iEstates.com

A red hot story on Reddit.com this morning started by one domain holder has already gotten over 1,500 comments.

The post that started it all is only a little over 3 hours old on Reddit.com and is entitled:

“GoDaddy supports SOPA, I’m transferring 51 domains & suggesting a move your domain day”

The poster goes on to say:

“”I just finished writing GoDaddy a letter stating why I’m moving my small businesses 51 domains away from them, as well as my personal domains. I also pointed out that i transferred over 300 domains to them as a director of IT for a major American company.

The House Judiciary Committee Markup of SOPA,  the Stop Online Piracy Act just ended.

The House Judiciary Committee halted its contentious markup of the Sat approximately 1:30 pm this afternoon.

The hearing started yesterday around 10 am with a one hour reading of the bill and did not stop until 9:30 pm.

According to Phil Corwin of the ICA which listened to the hearing non-stop for the two days, “prior to halting the markup, Chairman Smith committed to hold either a hearing and/or a classified briefing for Committee members in regard to whether the bill’s ISP and search engine domain blocking provisions present cybersecurity issues. Smith said that the markup will resume at the earliest practical date in the 2nd session.”

“The House is scheduled to come back in session the week of January 16th, but as a practical matter, that action on the bill does not resume until early February.”

There is also expected in 2012 going to be an introduction of a less invasive Bill sponsored by Rep. Issa called OPEN legislation.

The Senate PIPA counterpart bill, S, 968, is still on the table.

I listened to a few hours of the session yesterday and while many of the house members supported the underlying message of the bill, many also expressed concern that the bill was being pushed through too quickly and without proper hearings on the matter especially from the Tech guys or Geeks as they were called,  to see whether the bill could be technically implemented.

Its an issue that is in my opinion going to get addressed with some legislation in 2012.

Something that all domain holders, registrars, parking companies and others in our space need to watch carefully.

You can read another account of this here.

 

 

 

Phil Corwin on behalf of The Internet Commerce Association sent a letter to today to the senior members of the House Judiciary Committee “regarding the likely unintended but potentially devastating impact of H.R. 3261 (”SOPA”) as introduced upon ICANN-accredited registrars and other participants in the broad domain name industry”, as well as upon the domain registrants who use those services.”

Below is what Phil had to say about this law and we have reprinted the letter he sent to the House Committee as well.

There is a hearing scheduled for December 15th.

The bill is a minefield for domain holders and those in the domain industry.

You should take sometime to review Phil comments and read the letter he composed..

“”Registrants, for example, might find it impossible to renew domains due to the extrajudicial termination of payments services sanctioned by the proposal, or to complete domain sales or transfers.”

“Further, many of the domain name industry companies subject to potential payment and advertising service termination under the bill might lack the income to pursue their legal rights, and could well be forced into bankruptcy.”

“This potential impact arises because, while domain names are subject to trademark law, the Anti-Cybersquatting Consumer Protection Act (ACPA)  as well as ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP) place the responsibility for domain name infringement upon the domain registrant and look at a variety of factors, particularly the actual use of the associated domain, before reaching a determination as to whether infringement exists.”

“ICA believes that SOPA, as introduced, creates the strong possibility that trademark rights holders will seek to have payment and ad services terminated to registrars and other domain name intermediaries based upon the allegation that they are facilitating the use of domains that constitute “counterfeit marks” in and of themselves, without reference to actual use or available defenses. This potential shifting of “cybersquatting” responsibility from registrants to registrars and other domain name intermediaries, as well as the failure to incorporate the more comprehensive and nuanced analysis of the ACPA and UDRP, appears unjustified and unwise – and could lead to the shutdown of these domain name intermediaries and the associated termination of critical domain-related services to millions of registrants engaged in non-infringing uses of their websites.”"

“”The letter also expresses concerns that the introduced legislation needs substantial narrowing and is not required to effectively address infringement on websites subject to U.S. court jurisdiction, and will also have negative effects on cybersecurity and on the availability of venture capital for innovative Internet startups.”"

“At this time the full House Judiciary Committee is tentatively scheduled to “markup” – amend and vote on reporting the bill to the full House of Representatives – on Thursday, December 15^th. U.S.-based domain industry participants who have concerns about any aspect of the legislation should contact their representatives at once, especially if they serve on the Committee.  A complete list of Committee members is available at http://judiciary.house.gov/about/members.html .”

The full text of ICA’s letter follows —

 

VIRTUALAW LLC

Philip S. Corwin, Founding Principal
1155 F Street, NW  Suite 1050
Washington, DC 20004
202-559-8597/Direct
202-559-8750/Fax
202-255-6172/Cell
psc@vlaw-dc.com

 

December 7, 2011

 

Honorable Lamar Smith

Chairman, House Committee on the Judiciary

2138 Rayburn House Office Building

Washington, DC 20515

 

Dear Chairman Smith:

 

I am writing on behalf of the Internet Commerce Association (ICA; www.internetcommerce.org) in regard to H.R. 3261, the “Stop Online Piracy Act” (SOPA), which was introduced by you on October 26, 2011.

As fully discussed in this letter, we believe that SOPA may have an unintended but nonetheless devastating impact upon domain name registrars and other intermediary companies that participate in the domain name industry, and may also impose excessively burdensome and intrusive registrant monitoring responsibilities that will result in substantial cost increases in the pricing of domain name registrations and renewals as well as many other domain-related services. In addition, the collateral impact upon the domain registrants that our industry serves may be severe in many cases, resulting in extreme disruption of the Internet-based economy.

That potential effect is due to the fact that the legislation deviates from existing trademark law applicable to domains as well as ICANN-sanctioned arbitration procedures by shifting trademark law compliance from the domain registrant to domain name intermediaries, and by suggesting that a domain name may be considered a “counterfeit mark” in isolation from its intended or actual use. We believe that this would be an inappropriate expansion of trademark rights vis-à-vis registrars, registrants and the overall domain name system (DNS). It also risks the termination of vital and valuable services rendered to tens of thousands of domain registrants, as well as disruption of a thriving secondary marketplace for domain sales, based upon allegations made in regard to a handful of, or even one, domain that is in some way associated with the targeted domain name intermediary. Such allegations can result in the termination of vital payment and advertising services to a domain name intermediary long before any court has an opportunity to scrutinize the alleged facts in the context of relevant law.

We therefore urge the Committee to carefully consider this potential impact and to negate it by adopting clarifying language to the effect that SOPA does not place new liabilities or responsibilities on domain name industry intermediaries, and does not supplement or supplant existing arbitration and litigation remedies for “cybersquatting”.

 

ICA Background

ICA is a not-for-profit trade association representing the domain name industry, including domain registrants, domain marketplaces, and direct search providers. Its membership is composed of domain name registrants who invest in domain names (DNs) and develop the associated websites, as well as the companies that serve them. Professional domain name registrants are a major source of the fees that support registrars, registries, and ICANN itself. ICA members own and operate approximately ten percent of all existing Internet domains on behalf of their own domain portfolios as well as those of thousands of customers.

ICA supports SOPA’s goal of reducing online infringement of copyrights and trademarks. We respect the consumer protection aspects of trademark law as well as the legitimate expectations of trademark owners desiring to protect their reputation and goodwill. In particular, we believe that consumers must be protected against the potential dangers posed by counterfeit prescription drugs, auto and aircraft parts, and other counterfeit goods sold over the Internet.

ICA’s Member Code of Conduct (http://internetcommerce.org/member_code_of_conduct) takes a strong position against the use of domains for the trademark violation known as “cybersquatting”, stating:

Protection of Intellectual Property Rights: A registrant shall follow accepted trademark law and respect the brands and trademarks of others. Members will not intentionally and in bad faith register and use a domain name that is identical or confusingly similar to a trademark or service mark.          Registrants shall respond promptly to legitimate disputes relating to alleged infringement of intellectual property rights.

