.ART Interviews Gerald M. Levine, Domain Name Arbitration Expert

“You just can’t go to dictionaries or cultural resources anymore to find valuable domain names.”

In today’s day and age, domains are not simply URL names, but are also identifiers and marketing tools for trademarks, which is why businesses regard them as valuable investment properties. .art domains spoke to Gerald M. Levine about the nuances of the domain names market, investments, intellectual property infringements, and judicial regulation. Mr. Levine is the author of a critically acclaimed treatise on trademarks, domain names, & cybersquatting, titled “Domain Name Arbitration: A Practical Guide to the Uniform Domain Name Dispute Resolution Policy”, which analyzes the jurisprudence that has developed in that specific field of law. Gerald M. Leis also a panelist for UDRP disputes for the Forum and the Czech Arbitration Court.

What are your thoughts on the trademark rules in the domain name system (DNS)? Large corporations clearly have certain privileges. For example, Apple Inc. has preferential access to domains completely unrelated to their actual business, like apple.art. So an artist, whose work is titled ‘Apple’, would not be able to buy this domain. Is this a problem? If so, how can it be resolved?

You’re asking two different questions and I need to separate them. One concerns the two distinct interactive systems operating on the Internet: the DNS system and the Trademark system. The other question concerns the choice of a domain name and whether it can be forfeited by a mark owner whose mark merely corresponds with the domain name.

The DNS system is designed for traffic on the Internet. Its functioning is the responsibility of the Internet Corporation for Assigned Names and Numbers (ICANN). The Trademark system is a statutory mechanism of ancient origin designed to protect trademark owners from infringing registrations of domain names corresponding to their marks and consumers from fraud.

Not surprisingly, owners of well-known and famous marks have a greater level of protection than lesser-known marks, but whether a domain name infringes and the registrant can be deprived of its registration depends on its intention for registering a domain name identical or confusingly similar to the mark.

It does not follow that registering a domain corresponding to a mark necessarily results in forfeiture absent proof of cybersquatting.

These two systems, the DNS and Trademark, coexist on the Internet and this sometimes creates tensions that lead to claims of cybersquatting. To combat this kind of infringement, ICANN was implemented in 1999 and the U.S. Congress enacted in the same year, two sets of rules to resolve disputes concerning the registration and use of challenged domain names. The ICANN set of rules is codified in the Uniform Domain Name Dispute Resolution Policy (UDRP). In many respects, the UDRP is what we might call an administrative statute. It is an online dispute resolution mechanism available to mark owners worldwide regardless from the jurisdiction of their rights. The other set of legal rules is the Anticybersquatting Consumer Protection Act (ACPA), which is an amendment to the Trademark Act of 1946 (as amended, also known as the Lanham Act).

As to the issue of acquiring a domain name, there is no gatekeeper to prevent the registration of domain names corresponding to trademarks. The registrar will not question a registrant’s choice of domain name. However, “big companies” (if by that phrase means companies owning well-known and famous marks) can deprive registrants of domain names identical or confusingly similar to their marks but only if the challenged domain names are found to have been registered and used with an intent to profit from the mark. Under the UDRP, the mark owner must offer evidence that the domain name was registered and is being used in bad faith. This is known as a conjunctive model of liability. The ACPA is a disjunctive model of liability: the mark owner prevails on proof the domain name was either registered, traffics in, or used in bad faith.

But, whether Apple, Inc. can deprive the registrant of ‘apple.art’ is not a foregone conclusion. It depends on the intention for the choice. If an artist registered it for an authentic purpose (art work with apples and other fruit, for example), then ‘apple.art’ may very well be invulnerable to forfeiture by Apple, Inc. You may even get away with ‘appleart.com’.

One of your topics of interest is the emergence of a secondary market for buying and selling domain names. What is the difference between a genuine investor in the secondary market and a cybersquatter?

As you say, one of my topics is the emergence of a secondary market, but even more important in terms of the law is another topic of even greater importance, namely the emergence and development of a jurisprudence of domain names. We now have over 25 years of experience with cybersquatting; and from that experience has developed a canon of settled law on the factors that must be applied alike to domain name registrations and trademark owner overreaching their rights. Before the UDRP and ACPA, these cases were decided trademark and dilution law dating back to the mid-1990s. From this experience, we have learned the obvious, that there are good actors and bad actors in the virtual marketplace of the Internet.

An investor is one who is operating a legitimate business. It acquires domain names for inventory composed of common words, descriptive phrases, random strings of characters, etc. which it holds for future sale to businesses looking to brand their goods or services. If the acquisitions of these domain names are without intention to take advantage or target trademarks, even though they may by happenstance correspond to present or future trademarks, that does not automatically raise an actionable claim. It may be, as sometimes happens, owners of newly minted trademarks, challenge earlier registered domain names, but these mark owners have no actionable claim against domain name registrants regardless of the size and financial strength or current reputation of the company.

In contrast, cybersquatters are bad actors, with various intentions, that at base are intended to take advantage of the strength and reputation of the marks their domain names are intended to mimic.

If an investor wants to acquire domain names that would be attractive for brands yet are also non-infringing, how can they make sure that a UDRP will not be filed against their internet property?

Assuming an investor acquires domain names attractive for brands that are truly non-infringing, that is linguistic construction that are not simply associated with any one mark owner, but having associative value to other actors in the marketplace, the likelihood is they will be invulnerable to forfeiture in a UDRP proceeding. Claims of cybersquatting are decided on the merits. A mark owner does not succeed because it has a mark, and a registrant does not fail because it acquired a domain name corresponding to the mark. A registrant fails when it registers a domain name corresponding to a mark for its value as a mark; it succeeds when the domain name has a distinct semantic value others can use without infringing third-party rights.

