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Legal Reality: Picking an Identity

Legal Reality: Picking an Identity

April 18, 2014
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" Obtaining the right domain name is an important part of doing business. But equally important is obtaining a domain name that can be kept, and that does not result in costly, or catastrophic, litigation. "

Obtaining a desired domain name is a critical part of modern commerce. Unfortunately, all too often a company or a person will register a domain name and use it without sufficient consideration of whether doing so will infringe another’s trademark or service mark. This can be a very costly mistake. Registration of a domain name that is identical or similar to a trademark or service mark can trigger a lawsuit brought by a trademark or service mark owner under the Anticybersquatting Consumer Protection Act (ACPA) or an arbitration procedure brought under the Uniform Dispute Resolution Policy (UDRP).

The ACPA is a federal law that provides to trademark and service mark owners a cause of action for another’s wrongful registration, trafficking in, or use of a domain name confusingly similar to, or dilutive of, the owner’s trademark or service mark, or a personal name. Under the ACPA, a trademark or service mark owner can seek a court-ordered forfeiture or cancellation of the domain name or transfer of the domain name to the trademark or service mark owner. The owner can also recover up to three times the owner’s actual damages and obtain injunctive relief. Actual damages can include the profits the domain name registrant made from the wrongful use of the mark, as well as losses sustained by the mark’s owner as a result of the domain name registrant’s actions, such as lost sales or damage to the trademark’s or service mark’s value. Additionally, in lieu of actual damages, the mark owner can elect to recover statutory damages of between $1,000 and $100,000 per domain name wrongfully registered.

A UDRP action is a mandatory uniform arbitration process established by ICANN for the resolution of disputes regarding the registration of Internet domain names. A domain name registrant’s mandatory submission to the binding authority of a UDRP action results from the agreement each domain name registrant enters into at the time they register a domain name. A UDRP action allows a trademark or service mark owner (and others claiming to be damaged by a domain name registration) to file a complaint with an arbitration forum, usually the World Intellectual Property Organization (WIPO) or the National Arbitration Forum (NAF). The process is very fast by legal standards, usually resulting in a final decision usually within 30 to 45 days. A successful UDRP action typically results in an order by the adjudicating authority awarding and transferring the domain name to the complainant.

Regardless of whether a domain name owner is forced to defend an ACPA lawsuit, a UDRP arbitration, or both, the bottom line is that such actions can often be very expensive and time consuming. And because a loss under either action presents the likely forced surrender of a domain name, losing an ACPA lawsuit or UDRP arbitration can present a disastrous or even catastrophic scenario for a company that has invested substantial resources in, and built up goodwill around, a domain name that might be lost.

Fortunately, there are steps that can, and should, be taken to greatly reduce the risk of trademark or service mark infringement arising from the registration or use of a domain name. The following are what I consider to be very prudent and cost-effective steps that should be taken before anyone registers, invests in, or becomes emotionally attached to, a desired domain name.

Get Appropriate Legal Assistance

The answer to the question “does a desired domain name X infringe upon or otherwise violate another’s rights?” is a question that is best answered by a trademark attorney, and not a lay person or legal counsel inexperienced in trademark matters. That’s why when a person or company is considering the registration of a desired domain name, particularly one that will be a central or critical component of a business, I strongly suggest that the services of an attorney experienced in the fields of trademark law and domain name disputes be engaged to provide such a legal assessment prior to any registration or use of the desired domain name.

Hiring my law firm or another qualified law firm to provide such assistance will, of course result in some expense.

But for those considering whether the additional legal expense is worth the cost, I strongly urge consideration of the following. If there will be an investment of a substantial amount of money, time and other resources associated with the use of the domain name to build an online business and nurture its goodwill, it should be understood that such investment is put at risk in a trademark infringement action that can potentially result in the forced surrendering of the domain name and the payment of substantial damages. Such negative consequences may often be easily avoidable by engaging the assistance of a trademark attorney at the beginning of the process. Having been involved in numerous trademark infringement actions and domain name disputes, I know that the relatively small upfront investment required to obtain the assistance of trademark counsel is, dollar for dollar, one of the most efficient uses of capital a company engaged in online commerce can make.

But notwithstanding the prudence of obtaining legal advice early in the process of selecting a domain name, I understand that many companies and individuals simply do not have the resources to consult with legal counsel at the very beginning of the process of domain name consideration.

This is understandable, particularly since the process may result in one or more rounds of consideration of different domain names. For such companies, I suggest that certain preliminary steps, set forth below, could be taken to rule out unavailable or potentially legally problematic domain names prior to the obtaining of a legal opinion regarding one or more desired domain names that have not been ruled out.

Preliminary Steps to Help Rule Out Domain Names That May Pose an Elevated Risk of Trademark Infringement

The following is a list of the things that can be done in conjunction with obtaining legal advice regarding the acquisition of a desired domain name. But before we begin, a note of caution. No company or person should EVER register or purchase a domain name without first fully investigating whether the desired domain name is identical or similar to an existing trademark or service mark. Such investigation should be performed and/or approved by competent counsel. The following is provided only as suggested means to help rule out potentially problematic domain names and potentially reduce legal costs associated with the process of obtaining one or more domain names likely to pose a lowered risk of infringing a trademark.

• Domain name registry searches.