While ICA fully respects trademark rights, ICA also believes that domains are valuable intangible assets and that the interests of trademark owners vis-à-vis domain registrants must be carefully balanced to respect the legitimate rights and expectations of both. SOPA’s in rem jurisdiction provisions, along with those of other enacted Federal laws such as the Anticybersquatting Consumer Protection Act (ACPA; 15 U.S.C. 1125(d)), are consistent with the view that domains embody a quasi-property status that is similar to that of established forms of intellectual property (IP) such as copyrights and trademarks.

 

ICA Position on SOPA

ICA must oppose SOPA as introduced.

While a principal and worthy intent of the legislation is to curtail the Internet sale of counterfeit hard goods to U.S. individuals and businesses, scant attention has been given to its potential effect on the hundreds of highly competitive domain registrars accredited by the Internet Corporation for Assigned Names and Numbers (ICANN), as well as upon other intermediary participants in the domain name ecosystem — including “parking” companies that arrange for the display of click-through ads on domains, domain hosting companies, and domain auction and resale websites that facilitate the operation of a thriving secondary free market in domains.

Our concerns are heightened by the fact that SOPA would facilitate the termination of payment and ad services to a website – including the website of an ICANN-accredited registrar or other domain industry intermediary – before any judge had reviewed the factual allegations brought against it much less determined whether such allegations, if true, would constitute a violation of trademark law.

Such a result would not only be devastating to the companies operating through such websites but to their customers, who might find it impossible to renew valuable domains in a timely manner — potentially resulting in the unjustified closure of their own web-based business — or to complete domain transfers or sales that were in process at the time the allegations were levied.

We therefore urge the Judiciary Committee to give careful attention to the potential impact of SOPA upon the domain name industry and to amend the legislation to clarify that the mere fact that an industry participant facilitates the de novo registration of a domain, or its renewal, transfer, or sale, or provides other domain-related services, cannot give rise to an allegation that it is involved with unlawful activities concerning goods or services bearing a “counterfeit mark”.

The remainder of our letter provides further background on the basis of our concerns and also discusses the current remedies available to U.S. trademark owners against “cybersquatting”.

 

SOPA Provisions Are Unclear in Regard to Whether a Domain Can be Considered a “Counterfeit Mark”

Our principal concern with SOPA involves whether a domain name industry intermediary – and all domain name industry intermediaries conduct their operations almost exclusively through the Internet rather than through physical or other contact – could be alleged to be operating an “Internet site dedicated to theft of U.S. property” under Section 103(a)(1). The relevant portion of that definition reads:

(1) DEDICATED TO THEFT OF U.S. PROPERTY- An `Internet site is dedicated to theft of U.S. property’ if–

(A) it is an Internet site, or a portion thereof, that is a U.S.-directed site and is used by users within the United States; and

(B) either–

(i) the U.S.-directed site is primarily designed or operated for the purpose of, has only limited purpose or use other than, or is marketed by its operator or another acting in concert with that operator for use in, offering goods or services in a manner that engages in, enables, or facilitates–

… (III) the sale, distribution, or promotion of goods, services, or materials bearing a counterfeit mark, as that term is defined in section 34(d) of the Lanham Act or section 2320 of title 18, United States Code; (Emphasis added)

The initial question that arises is whether this definition could be relied upon by a trademark holder for the position that a registrar or other domain intermediary was engaged in offering goods (domains) or (domain-related) services bearing a “counterfeit mark”. It could also be alleged that a website operating under an allegedly infringing domain name was itself engaged in the offering of various copyright or trademark infringing activities.

As noted above, while U.S. law is not settled on the question of whether or not domains constitute a form of intangible property and thereby might be considered “goods”, there is case law precedent for that position – and Congress’ in rem treatment of domains in the ACPA, and as proposed in SOPA, would tend to further that viewpoint.[1] Notwithstanding the answer to that question, there is absolutely no doubt that domain intermediaries are involved in the offering of services. In fact, the Patent and Trademark Office’s own classification of goods and services, undertaken under authority of the Lanham Act, has established such domain-related service classes as:

• Services relating to the analysis, evaluation, creation and brand establishment of trademarks, trade names and domain names
• Parking domain names for others, namely, providing computer servers for facilitation of the storage of domain name addresses
• Computer services, namely, domain forwarding services
• Domain name search services, namely, conducting online computerized searches for the availability of domain names
• Domain name registration services

The question then arises as to whether a domain might be alleged under SOPA to constitute a “counterfeit mark” in and of itself, without reference to the intended or actual use of the associated website.  SOPA references two separate definitions of “counterfeit mark”.

The first, contained in Section 34(d) or the Lanham Act, reads in part:

As used in this subsection the term “counterfeit mark” means–

(i) a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered…

This definition might well be cited for the position that the offering of services that facilitate the registration, renewal, or sale or transfer of a domain that is identical to, or contains within it a trademark registered with the PTO, could be the basis for alleging that a domain industry intermediary is operating an “Internet site dedicated to theft of U.S. property”, even if the operator had no knowledge of such trademark registration. Our concern on this point is heightened further by the fact that SOPA does not look to the actual or intended use of a particular domain, which is solely within the ultimate control of the registrant and not the registrar or other intermediary, and that such use is a key component of both the ACPA as well as the Uniform Domain Name Dispute Resolution Policy (UDRP) established by ICANN to provide a lower cost administrative means for addressing cybersquatting.

The second, alternate definition of “counterfeit mark” referenced in SOPA (18 U.S.C. 2320) reads in relevant part:

the term “counterfeit mark” means –

          (A) a spurious mark –

(i) that is used in connection with trafficking in any goods, services, labels,…documentation,…of any type or nature;

(ii) that is identical with, or substantially indistinguishable from, a mark registered on the principal register in the United States Patent and Trademark Office and in use, whether or not the defendant knew such mark was so registered;

(iii) that is applied to or used in connection with the goods or services for which the mark is registered with the United States Patent and Trademark Office, or is applied to or consists of a label,…documentation,…of any type or nature that is designed, marketed, or otherwise intended to be used on or in connection with the goods or services for which the mark is registered in the United States Patent and Trademark Office; and

(iv) the use of which is likely to cause confusion, to cause mistake, or to deceive… (Emphasis added)

While the third element of this four-part test does take a domain’s actual or intended use into consideration, the inclusion of “otherwise intended” use could give rise to allegations that the registrar or other intermediary knew or should have known that the domain registrant interacting with it intended to use the domain for trademark-infringing purposes.

In fact, even if a registrar or other domain-industry intermediary knows that a particular domain that is being registered by a registrant is identical to or confusingly similar to a trademark registered with the PTO, that should not enough to establish culpability for trademark infringement. In this regard, we call to your attention that:

• ·         Thousands of trademarks consist in whole or part of dictionary words, but infringement arises only if they are used in conjunction with the service class for which they are registered. While Time and Tide may wait for no man, their use is infringing of trademark only in conjunction with an online news magazine and a website selling laundry detergent, respectively. And while the word United is used in conjunction with trademarks for a prominent airline, moving service, and charity, among others, that does not preclude its incorporation in other trademarks – or domain names.
• ·         Domain names are a form of user-generated content over which registrars and other domain intermediaries have no content control. It is common practice for many registrants, especially Internet startups, to create domain names that are made up, non-dictionary terms that are similar to dictionary words that may constitute trademarks for particular service classes of goods or services, but that similarity is insufficient to establish infringement.
• ·         SOPA is unclear on the issue of whether an action can be brought in regard to a PTO-registered trademark that has been translated into another language or script. There is no way for a registrar or other domain intermediary to know that a particular PTO-trademarked term has been translated into a particular language or script for domain registration purposes. This inability to conduct due diligence for the global Internet is further complicated by the fact that the Internet is now being opened up to International Domain Names (IDNs) that consist entirely of domains in non-ASCII scripts such as Arabic, Chinese, Cyrillic, and Japanese.

