Response of CASIE
to Request for Comments Regarding
[Second Revised] Draft Substantive Guidelines for
Administrative Domain Name Challenge Panels

Notice 97-03

To: gTLD-MoU Policy Oversight Committee
notice-97-03@gtld-mou.org

Date: December 5, 1997

From: Coalition for Advertising Supported Information and Entertainment (CASIE), a coalition of the Association of National Advertisers, Inc. (ANA) and the American Association of Advertising Agencies (AAAA)

By: Douglas J. Wood, Esq.
Counsel to CASIE
Hall Dickler Kent Friedman & Wood, llp
909 Third Avenue
New York, New York 10022-4731
(212) 339-5400
e-mail: dwood@halldickler.com

INTRODUCTION

As the Policy Oversight Committee (POC) is well aware, trademarks and brand names are among the most valuable assets owned and/or developed and promoted by the global marketing community. In many ways, the value of an established and respected brand name is immeasurable. While the Internet provides unprecedented means to increase global awareness of brand names, it also presents new challenges and threats to these assets on a global scale in diverse jurisdictions applying incompatible intellectual property laws.

CASIE's founding organizations, ANA and AAAA, collectively represent most of the major players in the global advertising and advertising agency industries. The members of CASIE are global companies which own some of the most valuable global and regional trademarks and "brands" in the world and are representative of the brand owners most affected by policies relating to the protection of trademarks on the Internet. Based on the latest estimates, ANA and AAAA members will spend more than $2 billion on advertising on the World Wide Web by 2000. This figure does not include the members' considerable investment to date in building and maintaining websites.
CASIE's primary concern is that the Internet be a stable medium for the delivery of product and service information and commercial messages to consumers, as well as a secure environment for global commerce. Any system must respect brands, minimize consumer confusion, and avoid unnecessary administrative expenses in doing so.

CASIE commends the POC for its efforts to address the unique and complex intellectual property problems engendered by the domain name system. The [Second Revised] Draft Substantive Guidelines for Administrative Domain Name Challenge Panels (Guidelines) do take certain laudable steps toward establishing a consistent, efficient worldwide resolution process for domain name disputes.

In some critical respects, however, this second draft has reverted to the rigid model employed by Network Solutions, Inc. (NSI). The Guidelines have supplanted the discretion of the Administrative Challenge Panels (ACP) to determine domain name rights with certain absolute rules. NSI's rules failed because NSI ignored fundamental intellectual property principles in favor of predictability of outcomes. The POC should not make the same mistake. Domain name rights often present challenging questions and the ACPs must be empowered to address each situation on its merits, not to apply rules by rote.

In sum, there is much work to be done before the Guidelines can command the endorsement of brand name holders worldwide. CASIE applauds the decision to solicit and respond to public comments to the Guidelines during this process as a means of creating broader consensus for a worldwide domain name dispute resolution initiative.

CASIE submits the following comments in response to the gTLD-MoU Policy Oversight POC's Request for Comments regarding the Guidelines. The first section of these comments addresses CASIE's general comments regarding the Guidelines, the second section discusses specific provisions in the Guidelines, and the third section responds directly to the questions posed in Notice 97-03.

I. General Comments

CASIE agrees that an administrative challenge procedure may provide the most efficient, consistent and economic approach to domain name disputes and that the Guidelines are an admirable first step in creating a new process from whole cloth. Before turning to the specifics of the Guidelines, CASIE addresses several over-arching issues which the Guidelines do not adequately address.

A. Technological Solutions

The rapid development of technology offers an unprecedented opportunity to resolve domain name issues creatively. The proposed Guidelines certainly acknowledge the effect technology will have in shaping the process -- after all, the entire process is intended to be conducted on-line in most cases and the Council of Registrars will be able to implement the decisions of an ACP almost immediately. The proposed addition of new generic top level domains (gTLDS) is another example of using technology to avoid unnecessary domain name conflicts.

