It was an omen of things to come. Just over an hour out from Hong Kong the pilot of my 777 en route from San Francisco came on the intercom. Hong Kong was temporarily closed due to torrential rain and we would need to land in Taipei to refuel before proceeding.
When we finally arrived in HKG my journey from Washington, DC was already close to 24 hours’ duration. I cleared immigration, collected my bags, and met the driver of my hotel-dispatched Mercedes. En route the downpour began again, in sweeping waves that the locals call “black rain”. I have no idea how my driver saw the road as the wipers engaged in a futile battle with the deluge. I never spoke to him during the ride except to say “thank you” when we finally arrived at the Sheraton in Kowloon, afraid that distracting him for even a moment could have fatal consequences.
That black rain would become a metaphor for the coming deluge of Internet-related trademark law and policy proposals that could arrive as a vast storm front in the next two years. The trademark community is readying an ark to ride out the flood, and the domain investment industry must do so as well.
The Sheraton was situated directly across Hong Kong harbor from the massive Convention Center housing the annual meeting of the International Trademark Association (INTA) from May 11-14. I was attending it in my new capacity as a member of INTA’s Internet Committee, which wrestles with the intersection of trademark protection and cyberspace, as well as its Subcommittee on Internet Governance. On the first morning of the meeting I made the mistake of walking the two blocks from hotel to the Star Ferry terminal to catch the 5-minute, two-and-a half Hong Kong dollar (33 cents U.S.) ride across to the Convention Center. During rainy season Hong Kong is akin to a giant steam bath, a mass of humanity in a cloud of humidity. I sweated through my shirt and suit on that stroll and for the rest of the stay took a taxi those two blocks to avoid a repeat of that.
Inside the cavernous convention hall, where walking from one end to the other took ten minutes at a brisk pace, it became clear how huge the world of branding is in the 21st century. Thousands were in attendance from every corner of the globe, and more than one hundred exhibitors filled a space of several acres.
While those exhibitors included booths from a variety of incumbent and new gTLD registries, registrars, and a large number of online brand protection providers, it’s no secret that the trademark world has been less than enthusiastic about ICANN’s new gTLD program — concerned about the potential for vastly expanded cybersquatting and unnecessarily draining costs for legal actions and defensive registrations. So now that the program was off the launch pad I wanted to see how the trademark sector was viewing and reacting to it.
The first feedback came at a small “Table Talk” luncheon discussion of domain name litigation and arbitration attorneys and consultants involved in the new world of 1,000-plus gTLDs. These was an informal, unofficial conversation that allow INTA members to discuss subjects among themselves. It became clear that many of the trademark experts in attendance were just beginning to focus on the new gTLD program, despite clear notice of its impending arrival and the availability of new rights protection mechanisms (RPMs) consisting of the Trademark Clearinghouse (TMCH) and Uniform Rapid Suspension (URS). Those more conversant with it were concerned by a variety of registry and registrar practices that they thought were undermining their ability to make defensive registrations at reasonable cost.
Anecdotal reports also indicated that much of the intentional cybersquatting was being done by amateurs with no understanding of trademark law — one domain industry attorney related, laughingly, how he had been asked to help broker the sale of a newly registered infringing domain to its major brand rights holder for a contingency fee, and how he had advised the registrant to just transfer the name now before he was hit with a cease-and-desist letter or worse. A major concern of discussants was whether a rights holder had to take action against every infringing domain, no matter how slight the impact, to demonstrate active policing of its rights, to protect their mark through active policing; the moderator suggested that a memo to file explaining why action had been declined might suffice, but noted that there is no way to tell how courts would treat such decisions in the context of new gTLDs.
More information came at a large general session on trademarks and new gTLDs. As of that date (May 12):
- 46 URS actions had been filed with the National Arbitration Forum (NAF), and 3 with the Asian Domain name Dispute Resolution center (ADNDRC).
- Complainants had prevailed in 78% of the decided URS cases, and were denied in 22%; 9 cases were still pending.
- A total of 29,823 trademarks had been registered at the TMCH, and 97.9% had passed verification. The registrants included more than 11,000 organizations from 97 nations and involved marks registered in 117 separate jurisdictions.
- The more than 700,000 new gTLD domain registrations had generated 46,309 Trademark Claims notifications of exact match domains to rights holders. (Note: Since the INTA meeting TMCH registrations have passed 30,000 and total new gTLD domain registrations have passed 1 million.)