We are aware that some parties might view our concerns as overstated and argue that courts will ultimately find that the provision of domain name-related services cannot give rise to a finding that one is enabling or facilitating the sale, distribution or promotion of goods (domains) or (domain-related) services bearing a “counterfeit mark”. ICA would certainly argue against that interpretation of SOPA if it were to be enacted in its current form. However, only a few years ago the State of Kentucky alleged that domains constituted “gambling devices” and seized dozens of domains in a state court action. While that reading of its statute was eventually negated by its courts, it is much less of a stretch to allege that a domain is a “counterfeit mark” for SOPA purposes as domains are clearly encompassed by existing trademark law – indeed, such arguments have already been heard and accepted in U.S. courts.[2] Also, there can be no argument that some (but by no means all) domains which are identical to or confusingly similar to registered trademarks are used in conjunction with the online offering of counterfeit goods and services for which the marks are registered – but, again, such activities are under the ultimate control of the domain registrant, not a registrar or other domain name industry intermediary.

Regardless of how U.S. courts might ultimately rule on the question of whether a domain can be regarded as a “counterfeit mark” for SOPA purposes, it would take years for a clear judicial interpretation to emerge. In the interim, scores of registrars and other domain name intermediaries could be effectively shuttered because SOPA would sanction extrajudicial, de facto injunctions cutting off payment and ad services that would render it impossible for them to serve customers, generate income, and remain in operation.

Our understanding of the procedure contemplated under SOPA is:

• A trademark rights holder claiming harm (but not necessarily direct infringement) stemming from a website “dedicated to infringement” under the bill’s expansive definition would notify the website’s providers of payment and advertising services. Those providers would have to expeditiously terminate their services to the website, but in no event later than five days after serving the website operator with notice that these allegations had been received. While this cessation of services is characterized as “voluntary”, in actuality it is largely compulsory because the service providers face potential judicial sanctions and monetary fines unless they can establish an affirmative defense that compliance is technically infeasible or economically burdensome – while simultaneously being immunized from any damages from the harm ensuing to their customer from the termination of services.
• After being advised of the allegations by his service providers, the website operator has, at most, five days before those services are terminated. He has the right to file a counter-notification maintaining that the website is not in fact dedicated to infringement as defined in the bill – but five days is very little time to retain counsel and file such a countersuit, so in most instances the operator will be funding this legal action after its payment and ad services and associated income have been choked off. (Foreign websites, including foreign-domiciled registrars, that direct any activities to the U.S. can also be the target of a SOPA service termination action, and if they choose to file a countersuit in Federal court they automatically consent to full U.S. jurisdiction going forward.)
• Payment and ad providers have no obligation to restore services if a countersuit is filed by the website operator, and are provided with full immunity against any claims for damages resulting from initial or continued compliance so long as they reasonably believe the allegations and such termination is consistent with their terms of service and other contract provisions. But, if they do restore services, the rights holder alleging harm can then file a lawsuit seeking a court order to compel them to again terminate such services.  That would be the first instance where a federal judge is involved — the fact that a domain name industry company’s  income can be shut down absent any judicial review of the alleged facts or statutory interpretation prior to such termination raises serious due process concerns.
• The proposed system is unbalanced in favor of rights holders and against service providers and website operators. Both entities alleging that a website is dedicated to infringement as well as operators of such websites filing a counter-notification would face the possibility of damages only if they had knowingly and materially misrepresented the claim. However, no mechanism is provided for website operators to seek restitution. And, as noted, service providers are immunized against any damages resulting from their cessation of services but face potential monetary sanctions for refusal to comply with a court order, as well as the possibility of a contributory infringement lawsuit filed by the rights holder.

Domain registrants regularly receive cease-and-desist letters from trademark owners or their attorneys falsely or mistakenly alleging that a website is infringing and demanding that it be transferred. Such “trademark bully” letters often display an ignorance of trademark law or an attempt to abuse it to obtain a valuable asset at no cost. Registrants who understand their rights generally reject such demands – and often find that the trademark owner either drops the matter or, if he initiates a UDRP or ACPA action, it subsequently fails (sometimes with the trademark owner being cited for attempted reverse domain name hijacking or abuse of judicial process). However, if SOPA is enacted in its present form, these same trademark owners could direct similar allegations against those who provide critical payment and ad services to registrars and other domain intermediaries. These payment providers do not have in-house knowledge of general trademark law much less the complex treatment of domains under it, and are fully incentivized by the legislation to simply take the allegations at face value, immediately terminate services, and thereby avoid any potential liability. This is an unacceptably dangerous prospect for domain industry intermediaries and their domain registrant customers.

We are hardly alone in raising concerns about the procedural deficiencies of this proposed process for sanctioning the termination of a website’s income before any judge has reviewed the substance of the allegations, much less issued a ruling. For example,  the Trademark Legislation Committee of the American Bar Association’s Section of Intellectual Property Law – hardly an apologist for infringers – adopted a November 7^th Resolution supporting the bill’s introduction in principle but requesting “that certain aspects of the Bill be revised before the Section could support the Bill as currently proposed”. In addition to noting inconsistencies in the standard of proof required of those providing notices of alleged infringement to payment and ad providers, the Resolution raises serious concerns about the legislation’s failure to place the entirety of such allegations under a perjury standard:

Absence of Requirement to State Allegations in Notification Under Penalty of Perjury Opens the Door to Rampant Abuse – § 103(b)(4)(A) – The Notification provisions of this Bill prescribes a list of information that must be provided by a qualifying plaintiff to either a Payment Network Provider or an Internet Advertising Service in order to trigger the cessation of certain services to the Internet site at issue.  Only one of these items requires any statement under oath that they are true:  “A statement . . . , under penalty of perjury, that the signatory is authorized to act on behalf of the holder of the intellectual property right harmed by the activities described in subsection (a)(1).”  Id. § 103(b)(4)(A)(vii).  While the beginning part of this provision requires a qualifying plaintiff to submit a statement “that the information in the notification is accurate,” such statement does not require oath under penalty of perjury, considering the plain language of this clause.

We believe this oversight needs to be corrected, so that qualifying plaintiffs have the burden to allege their claim within a sworn statement.  Omitting this requirement simply opens the door to rampant misuse – particularly by those who may be judgment proof such that an attempt to enforce the monetary damages provisions of § 103(b)(6) would have no deterrent effect.  Given that the private right of action in § 103 permits private rights holders to pursue either foreign or U.S. Internet sites, the risk that a legitimate U.S. business could be harmed by malicious or merely frivolous filings under this provision is real and must be minimized. (Emphasis added)

 

SOPA Provisions are Inconsistent with Current Administrative and Statutory Remedies for “Cybersquatting”

Many domain industry intermediaries, including many ICA members, already provide voluntary in-house administrative procedures through which trademark owners who believe that a domain under its ownership or management is infringing may file for expedited review and remedial action. While not required or specifically sanctioned by law, this process is similar to the “notice-and-takedown” procedures undertaken to satisfy the Digital Millennium Copyright Act’s (DMCA) safe harbor provisions. Often a trademark owner’s concerns can be effectively alleviated simply by altering the type of ads being displayed on a particular website so that they do not overlap with its service class and thereby give rise to inadvertent infringement.[3]

Where such remedies are unavailable, or the trademark holder is dissatisfied with the result, it can utilize either the low-cost administrative remedy provided by ICANN’s UDRP[4] (http://www.icann.org/en/dndr/udrp/policy.htm) or can bring suit under the ACPA.[5]

Both the UDRP and the ACPA focus on the direct responsibility of the registrant, who has ultimate control over the use of a particular website, rather than on trying to establish secondary liability and sanctions for domain name intermediaries.

The UDRP provides notice to all registrants that their use of a domain name may be subject to a mandatory administrative procedure; ICANN-accredited registrars are, in turn, required to abide by the results of any UDRP proceeding under the standard Registrar Accreditation Agreement (RAA) entered into with ICANN.

The UDRP looks beyond the domain name itself and establishes a multi-part test for determination of cybersquatting:

Mandatory Administrative Proceeding.

This Paragraph sets forth the type of disputes for which you are required to submit to a mandatory administrative proceeding. These proceedings will be conducted before one of the administrative-dispute-resolution service providers listed at www.icann.org/en/dndr/udrp/approved-providers.htm (each, a “Provider”).

a. Applicable Disputes. You are required to submit to a mandatory administrative proceeding in the event that a third party (a “complainant”) asserts to the applicable Provider, in compliance with the Rules of Procedure, that

(i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

(ii) you have no rights or legitimate interests in respect of the domain name; and

(iii) your domain name has been registered and is being used in bad faith.