The POC is encouraged to use technology creatively throughout the domain name challenge process. For instance, some domain name conflicts may be addressed by the creation of a directory, akin to a telephone directory, which would allow Internet users to choose from a variety of listings which share the same or similar names. In what appears to be a close case, an ACP might order the use of a directory as an alternative to suspending a domain name during the pendency of a challenge. Or a conflict between multiple users with equal rights to the same name may be successfully mediated by the parties agreeing to set up a directory under a suggestive domain name such as gambling.com or clothing.com (both of which are private directories currently available on the World Wide Web). As discussed in greater detail below, in Section II.C., another directory-like solution is currently under development on the Internet at http://www.io.io.

B. Initially Retain Resort to Judicial Resolution

Because any administrative challenge process will continue to evolve once it is implemented, the Guidelines should expressly recognize that local courts must retain jurisdiction to resolve domain name disputes de novo, should any party contesting ownership of a second level domain (SLD) feel the administrative procedure denied them due process or failed to address material issues. While this availability necessarily retains some of the cumbersome and expensive aspects of the present system, it would be foolish to assume brand owners are prepared to leave decisions regarding such valuable assets to an unproven system, regardless of how attractive it may be in theory.

Given the undeniable continuing role of local courts in the process, the Guidelines remain unacceptably vague about how the courts will interact with the ACPs. Except for Section IV.B.7.(f)'s reference to a determination that a conflict is not appropriate for ACP procedures, and various references throughout to the weight to be given to courts' determinations of a party's intellectual property rights, the Guidelines are largely silent. For example, will the courts be part of the appellate process referred to in the Guidelines? What effect will a local court's decision on the merits have if the disgruntled party later starts an administrative challenge?
The Guidelines must provide some perspective for the concurrent jurisdiction of local courts in domain name proceedings.

C. Consider Multiple Administrators of the Challenge Process

There has been some suggestion in the Internet community that the World Intellectual Property Organization (WIPO) not be the only administrator of the Guidelines, and that arbitrators, mediators and ACPs be offered by other appropriate entities such as the International Trademark Association (INTA) or the American Arbitration Association. In fact, the Guidelines themselves seem to recognize a need for additional methods of dispute resolution by providing for consensual arbitration as an alternative to the ACPs.

CASIE encourages the POC to consider the advantages of multiple providers for domain name dispute resolution, especially if this approach would increase the Internet community's acceptance of, and participation in, the administrative challenge process. Of course, if this approach is adopted, it will require a strong, centralized appellate process to ensure consistency.

II. Comments Regarding Provisions of the Guidelines

The following are comments addressing specific provisions of the Guidelines.

A.Section IV.C.(b)(i): "Evidence of the Existence of an Intellectual Property Right Which May be the Basis for a Challenge"

Sections IV.A.(b), IV.C.(b) and V.A.(b) of the Guidelines require a party to assert a demonstrable "intellectual property right" which has been "granted" to that party. Section IV.C.(b)(i) lists types of evidence which may be sufficient to demonstrate an asserted intellectual property right. All but one of these types of evidence presume registration or another form of government recognition of the right. Moreover, the Guidelines warn that:

[r]ights which may not be demonstrable for the purposes of these Guidelines could be common-law rights or rights resulting from acts of unfair competition, etc., which have not been established by authoritative government sources.

The second version of the Guidelines has been re-drafted to heavily favor registration, as opposed to use, as the basis for cognizable intellectual property rights on the Internet. As such, the Guidelines are likely to be objectionable to trademark owners in those countries such as the United States which recognize the rights of the first-to-use owners over the rights of the first-to-register owners.
This approach is an unacceptable regression to the rigid structure created by NSI to resolve domain name disputes. Registration or other formal state recognition of a trademark right may be very persuasive evidence that the right exists. On the other hand, it may be nothing more than an official rubber-stamp for a fraudulent application. Although it is tempting to imagine the ACPs can apply absolute rules on a mechanical basis to resolve these disputes, the complicated issues arising from competing claims to domain names will only be effectively resolved by an arbiter which fully considers the merits and equities on a case-by-case basis.

