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Car makers fight for domains

Porsche has gone to court to retain Internet rights to its trademark, and now Volkswagen may do it too. The German giant has filed a complaint against a small ISP that owns the vw.net domain.

As auto makers awaken to the importance of the Internet, they're quickly moving to fight firms they believe are stealing their trademarks online.

Porsche is doing it. And Volkswagen is now moving against at least one online business, small Internet service provider Virtual Works, which was issued the domain name vw.net in 1996. Now, VW, which has filed a complaint with domain-name issuer Network Solutions, is demanding that McLean, Virginia-based Virtual Works, stop using it.

The squabble underscores a larger move by auto makers--largely seen as a not-so Internet-savvy lot--to clamp down and control what they consider to be their trademarked names on the Web, as cyberspace becomes more important to them strategically.

Indeed, auto makers who did not recognize the importance of the Net two years ago will be scrambling for some time to come to recover domain names, industry observers said.

"There will be many more suits," said Chris Denove, director of consulting operations at J.D. Powers and Associates. "Many lawyers are going to live very nicely over the next several years due to this very issue."

Though VW has not yet resorted to a suit, the firm is issuing some stern warnings. In a letter to Virtual Works chief executive Jim Anderson, Volkswagen's attorney Kristen Mollnow, stated: "We demand that you immediately cease and desist infringement and dilution of our client's trademark VW, that you cease all use of Volkswagen trademarks in your domain name, cease all efforts to use, sell, or transfer the domain name VW.net." The letter warned that if Anderson fails to do so, VW will consider litigation and punitive damages.

"It's very threatening," said Anderson, who said he has built his business around the vw.net name that Network Solutions gave it to him about a year after VW registered vw.com. "I have a business that's trying to be squashed by the German giant."

Network Solutions, citing Section 9 of its domain name dispute policy, has put Anderson's right to use vw.net on hold, giving him 90 days to file in court to fight to keep it, according to a company spokeswoman.

University of Miami Law School professor Michael Froomkin said the problem with Network Solutions' policy, which is heavily influenced by trademark law, is that it fails to recognize that a set of letters--such as VW--is not necessarily a trademark.

He added that many disputes--in the auto industry and other businesses--typically involve a large corporation wrestling to get a .com domain name that was snagged early by a smaller company, Froomkin said. VW's move against Anderson is particularly unusual because Virtual Works, as an ISP and Web site designer, is not a competing business and is no threat to Volkswagen, industry observers said.

Still, Volkswagen might have a leg to stand on if the case were to go to court, said Kevin Goering, an intellectual property lawyer at New York-based Coudert Brothers. "It's not a domain name issue, it's a pure trademark issue."

Goering said a trademark can be infringed upon, regardless of whether it's used in a competitive way.

"Just because I am not trying to sell cola drinks, if I put Coke's logo on a pair of jeans they're going to go after me," he said.

Porsche Cars North America certainly believes the company has a leg to stand on. The sports car maker is now appealing a recent suit against the holder of the porsche.net and porsche.org domains. The case was recently rejected by a federal court in Virginia that ruled that the firm can only sue the persons or entities who registered Internet domain names, rather than just the domain names. Porsche had filed suit charging that 135 Internet domain names used variations of its name.

Porsche, in a statement, said the so-called "in rem" lawsuit it filed was "the only feasible way Porsche can put an end to the cyber-abuse and cyber-piracy it faces on the Internet."

The Porsche case could be a bad sign of what's to come industrywide, according to lawyers.

"The Porsche case was unusual because the company went after authorized (Porsche) repair shops," said Eric Goldman, a lawyer at Palo Alto-based Cooly Godward. "That's the name of their business and yet they still got sued."

"That's very troubling," he said.