In the administrative proceeding, the complainant must prove that each of these three elements are present.

The UDRP then goes on to list a number of factors that may be looked to as evidence of bad faith registration and use, including one that speaks to the trademark concerns addressed by SOPA:

…by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your web site or other on-line location, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of your web site or location or of a product or service on your web site or location.

The UDRP also outlines ways in which the domain registrant can establish its rights to and legitimate interests in a domain name, including:

…you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.

It is critically important that the Judiciary Committee understand that under the UDRP the mere fact that a domain is identical or confusingly similar to a trademark is insufficient to establish it as a “counterfeit” – a much more detailed and nuanced examination must be undertaken.

In this regard, the World Intellectual Property Organization (WIPO), which is the leading ICANN-accredited provider of UDRP arbitration services, has recently published the “WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Second Edition (“WIPO Overview 2.0″; available at http://www.wipo.int/amc/en/domains/search/overview2.0/index.html). A quick review of this compilation of WIPO panelist precedents will clearly establish that the question of whether or not a domain is infringing a trademark is a complex undertaking that goes far beyond the domain name itself.

In fact, the very first issue addressed by this WIPO overview establishes that use of a domain name that is identical or confusingly similar to a trademark is sufficient to establish the trademark owner’s rights – but is insufficient to demonstrate the required element of bad faith registration and use, for which a more thorough inquiry and analysis is required:

Does ownership of a registered trademark to which the domain name is identical or confusingly similar automatically satisfy the requirements under paragraph 4(a)(i) of the UDRP?

Consensus view: If the complainant owns a trademark, then it generally satisfies the threshold requirement of having trademark rights. The location of the trademark, its date of registration (or first use), and the goods and/or services for which it is registered, are all irrelevant for the purpose of finding rights in a trademark under the first element of the UDRP. However, such factors may bear on a panel’s determination whether the respondent has registered and used the domain name in bad faith under the third element of the UDRP. (Emphasis added)

Similarly, the ACPA looks to a domain registrant’s bad faith intent:

(d) Cyberpiracy prevention

(1)(A) A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person –

(i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and

(ii) registers, traffics in, or uses a domain name that –

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or 

(III) is a trademark, word, or name protected by reason of section 706 of title 18 or section 220506 of title 36. (Emphasis added)

The statute then goes on to list nonexclusive factors that the court may consider in determining bad faith intent, including “the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services” and “the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name”.

The statute also provides a safe harbor for a registrant who establishes that he had a reasonable belief that the domain name’s use was fair use of or otherwise lawful:

Bad faith intent described under subparagraph (A) shall not  be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful. (Emphasis added)

The use of a trademarked term in a domain name is not necessarily infringing, even if it is used for the good or service class for which the trademark is registered. For example, in the 2010 decision Toyota Motor Sales U.S.A. v. Tabari, the Ninth Circuit Court of Appeals rules that the registrant of the domains buy-a-lexus.com and buyorleaselexus.com was not guilty of trademark infringement, stating:

“The Tabaris are using the term Lexus to describe their business of brokering Lexus automobiles; when they say Lexus, they mean Lexus. We’ve long held that such use of the trademark is a fair use, namely nominative fair use. And fair use is, by definition, not infringement.”

Yet, under SOPA, Toyota could well have proceeded against any domain name intermediary associated with the two domains in question by alleging that they were enabling or facilitating the distribution of domains constituting “counterfeit marks”  and, absent any adjudication of their fair use for legitimate business purposes, cause its payment and ad services to be terminated.

It is also well-established that the use of domains for “gripe sites” is a fair use protected by the First Amendment. Thus, a registrant is free to register domains with such names as “RIAAexploitsartists” or “Googleisevil” if they are using the websites that incorporate these trademarked names to engage in legitimate criticism and speech. Yet SOPA opens the possibility that a rights holder aggrieved by such use could block payment and ad services to a domain name intermediary involved with such a domain in an attempt to squelch legitimate speech.

While differing from the UDRP, the ACPA also stands for the proposition that a domain name alone, even if identical or confusingly similar to a registered trademark, is insufficient to establish cybersquatting by its registrant.[6] Yet, as described above, SOPA would appear to establish the possibility that a domain name intermediary could have its payment services terminated on the mere allegation by a single disgruntled trademark rights holder that it was facilitating the use of domains constituting “counterfeit marks”. It would take years for the courts to sort out such cases (if the accused domain name intermediaries could even afford to litigate the cases to conclusion after having their payment and ad services terminated) and in the interim the domain sector would be thrown into turmoil, with negative consequences for millions of domain registrants and their associated speech and businesses. This potential damage and disruption is unacceptable. SOPA’s inconsistencies with existing arbitration and statutory remedies for allegedly infringing domain names must be corrected.

 

Conclusion

As described above, we believe that SOPA’s trademark provisions could have unintended but nonetheless devastating consequences for domain registrars and a broad array of other intermediary participants in the domain name industry. It is not at all clear that active monitoring of registrant domain use by these intermediaries would be sufficient to alleviate potential liability, but it would be extremely intrusive to our customers and would add considerable new costs that would have to be passed along in the form of significantly higher pricing for registrations, renewals, and other domain-related services. We therefore urge the Committee to carefully consider our views and to eliminate any possibility that SOPA could be utilized against domain name industry intermediaries to terminate their ability to conduct business with their domain registrant customers.

We are also quite concerned about SOPA’s potential impact on domain name registrants. Many of the most successful websites incorporate user-generated content and links to a variety of copyrighted works as well as advertisements for trademarked goods and services. SOPA appears to expose Internet entrepreneurs to the effective loss of their valuable intangible property and domain-based businesses based upon the allegations of a single aggrieved rights holder and absent adequate due process.

We also share the concerns expressed by many other parties that enactment of SOPA in its present form will make access to capital for Internet start-ups and other cyber-investments much more difficult to secure and thereby hamper innovation and job growth, and will severely undermine efforts to improve cybersecurity through the adoption of DNSSEC and other mechanisms.

Finally, we believe that existing statutory protections for copyright and trademark and more than sufficient to successfully address and deter infringement committed by parties subject to U.S. court jurisdiction, and urge that SOPA be recast as a narrowly focused measure targeting the very worst IP infringers operating from outside the U.S.

We appreciate the opportunity to comment on this proposed legislation and are open and willing to interacting with Committee staff in regard to resolving the issues we have raised.

 

Sincerely,

Philip S. Corwin

Counsel, Internet Commerce Association

 

Cc:      Honorable John Conyers, Jr.

Honorable Robert Goodlatte

Honorable Melvin Watt

 

---

Yesterday Rep. Lamar Smith (R-TX), Chairman of the House Judiciary Committee, introduced HR 3261, the ‘‘Enforcing and Protecting American Rights Against Sites Intent on Theft and Exploitation Act of 2011’’, also known as the “E-PARASITE Act.

Its the house version of the PROTECT IP Bill which is even more stringent, provides great penalties on a wider range of people than the quite harsh PROTECT IP bill.

As the names of both bills indicate its all about IP protection and driving by the RIAA, Hollywood interests, Trademark Interests and those representing them. (known as “rights holders”)

The 79 page bill  Would Cut Off Website Payment and Ad Services Without Initial Court Review

It requires payment providers and ad networks to terminate their services to a website upon mere receipt of a letter from a rights holder alleging that the website was one “dedicated to theft of U.S. property”.

As the Internet Commerce Association wrote today:

“Any domain registrant who has ever received an aggressive and unsupported cease-and-desist letter from a trademark attorney has got to be concerned by the prospect of having a domain’s ad and payment services shut down absent any court review. The bill would provide the website owner with the ability to seek after-the-fact judicial lifting of the ad and payment suspension – but this expensive and uncertain option would occur during a period when the website had been deprived of all income! Overall, this approach creates major due process concerns and clearly tips the balance against domain registrants and in favor of rights holders.”
The bill’s requires ISPs and search engines to block access to all websites placed on a “blacklist” creating what some has described as  a “Great Firewall of America”.