Can you recommend what steps one should take for a preliminary check?

Due diligence in researching choice of domain name is certainly recommended. The USPTO database is easily searched for trademarks corresponding to the domain name; there is also the EU View database; the Internet can be researched to see who may be using the name; research whether the domain name has ever appeared in a UDRP proceeding; and you can run a check on Internet Archive’s Wayback Machine to see how the domain name has been used in the past.

What markers indicate that a violation took place? How can the owner of the mark owner prove that a violation took place?

First of all, we should also add to your question the following: “What can the domain name registrant to establish good faith and lawful registration of the domain name”?

Mark owners have the burden of proving whether 1) the challenged domain name is identical or confusingly similar to a mark in which the complainant has a right; 2) the registrant (called a respondent under the UDRP) lacks rights or legitimate interests in the domain name; and 3) the respondent registered and is using the domain name in bad faith.

(Note I emphasized “and”; theUDRP is a conjunctive model of liability). Where there is sufficient factual evidence to infer that the registrant lacks rights or legitimate interests in the domain name, it has the opportunity to come forward with its own proof that it does, and also that its registration was lawful. There are evidentiary demands on both sides.

Is it easier for biggger, well-known trademarks to prove their right to domain names with words related to trademark names?

Reputation and size are not necessarily part of the equation. There are well-known and famous marks, and lesser-known marks composed of common words and descriptive phrases. As the fame of a mark ascends the scale, a suspicion grows that a domain name is acquired for its trademark value. For owners of lesser-known marks, while they are equally protected, they must offer greater proof of their reputation and registrants’ knowledge of their existence. Knowledge is a key factor in determining whether the domain name was registered in bad faith. However, if a registrant markets its domain name with an active website containing hyperlinks to the mark owner or its competitors the domain name will surely be forfeited. For buyers and sellers of domain names, it is necessary to have a researched awareness of likely trademark complainers and to curate their domain names strategically.

If a UDRP is filed, what can be done to evidence that the domain names are non-infringing?

A respondent in a UDRP proceeding has defences to a claim of cybersquatting. The Policy lays out three nonexclusive defences and four nonexclusive circumstances of bad faith. These defenses include the current or demonstrable proof of future use of the domain name and lawful noncommercial and fair use of the challenged domain name. If the registrant establishes any one of the three circumstances, it wins. Assuming the mark owner offers sufficient evidence which if not contradicted, then the burden shifts to the registrant to establish that it either has rights or legitimate interests or that bad faith is impossible because, for instance, the domain name was registered before the trademark right came into existence. And, finally, the mark owner must prove registration and use in bad faith.

What legal opportunities (besides the UDRP) are at the disposal of trademark owners?

For trademark owners operating in the U.S. market, there is the ACPA already mentioned. And, if the registrant in a UDRP proceeding loses it has a right to challenge the award in district court, but the cost can be very high.

Can you recall any interesting cases between domain resellers and trademark owners? Have you observed any patterns among them?

There are too many interesting cases from the UDRP and a handful from the ACPA to give you a list, but together they have contributed to the development of a jurisprudence of domain names. It is difficult to talk about trends and patterns. To prevail in a dispute, a party must have evidentiary facts to support its claim or defence. From the UDRP you might look at Mountain Top (Denmark) ApS v. Contact Privacy Inc. Customer 0133416460 / Name Redacted, Mountaintop Idea Studio, D2020-1577 (WIPO September 1, 2020) (<mountaintop.com>) and iCommand Ltd v. Johnny Gray, ArtWired, Inc., D2020-1438 (WIPO August 11, 2020) (<downpat.com>) (“A domain name is worth what someone is prepared to pay for it.”). From the ACPA there are several investor cases currently being litigated, in various stages of progress which are worth watching, but I will say on the ACPA side that the costs for challenging UDRP awards is prohibitively high; unless the case is solid, it may not be worth it.

What sort of future do you envision for the domain name industry as a whole? Will it remain attractive for investors?

There is tremendous vitality in the secondary market for domain names, and there are opportunities, but not without risk. I would say that to tap into this market requires a high degree of skill in creating and selecting investment-grade domain names. It cannot be done without understanding the value of domain names in branding goods and services. If domain names are perceived as having that value, there are ready, willing, and able purchasers. The skill is in identifying the brand potential of a portfolio.

Also, it must be acknowledged that the opportunities are different today than they have been. You just can’t go to dictionaries or cultural resources anymore to find valuable domain names. The first entrepreneurs in this industry began hoovering in dictionary words, and over time they combined these with appropriate adjectives and adverbs so that now all these words and combinations are registered and being offered for sale. The skill one must now have, then, is in searching out valuable domain names already held and being offered at prices one considers reasonable for future exploitation.

There are a number of discriminating and must-go-to commentators on this subject on the Internet, including Mike Sullivan, Andrew Allemann, Raymond Hackney, Mike Cyger at DNA Academy, Elliot Silver, and others. You might also look into the upcoming online NamesCon Conference in January 2021. And, if particularly interested or already buying and selling domain names, you should consider joining the Internet Commerce Association,. If you go to the ICA website you’ll find more information and essays on the UDRP.

Mr. Levine’s articles are available online on circleid.com and on his firm’s website at iplegalcorner.com.