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Trademarks haunt domains

As the Net grows and various groups fight for control over the Domain Name System, trademark disputes are more and more common.

A charming store selling handmade furniture in middle America wants to expand. Instead of hiring a sales team, the shop's owners, Bess and Harry McDonald, launch a Web site: "themcdonaldsite.com." Before they know it, an attorney for the giant fast-food chain is sending them threatening letters.

That was a hypothetical.

But for Network Solutions, the administer of the official U.S. domain name registry, investigating trademark and ownership disputes over Net site names is a full-time job. Companies such as Sprint and Microsoft and even the White House have tangled with others over the use of Net domain names. New cases are popping up every day. (See related story)

The disputes are unique, making it complicated to apply a decision in one squabble to another. Take for example a skirmish between Sprint, which owns the trademark "Spree" for use in telecommunications, and a company named Spree.com, which has applied for the trademark for use in electronic commerce. Maybe they can both own rights to Spree, but only one can possess "spree.com." The case is in court now.

Although Network Solutions has a domain name dispute policy, that doesn't make dealing with trademarks and Web site names any easier. The company has been criticized for favoring big U.S. companies that flash well-known trademarks as proof that they should get a certain name. The lack of clear-cut rules and the emergence of new domain name registry systems have led Congress and the World Intellectual Property Organization (WIPO) to get involved.

Today the House Subcommittee on Courts and Intellectual Property held hearings to discuss whether the government needs to step in. The hearings come at a time when the National Science Foundation actually is trying to get out of the domain name game with the approaching March expiration date of its contract with Network Solutions to run the registry.

As the government lets go of the domain name system (DNS), commercial players are jumping in. The situation, observers say, makes it even more imperative that national, if not global, guidelines are drafted regarding what trademarks are recognized on the Net, and whether an entire domain name, such as "news.com," can be a trademark.

Already another group of 89 domain name registrars are rolling out their plan, which critics say still has kinks regarding trademark controversies. (See related story) The so-called Internet Council of Registrars (CORE) wants to set up a third-party review of challenges under the WIPO.

Network Solutions never anticipated dealing with these international issues. It has gone from a staff of two to 12 in the past two years, just to handle the trademark-related calls.

"Back in 1992 when we put our proposal together for the NSF, the Internet was the purview of the military and academic or research institutions. Nobody thought it would be the electronic forum for commerce that it is today," said David Graves, Internet business manager for Network Solutions.

However, the company's CEO, Gabriel Battista, testified before Congress today that government intervention wasn't needed. Furthermore, he said the trademark issues really weren't a big deal.

But House members expressed concern about "cyber-squatting" or the act of buying up a bunch of potentially valuable domain names and then selling them to the highest bidder. "That perhaps is the easiest abuse for the members to grab onto as far as an area that would need action," said Vince Garlock, counsel to the subcommittee on intellectual property.

Network Solutions has received and investigated more than 3,000 complaint letters from trademark owners against domain name holders since 1992. The company also has been named in about 40 subsequent domain name-related lawsuits.

The company registers names on a "first come, first served" basis. According to the registrar's policy, if a federally registered trademark owner challenges the use of a domain name, in most cases the name will be put on hold after 90 days if the situation is not resolved between the parties. If one party sues, use of the name is put in the hands of a court.

Believe or not, the Sprint vs. Spree.com-type disputes are the simpler of the batch.

"We have no way of knowing which trademark has superiority. This is what my staff and I call the 'dueling trademark' scenario. We let the true trademark owners sort it out, and leave it at that," Graves said.

Other fights are stickier. For example, people have had trouble reregistering sites after purchasing domain names from the Internal Revenue Service, which seizes names as tangible property when taxes aren't paid on time. In such a case, Network Solutions has to investigate extensively before turning over the site to the new owner.

Couples seeking divorces or business partners who are splitting up also get into feuds over Net sites. It is no surprise the registrar would rather let the lawyers fight those cases out.

"I would say about 90 to 95 percent of our complaints are related in some way, shape, or form to trademark disputes," Graves added. On November 14, the Commerce Department will release its recommendations for the future of the DNS, and trademark issues are expected to be addressed. A plan announced by the WIPO would require that a trademark be recognized in more than 30 countries before it counts on the Net.

Now that business on the Net is no longer child's play, Graves offers some advice to live by until the verdicts are in. He suggests that people contact an intellectual property attorney to research names before registering a site. A little research could go a long way toward avoiding a court battle.

"When we see case law that everyone can rely on, it will be helpful. But I don't see it evolving quickly," he said.

Be careful whose name the site is registered under as well. "When a company wants to make a change it becomes hard to decide who the real registrant is and who can make decisions regarding the domain name," he added.