internet in the same way that a telephone number uniquely identifies a
telephone line connected to the global telephone network. Therefore a domain name is no more than
data, a reference point in a computer database. No two organizations can have the same domain
name and no two people can have the same telephone number. However, from a legal perspective,
it is not yet clear what a domain name is? Broadly speaking, the rights over a domain name arise
from either the domain name registration agreement, contractual agreement with the registrar[3] or
from the property right interest over the name itself. The registry of domain names is operated by a
“registry operator” or “sponsor” under an agreement with the Internet Corporation for Assigned
Names and Numbers (ICANN).[4]

The majority of domain name disputes seem to involve trademarks. Although, it is submitted that
disputes may also arise when the registration or use of the domain name infringes any legally
recognized right(s), such as trademark rights, common law right in passing off, or any other right.

Trademark law
Article 15 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
defines a trademark as;
“any sign, or any combination of signs, capable of distinguishing the goods or services of one
undertaking from those of other undertakings, shall be capable of constituting a trademark. Such
signs, in particular words including personal names, letters, numerals, figurative elements and
combinations of colours as well as any combination of such signs, shall be eligible for registration as
trademarks...”[5]

Word marks are the only form of trademarks capable of being used as a domain name.

Trademarks serve a variety of important economic functions, including the identification and
differentiation of products and services (origin); they indicate consistency of source and quality that
measure up to customer expectations (quality and guarantee); and they also facilitate advertising
and sales (advertising or investment functions).[6] The creation of trademark rights is dependent
upon certain requirements being met such as functionality, identity, use, and registration. Trademark
law was legislated to protect the public. When someone purchases a product bearing a particular
trademark, that person can be confident that the product is genuine and protected from appropriation
by criminals.

The growth of the World Wide Web (www) has fuelled the boom in business growth on the internet
with many businesses establishing internet storefronts. Due to this commercialization there is a
relationship between domain names and trademark law.[7]

It would seem reasonable that as many domain names reflect trademarks, that domain names are
capable of being protected under trademark law.

The conflict between trademarks and domain names is far broader than the problem of cyber-
squatting. The domain name system presents a series of conflicts within the basic principles of
global trademark law. Conflicts between trademark rights and domain name registrants occur in a
number of situations including cyber-squatting which has been criminalized in many countries
throughout the world; genuine disputes which occur when two or more parties with independent and
legitimate rights for the same trademark in different lines of business or jurisdictions seek the same
domain name;[8] and the final type of dispute arises when an individual “hijacks” a company's
trademark by obtaining a domain name identical to that mark before the holder of the trademark.

The question arises as to whether trademark law is a truly applicable model for the protection of
domain names. Although there are considerable differences and similarities between the trademark
law model, and domain names; domain name literature suggests that trademark law is not fully
applicable to domain names disputes because trademark law is limited by geography and open by
classification. Hence trademarks are attached to specific jurisdictions and specific goods or services.
The same does not apply to the domain name system because any name has to be absolutely
unique and not shared by anyone else across the globe in the Top Level Domains(TLD). There can
only be one “amazon.com”.[9] Another registration issue is that most registries implement a “first
come – first served” policy. This practice provides another incentive for cyber-squatters to register
the trademark before the rightful owner of the trademark and then offer it for sale later at a
substantial price.

The registration requirements are one of the major issues in trademark law. The law of trademarks
cannot be applicable as these differences make the trademark laws unsuitable as a remedy against
trademark infringement.[10]

The resolution of legal conflicts under US and UK jurisdictions

Domain name disputes in the context of trademarks arguably can be decided within the legal
structure of trademark law. The main role of the courts in addressing these disputes is to determine
whether the use of a domain name infringes the trademark registered or used in that jurisdiction.