Moreover, the Guidelines' reliance on registration may be perceived as an attempt to conform the trademark laws of the use-based countries with those of the registration-based countries. That approach could conceivably alienate trademark owners from participating in the ACP process or continuing to invest in the growth of the Internet as a commercial medium if they feel that their use-based rights may be diminished or disregarded.

CASIE suggests that the Guidelines expressly recognize the superiority of use based rights in the appropriate countries and restore adequate discretion to the ACPs to consider the merits of use-based rights in disputes.

B.Section IV.B.: "Determinations Which May Be Made in the Context of a Challenge"

Section 7.(d) describes a resolution in which both parties agree that the SLD in dispute will be changed to resolve the conflict. In addition to this remedy, CASIE suggests that ACPs should have the authority to transfer the SLD to a more appropriate gTLD, when necessary.

This approach would not be useful in the case of an internationally-known famous mark which could serve as the basis for a general exclusion from registration of the SLD in all of the gTLDs. However, in many cases this solution would maximize the effect of creating new gTLDs as contemplated by the gTLD MoU and could provide Internet users with better information about their selections.

C.Section IV.C.(a): "First-Come First-Served Principle"

The Guidelines indicate that the "first-come first-served principle" is a valid consideration in a conflict between two or more parties who may both have equal rights in the domain name in question. Rather than perpetuate the unfairness of an approach which may be more accurately characterized as "first-come only-served," the POC is urged to create Guidelines which address the inequities in the current domain name assignment system in order to further stabilize the Internet as a viable commercial medium.

It is somewhat disingenuous to assert that the first-come first-served notion is not related to domain name trademark concerns and therefore should be allowed to continue unchecked, as the Guidelines do. By segregating trademark matters from other domain name issues and addressing only the former, not the latter, the Guidelines do a disservice to the vast middle-ground of domain names not based on fanciful, arbitrary and/or famous trademarks.

Those domain names which should be addressed by the Guidelines range from merely suggestive names to generic names which may someday be new gTLDs. The fundamental inequity of the first-come first-served model is evidenced by the price certain entrepreneurs currently command for generic domain names such as beauty.com, cologne.com, makeup.com, perfume.com, exercise.com, vitamins,com and automobile.com. In fact, on its website, the owner of these domain names claims that the average sale price of names that it has brokered is $4,855 and that the minimum bid it accepts is $1,000. (See http://www.bestdomain.com).

A directory solution may be appropriate both in the case of domain names to which multiple entities have competing rights and those descriptive or generic domain names in which no one is entitled to a monopoly. Examples of directories currently appear on the World Wide Web at clothing.com, a website that claims to link over 500 clothing sites and gambling.com, a self-described "global gambling guide" with links to gaming websites.

An ambitious experiment to create a technical solution appears at http://www.io.io, a website created by Internet One, a not-for-profit service. Internet One's idea is that when two or more identical domain names are registered, an Internet user will be directed to a shared web page which offers distinguishing information about the registrants and provides hyper-links to their websites. Should the Internet One solution become fully functional, it could be one mechanism by which ACPs resolve domain name disputes.

D.Section IV.C.(d)(iii): Bad Faith Assertion of An Intellectual Property Right

Certain examples in this Section of what may constitute bad faith in the assertion of an intellectual property right are inappropriate. Specifically, the proposal that a challenger may act in bad faith simply by acquiring a third party's valid intellectual property rights in order to have standing to challenge the domain name registrant's right to use the domain name is unacceptable. One's private motives for asserting and protecting one's legitimate legal rights are largely irrelevant in the intellectual property arena.

Presumably these examples were chosen in an effort to address one type of "reverse domain name hijacking," but they go too far. As in trademark law, if a domain name owner's rights are junior or inferior to the intellectual property rights of another, the outcome of a challenge based on the superior rights should not depend on who asserts those rights. Moreover, from a practical perspective, this bad faith standard would require a complicated and expensive factual inquiry into the subjective motivations of the various actors -- an inquiry well beyond the expertise of an ACP and one not well suited to being conducted on-line.