The bill reads:

“”"”A service provider shall take technically feasible and reasonable measures designed to prevent access by its subscribers located within the United States to the foreign infringing site (or portion thereof) that is subject to the order, including measures designed to prevent the domain name of the foreign infringing site (or portion thereof) from resolving to that domain name’s Internet Protocol address. Such actions shall be taken as expeditiously as possible, but in any case within 5 days after being served with a copy of the order, or within such time as the court may order.”"

To ensure compliance with orders issued pursuant to this section, the Attorney General may bring an action for injunctive relief….

against any entity that knowingly and willfully provides or offers to provide a product or service designed or marketed for the circumvention or bypassing of measures described in paragraph (2) and taken in response to a court order issued pursuant to this subsection, to enjoin such entity from interfering with the order by continuing to provide or offer to provide such product or service. ”

The bill appears to place on ISP and search engines and others affirmative content filtering by domestic websites and according to the ICA “could be a death knell for all domains that provide a platform for user-generated content.”

The House Judiciary Committee will reportedly hold a hearing on the proposal on November 16th.
ICA will be carefully monitoring House consideration of this bill and will be communicating its members’ concerns to Capitol Hill.

For more info on this bill you can check out the story on TechDirt.com

Yesterday Rep. Lamar Smith (R-TX), Chairman of the House Judiciary Committee, introduced HR 3261, the ‘‘Enforcing and Protecting American Rights Against Sites Intent on Theft and Exploitation Act of 2011’’, also known as the “E-PARASITE Act.

Its the house version of the PROTECT IP Bill which is even more stringent, provides great penalties on a wider range of people than the quite harsh PROTECT IP bill.

As the names of both bills indicate its all about IP protection and driving by the RIAA, Hollywood interests, Trademark Interests and those representing them. (known as “rights holders”)

The 79 page bill  Would Cut Off Website Payment and Ad Services Without Initial Court Review

It requires payment providers and ad networks to terminate their services to a website upon mere receipt of a letter from a rights holder alleging that the website was one “dedicated to theft of U.S. property”.

As the Internet Commerce Association wrote today:

“Any domain registrant who has ever received an aggressive and unsupported cease-and-desist letter from a trademark attorney has got to be concerned by the prospect of having a domain’s ad and payment services shut down absent any court review. The bill would provide the website owner with the ability to seek after-the-fact judicial lifting of the ad and payment suspension – but this expensive and uncertain option would occur during a period when the website had been deprived of all income! Overall, this approach creates major due process concerns and clearly tips the balance against domain registrants and in favor of rights holders.”
The bill’s requires ISPs and search engines to block access to all websites placed on a “blacklist” creating what some has described as  a “Great Firewall of America”.

The bill reads:

“”"”A service provider shall take technically feasible and reasonable measures designed to prevent access by its subscribers located within the United States to the foreign infringing site (or portion thereof) that is subject to the order, including measures designed to prevent the domain name of the foreign infringing site (or portion thereof) from resolving to that domain name’s Internet Protocol address. Such actions shall be taken as expeditiously as possible, but in any case within 5 days after being served with a copy of the order, or within such time as the court may order.”"

To ensure compliance with orders issued pursuant to this section, the Attorney General may bring an action for injunctive relief….

against any entity that knowingly and willfully provides or offers to provide a product or service designed or marketed for the circumvention or bypassing of measures described in paragraph (2) and taken in response to a court order issued pursuant to this subsection, to enjoin such entity from interfering with the order by continuing to provide or offer to provide such product or service. ”

The bill appears to place on ISP and search engines and others affirmative content filtering by domestic websites and according to the ICA “could be a death knell for all domains that provide a platform for user-generated content.”

The House Judiciary Committee will reportedly hold a hearing on the proposal on November 16th.
ICA will be carefully monitoring House consideration of this bill and will be communicating its members’ concerns to Capitol Hill.

For more info on this bill you can check out the story on TechDirt.com

In a September 21st letter sent by Assistant Secretary for Communications and Information Lawrence Strickling to U.S. Senator Ron Wyden, the National Telecommunications and Information Administration (NTIA) disclosed that it is “actively exploring how to best meet this requirement” for “a clear and enforced ethics and conflict of interest policy” in the next version of the Internet Assigned Numbers Authority (IANA) contract.

The situation arising about conflicts of interest arose after the former Chairman of ICANN Peter Thrush,  was hired by Minds + Machines shortly after leaving ICANN and leading the vote to approve the new gTLD program.

This Department of Commerce letter was sent in response to a September 14th letter from Senator Wyden to NTIA raising concerns about news reports of a “revolving door” at ICANN.

The letter was received via the Internet Commerce Association (the “ICA”)

You might note that Senator Wyden was the one who basically put the hold on the Protect IP bill that would have authorize private lawsuits that could shut down ads and payments on domains.

In the letter Senator Wyden writes:

“While I support the control of this system by NTIA, I also believe that any IANA employees ought to be made subject to the same ethics rules in place as NTIA employees. With the growth in importance of this authority, it is important to ensure that decisions are made impartially.”

“Senator Wyden’s interest in this issue was reportedly sparked by a September 21st story in the Washington Post headlined “A ‘revolving door’ at nonprofit keeper of domain names”

Secretary Strickling’s letter of response also notes that the NTIA has conducted two Notices of Inquiry regarding the IANA contract in February and June of this year, and has “received 136 comments from a range of domestic and international stakeholders including governments, private sector entities, and individuals who also noted the need for increase transparency and accountability” — all as part of the first comprehensive review of the IANA contract since it was initially awarded to ICANN in 2000.

NTIA recently exercised its option to extend the length of the current IANA contract, from the end of September 2011 to March 2012, to allow for extended consideration of whether the contract should be re-awarded to ICANN, as well as what additional conditions should accompany it.

Here is the letter:

ICANN-NTIA Letter to Sen. Wyden 9-21-11

The Internet Commerce Association (ICA) has just put up a post that all domainers need to take notice of and therefore I’m republishing it on theDomains.

The Post is written by Phil Corwin of the ICA which talks about a topic we have been warning about for a couple of years now, which is the existing Registries may want the same terms and conditions in their contract the new gTLD operators will be getting including the right to price domains differently (variably pricing) and there is also a movement to apply the Uniform Rapid Suspension (URS) to existing extensions like .com and .net.

Here is the post:
“”On June 1st an ICANN comment period ended in regard to the process for terminating registry/registrar separation at incumbent gTLDs like .Com and .Net (announcement at http://icann.org/en/announcements/announcement-02may11-en.htm).

“ICANN’s Board has decided that any new gTLDs will not be subject to such a separation requirement and will rely on other restrictions as well as national competition authorities to curb any potential harms. So this proposal is designed to “level the playing field” for incumbent gTLDs.”

“The process proposed by ICANN would give the incumbents a choice of accepting the entirety of the new gTLD registry contract, or negotiating changes in their existing contract with ICANN and then subjecting those proposed changes to public comment. ICA presumed that incumbent registry operators would choose the second route.”

“However, of the four comments filed on this issue, only the Registries Stakeholder Group proposed technical adjustments. The other three parties – Momentous, AusRegistry, and the International Trademark Association (INTA) – took an “all or nothing” position to the effect that any incumbent gTLD wishing to affiliate with a registrar must adopt the entirety of the registry contract for new gTLDs to prevent “cherry picking” of favorable terms. (Comments at http://forum.icann.org/lists/cross-ownership-existing-registries/ )

We have no idea whether VeriSign plans to seek to integrate with an ICANN-accredited registrar, or if a major registrar might propose to merge with or acquire VeriSign.

But if the “all or nothing” position were applied to .Com it would mean:
·         The end of any pricing constraints
·         The imposition of all the new gTLD “rights protections”, including Uniform Rapid Suspension (URS)

We anticipate that some business interests holding large portfolios of defensively registered or UDRP-acquired domains would resist the termination of price controls – but might simultaneously support imposition of new gTLD rights protections as a condition of integration.