3. THE US COURTS APPROACH

The early development of the internet has been attributed to the USA as the majority of domain
name are registered there. Suffice to say that most disputes also emanate from the USA. The courts
in the US have struggled to address the disputes of domain names in the context of trademarks law
in light of two important polices of trademark law: (1) to prevent confusion among the public and (2)
to protect the trademark owner s investment in its mark.[11]

It should be noted that the United States' trademark system is uniquely a common law user-based
system, combined with elective federal registration. Trademarks used in interstate commerce are
protected under the Lanham Act, while those used locally are protected under common law.
Nevertheless, both common law and federal law apply the same principles in protecting trademarks
and resolving disputes.[12]

Trademark infringement
Federally registered trademark owners can bring actions against the infringement of their trademark
section 32 (1) of the Lanham Act. [13] S32(1) of the Act provides that an infringement occurs when
someone uses a registered mark in business or commerce, or applies it to goods or services without
the consent of the registered trademark owner, and that such use is likely to cause confusion.21 If a
trademark infringement was established, then financial damages and/or injunctive relief could be
granted. To succeed in an action under S32(1), a plaintiff must prove that the defendant's
unauthorized use of a trademarked domain name has resulted in likely confusion regarding the
origin of the goods and services. The touchstone of liability under this Act is that of confusion.
However, given the technical aspects of the Internet, the plaintiff may also prevail if initial interest
confusion occurs as a result of the defendant's use of the trademark, via a domain or meta-tags. [14]

Unfair Competition
The Lanham Act goes beyond trademark infringement and creates a federal statutory tort, which
provides wide protection against various aspects of unfair competition. Causes of action for unfair
competition can be brought under section 43(a) of the Lanham Act [15] for all marks, registered or
not, as well as trade names. S43(a) is often referred to as the Federal Unfair Competition Law and
provides another channel to deal with domain name-trademarks disputes.

Trade Mark Dilution

The Federal Trade Mark Dilution Act of 1995 (FTDA), signed into law in 1996 amended the Lanham
Act to create a federal cause of action for the dilution of famous marks. The Act affected domain
name disputes, in that famous marks were automatically protected, and unlike infringement or unfair
competition claims, the likelihood of confusion is not a requirement.[16]

Dilution of trademarks by domain name has been considered by the US courts and they have
determined that there are three types of dilution; blurring, tarnishment, and
disparagement. Dilution by blurring anticipates the “whittling away of selling power and value”[17] of
an original mark by using a similar mark even if on dissimilar products or services and thereby
conjuring up in the consumer's mind a new association with the original mark. Dilution by
tarnishment occurs when a mark is used by a third party in a manner that is inconsistent with the use
of the mark by its original owner such that the goodwill associated with the original owner's mark
becomes degraded or tarnished. [18]

Although the FTDA has been applied in a number of domain name disputes because of its
advantages, there are two principle weaknesses which constrain the FTDA's resolve in domain
name disputes. Firstly, the threshold that the mark must be famous is difficult to meet. The second
limitation is the requirement of commercial use in commerce.

As to the first limitation, the FTDA lists eight non-exclusive factors for evaluating whether a mark is
famous. The standard for fame is very high and the evaluation is often subjective. Federal courts
have concluded that to be famous, under dilution a mark must be prominent and well known, and
therefore most likely to be adversely affected by dilution.[19] However, this limitation seems to have
been ameliorated by a number of recent cases in which the courts have adopted a relatively lower
threshold in favor of finding trademark dilution in the Internet context.[20]

The commercial “use in commerce” requirement involves a two-step analysis; firstly, the defendant
must meet the definition of “use in commerce”, that is use in the regular course of interstate trade.
This means the domain name must be attached to some form of commercial goods and/or services
of the registrant. Secondly, the defendant's use must be commercial, in that it proposes a
commercial transaction. Mere registration of a domain name without more does not constitute
commercial use.[21] The non-commercial use of a domain name that hinders a trademark owner's
exploitation of the value of its trademark on the Internet will not cause dilution.[22] Therefore, in
cases where there are no goods or services sold or advertised on the Internet, the courts have to
stretch the meaning of the statute so as to find commercial use and thus establish dilution.
Moreover, if the cyber-squatter does not attempt to sell trademark-based domain names to the
rightful trademark owner, but rather sits on it to curtail the trademark owner's use, it seems that the
cyber-squatter can avoid commercial use, and escape liability under dilution.

