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Retailers fail to derail ICANN’s ‘Express’ train to more top-level domains

There’s no denying it: The Internet domain name system poses serious challenges for trademark owners. Domain name cybersquatting was the original trademark Internet twist. And the current explosive expansion in top-level domains will create new trademark conflicts, and possibly new twists in Internet trademark law, as two very recent cases involving the retailers Express and The Limited illustrate.

Before diving into these recent decisions, let’s quickly review top-level domains. They are the highest category of domains in the hierarchical domain name system. They’re known by the words after the dot — like “.com” and “.org.” For many years, the Internet ran on a very limited set of top-level domains, selected by a single volunteer, Jon Postel of the University of Southern California, and confirmed through a consensus process among early Internet experts.

Postel set up two categories of top-level domain — seven generic top-level domains (gTLDs) including “.com,” “.gov,” “.edu,” and “.org,” and approximately 250 country-code top-level domains (ccTLDs) based on the then-current United Nations list of country postal abbreviations. When public use of the Internet took off around 1995, Postel recognized that more generic TLDs were needed, but because of his time-consuming consensus-based decision-making process, he wasn’t able to create them quickly enough. It fell to the Internet Association for Domain Names and Numbers (ICANN), the corporation that took over Postel’s work, to create new TLDs, and that’s what the current effort is all about.

ICANN long recognized the need for many more TLDs, and it gradually added 15 new ones to the list between 2002 and 2012. But in 2011 it also invited applicants to apply without limitation for many more TLDs, which could include new international domains in non-Western alphabets, branded domains (.[your company’s trademark]), and new generic domains like “.auto” and “.bank.” ICANN created various safeguards in the process. Sophisticated companies had one expensive and clumsy chance to protect their brands by formally disputing new domain applications. And now that applications have been formally filed and vetted, trademark owners have another process for challenging new proposed TLDs.

The Limited and Express decisions

That’s where the Express and Limited cases come in. Donuts, Inc., (which is in no way affiliated with the production of delicious baked goods) through subsidiaries, applied to own and operate many TLDs, including the TLDs “.express” and “.limited.” Both retailers objected, claiming that Internet users would be confused and would identify the domains with their stores.

The issues thus were simple: Should new “.express” and “.limited” top-level domains be allowed, or should they be stopped because of the trademarks owned by the two fashion retailers?

The cases were decided in July under a special ICANN procedure, similar in some ways to the Uniform Dispute Resolution Procedure (UDRP) used to resolve claims of bad faith domain name registration. It employs a dispute-resolution provider (in this case, the World Intellectual Property Organization) and a “panelist” (an experienced lawyer) appointed by that provider to decide the case under the guidelines laid out by ICANN.

The panelist who decided the Express case noted that ICANN could have adopted one of two blanket rules:

  • - You can always use a common word (in English or any other language) as a TLD, or
  • - You can never use a recognized trademark as a TLD.

But ICANN chose neither of those two categorical rules. Instead, the organization left it to the decision-maker to balance what the panelist called “the relative interests of trademark owners and prospective users of common terms.”

In both cases, each side presented serious claims. The two retailers, The Limited and Express, pointed to their huge sales and established brand recognition. Donuts pointed to its large investment in new TLD applications and its hopes that new TLDs could increase choices and competitiveness among TLDs.

The panelists in both cases were on virgin territory. Again, in the words of the Express case panelist, “This is a somewhat unusual proceeding in that it involves a Procedure that has been newly-created for a set of circumstances that is newly-created.”

But both panelists, adhering to ICANN’s rules, recognized a presumption in favor of the applied-for TLDs. As the panelist in the Limited case put it, in order to reject a TLD application on trademark grounds, “there must be something untoward — even if not to the level of bad faith — in the conduct or motives of Applicant, or something intolerable in the state of affairs which would obtain if Applicant were permitted to keep the [TLD] in dispute.”

In both cases, the panelists found Donuts’ application to be legitimate and in good faith. Both panelists ruled that because that there were sufficient other meanings to the words in question, the trademark owners should not be allowed to prevent the use of the words as TLDs.

Will these rulings be followed in future TLD disputes? It’s too soon to say, since early decisions in Internet cases aren’t always predictive of future decisions. Indeed, the results in these cases may spur trademark owners to pressure ICANN to give more deference to trademarks. But at the least, these rulings reinforce the lesson of the mid-1990s that Internet domains can create seismic disruptions in the trademark world. They also reaffirm a timeless principle of trademarks: Descriptive and other weak trademarks are the most at risk for dilution from non-trademark use.

As the new TLD process rolls out this fall, expect more trademark battles with a twist—including disputes over new complete domain names using the new TLDs. Many of those disputes will go through ICANN’S UDRP process, or its new Uniform Rapid Suspension process, after trademark owners become aware of potential problems through Trademark Clearinghouse procedures.

Mark Sableman is a partner in Thompson Coburn’s Intellectual Property group. He is the editorial director of Internet Law Twists & Turns. You can find Mark on Google+ and Twitter, and reach him at  (314) 552-6103 or msableman@thompsoncoburn.com.

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