ICANN’s Board is slated to consider this matter at its June 20th meeting at which the main topic will be whether to approve the overall new gTLD program. It’s likely that the conditions for incumbent gTLD integration will not be settled with finality at that meeting and that this issue will persist for quite some time.

The ICA will vigorously articulate the interests of domain investors on this matter in order to protect the value and security of domain portfolios consisting primarily of incumbent gTLDs. These portfolios were acquired with the understanding that they would require compliance with the UDRP and not new and untested “rights protections”, and that incumbent gTLD domains are qualitatively different than those of any proposed new gTLD and therefore should be protected against unreasonable price increases.”

The Internet Commerce Association has just filed its comments to ICANN on the renewal of the .Net registry contract with VeriSign.

Yesterday the Business Constituency of ICANN came out in support of placing the Uniform Rapid Suspension (URS) proposal into the .Net contract.

Earlier today we told you that though the hard work of Phil Corwin of the ICA, the BC dropped its request.

However some other Intellectual Property (IP) interests have now filed comments with ICANN asking that the URS be placed and made part of the .Net contract.

The Intellectual Property Consistency another working ICANN group filed its comments in support of putting the URS into the .Net Contract. (pdf) saying in part:

“”"Once the post-launch rights protection mechanisms called for in the new gTLD registry agreements are up and running, .NET should be obligated to participate in them. Notably, .NET should be required to make the uniform rapid suspension (URS) system available as an efficient and expeditious method of dealing with clear-cut cases of abusive registrations in .NET. The renewal agreement should set forth a process for ICANN to specify the date upon which these obligations will become effective for the .NET registry, along with an adequate transition period for the registry operator to put the necessary procedures into place.”

Therefore all Domain Holders must file a comment with ICANN on this matter today and make their voice heard.

In your comment, you can simply say you support the comments filed by the ICA or you may take part and pieces of this response and submit it as your own as Mr. Corwin has generously agreed

You can comment on the proposal by sending an email to net-agreement-renewal@icann.org

Once you send your comment you will get an email back which you must confirm by clicking on a link otherwise the comment will not be posted.

You can view current comments here.

Here is the comment filed by the ICA:

This comment letter is submitted by the Internet Commerce Association (ICA) in regard to ICANN’s April 11th notice (http://icann.org/en/announcements/announcement-11apr11-en.htm) establishing a period for public comments on the proposed renewal of the .Net generic top level domain (gTLD) registry agreement between ICANN and VeriSign.

ICA is a not-for-profit trade association representing the domain name industry, including domain registrants, domain marketplaces, and direct search providers. Its membership is composed of domain name registrants who invest in domain names (DNs) and develop the associated websites, as well as the companies that serve them. Professional domain name registrants are a major source of the fees that support registrars, registries, and ICANN itself.

Executive Summary

• Rights protections mechanisms developed for the new gTLD program, especially Uniform Rapid Suspension, should not be imposed on .Net through the contract renewal and revision process. The .Net registry is far too important to be a “guinea pig” for these incomplete, controversial, and thoroughly untested mechanisms.
• We do not oppose allowing VeriSign to make commercial use of .Net traffic data so long as ICANN rigorously enforces the contract restrictions on reintroduction of SiteFinder or other wildcard services and such data is made available on a nondiscriminatory basis. We also have no objection to .Net’s transition to a thick WHOIS model under the applicable contract requirements.
• While we do not object to the provision that would allow ICANN to better serve the Internet community through the provision of marketing and incentive programs by VeriSign to “underserved geographies”, we believe that a tight definition of that term as well as additional safeguards should be written into the registry agreement to prevent potential abuse of these programs by registrars or registrants, as well as potential cross-subsidization by registrants residing in the developed world. In addition, ICANN should disclose how it has utilized the $6.8 million annual excess transaction fee (as of 2010) that .Net registrants already pay into a restricted fund that is intended to benefit “developing country Internet communities”.

Discussion

Application of URS and other New gTLD RPMs to .Net Via the Contract Renewal Process

While we had intended that our comments focus solely on proposed alterations of the .Net registry agreement we feel compelled to address an extraneous issue that has been injected into this discussion by others. On May 3^rd ICANN’s Business Constituency posted a proposed draft of a Constituency comment letter on the .Net contract advocating that VeriSign be required to implement Uniform Rapid Suspension (URS) and the Trademark Claims Service (TCS) through additional amendments to the registry agreement. As a member of the BC, ICA  strenuously raised its concerns in regard to requiring incumbent gTLDs to adopt the Rights Protection Mechanisms (RPMs) developed for the new gTLD Applicant Guidebook (AG) at this point in time, and our fellow members of the BC heard our concerns and graciously dropped these provisions from the latest version of the Constituency comment letter.. However, since other parties may make the same suggestion – and we note that the Intellectual Property Constituency has in fact done so today — we feel we  must recite our deep concerns and strong opposition to it.

 

We are not opposed in principle to the long-term goal of having all gTLD registry agreements be as uniform as possible (while recognizing the inherent differences of certain legacy gTLDs), and throughout the new gTLD policy development process we have consistently advocated that the legitimate concerns of rights holders be addressed through a UDRP reform process that established uniform rules across all gTLDs. The ICANN community chose a different path, the establishment of new RPMs for new gTLDs, but never in the course of the long discussions of these measures was it ever suggested that they be applied to incumbent gTLDs simultaneous with the opening of the new gTLD application process. Yet that would be the effect of the proposed and withdrawn BC position and the filed IPC position, to impose these requirements on .Net through a contract that takes effect just a few weeks from now as of July 1, 2011.

 

Our reasons for opposing the imposition of URS or other new RPMs on .Net or other incumbent gTLDs in the near term through the contract renewal process are:

• It is not yet clear what the final form of the URS will be. In particular, it remains unclear whether the URS will be further amended to reduce the burden of proof on a complainant, and to provide a complainant with first option to acquire a suspended domain. The transfer option in particular would make this proposed $300, 500-word complaint, single examiner URS procedure the functional equivalent of the UDRP – which, despite its flaws, offers a far higher level of procedural and substantive due process to domain registrants. Further, it remains unclear whether the AG will be approved by the ICANN Board next month in Singapore or whether that decision will be deferred to permit further discussions with the Governmental Advisory Committee (GAC), which in turn continues to press the Board for additional concessions on RPMs that favor complainants at the expense of registrant rights. We also do not yet know which arbitration organization(s) will be selected to administer the URS or what quality of decision will be provided for such a low fee. And, regardless of the final details of the URS, it will take several years of experience to adjudge whether it is an effective tool against the most egregious types of cybersquatting and, most importantly from our perspective, whether it is prone to complainant abuse and if the notice and appeals process available to registrants is meaningful.
  • There is no foundation of support in past ICANN policy processes for any such proposed contract amendment. The last ICANN body to examine better means to address cybersquatting and other rights and consumer abuses was the Registration Abuse Policy Working Group (RAPWG). Its final report was issued one year ago, in May 2010 (available at https://st.icann.org/reg-abuse-wg/). The RAPWG specifically considered whether new RPMs should be made applicable to incumbent gTLDs and did not adopt any position in support of that. The relevant portion of their Final Report (p. 33) reads as follows –

 

Recommendation #2:

The RAPWG was evenly split regarding a second recommendation. The two opposing views are below.

Seven members supported View A: The RAPWG recommends the initiation of a Policy Development Process by requesting an Issues Report to investigate the appropriateness and effectiveness of how any Rights Protection Mechanisms that are developed elsewhere in the community (e.g. the New gTLD program) can be applied to the problem of cybersquatting in the current gTLD space.

In favour of View A (7): Cobb (CBUC), Felman (MarkMonitor), Queern (CBUC), Rasmussen (Internet Identity), Rodenbaugh (CBUC), Shah (MarkMonitor), Sutton (CBUC).

Seven members supported View B: The initiation of such a process is premature; the effectiveness and consequences of the Rights Protection Mechanisms proposed for the new TLDs is unknown. Discussion of RPMs should continue via the New TLD program. Experience with them should be gained before considering their appropriate relation (if any) to the existing TLD space.