State Causes of Action

Besides the federal law, there are basic state law causes of action available for domain name-
trademark disputes including; common law trademark infringement; state anti-dilution statutes; unfair
competition and deceptive trade practices under common law and state statutes; and claims under
other state laws.

Anti-cybers-quatting Consumer Protection Act

In late 1999, the US congress enacted the Anti-cyber-squatting Consumer Protection Act (ACPA).
The legal remedies available for victims of cyber-squatting before the enactment of the ACPA were
viewed by the Congress as expensive and uncertain. The ACPA amends the trademark act of 1946,
creating specific federal remedies for cyber-squatting. [23]

In the case of Sporty's Farm v Sportsman's Market, [24] the second circuit court outlined a five-step
process for the ACPA analysis. The first issue before the court is the applicability of the ACPA to the
case in question and whether the court can exercise personal jurisdiction over the defendant or if an
in rem jurisdiction over the domain name itself can be obtained. Secondly, the court must decide
whether the plaintiff's trademark is famous or distinctive and thus entitled to the protection under
ACPA. Thirdly, the court must determine whether the defendant's domain name is identical or
confusingly similar to the plaintiff s trademark. The fourth step is to identify whether the defendant
has acted with bad faith intent to profit at the time of registration; and finally, the court must
determine a proper remedy.

4. THE UK COURTS APPROACH

There have only been a handful of cases in relation to domain name and trademark disputes that
have appeared before the courts in the UK. In comparison with the US courts, UK courts have fewer
opportunities then their counterparts in the US, in developing the approach of resolving trademark
issues in the context of cyberspace.

There are three possible legal grounds on which the courts in the UK may rely on in addressing
domain name/trademark disputes: the law of registered trademarks, passing off, and common law
conspiracy.

Trademark Infringement
There is no simple answer to the question as to whether the registration of a domain name
incorporating a registered trademark amounts to trademark infringement under The Trade Marks Act
1994 (TMA). The outcome may well depend upon the intended use of the domain name.
Section 10(1) of the TMA states that; “trademark infringement occurs if a person uses in the course
of trade a sign that is Identical with the trademark in relation to goods or services which are identical
with those for which it is registered”.

Accordingly, there is no likelihood of confusion requirement needed under this section. However, the
relevant questions here are whether the domain name in question is identical to the registered
trademark; whether the domain name is used in the course of trade; and whether such use is in
relation to identical goods or services for which the trademark is registered.

Identical to the registered trademark means that in order to succeed under this provision, the domain
name in question has to be identical to the trademark. However, it should be noted that the
established principle is that identical does not necessarily mean absolutely identical. [25]

In the Internet context, many questions remain unclear regarding use in the course of trade. Cyber-
squatters usually do not make significant use of the domain name once it is registered. The law does
not tell us whether mere registration of a domain name in the absence of a web site providing goods
and services is sufficient to satisfy the test of use in the course of trade. However, the court of
appeal made such a decision in the case of British telecommunications Plc and others v. one in a
Million Ltd and others,[26] where it was held that the use of a trademark-based domain name in the
course of the business of a professional dealer for the purpose of making it more valuable and
extracting money from the trademark owner amounts to use in the course of trade. In short, the
cyber-squatter's activity of offering to sell names to trademark owners constitutes use in the course
of trade but it is still unclear whether the use in the course of trade would be found if the cyber-
squatter does not actively offer to sell it.

