Part III: new gTLDs and Trademark Issues

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Parts I and II have laid the framework for ICANN and how the newly available domain names will operate. But, how will all of this affect trademark owners and how will disputes be handled?

The next wave in the domain name business will be providing specific domain names to trademark owners interested in purchasing them.

Trademark owners that have spent a great deal of time and money building value in their mark are likely to also want to control the use of that mark as a domain name. For example, instead of shopping at AMAZON.COM, consumers can simply go to .AMAZON. If a random company owns .AMAZON, it is likely to create confusion for consumers expecting to find AMAZON.COM products and services on the site. The goodwill associated with the AMAZON.COM mark will suffer. Thus, an outlet for potential cybersquatting has materialized.

This system poses new opportunities as well as new challenges for trademark owners. According to the ICANN Factsheet for gTLDs, the organization has given great consideration to protecting trademark holders and has outlined a 4 part process: (1) “an objection-based process will enable rightsholders to demonstrate that a proposed gTLD would infringe their legal rights,” (2) applicants for new gTLDs will be required to describe in their applications the rights protection mechanism they propose for second-level registrations, which must be made public,” (3) all new gTLDs must ensure that second-level registrations are subject to ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP),” and (4) “ICANN has been working closely with the trademark community to find additional solutions to potential issues for trademark holders in implementing new gTLDs.” (http://www.icann.org/en/about/learning/factsheets)

ICANN has set up a Trademark Clearinghouse (TMCH) to assist trademark owners as the domain name system (DNS) expands. The body handles all applications, conflicts and objections through a system composed of various timelines.

A Sunrise Period of at least 30 days, and up to 60 days, has been opened in which trademark owners are encouraged to submit applications to TMCH for a desired gTLD of their particular mark. Deloitte is currently the only company working with the TMCH, and will be tasked with authenticating all applications, compiling a database of the applications and providing that information to registries and registrars. Once they have been added to the database, owners will be informed when a gTLD matching their trademark becomes available.

The Trademark Claims Period follows the Sunrise Period. Applications are accepted in a number of languages and all parties with matching or conflicting marks are notified when a conflict arises. This period runs for up to 90 days. In order to be eligible, marks must fit into one of the following categories:

  • “Nationally or regionally registered word marks form all jurisdictions
  • Word marks that have been validated through a court of law or other judicial proceeding
  • Word marks protected by a statute or treaty in effect at the time the mark is submitted to the Clearinghouse for inclusion
  • Other marks that constitute intellectual property may be recorded in the Clearinghouse by arrangement with a registry” (http://newgtlds.icann.org/en/about/trademark-clearinghouse/faqs)

Following the Trademark Claims Period is a Land Rush Period in which registration is open to anyone.

When an application period ends, the applications are published on the ICANN website for objection. There is a 60 day window for public commentary and a 7 month window for objections. If no objections exist, the registration will be completed following this period.

The Uniform Domain-Name Dispute Resolution Policy, UDRP, was adopted in 1999 as a way to provide an “alternative to costly litigation for resolving disputes concerning cybersquatting in gTLDs.” All registrars are required to abide by this policy as it is included in their contracts. To date, over 30,000 complaints have been filed.

Trademark-based domain name disputes will be resolved by agreement, court action or arbitration. Following a decision, the registrar can be advised to cancel or suspend a domain name or transfer the domain name to the successful complainant.

Decisions through the UDRP have been very inconsistent making it difficult for lawyers to advise clients on their likelihood of success. Complaints must adequately prove that the opposing party is a cybersquatter or used the domain name in bad faith.

The big question with all of these changes is how will the consumers respond? Will they readily adopt these new advances? Will the companies that have invested receive an adequate return on investment? Registrars have outlined marketing campaigns that they intend to implement in order to encourage consumers to use these new gTLDs. But it will be some time before we can rule on whether or not the system is a success.

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Part II: New gTLDs

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Part I provided an introduction to ICANN, its many acronyms and how the system came to be. This section focuses on what this means for consumers.

ICANN’s Generic Names Supporting Organization (GNSO) conducted trials in the early 2000s and introduced a policy development process in 2005 based on the introduction of new gTLDs. The new gTLD release was approved in June 2011 and has now reached the implementation stage. Sixty one new gTLDs have been released in the first 5 weeks of 2014 with many more expected in the coming months. (http://newgtlds.icann.org/en/program-status/delegated-strings)

The goals of the program include “enhancing competition and consumer choice, and enabling the benefits of innovation via the introduction of new gTLDs.” (http://newgtlds.icann.org/en/about/program). The organization considered intellectual property concerns, consumer protection, DNS stability, and several other factors when deciding to implement this program. They started accepting applications in January 2012 and 1,930 were received. (http://newgtlds.icann.org/en/program-status/statistics)

Applying to be a registrar for one of these gTLDs requires an application fee of $185,000 and ICANN warns that companies should anticipate additional operating costs.