In favour of View B (7): Aaron (RySG), Amadoz (RySG), Bladel (RrSG), Neuman (RySG), O’Connor (CBUC), Seltzer (NCSG), Young (RySG).

In short, half the members of the RAPWG favored initiation of a PDP to investigate whether it would be appropriate and effective to impose new RPMs developed elsewhere in the ICANN community on incumbent gTLDs, while the other half said it would be premature to even initiate such a process until experience was gained with the effectiveness and consequences of new RPMs. No members of the RAPWG advocated the immediate imposition of new gTLD RPMs on incumbent gTLDs, which would be the result of any .Net contract amendment requiring such action.

• The imposition of URS on .Net is not a trivial technical detail of the proposed contract but a major policy change for one of the leading gTLDs. According to VeriSign’s February 2011 Domain Industry Brief (http://verisigninc.com/assets/domain-name-report-feb-2011.pdf), .Net is the third largest TLD overall (trailing only .Com and .De) and the second largest gTLD. It is our further information that approximately 13.6 domains were registered at .Net as of the end of 2010, and it is almost certain that the total number of .Net registrations has increased since then. In other words, the total number of domain registrations at .Net probably exceeds any reasonable estimate of the combined total registration at all new gTLDs over the next several years.
• It is fundamentally unfair to impose the possibility of URS actions on .Net registrants absent additional policy development work and several years’ experience with URS at new gTLDs. Potential registrants at new gTLDs will acquire domains there with clear advance notice that they will be subject to the URS and other new RPMs and have the opportunity to make the decision to register, or not, on an informed basis. Registrants at .Net, on the other hand, have acquired their individual .Net domains or portfolios thereof with the understanding that they could only lose the use of their domains, or see them involuntarily transferred, if they registered and used their domains in violation of the Uniform Dispute Resolution Policy (UDRP). These domains are valuable intangible assets, and in many cases they have been acquired not through a relatively low registration fee (as will be the case for new gTLD domains initially) but in the secondary domain marketplace for substantially higher prices.  The rights of .Net registrants require just as much respect as the rights of trademark holders, and it is unacceptable that they should be exposed to the substantial new risk of losing access to or even possession of their domains through adoption of a yet-to-be-finalized and thoroughly untested URS supplement to the UDRP without the benefit of a balanced and considered policy process preceding any such decision.
• Imposition of URS on .Net at this time through the contract renewal process has the potential to derail the UDRP reform process that ICANN has embarked upon. It is important to note that this UDRP reform effort is being initiated as a result of the unanimous RAPWG recommendation for “the initiation of a Policy Development Process by requesting an Issues Report to investigate the current state of the UDRP, and consider balanced revisions to address cybersquatting if appropriate”. If URS can be incorporated within the .Net contract this year it will certainly set a powerful precedent for the inclusion of URS in the .Com registry contract when it comes up for renewal in 2012.  If trademark interests are able to achieve this result through the gTLD contract renewal process we suspect they will have considerably less incentive to participate in a meaningful and balanced UDRP reform process that addresses the legitimate concerns of all parties, and may even work to subvert it. We reach this conclusion based upon the very current example of trademark interests’  refusal to accept the balanced community consensus RPMs included in the last iteration of the new gTLD AG and to instead lobby members of the GAC to press for additional “protections” that  go substantially beyond the original recommendations of the Implementation Recommendation Team (IRT).

 

As for the imposition of the TCS on .Net via the contract renewal process, while that prospect raises less concerns than the URS we must also oppose it based on the principle that no new RPMs should be imposed on incumbent gTLDs until we have had sufficient experience to judge their effectiveness, potential for abuse, and impact on registrant rights, and then only after balanced and deliberative policy consideration. Also, of course, we have no idea what the final form of the TCS will be until the AG is finally adopted by ICANN’s Board. Finally, based upon the recent Board notes on the GAC new gTLD “scorecard”, (http://icann.org/en/topics/new-gtlds/board-notes-gac-scorecard-clean-15apr11-en.pdf), it seems entirely inappropriate to impose TCS on .Net.

 

The relevant Board note (at Section 6.1.2) states:

 

After discussion with the GAC and some other community members, including those representing trademark interests, the Board has determined to make both a limited Trademark Claims service, and Sunrise service, mandatory. All registries will be required to offer: (i) a Sunrise program, and (ii) for at least 60 days from launch, a Trademark Claims service using the Clearinghouse database. Thereafter, utilization of Trademark Claims services will be at the registry’s discretion. (Emphasis added.)

As is clearly noted, a registry’s use of TCS becomes entirely discretionary 61 days after launch, so it would be entirely inconsistent to require .Net to use the TCS service on an unlimited, non-discretionary, going-forward basis. In addition, as the TCS will only, quite properly, provide notice to registrants of exact matches to marks listed in the Trademark Clearinghouse, it is highly unlikely that it would receive much use or provide much benefit at .Net given the 13 million-plus domain registrations at that gTLD and the high probability that any exact match to a valuable mark has already been challenged in a UDRP if registered or used in violation of it.

 

Commercial Use of Traffic Data and Possibility of Transition to “Thick” WHOIS

Section 3.1(f) of the revised agreement allows the registry operator (VeriSign) to make commercial use of traffic data regarding existing or non-existent domain names for unlimited purposes provided that it does not disclose domain name registrant and end user information and other personal data; and also subject to the limitations that it does not reintroduce the SiteFinder service previously introduced in 2003 or of any other service employing a universal “wildcard” function and that traffic data is made available on a non-discriminatory basis. This would not prohibit the provision of a domain nameservice or other non-registry service for a domain or zone used for other than non-registration services to unaffiliated third parties by a single entity (including its affiliates) for domains registered through an ICANN-accredited registrar.

 

Our understanding is that the above listed changes arise from the application of Section 4.2 of the current .Net agreement which states that, upon renewal, terms that are not similar to those generally in effect at the 5 largest gTLDs (by number of domain name registrations) shall be made similar – except in certain areas including the price of registry services, standards for consideration of proposed registry services and their definition, and terms and conditions for the renewal and termination of the agreement.

 

We have no objection to the above listed changes so long as ICANN engages in rigorous enforcement of the  contractual restrictions, particularly the prohibition of SiteFinder reintroduction or any other “wildcard” service, as well as the availability of traffic data on a non-discriminatory basis.

 

This Section also provides that, if .Net becomes a “thick” registry (WHOIS data residing with the registry rather than registrars), the traffic data that may be accessible to and used by the Registry Operator (RO), VeriSign, will be limited to the data that would be available under a “thin” model; and, further, that the process for the introduction of new registry services will not apply to such traffic data. Again, we have no objection to this standardization provision so long as the restrictions are rigorously enforced.

 

Support for Internet Development in “Underserved Geographies”

Section 7.1(b) would allow VeriSign to offer .Net marketing or incentive programs to registrars in underserved geographies. It appears that, in practice, it would allow the availability of lower registration and renewal pricing to registrars in developing nations, quite possibly in conjunction with IDN domain names. Our reading of that provision is reinforced by revised provisions of Section 7.3(a), which state that programs explicitly permitted by Section 7.1(b) shall not be in violation of otherwise applicable uniform pricing requirements.  ICANN has characterized this provision as being “designed to allow VeriSign to better serve the Internet community”.

 

Specifically, this Section would permit VeriSign, for purpose of supporting the development of the Internet in underserved geographies, to provide training, technical support, or marketing or incentive programs based upon the unique needs of registrars located in such geographies, so long as the .Net Registry treats similarly situated registrars the same and does not apply such programs arbitrarily. It further stipulates that Geographic regions must be defined broadly enough to allow the participation of multiple registrars, and may not favor any registrar in which  VeriSign may have an ownership interest.

 

We have no general objection to the proposition that VeriSign should be permitted to undertake initiatives that facilitate the utilization of the Internet in the developing world. However, we believe that the present language needs to be substantially tightened to prevent potential abuse.

