July 1, 1996

Hundreds of disputes are in progress over who owns
valuable business domain names on the Internet –
those ubiquitous “acme.com” identifiers for e-mail
addresses and corporate Web sites. This long-brewing
controversy has pitted owners of domain names afraid of
losing their names against trademark owners who contend
that their marks are being compromised.

And both sides now are clamoring for someone to
do something. Someone, in this case, is Internic, an
organization serving as the registry for the most
recognized categories of Internet domains: .com, for
commercial enterprises; .edu, for educational
institutions; .net, for organizations that run networks,
and .org, for research and nonprofit groups. Internic
has registered some 400,000 names in these domains,
first-come, first-served, since it was founded in 1993
through an arrangement with the federally backed
National Science Foundation.

Last year, Internic began charging registrants $50 a
year for each name registered. Previously, Internet name
disputes were rare and, invariably, had been settled
cooperatively. But as commercial interest in the
Internet increased, domain-name speculators and
trademark lawyers descended like locusts.

Speculators staked out names of well-known companies and
products and began selling them back to the companies
themselves. Trademark holders began sending threats to
holders of domain names that came close to, or matched,
their trademarks. If the domain holders didn’t
relinquish, the trademark owners often would sue — even
if the trademark was for Acme Plumbing, say, and the
registered name holder’s business, Acme Bakery, was
unrelated.

And if threats didn’t work, many trademark holders were
also happy to threaten Internic. “Their lawyers say,
‘We’ll sue everyone, including you,”‘ said Grant Clark,
corporate counsel for Science Applications International
Corp., which owns Internic and the company that operates
it, Network Solutions Inc.

According to Internic, such threats have forced
it to assume that it will be sued in such circumstances
— despite the fact that Internic lawyers say it has
never performed any kind of trademark search or
verification before issuing a domain name — nor does it
intend to.

To deflect some of its perceived liability, Internic
adopted a name-dispute policy that appears to favor
trademark holders. The policy so infuriated holders of
existing domain names that the Electronic Frontier
Foundation, a public policy group, is actively seeking
pro bono counsel to file a class action suit against
both Network Solutions Inc. and the federal government.

It’s not clear how much of an effect such a suit might
have. Although Internic’s name registry was formed with
the blessing of the National Science Foundation,
Internic has no known legal authority. It was given its
responsibility by the Internet Assigned Numbers
Authority, a clearinghouse chartered by the influential
Internet Society and the Federal Network Council to
coordinate how domain names are linked to the physical
locations of computers on the global network.

In any event, one worrisome feature for groups like the
Electronic Frontier Foundation is a contract that
Internic requires domain-name applicants to sign. The
contract says they must agree not to sue Internic over a
name dispute. And in the event of a dispute, they must
post a bond to cover Internic’s legal fees. The amount
of the bond, according to a lawyer for Network
Solutions, could be little or nothing if the company is
not named in the suit, though if the company is named,
it would be higher.

Another concern is that Internic overwhelmingly favors
trademark owners over those with registered domain
names. A trademark holder must simply inform Internic of
a registered trademark that predates the registration of
an Internet domain name and contend that the duplication
is causing confusion or harm. These two conditions are
sufficient grounds for Internic to start a dispute
proceeding against the existing holder of the domain
name.

At the end of 30 days, the name “goes dark,” or
is taken off the network pending an agreement between
the name holder and the trademark owner. Going dark, of
course, could put a network provider, or anyone who
conducts business on the Internet, out of business
overnight.

One such unresolved dispute involves the domain name
“sylvan.com,” registered with Internic by Kayvan Sylvan,
a software consultant. His domain name is being
challenged by Sylvan Learning Systems Inc., which sells
franchised educational services.

If Kayvan Sylvan and the company are unable to settle
the dispute in the allotted time, Internic will take the
“sylvan.com” address off the Internet until the matter
is finally resolved. Internic contends that its only
alternative would be the dubious one of waiting for
Sylvan Learning to slap it with a lawsuit for
contributing to a trademark infringement.

The logical solution to this industry problem
would be to indemnify Internic from trademark liability
so that name disputes could be settled directly between
the parties involved, through existing trademark law.
Such legal protection would have to come from the
Federal Communications Commission or from Congress.
Clark, the lawyer for Internic’s corporate parent, said
he would be “ecstatic” if Congress granted his
organization immunity from lawsuits accusing it of
contributing to trademark infringement. “It would put an
end to the need for the dispute policy,” he said.

Even Internic’s biggest detractors agree. By whatever
means, “Internic needs to get out of the business of
deciding who will have their domain name taken away,”
says Carl Oppedahl, a lawyer who had sued Internic on
behalf of clients who wanted to challenge its dispute
policy. “If a trademark owner doesn’t like a domain
name, it should go to the courts. Existing trademark law
applies to the Internet, just like it does to toothpaste
brands in stores.”

Denise Caruso

Copyright 1996 The New York Times Company