Under section 10(1), it is also necessary to consider the essential content of the specification. The
case referred to here is Avnet v Isoact, [27] where the plaintiffs argued that the defendant's activities
of using the word “Avnet” in the domain name in relation to identical services amounted to trademark
infringement under section 10(1) of the TMA and applied for summary judgment. It was decided that
since the services provided by the defendants were quite different from those of the plaintiffs, there
was no infringement of the trademark established under the Act.

Section 10(2) of the TMA states that; “a person may infringe a registered trademark if he or she
uses, in the course of trade, an identical or similar sign in relation to identical or similar goods or
services which results in a likelihood of confusion on the part of the public, which includes the
likelihood of association with the trademark”.[28]
Compared with s10(1), this type of infringement extends to similar goods or services, which may be
likely to confuse the public.

Applying this section to trademark-based domain name disputes involves four steps. First, is the
domain name identical or similar to the registered trademark? If so, is it used in the course of trade?
The third step is to consider whether the goods or services provided under the domain name are
identical or similar57 to those undertakings specified in trademark registration. If not, no infringement
will be established under this section. If the similarity is found, the final step is to examine whether
the public is likely to be confused.58

As far as goods or services provided on the Internet under the trademark-based domain name is
concerned, the finding of confusion depends partially on the technical feature of the Internet and the
unique character of the domain name. It needs to be clarified whether the domain name is viewed as
associated with the website only, or the underlying goods and services. In addition, if the domain
name is deemed to infringe the trademark, where is the point of confusion? Whether at the point of
access to the web page or at the point of finding out the goods or services offered at the site?. After
raising these issues, Charlotte Waelde draws analogy with non-Internet related cases and indicates
confusion occurs at the point when the surfer actually reaches the website and makes his or her
decision as a purchaser. However, she further points out that applying this approach to the question
of confusion, confusion is arguably unlikely to occur.59

C. Where a trademark has a reputation in the UK, Section 10 (3) states it is an infringement for a
person to use in the course of trade an identical or similar sign for dissimilar goods or services,
where the use of the sign , being without due cause, takes unfair advantages of, or is detrimental to,
the distinctive character or the repute of the trademark.

This section introduces into English trademark law the concept of dilution that has been pioneered in
US. The fundamental prerequisite is the reputation of the trademark. Whether S 10 (3) is breached
or not depends heavily on this requirement. In Harrods case, it was clear that Harrods marks have a
reputation in the UK. Since the registered mark is the name itself, the 57 The test of similarity was
considered by the court in British Sugar v. James Robertson [1996] R.P.C. 281, six factors may
need to be considered in determining similarity of the goods and services.

58 The issue of similarity of goods and services and likelihood of confusion was considered by the
European Court of Justice in Canon Kabushiki Kaisha v. Metro-Goldwyn-Mayer Inc C39/97 [1998]
All E.R. (EC) 934

59 Charlotte Waelde, Chapter 7: Trademark and Domain Names; There s a lot in a name in Law &
the Internet A framework for Electronic Commerce, second edition edited by Lillian Edwards &
Charlotte Waelde, Hart Publishing, Oxford-Portland Oregon, 2000. at 139 reputation attached to the
name also extends to the marks. Gardener argues that it is difficult to find a clearer example of
marks that has such a reputation.60 Nevertheless, a mark has a reputation does not need to be well
known or famous .61

The second bit of establishing a successful case under S10 (3) is to show that the use of the domain
name is without due course and takes unfair advantage of or is detrimental to the distinctive
character of the trademark. This is not an easy task. In Harrods case, Harrods argued that the use of
the domain name was without due cause. The defendants gave a misrepresentation when they
registered the domain name. The intention of the activity is to make profit on the back of the well-
known name Harrods . Further, the use would harm the distinctive character of the mark because it
would dilute the strength of the Harrods mark. This would result in a third party presenting itself to
the world under the sign Harrods . Consequently, Harrods would be prevented from using the
domain name itself and building up a further reputation.62