 

In this regard, we would suggest that –

• The term “underserved geographies” be tightly defined so that marketing and incentive programs in particular are targeted solely at those regions of greatest technical and economic need.
• The agreement set a “floor” limit on .Net prices made available  in such underserved geographies for the purpose of assuring that they reflect the actual cost of provision and that the incentive program does not result in further cross-subsidization of developing world registrants by developed world registrants. In this regard, we must note that existing Section 7.2(a) of the agreement requires VeriSign to pay ICANN an annual Registry-Level Transaction fee of $.75 for each annual increment of an initial or renewal domain name registration, or for a domain name transfer — which is $.50 more than the fee charged at most gTLDs. This elevated fee is in turn referenced in Section 7.3(a), which states that ICANN “intends to apply this fee” to special restricted funds for the participation of developing country Internet communities in ICANN; enhancement of the Internet’s security and stability; and general operating funds. In short, existing .Net registrants already paid an additional $6.8 million (2010) through VeriSign to ICANN into a special fund that is intended to benefit “developing country Internet communities” first and foremost. We believe that ICANN should disclose to the community through a transparent accounting exactly how these restricted funds have actually been utilized in the past several years.
• That registrars located in such underserved geographies be restricted to making below-standard price domains available solely to registrants domiciled within such geographies, to prevent gaming of the incentive pricing system by either registrars or registrants.

Conclusion

We appreciate the opportunity to comment on the proposed revisions to the .Net registry agreement. It appears that VeriSign is entitled to presumptive renewal of the agreement under the terms of the existing agreement and that the proposed revisions are generally reasonable and consistent with other gTLD agreements. Our comments on the proposed revision are few and minor save for our adamant opposition to any suggestion that new gTLD RPMs be imposed on .Net as part of this contract renewal process. Finally, our positions on .Net revisions should not necessarily be viewed as indicative of our views on any proposed revision of the .Com agreement when it is up for renewal in 2012, as we reserve the right to review that agreement de novo when it becomes available for comment.

Thank you for your consideration of our views on this matter.

 

Sincerely,

Philip S. Corwin

Counsel, Internet Commerce Association

Yesterday we wrote about the Business Constituency (BC) group of ICANN that proposed including the Uniform Rapid Suspension (URS) into the renewal of the Verisign contract to operate the .Net registry.

Today word comes from Phil Corwin of the Internet Commerce Association that the BC has dropped this proposal in its new comments to ICANN.

In his letter to the BC today Mr. Corwin Wrote:

“The ICA supports this new draft.”

“We greatly appreciate the response of other BC members to our concerns regarding the imposition of untested RPMs through this contract renewal, and look forward to working cooperatively with other BC members to address rights and consumer protection issues within the context of UDRP reform and other appropriate mechanisms.”

“ICA’s comment letter will address the issue of RPMs based on the possibility that others may suggest such amendments to the contract. We will also support transition to Thick WHOIS, as well as the possibility of VeriSign’s engagement in commercial use of traffic data so long as ICANN engages in vigorous enforcement of contract clauses regarding nondiscrimination and prohibition of wildcard services.”

“Finally, while not opposing new contract provisions that permit VeriSign to offer marketing and price incentives in “geographically underserved’ regions, we request a tighter definition and other safeguards to prevent gaming as well as to assure that this will not lead to below cost furnishing of .Net domains to such regions subsidized by developed world registrants. In that regard, we note that the current and revised .net contract sets annual registry-level transaction fees at $.75 per domain, which is $.50 higher than the standard for most registry contracts, and that this differential generated approximately $6.8 million in additional ICANN revenue in 2010. These monies are set aside in a  restricted fund, the primary use of which is supposed to be support of developing country Internet communities in ICANN, and we request that ICANN account for how these funds are actually being utilized.”

“Again, we appreciate the BC’s response to our concerns and look forward to seeing many of you in Singapore.”

The ICA will still be filing comments as indicated above on the proposed contract renewal later today.

Lets be clear about what happened here.

Mr. Corwin was able to get the BC to drop this proposal basically on procedural grounds and saved domainers a huge headache, for now.

All domainers owe a big thanks to Phil and the ICA.

This is not the first and won’t be the last time trademark groups seek to get more protections for them and less for you in existing extensions which is why I continue to support the ICA and so should you

 

Phil Corwin of the Internet Commerce Association, (the “ICA”) sounded the alarm yesterday on a sleepy Mothers Day that trademark interests led by Elisa Cooper, Director of Product Marketing at MarkMonitor, are pushing for ICANN to add the URS (Uniform Rapid Suspension) to the propose .Net VeriSign contract currently opened for public comment. Ms. Cooper was the primary drafter of a proposed position statement by ICANN’s Business Constituency that advocates this move.

I have for years been telling you even if you have no interest in the new gTLD’s you had to pay close attention to the process as whatever rules come out of that process will be attempted to be applied to all existing TLD’s including .com, .net and .org.

This is especially troubling because as you know the new gTLD process has not even been approved yet since the .Net contract is up for renewal, trademark groups are going to push for this new system to take away domains, be imposed on .net

And guess what is up for renewal next year?

Right the .Com contract with VeriSign.

If This proposal to apply the URS to .Net’s gets adopted then its almost a guarantee that it will be included in the .Com contract next year.

To refresh your memory the Uniform Rapid Suspension allows a trademark owner to file a short one page form, pay a fee ranging from $300-$500 and maybe wind up with the domain.

The URS has a shortened time frame for domain owners to respond, so short that if you go on vacation your likely to miss the time,  and parts of the proposal under consideration include one where a domain owner who loses a fixed number of URS in a certain time frame may be barred from even filing a defense to future URS filings.

The URS also limits the length of the response, and doesn’t allow for a three member panels.

We have all seen horrible one person UDRP decisions and with no option of getting a three member panel and a limited response, this should scare the crap out of any domain holder.

The maybe is in the above sentence because the final rules haven’t even been set for this new program as they are still under debate in the new gTLD program.

Originally the URS was a meant to suspend a domain, meaning the trademark holder wouldn’t wind up with the domain, its functionality would just seize.

But more recently in the new gTLD process trademark groups have been pushing to actually get the domain name through this process and make the URS a loser pays model, so not only would the domain holder lose the domain, but it would have to pay the costs.

Since the debate at the new gTLD process is still ongoing we don’t know which way the rules will be set.

Moreover Mark Monitor wants the Global Trademark Database which is part of the new gTLD process to apply to .Net’s as well.

The problem with that is the WIPO database which is already up and operating, in anticipation of the passage of the final gTLD rules, contains over 630,000 entries, including most dictionary words, two and three letter combo’s and all sorts of generic terms.  Hell even the letter ‘F” is in the database

If trademark owners can get a domain name like they can with a UDRP but in a though a process which costs 1/10th of the price of a UDRP, and which is a much quicker process, then most trademark holders will go to the URS and not even bother with UDRP.

As Phil Corwin told me:

“This is absolutely outrageous.”

“URS is a totally untested, $300, 500-word procedure by which a domain can be suspended. ”

“We don’t even know its final form yet but it could get worse than what is in the Applicant Guidebook now, and could give the complainant first option to acquire a suspended domain, which would make it a functional equivalent to the UDRP. ”

“.Net is the third largest registry in existence (after .com and .de) and registrants have invested massive sums in aggregating portfolios and developing websites based on the understanding that they could only lose their domains in a UDRP.”

“Another danger is that if URS gets imposed on .net and .Com via contract renewal then trademark interests may have no incentive to engage in the UDRP reform process that ICANN is teeing up.”

“We have no idea yet who the URS providers will be or how it will be used (or abused) in real world practice.”

The comment period for the .Net renewal ends tomorrow  Tuesday, May 10

You can comment on the proposal by sending an email to net-agreement-renewal@icann.org

Once you send your comment you will get an email back which you must confirm by clicking on a link otherwise the comment will not be posted.

You can view current comments here.

I will be filing a comment and I urge all domain holders to file a comment and object to the URS from being placed into the .Net contract.

Once again the ICA has shown they are the only group watching out for domainers and they deserve your support.