What will the new gTLDs look like and how does this affect the average consumer and/or company? Donuts and GoDaddy are registrars that are heavily involved in the new gTLDs and have filed a large number of applications. They will be controlling domains such as .COMPUTER, .MEDIA, .MENU and .UNO.

This system is meant to ease the burden on consumers searching out businesses. If a consumer is interested in researching places to visit during a trip, he can simply go to .MUSEUM or .TRAVEL instead of performing a more generic search. Individuals looking for food options can go directly to .MENU. Those in need of housing can use .APARTMENTS or .RENTALS.

The system is intended to benefit businesses as well. Previously, businesses may have had a hard time procuring a domain and web address that adequately described their business. Now they will have the ability to be part of a domain that specifically serves a particular industry. For example, snow boarding business called Big Air may not have been able to obtain the BIGAIR.COM domain because it was already in use by another company, like a fan retailer or water ski seller. Big Air may be forced to choose a domain name that could confuse its customers or make it more difficult for them to locate the proper company. Now, Big Air would have the option of locating itself on a domain that is more specific, like .SNOW.

In the past, .COM domains were once thought of as the one and only option (or one of the only, but now they will just be “one store in the whole shopping mall.”

In Part III we will provide a discussion of  the effect of gTLDs on trademark owners.

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Part 1: gTLDs, ICANN, and Donuts, What Does It All Mean?

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The internet has changed our lives in a number of ways. And in order to keep up with the demands of today’s technologically savvy society, it must continue to grow and change as well. In recent months, the internet universe has been expanding from the .COM and .ORG universe to a number of new domains that were not previously available.

Antonelli Law is providing a series of three posts to explain the development and release of the new generic Top Level Domains. Part I is an introduction to ICANN and domain names.  Part II will further discuss the release of new gTLDs. Part III will provide information on how trademark owners will be affected and how disputes will be resolved.

The first release of new generic top level domains occurred in October 2013 and there are no signs of slowing down. This effort is ostensibly aimed at making things easier for consumers and poses new considerations for companies and trademark owners interested in further developing and protecting their brand.

Whether the release of new gTLDs will in fact achieve these stated aims remains unclear. Remember the .XXX domain released in 2012, where legitimate companies were urged to purchase their identities in the .XXX domain to avoid market confusion? In our opinion, there is no public clamor for these new gTLDS and appears to be just another shot at pumping an internet commerce bubble. Perhaps soon, the market will tell.

Part I: Introduction to ICANN and Domain Names

It is an undisputed fact that the internet has greatly altered the way that companies do business. All aspects of a company’s online presence are closely related to marketing, consumer exposure and trademark rights. But our .COM world is changing to one which is expected to be even more tailored toward the consumer experience.

With these changes, comes a new list of acronyms and buzz words.

  • DNS: Domain Name System
  • ICANN: Internet Corporation for Assigned Names and Numbers
  • TMCH: Trademark Clearinghouse
  • gTLD: Generic Top Level Domain
  • ccTLD: Country Code Top Level Domain
  • Sunrise Period: exclusive trademark holder registration period
  • UDRP: Uniform Domain Name Dispute Resolution Policy
  • ACPA: Anti Cybersquatting Consumer Protection Act
  • Donuts: company that filed the largest number of gTLD applications

While companies were previously in a position to ignore them, they are quickly becoming part of the vernacular. But what do they all mean and how do they work together?

ICANN is an organization that was created in 1998 to handle all of the background operations that enable the internet to function. Participants in the organization come from all over the world and offer input on how the internet should be run.

Computers operate by each having unique identifiers (commonly known as the IP address) so that they can properly communicate with each other. ICANN compiles databases of these identifiers, typically unreadable series of numbers, and implements systems which make the Internet usable. Instead of typing in a series of numbers to reach a specific website, consumers use the name that has been associated with those numbers.

This organization initially focused on handling cybersquatting complaints. Cybersquatting occurs when a party acts in bad faith by occupying a domain name that it feels will be desirable to another party. In many instances, cybersquatters acquired a number of domain names in order to solicit money from parties that had trademark rights in the name and would likely want to use it for their business. The Anti Cybersquatting Consumer Protection Act was put in place to prohibit registration of domain names that contain the marks of others. Today, cybersquatting is almost completely nonexistent.