Passing off
If the party claiming to use and ownership of the domain name does not have a registered
trademark, he may turn to the common law tort of passing off. The classic trinity of passing off is
goodwill of the plaintiff, misrepresentation by the defendant and consequent damage.63 In
judgments, courts usually look at the five essential requirements enumerated by Lord Diplock in
Erven Warnink BV v. J. Townsend & Sons (Hull) Ltd64 as follows:

There must be a misrepresentation;

60 Nick Gardner, The Harrods Case: protecting your name on the Internet; SCL Electronic Magazine
Apr/May 97 Vol 8 Issue 1, original source: www.scl.org
61 W.R. Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, Fourth
Edition, London, Sweet & Maxwell, 1999, at 726, 629. Cornish observed the limitation of well known
in the Paris International Convention sense, i.e. it requires proof of a substantial degree of
recognition, though how high a degree is not defined he further points out in the footnote that the aim
of the convention to give well known but unregistered marks protection is largely fulfilled by passing-
off in U.K.

62 Nick Gardner, The Harrods Case: protecting your name on the Internet; SCL Electronic Magazine
An early case in relation to domain name disputes and passing off is Pitman Training Limited and
PTC Oxford v. Nominet UK Ltd and Person Professional Ltd65. Since neither party had a registered
trademark, this dispute was addressed under the common law tort of passing off. Pitman Training
Limited and Pearson Plc were the legitimate owners of the same trade name Pitman in the UK within
their respective classes of business. Pearson plc was the first to register the domain name
pitman.co.uk . Unfortunately, this domain name was reallocated in error by Nominet to Pitman
Training Limited. As a result, Pearson Plc was deprived of its registration. After discovering the error,
Pearson Plc complained to Nominet and made Nominet reallocate the domain name to it. Pitman
Training Limited s argument that the reversion of the domain name to Pearson Plc would constitute
passing off was rejected by the court. It was held that no evidence showed that the general public
has associated the domain name with PTC Oxford since Pitman Training Limited only received two
emails during the period of ten months operation. Though this case highlights the importance of
early registration in situations of competing legitimate rights, the rulings does not mean that passing
off will never succeed against someone who registered the name first in time but has no connection
with or real interest in the domain name.

Passing off in its traditional form arguably has limits in addressing domain name disputes of cyber-
squatting if the cybersquatter does not threaten to use to permit others to use the domain name in a
manner that is misleading and would cause damage to the business or goodwill of the plaintiff.66

The issue of whether or not the The landmark case in the evolution of tort of passing off against
cyber-squatting is British Telecommunications Plc and Others v. One in a Million Ltd and Others.67
The defendants registered many famous trademarks of British companies as domain names, such
as markandspencer.com, burger-king.com, britishtele.com and etc. it attempted to sell them to the
plaintiffs. There was no direct infringing use of the trademarks in association with the plaintiff s
goods and services. The plaintiff sought injunctive relief, alleging passing off and infringement of
their trademarks and applied for summary judgment. The court granted injunctive relief against the
defendant on the basis of passing off, because the motive of the defendants was to use the plaintiff s
goodwill, the defendants made explicit threats to sell the domain name to others who might use it for
passing off, and any future use of a domain name which was similar or identical to household names
would inevitably amount to passing off.

Thus the systematic registration of well-known trademarks as domain names with a view to blocking
true owners registration and threat to sell them to others are sufficient to convince the court that
ingredients needed to establish passing off were met. Rochow argues that the court s statement
recognising the flexibility of passing off indicates a welcome message that passing off may develop
to provide remedies in disputes in relation to alleged misappropriation of reputation without exactly
meeting Lord Diplock s five requirements and the court s decision may lay the foundation for the
modification of the requirement of passing off that a risk of misrepresentation to consumers and
damage to a plaintiff s business or goodwill would suffice.68

As admitted by Aldous L.J. the ambit of passing off set out in the Avocaat case and Jif lemon case
was expanded in order to reach the decision. He argued that the five characteristics set by Lord
Diplock should not be used to improperly constrain the action, but rather must develop so as to
tackle changes in methods of trade and communication. He stressed the concept of the registration
of a domain name being an instrument of fraud and that the court had the right to infer this form of
evidence.