A good first step is to do a search at Whois.net to see if there are any registered domain names that are identical or similar to the desired domain name or that contain identical or similar text. Also to assist in this process I also use an online service “Bust A Name” (www.bustaname.com). Bust A name will display domain names that contain a text string entered by a user. There are other similar services available online, including some that provide some pretty cool additional features. These include, Domains Bot (DomainsBot.com), Nameboy (Nameboy.com), and Instant Domain Search (InstantDomainSearch.com).

If a search for any identical or similar domain names results in any hits, each associated website should be examined to see if the text in the desired name is being used in whole or in part in association with any products or services. If so, registration or use of the domain name may be problematic. The results of the domain name registry searches should be brought to trademark counsel to help in his or her evaluation of whether use of the desired domain name will likely infringe another’s trademark.

• Search engine searches.

Next, one should do searches on a number of search engines, such as Google, Yahoo and Bing, to see if the text comprising desired domain name, or something similar, is being used in association with any goods, services, trade names, business names or personal names. If any are found that are identical or similar to the desired domain name, registration or use of the domain name may be problematic. Such information should also be brought to a competent trademark attorney’s attention to help with his or her evaluation of the desired domain name.

• Search of the U.S. Patent and Trademark Office database.

The USPTO provides a very useful trademark search utility called the Trademark Electronic Search System (TESS) at USPTO.gov. TESS should be used to search to see if the text comprising desired domain name is identical or similar to a federally registered trademark, a mark for which federal registration has been applied, or an abandoned or dead federally registered trademark or federal trademark application. If any are found that are identical or similar to the desired domain name, registration or use of the domain name may be problematic. Such information should also be brought to a trademark attorney’s attention to help with his or her evaluation of the desired domain name. It is important to note that there is a short lag time after a trademark application is filed until the data appears in the USPTO’s database. Therefore, one should perform another TESS search after the lag period (referenced on the USPTO site) has lapsed to make sure that no trademark applications were filed between the time of the first search and the elapse of time it takes the USPTO to post all trademark application data received after the first search. Also, it is important to note that the trademarks, service marks, and applications in TESS do not include any state or foreign trademark or service mark registrations or applications.

• Engage a professional trademark search.

If after performing the preliminary actions set forth above do not reveal any search results of trademarks, trade names, business names, personal names, goods or services identical or similar to the desired domain name, the next preliminary step should be to hire a reputable trademark search firm to perform a comprehensive national and international trademark, service mark, trade name and domain name search. This is suggested, in part, because TESS does not include data from state or foreign trademark registries, and because trademark and service mark owners can possess common law trademark rights in trademarks and service marks that are not registered in any federal, state or foreign trademark registry. Professional comprehensive searches by a reputable search firm, such as Thomson CompuMark (Thomson-thomson.com) will provide a written report of their search results. As with other recommended searches, if the results reveal that the desired domain name is identical or similar to any trademarks, service marks, trade names, domain names, personal names, goods or services, registration and use of domain name is may be problematic.

Also as with other search result findings, the written report provided by a professional trademark search firm should be provided to a trademark attorney help with his or her evaluation of the relative legal risks of registration and use of the desired domain name.

While non-attorneys can perform all of the preliminary actions above, I strongly recommend that a trademark attorney do so instead. This recommendation stems from my observation that there is a substantial risk that a person or company will err in their assessment of whether a search result reveals that a domain name, trademark, service mark, trade name, personal name, or name of a product or service is, or is not, identical or similar to the desired domain name. Therefore, it is highly recommended that the diligence suggest above be performed by a trademark attorney, or at the very least, all search result data should be provided to competent counsel to make such assessments. This course of action is also highly recommended because the question of whether a possible domain name will infringe another person’s or company’s trademark rights or other rights is usually not a simple one that provides an obvious answer. It is possible, for example, that in some cases a desired domain name will not infringe another’s trademark or service mark even if the preliminary research reveals identical or similar marks.

Whether the registration and use of desired domain name will pose an infringement problem will always depend on specific facts and circumstances. While no reputable trademark attorney can guaranty that a desired domain name will not infringe another person’s or company’s trademark or service mark, competent counsel can effectively analyze the specific facts and circumstances and provide an educated opinion that can be used to make an intelligent decision whether to register and use the desired domain name.

Finally, if a company and its counsel determine that the registration and use of a desired domain name pose a relatively low risk of trademark infringement, it may be advisable for the company to apply for trademark registration of the text in the domain name or to otherwise take steps to protect common law trademark rights in the name. If so, such protection should be sought in all areas of the world in which the domain name will be used. Also, it is highly recommended that competent trademark counsel be further engaged to prosecute such trademark registration application(s) and protect common law rights in the domain name.

Conclusion

Obtaining the right domain name is an important part of doing business. But equally important is obtaining a domain name that can be kept, and that does not result in costly, or catastrophic, litigation. A prospective domain name owner can substantially reduce the risk that a desired domain name will infringe another party’s trademark or service mark rights through the performance of proper due diligence in association with the obtaining of assistance of trademark counsel before the registration or use the desired domain name.

This article is not intended to be, nor should it be considered to be, legal advice. If you have a legal question or other matter related to the any of the topics discussed in this article, I strongly urge you to contact our office at the number below or seek the counsel of another qualified attorney.

Gregory A. Piccionelli is an entertainment and Internet attorney and free speech advocate. He can be reached at (818) 201-3955 or greg@piccionellisarno.com.


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