Tuesday, March 20, 2012

gTLDs and Property Rights: Legal Rights Objection

With the opening of the top level domain space, ICANN and the Internet community face a potential wave of new infringers and cybersquatters. ICANN has openly discussed the possible issues, and has put forth a procedure for addressing them. The gTLD Applicant Handbook describes the “Legal Rights Objection” as the best remedy for a proposed gTLD that infringes an existing legal right.

ICANN contemplates several possible standards that are very similar to trademark law. The applied for string may not take “unfair advantage of the distinctive character or the reputation” of an established mark. A second impermissible use is one that “unjustifiably impairs the distinctive character or the reputation” of the existing mark or name. Finally, the proposed string must not “otherwise create[] an impermissible likelihood of confusion” between the applied for string and the existing mark.

The existing legal right is proposed to exist in either a registered or unregistered service mark. Despite using language generally consistent with trademark principles, there are other legal rights contemplated. For example, very specific language describes the possibility of an IGO organization’s name or acronym as an existing legal right which new gTLDs must stay clear of. Although generally an IGO should register for rights in the various locations that it operates, ICANN specifically calls them out. Perhaps this is ICANN’s attempt to recognize the completely international nature of the internet domain space.

Interestingly, ICANN describes separate standards for evaluating a legal rights objection based on trademark rights or an existing IGO. There are eight non-exclusive factors for evaluating an objection based on trademark rights.

The first is whether the applied-for gTLD is identical or similar to the legal rights objector’s mark. This can include in appearance, phonetic sound, or meaning.

The second is whether the objector’s acquisition and use of rights in the mark has been bona fide. This rule seems to be contemplating the possibility of a “reverse troll,” that is a case where the applicant is a bona fide user, and the objector is a holder of a trademark for reasons other than legitimate use. An interesting issue that may arise are situations where both the objector and the applicant lack bona fide rights to the particular mark.

The third factor is a single lengthy sentence; “Whether and to what extent there is recognition in the relevant sector of the public of the sign corresponding to the gTLD, as the mark of the objector, of the applicant or of a third party.”  The “public recognition” may be a fame or secondary meaning analysis; however it is important to note that the “relevant sector” of the public must be considered. It is unclear if this is similar to a “channels of trade” determination or if there are other divisions. Could a trademark holder without a significant online presence be blocked from challenging an otherwise infringing gTLD string because the “relevant sector” includes only internet users?

The fourth factor considers the applicant’s intent in pursuing the registration. This is further defined by sub-factors. The first is whether the applicant had knowledge of, or “could not have been reasonably unaware of,” the objectors existing mark. The second is whether the applicant has previously engaged in registering or operating confusingly similar domain names. ICANN has clearly considered the possibility of various opportunistic possible registrations, including those that are fundamentally infringing or in bad faith. However, ICANN has also chosen to include a knowledge requirement.

ICANN has instructed dispute resolution providers to consider the extent the applicant has prior use with the mark, which can also be proven through “demonstrable preparation to use” the mark with goods or services “in a way that does not interfere with the legitimate exercise by the objector.” This factor would give weight to co-existing marks or previous settlement agreements. However, this could spell trouble for licensors who have given licensees permissions to use the licensor’s mark.

The sixth factor is to consider the applicant’s other intellectual property rights in the same sign or mark, and again, if those rights were acquired bona fide. This inquiry should extend to one question further, however, and also consider whether the use of the gTLD will be consistent with the applicant’s other intellectual property rights in the mark.

The seventh factor succinctly asks “to what extent the applicant has been commonly known by the sigh corresponding to the gTLD” and if the planned use of the gTLD will be consistent with this prior use.

The eighth and final factor asks if the applicant’s “intended use of the gTLD would create a likelihood of confusion with the objector’s mark as to the source, sponsorship, affiliation, or endorsement of the gTLD.” This has the potential to be a powerful tool for objectors who desire to block a similar gTLD registration. The applicant could have full rights to the mark, be using the mark in bona fide good faith, and could otherwise not be infringing in any way on the objector’s mark, but the objector could still make a strong case for the disallowance of the gTLD.

It is important to remember that the legal rights objection process has an important distinction from the string contention process. String contention (covered here) is designed to resolve disputes between competing interests where each party is attempting to register a gTLD. With the legal dispute process, an objector would be likely attempting to block a gTLD registration without filing their own or filing their own but under a different mark.

This perhaps may be the best evidence of ICANN’s good faith in opening the gTLD space for registration. While each new gTLD operator will provide significant financial compensation for ICANN, as well as furthering ICANN’s stated goals of access and openness, the legal rights objection could actually stop both of these from occurring. A strong objector could theoretically close down a variety of potential gTLDs if they already had a strong enough mark.

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