Domain dispute proposal counters NSI policy

In 1996, the chief executive of Virtual Works registered the domain "VW.net" with Network Solutions--the sole registrar of domains ending in ".net," ".com," and ".org."

NSI's policy for handling domain name disputes, designed to protect trademark rights in cyberspace, forced Anderson to choose the lesser of two evils. He could enter into a costly legal battle with Volkswagen or automatically hand over the VW.net name to the German automaker, which claims it has rights to the domain because it owns the trademark on the initials "VW."

Anderson chose to fight by filing a suit not only against VW, but also against NSI. While the suits are pending, Anderson has retained the domain. Virginia-based Virtual Works provides Web site development, hosting, and e-commerce services to small businesses.

But under an alternative policy introduced by NameSecure, one of seven registrars that now competes with NSI, Anderson would be free to hold onto his domain name until Volkswagen obtains a court order requiring him to surrender it. Essentially, the tables are turned because the challenger to the domain must go to court, rather than the original owner.

"I absolutely would have gone to [NameSecure], but they weren't an option at the time, unfortunately," said Anderson. "Everything in my business revolves around our domain name. You can't just unplug somebody that way."

The dueling policies may serve as a lesson for the nonprofit organization appointed by the Clinton administration to oversee key Internet functions. The Internet Corporation for Assigned Names and Numbers (ICANN) is putting the finishing touches on a domain dispute resolution policy that it approved last month at a conference in Santiago, Chile.

NameSecure and NSI's policies show just how crucial the fine print in a dispute policy can be to a company's valuable Web real estate. Both companies said they will adopt a standard policy once it is put in place by ICANN.

NSI said its current policy is designed to strike a delicate balance between protecting trademark holders and domain name owners. It also is aimed at preventing the registrar from being sued by powerful companies when third parties register their trademarks as domain names. NSI and trademark owners are especially wary of so-called cybersquatters, who register scores of popular names in hopes of selling them to trademark owners.

NSI friend of big business?
Critics, however, charge that the policy unfairly burdens small companies doing business on the Net.

They point to a recent court decision ruling that multibillion-dollar toy maker Hasbro is not automatically entitled to the domain Clue.com despite a registered trademark the company holds for its popular mystery board game of the same name. The victory was bittersweet for tiny Clue Computing: Although the Colorado consulting company prevailed, it was forced to spend a small fortune in legal fees to prevent having the name yanked by NSI.

For NameSecure, the alternative policy makes good business sense.

"We think that Network Solutions' policy was flawed from the very beginning and actually put them in a position of being sued," said Jeff Field, president and founder of Moraga, California-based NameSecure. "I've never believed that Network Solutions should have placed themselves in the middle."

Advocates of domain name owners say NameSecure's policy is the right approach.

"The question of whether a domain name infringes or dilutes a trademark is a very complicated question of law, and at this time the law is not terribly clear on the subject," said G. Gervais Davis, an attorney who represents domain name owners. "[Registrars] don't have the resources, legal knowledge, or experience to make a decision as to whether or not it's an infringement or dilution."

How ICANN sees it
ICANN's policy is similar to NameSecure's in that it directs registrars receiving complaints about a domain name to take no action until ordered by a court or other neutral decision maker. The policy, however, quickly diverges from the NameSecure plan because it calls for an arbitration panel to make an initial decision in many types of disputes.

A number of details remain to be worked out in ICANN's plan, however. For example, the makeup of the arbitrating body and which country's laws should be applied to the dispute have yet to be decided.

The rules for triggering when a dispute should face the arbitration panel also are unclear. The policy calls for the dispute to go to arbitration when there is a finding that a domain name has been registered "in bad faith." ICANN still has not decided what constitutes "bad faith," however.

Although both sides in the debate have expressed reservations about ICANN's policy, they tend to agree that it strikes reasonable middle ground between NameSecure's hands-off approach and NSI's trademark-protective plan.

"What's wrong with [NameSecure] saying 'hands off' is that it forces everyone to sue, and all you're going to do is encourage cybersquatting," says David Stewart, an attorney at Alston & Bird who represents trademark holders. "[ICANN's policy] really is a win-win situation for both parties."