Session speakers conveyed anecdotal reports of substantial levels of cybersquatting. Many rights holders appeared to be passing on TMCH registrations because they had little interest in making large numbers of defensive “sunrise” registrations at new gTLDs. Complaints were heard that the URS was unattractive because it involved perpetual monitoring of suspended domains that could later be re-registered, and that the UDRP was too slow and expensive to scale to the new world. Session attendees were reminded that ICANN would be conducting an initial review of the efficacy of the new RPMs in 2015, and that review of the UDRP would also commence next year – and were urged to document how they used the new RPMs and what their total defensive costs stemming from new gTLDs added up to.
At the meeting of the Internet Governance Subcommittee I was asked to head up a new task force to analyze ICANN’s proposal for the process to develop enhanced accountability measures to accompany the transition of the IANA functions from the US government to the multistakeholder community. This followed up on performing the same lead role regarding the IANA transition process, which resulted in submission of an INTA comment letter.
Both domain investors and rights holders appear to share similar concerns about the prospect of a termination of the remaining U.S. role absent the establishment of enhanced and enforceable accountability measures.
At the full Internet Committee I reported on the state of play of that transition and accountability process, including the key elements of ICANN’s initial proposal as well as recent Congressional oversight hearings. At that meeting I also learned more about the use of RPMs against new gTLDs. Many domain registrations that had infringement potential could not yet be the target of a URS or UDRP action because the suspect domains were still “dark” with no content, and hence bad faith use could not be alleged or proven. Overall, only 5 UDRPs had been filed against new gTLDs, so for now the URS appears to be the favored arbitration response.
I also learned at the Internet Committee meeting that the trademark community was readying itself for the major trademark law and policy debates that are likely to arise in the 2015-16 timeframe.
The likely policy issues include:
- Potential amendments to the US Anticybersquatting Consumer Protection Act (ACPA) — premised on the fact that the statute, developed at the dawn of the commercial Internet in 1998, was outmoded and needed modernizing, especially in the face of new gTLDs.
- A comprehensive UDRP reform review within ICANN.
- Review of the performance of the RPMs for new gTLDs, which will be influenced by detailed analysis of URS decisions.
- Trademark issues related to “parked” websites.
- Analysis of the best and worst practices engaged in by new gTLD registries.
The Committee was also getting ready to react if other parties should propose legislation related to Internet fraud, or an international treaty on cybersquatting.
I left Hong Kong with a suitcase full of business wear in need of dry cleaning – and with a much better understanding of what trademark owners are thinking about new gTLDs. While .brand gTLDs and certain new gTLD vertical categories may enhance their web presence and marketing/sales strategies, monitoring and enforcement costs are a growing concern. Even if a global brand can keep its total URS costs down to $1,000 an action for filing fees and counsel, that can readily add up to a $1 million cost per mark across the new gTLD landscape.
Hopefully, my engagement on the Internet Committee, as well as that of other domain sector attorneys, can help to bridge the understanding gap between rights holders and domainers and deliver the message that the professional domain portfolio investors represented by ICA are not cybersquatters. (That point was driven home two weeks later when I attended the TRAFFIC domain conference in Las Vegas, where major investors related their own tales of being approached by cybersquatters attempting to sell newly registered and clearly infringing gTLDs — and of telling them to get lost).
It’s prudent for the trademark sector to be gearing up for the coming Internet trademark policy debates, and it would be imprudent for the domain industry to fail to do the same. The domain community respects the measured enforcement of trademark law, and asks in return that the trademark sector recognize that domains are also valuable intangible assets — and that a reasonable balance must be established to reconcile the separate bundles of rights within trademarks and domains. ICA will be delivering that message and readying its own strategy as the debates approach.
And there are many areas where a candid dialogue may produce win-win results. Trademark owners are justifiably chagrined that a URS action only suspends a clearly infringing domain for its remaining registration period, leaving it available for re-registration and the need for a follow-up URS filing — while domain investors don’t want a domain transfer option out of equally justifiable concern that the URS could become a low-cost means of reverse domain name hijacking (RDNH). One possible reconciliation would be to amend the URS so that a lost domain is permanently barred from being reregistered. That would alleviate domainers of their hijacking concern – and take a clearly infringing domain out of circulation with no continuing defensive registration costs for the rights holder.
When it comes to UDRP reform, ICA members have discussed a variety of changes they would like to see come about, and those can be the basis for future negotiations. As for amending the ACPA, we’ll have to see what is proposed – creating secondary liability would concern the entire domain industry far beyond professional investors, including registrars and secondary markets, while a “loser pays” rule would also be of significant concern. (While there is no current indication that those items will be on any INTA wish list, they have already been floated by the DC-based Coalition Against Domain Name Abuse (CADNA)).
How these debates will play out is far from certain. But that they will soon be engaged in is absolutely certain. So everyone with a stake in the future of Internet trademark law and domain investment needs to gear up and be ready to make their case – or else be swept away by coming torrents of policy black rain.