ICANN controls all of these web addresses and makes available to users wishing to start websites. It creates domains, called registries, and then gives them to a registrar. The registrar has the ability to assign each domain to a specific purchaser. ICANN oversees the many registrars and makes sure that the domains are not duplicated. The US is home to the largest number of registrars, but the can also be found in 60 other countries throughout the world.

ICANN also created a system of ccTLDs (country code top level domains). While it is something that we are relatively unaware of in the US, the rest of the world relies heavily upon these domains. Each country can be assigned its own TLD and it then controls the distribution of sites within that domain. Examples: .CO for Colombia, .DE for Germany, .JP for Japan. There are currently 250 active ccTLDs. Countries are allowed to put their own regulations in place for handling these domains.

The remainder of the internet was originally occupied by a small number of gTLDs, including .COM, .NET and .ORG. ICANN is in the process of greatly expanding the number of gTLDs with the first new ones hitting the market in late 2013. New gTLDs were made available and a number of registrants filed applications in order to obtain them for sale. ICANN claims that “establish[ing] market competition for generic domain name (gTLD) registrations [will] result in a lowering of domain name costs by 80% and saving consumers and businesses over $1 billion annually in domain registration fees.” (http://archive.icann.org/tr/english.html)

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Successful Brand Protection: Who Really Owns the “12TH MAN” Mark?

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With the recent Seattle Seahawks Super Bowl win, mention of the “12th Man” has been in the news for a number of weeks. Surprisingly, Seattle does not have ownership of this mark. The actual owner, Texas A&M University, has been very aggressive in policing its mark.

Texas A&M registered the marks “12TH MAN” and “HOME OF THE 12TH MAN” in 1990. Various registrations for these marks in other product categories have followed since.

The school’s website claims that the tradition of referring to fans at football games as the “12th Man” began on Jan. 2, 1922. During a home football game, the team was struggling and had been forced to go through all its reserve players. The coach asked E. King Gill, a former football player that had decided to play basketball, to leave the stands and suit up for the team in case he was needed. He never played in the game, but he was the only player remaining on the sideline when A&M finally won the game.

Seattle also claims to have a long history of association with the number “12” and the phrase the “12th Man.” The team alleges to have started using the term “12th Man” shortly after its creation in 1976. On Dec. 15, 1984, jersey #12 was retired in honor of the fans. A flag meant to honor the “12th Man” was first hoisted on Oct. 12, 2003 by 12 original season ticket holders and continues to be raised before every home game.

A&M started sending cease and desist letters to the Seahawks in 2004, but the team refused to stop using the marks. A&M responded by filing a lawsuit immediately before Seattle was set to take on Pittsburgh in Super Bowl XL. It requested a temporary restraining order and permanent injunction based on dilution of the marks when viewed by large Super Bowl audiences that would likely associate the marks with Seattle and not the actual owner. (The case, originally filed in Brazos County, Texas was removed to federal court so the injunction was not issued.)

Seattle is the only team that A&M has actually filed a lawsuit against. The parties quickly reached a settlement in the case and a licensing agreement was signed 6 months later in July 2006. Under the agreement, Seattle agreed to pay A&M a lump sum of $100,000 and $5,000 per year for a term of 5 years. It included a renewal option which was exercised in 2011, extending the agreement to 2016.

Under the licensing agreement, Seattle is not allowed to attack A&M’s ownership of the marks, sell any merchandise with the term “12TH MAN,” encourage media outlets to use the term, use the term along with the color maroon or any other shades of red, establish or endorse any organization that uses “12th Man” in its name, fly a flag with the term, use the term “12TH MANIA” in any way or apply for registration of the marks. Seattle is also required to submit samples of all goods and services containing the mark before they can promote them in order to ensure quality.

The royalty amount paid to A&M is subject to renegotiation after the end of the first renewal period. The availability of new forms of social media and the success of the Seahawks are likely to affect these negotiations in 2016. Currently the “12TH MAN” as associated with Seattle has 1.5 million likes on Facebook and 431,000 followers on Twitter. Value in these marks continues to grow, based both on the actions of the actual owner and the licensee.

A&M is extremely active in policing its brand and typically relies upon the effectiveness of cease and desist letters. Over the years, letters have been sent to many teams including the Buffalo Bills, Chicago Bears and Denver Broncos, all of which stopped using the mark(s).