However, Gordon-Pullar submits that it is difficult to see how registering domain name would
become instrument of deception and consequently the legal reasoning behind the case in finding
passing off may be doubtful.69 There are also suspicions that the result of the case was out of a
policy consideration due to great commercial pressure rather than a straight application of the law of
passing off.70

Despite the controversies, the decision of the court of appeal demonstrates that the UK courts will
not condone the practice of cyber-squatting and it brings English law into line with the international
position of battling against cybersquatters. The court did whatever it could to stop the cybersquatters
from sitting on the registered domain names incorporating famous marks or names with the intention
of offering those domain names for sale at a premium. However, it is noteworthy that not every
registration of a domain name would constitute instrument of fraud . Further, by reference to the
judgment in Glaxo Plc v. Glaxowellcome limited71 judge Sumption pointed out that mere registration
of a deceptive Internet domain name does not constitute passing off. Thus, the outcome depends on
the facts of particular case. For the courts to follow the One in a Million in assessing the
establishment of passing off, the goodwill, the similarity of the names, the intention of the defendant,
the type of trade and all the other surrounding circumstances 72should be taken into consideration.

Common Law Conspiracy

The common law conspiracy may be a peripheral action available for domain name disputes as
raised in the Harrods case.

Lonrho v Fayed73 sets forth the ingredients of conspiracy as a tort in civil law. Two distinct forms are
actionable. Firstly, it constitutes a civil tort if there is an agreement between two or more persons to
carry out an illegitimate act, which caused harm to the plaintiff. Secondly, it also suffices if there is an
agreement between two or more persons to carry out an act which itself is legitimate but primary
purpose is to injure the plaintiff.
In Harrods case, Harrods argued that the purpose of the agreement between the defendants to
register the name was either to extract financial compensation for its return or allow unrelated third
parties to operate the website using Harrods name, both of which were intended to harm Harrods.74
However, since the defendants did not turn up, no reasoned judgment was given in the case.
Whether common law conspiracy would be appropriate action for trademark owner in domain name
disputes remains to be seen.

5. CONCLUSION
One of the major issues tackled here is whether the current legal scheme in the United Kingdom and
the United States provide an adequate protection for Internet domain names in the context of
trademarks. It shows that in certain domain name cases, an effective remedy can be obtained
through the UK and US courts. However, examining the legislations in these two jurisdictions,
suggest that certain aspects of domain names have a very little protection and in some cases no
protection at all. It was also explained that because of the significant differences between trademark
law and domain names, how these aspects lie beyond the reach of trademark law.
To protect domain names more adequately and accurately, it should be noted that just as no one
single type of dispute exists, there is no one single model to solve the problem. It may be naïve and
impractical to conceive a single dispute resolution for all kinds of domain name and trademark
disputes because of the numerous technical, legal and factual issues involved. Due to their
corresponding strengths and weakness, I am of the opinion that the court system and the regulatory
system should go hand in hand and supplement each other in dealing with these disputes. A
combination of reshaping domain name system, developing traditional trademark law, enacting
special legislation and improving current alternative dispute resolution proceedings are key to
achieve positive results. But even this, has to be implemented carefully, For example, changing the
nature of the domain name registration system would probably eliminate part of the cyber-squatting
problem. However, Spyros Maniates, stresses that changing the nature may cause distortion to the
nature of the Internet as the cost of registration will rise accordingly.75
It is also believed that a global domain name convention, through a universal body such as the UN
would partly achieve this purpose. This global convention will simply ensure that member states offer
basic domain name protection. However, implementation of that protection will remain a matter of
national law, and there exists wide disagreement over the appropriate scope of protection for domain
name beyond very basic notions.

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