Re: NSI v. Clue (was: Trademarks, random strings, sharing, reserved words)

[Carl Oppedahl <carl@oppedahl.com>]

At 02:10 PM 01/07/97 -0800, Dale Mead wrote:
>
>>Many people have held out hope for the interpleader process.
>>Unfortunately, the
>>only time it was tested in the courts, it was held to be unavailable on the
>>grounds that the registry was not a disinterested stakeholder, but rather
>>was a
>>party to a contract (the registration itself) that was fundamental to the
>>lawsuit. (NSI v. Clue Computing, DC Colo, Civ Action No. 96-D-1530,
10/29/96).
>>In other words, the registrar created and issued the domain name for the
>>purpose
>>of its use on the Internet;  it cannot therefore remove itself from the
>>conflict.
>
>I don't read NSI v. Clue as grimly.  It is absolutely true that if a
>registry wants to invoke interpleader, it *must* be a disinterested
>stakeholder, or as the court said, "[W]here he stands as a wrongdoer with
>respect to the subject matter of the suit or any of the claimants, he
>cannot have relief by interpleader." The holding was that there were claims
>of wrongdoing associated with NSI's handling of the res, and therefore, NSI
>couldn't just walk away.  IMHO, the case was rightly decided.
>
>That is a far cry from saying that interpleader is not available to
>registries.  (In fact, the judge, in dicta, said that he believed that such
>a case could be framed in interpleader). 

I agree with Dale Mead.  As I describe in my paper at
<http://www.patents.com/nsi/iip.sht>, there is proper interpleader (in
which the registry avoids involving itself in disputes) and flawed
interpleader (in which the registry arguably caused the dispute by
prompting a trademark owner to attempt to get something through NSI's
procedure that it could never have gotten in normal court).  NSI attempted
flawed interpleader, and had its head handed to it.

In contrast, a responsible registrar (one that does not conduct NSI-style
star chamber in absentia hearings to decide whether to cut off a domain
name) could use interpleader to deal with situations in which a trademark
owner sues it to get at the domain name owner.

>The problem then is how a
>registrar must act in order to be entitled to interpleader.  The existence
>of a contract being the registrar and the initial registrant does not
>preclude interpleader--the most common use of interpleader is in escrow
>environments where there are plenty of contracts.  

That's exactly correct.

>Where NSI failed in this
>case was with the claims that NSI breached that contract.  That
>unfortunately enabled the court to avoid considering the more interesting
>questions:
>
>1.  Is a registrar/steward itself liable to a trademark owner when the
>court finds that a domain infringes?  (This question probably needs to be
>resolved before any interpleader request will be allowed to move forward.
>However, it is also true that interpleader might be the best place for
>registrars to raise the issue).

In the Panavision case, the court ruled that the registrar was under no
general duty to conduct infringement screening inquries for all applied-for
domain names.  Such a ruling makes perfect sense given that to rule
otherwise would require doing trademark searches in some 180 countries, for
each domain name.

>2.  How much mediation and dispute resolution activity may the stakeholder
>engage in before being at risk of being drawn in as party?  The traditional
>advice to stakeholders is to stay completely at arms length from any
>disputes.  I would be very uncomfortable with one of my clients claiming to
>be a stakeholder and engaging in the level of dispute resolution that NSI
>has been.

Merely attempting to facilitate out-of-court settlements should not render
interpleader unavailable, in my view.  Of course NSI does more than that,
presuming to be clever enough to determine by itself when a domain name
should be cut off.

>>My point is that, if trademark issues are ignored now, registries may (and
>>probably will) find themselves faced with liability in trademark disputes
>>in the
>>future.  The measures contained in the IAHC draft are intended in part to
>>avoid
>>or delay that.
>
>
>Agreed.  But I wonder how well the specifics of the draft accomplish your
>purposes.  I can't imagine it stopping any lawyers who otherwise would from
>including a registrar in a suit, but I can imagine suits arising out of it.

Getting sued is part of life for any large organization.  People slip and
fall (or claim to have slipped and fallen) in the reception area, and sue.

Please see my paper at <http://www.patents.com/nsi/iip.sht>.  I recount
there the many reasons why a registrar that worries about getting sued is
like chicken little worrying that the sky will fall.  (The exception being
NSI which brings lawsuits upon itself by its flawed policy.)