A less draconian approach would be more appropriate. Certainly the question of whether the challenger is actually using its rights in any way is relevant in a domain name challenge. (Again, from the perspective of use-based trademark jurisprudence, the issue is paramount.) But a failure to use the rights asserted should be one factor among many considered by the ACP, not a dispositive factor for a finding of bad faith.

E. Section VII: Appeals

This Section is not currently sufficiently detailed to invite comment. The entire appellate procedure must be addressed in detail either in these Guidelines or a similar companion piece. Questions that must be addressed include: what entity(ies) will review the decisions of the ACPs? The local courts, or another administrative level, or a combination of both? What decisions will be appealable?

III. Answers to the RFC Questions

1.Do the [Second Revised] Draft Substantive Guidelines adequately address the following concerns:

To further a stable global commercial environment on the Internet/World Wide Web;

The Guidelines are a first step toward the establishment of a consistent, fair, inexpensive and expedited resolution process for domain name disputes. As such, they do further a stable global commercial environment on the Internet. However, the current Guidelines raise significant issues such as ensuring adequate protection for use-based intellectual property rights and defining the role of local courts in the administrative challenge process. Thus, the Guidelines still require additional substantive revision before they are ready for implementation.

To protect the legitimate interests of trademark owners on the Internet, in particular, to make the dispute settlement procedures available in the context of as many conflicts as is appropriate;

For some issues, the answer is yes, for others, no. While the Guidelines do address many of the concerns typically raised regarding rights to domain names, they do not yet adequately meet certain fundamental concerns of intellectual property right owners, especially with respect to conflicting rights to domain names which do not correspond to famous, fanciful or arbitrary trademarks. The POC is urged to amend the Guidelines to address those concerns (such as those raised in this response) to ensure the cooperation and endorsement of these owners in the administrative challenge process.

To provide adequate safeguards in order to protect the interests of domain name holders who have a legitimate interest in continuing use of their domain names;

The Guidelines are a beginning for this process, but still require revision.

To inhibit, in the new gTLDs, "trafficking" in domain names that correspond to the intellectual property rights of others;

The Guidelines do address the trafficking of unique trademarks as domain names. However, the continued endorsement of the "first-come first-served" principle ignores the serious effect of trafficking suggestive, as well as descriptive and generic, domain names. CASIE advocates an application of the dispute resolution principles to address all domain names in conflict, at least in the commercial arena, rather than just those names which may correspond to unique trademarks.

To reduce what has been referred to as "reverse domain name hijacking";

As discussed above, the proposed Guidelines are overreaching in their attempt to address this issue by expanding the definition of bad faith to include a challenger's legitimate enforcement of intellectual property rights. In fact, it is not yet clear that this phenomenon is a legitimate concern. It would be very helpful to have concrete examples of it occurring.

Even if it is demonstrated to be serious concern, however, the issue of "reverse domain name hijacking" may be adequately addressed by application of the criteria already embodied in the Guidelines such as an inquiry into the nature and extent of the use of a challenger's asserted intellectual property rights.

To meet due process concerns;

The Guidelines have made progress toward this goal, especially when compared to the original draft. Until the role of the local courts is addressed by the Guidelines, however, their unanticipated effect on the administrative challenge process may create due process issues, especially if a dissatisfied party attempts to inject a local court into the process.

To provide quick, efficient and fair resolution of disputes concerning intellectual property and domain names.

The Guidelines certainly attempt to offer such a resolution process. The provisions for an expedited hearing if a challenge is raised in the first thirty days after a domain name is registered is an excellent example of the Guidelines achieving this objective.

2.Are there other important concerns that have not been addressed in the Substantive Guidelines?

At this time, CASIE does not have additional concerns in addition to those raised in this response.

3.Are there any other comments you have concerning the proposed dispute resolution system, or concerning trademarks/intellectual property and domain names in general.

At this time, CASIE does not have additional concerns in addition to those raised in this response.

In closing, CASIE appreciates this opportunity to communicate with the POC regarding the Guidelines and would welcome comments about this submission.