These marks are also common in other sports. European and South American soccer clubs are known for retiring #12 in honor of their fans. And RFK Stadium, home of DC United, has a sign that says “Home of the 12th Man.” (DC United has received cease and desist letters from A&M but claims that they only have a single sign and in no way engage in commercial use.)

A&M has also been successful in deterring use of their marks in other industries. Recently, Foggy Noggin Brewing, a small brewery 20 miles northeast of Seattle, planned on selling “12th Man Skittles IPA” on the Saturday before the Super Bowl. The brewery is only open from 12-4 on Saturdays and only made 5.6 gallons of the beer. However, a cease and desist letter from A&M encouraged them to change the name of the beer. The brewery opted for “Cease and Desist IPA” in order to avoid any potential legal complications. A&M does not own the mark when associated with beer and would have had a difficult time proving likelihood of confusion for consumers if this case had gone to trial.

In 2012 and 2013, A&M sent out 460 cease and desist letters for other marks that it owns. The school is a prime example of how to effectively police uses of registered trademarks in order to avoid dilution of its brand. Until it comes across a company that is willing to wage an expensive legal battle, it is likely to stop usage of its marks in industries and categories it cannot legally control as well as those it can.

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9th Circuit Rules that Time is Of the Essence When a “Close Relationship” Exists Between the Parties to a Copyright Infringement Suit

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On November 6, 2013, the 9th Circuit, following previous decisions by the 2nd and 6th Circuits, ruled that a copyright infringement claim filed by Seven Arts was barred based on the three year statute of limitations imposed by the Copyright Act. The decision cited that this decision was proper for the circumstances at hand because “the gravamen of the dispute is ownership” and “the parties are in a close relationship.”

This case arose out of a series of cases (spanning over ten years) that Seven Arts filed concerning its alleged ownership of the copyrights for three motion pictures: Rules of Engagement, An American Rhapsody and Who is Cletis Tout?

Seven Arts filed a lawsuit in Canada in 2003 against CanWest based on its alleged ownership of the copyright rights to the films. In the complaint, “Seven Arts claimed co-ownership rights to the pictures stemming from a document referred to as the ‘Heads of Agreement’ or ‘Master Structure Agreement.’” (The agreement contained a forum selection clause that designated Canada as the proper venue.) While the Canadian case was still pending, Seven Arts filed the same action against the same defendant in the Central District of California in 2005. This time, it claimed to be the sole owner of the rights. (This case is dismissed in 2008 for failure to prosecute.)

In 2011, the Canadian court ruled that Seven Arts is the sole owner of the copyrights. Seven Arts relied on this judgment as proof of ownership and it immediately filed suit against Paramount and Content Media Corporation for copyright infringement of the three works. (This action was almost identical to the suit filed in this court in 2005 that was later dismissed.) The complaint also asserted that Paramount had been improperly paying royalties to CanWest or Content Media despite several attempts to alert them to Seven Art’s ownership claim.

Seven Arts chose to voluntarily dismiss Content Media from the suit and instead intended to pursue the company in the High Court of England and Wales. Paramount admitted to “exploiting the pictures” but was unwilling to recognize that Seven Arts maintained ownership of the associated copyrights.

While the court recognized that “each new infringing act causes a new claim to accrue,” it explained that a “plain and express repudiation” of ownership by the defendant begins the tolling of the three year statute of limitations. If the claim of ownership is time barred, all claims related to the ownership must also be barred.

Seven Arts attempted to argue that the rulings in the other circuits were not applicable because Paramount did not maintain a close relationship with Seven Arts, but was instead only a “downstream, third party licensee.” In reference to this contention, the court considered the relationship of the various predecessors-in-interest to both parties. It determined that there was a “close relationship” between these groups. (The current CEO of Seven Arts had even been personally involved in creating the licensing agreement with Paramount on behalf of CineVisions, a predecessor-in-interest to Seven Arts. Thus, Seven Arts was aware of Paramount’s interest in the distribution rights of the films during the statutory period.)

The court also looked at evidence that Seven Arts had sent three letters to Paramount throughout 2005 claiming that it was the rightful owner of the copyrights and royalties should rightfully be paid to Seven Arts and not other parties. Paramount ignored these requests, which the court determined constituted a “plainly and expressly repudiat[ion]” of Seven Arts’ copyright ownership claim and it occurred outside the three year window.

The 9th Circuit stated obvious concern for causing a split between the rulings of other circuit courts, but whether or not that feeling will be echoed by other circuit courts is uncertain.

For more information:

  • Case 2:11-cv-04603-ABC-FMO
  • Copyright Act, 17 USC §507(b)

 

 

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