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Intellectual Property in the World of E-Business: Trademarks, Trade Names and Domain Names

January 2002 Just as corporate headquarters rest on real property, e-business rests on intellectual property. Indeed, without intellectual property, e-businesses could not operate. Intellectual property is a collective term that embraces trademarks, trade names, domain names, copyrights and patents. This issue will be devoted to the basics of understanding how domain names, trademarks and trade names are related to each other and how they are used in the virtual world. Subsequent issues will be devoted to: cybersquatting and how trademarks can be protected against cyber-infringement; copyright issues in cyberspace and e-business patents.

Identifying Your Business, Goods and Services in the Virtual World

Trademarks and trade names are forms of intellectual property familiar to brick-and-mortar businesses, and their use in the virtual e-business world is generally governed by the same principles and laws as their use in traditional business. Domain names are the only form of intellectual property that are unique to doing business on the internet. Some question whether a domain name per se is intellectual property at all, because domain names are functionally different from trademarks and trade names. However, the use of domain names in connection with virtual businesses is generally subject to the same laws and principles as trademarks and trade names.

Although trademarks, trade names and domain names may be employed internationally by your e-business, their use will be subject to the laws of each country in which your e-business operates. Of course, there are some basic global principles of trademark law and the registration and use of domain names (at least through registrars accredited by the Internet Corporation for Assigned Names and Numbers (ICANN)) are governed by a uniform policy implemented by each registrar through contracts with domain name registrants. However, the adjudication of your and your competitor’s respective rights in trademarks, trade names and domain names will be governed by the laws that would be applicable if your e-business had a physical presence in the country where your competitor resides. In other words, you may have a valid trademark and a domain name under which you do business in the United States, only to discover that your use of that trademark and domain name in your e-business violates the rights of a competitor in, for example, Germany.

Trademarks, Trade Names and Domain Names: How They Are Used in Cyberspace

"Trademark" is the legal word for "brand name." Technically, a trademark identifies the goods that you manufacture or sell, and it distinguishes your goods from those of your competitors. A service mark performs the same function for your services. Because the law that governs the use of both trademarks and service marks is the same, we often refer to these "source identifying and distinguishing" marks together as trademarks. Trademarks are protected internationally under the respective national laws of each country, and if your e-business solicits customers in more than one country, you are using your trademarks in each of the countries where you do business. Therefore, if you are doing business internationally through the internet, it is possible that by selling goods or offering your services to customers outside of your home country your trademarks might infringe trademarks and service marks used by a local competitor. You could find yourself facing litigation in a foreign jurisdiction.

A "trade name" is simply any name that is used by a person to identify his or her business or vocation, rather than his goods or services. A "trade name" may also be a "corporate name," which is the legal name adopted by a corporation, or it may be a "fictitious name" or "assumed name." In the United States, state law rather than federal law governs registration and use of corporate names, fictitious names and assumed names. Similar local laws exist in most countries around the world. Although your company’s name may be recognized globally, its corporate presence is local in those countries where it actually has offices or other facilities. Whether or not you are physically present in countries outside of your home country, your use of your trade name in your e-business might also be the basis for infringement or unfair competition claims in countries other than those in which your company physically resides.

A "domain name" is the unique sequence of words, phrases, letters or other characters (such as numbers or certain punctuation marks) that identifies a specific computer or network on the internet and serves as the address through which users can access the information stored in that computer or network. Domain names are assigned by a registration authority and consist of a top-level domain (TLD) and a second-level domain (SLD). There are two different types of TLDs. The first is a TLD that is assigned through ICANN-accredited registrars, i.e, .com, .net, .org, .gov, .edu, .biz and .info (others are coming soon). The second type is the individual country TLD, which is administered in each country by a government agency, self-regulatory body or private contractor engaged to handle the administration in a particular country. The SLD consists of any group of letters, certain other characters or a word or phrase not already reserved in combination with the particular TLD being sought.

Each domain name corresponds to a host intellectual property address, which is a string of four numbers separated by periods (such as 111.22.3.444) used to represent a computer on the internet. This is why no two domain names can be exactly the same. If someone has registered "cars.com" as his

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Michelle C. Burke

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e-Business - IP

domain name, no one else can register "cars.com." However, someone could register "car-s.com," "cars.org" or "kars.com," because each of these is different from "cars.com" even though each is recognizably based on the word "car."

This address function does not require adoption of a word or phrase having any particular creative or unique invention. Therefore, the limited purpose of a domain name, which is to serve as an address in the internet virtual space, separates domain names from other forms of intellectual property. However, doing business on the internet does benefit from the use of a domain name that will be easily remembered by customers. Brick-and-mortar companies generally want to select a domain name for their e-business that is the same as or closely similar to a trade name or a trademark they are already using in their traditional business. New e-businesses, on the other hand, have grown up around the domain names they selected, which became their trade names and trademarks.

An example in the first category is "ibm.com." The SLD, "IBM," is a registered service mark and trademark belonging to International Business Machines Corporation and is also that company’s familiar trade name. An example in the second category is "amazon.com," which is the domain name, trade name and registered service mark of Amazon.com, Inc., a company created as an e-business. Other companies have easy to remember domain names that may not correspond to protectable trademarks or trade names. For example, The Weather Channel’s domain name is "weather.com." The word "weather" cannot be claimed by any single company as a service mark or trade name, but it certainly functions as a convenient SLD for a domain name used by a company dedicated to providing weather forecasts to the public.

Because domain names may correspond to existing trademarks and trade names and because e-businesses may extend the use of their domain names into the traditional realm of marketing and identification, domain names can also be considered intellectual property - at least when they are used for purposes of marketing and identification. When used in an e-business as a service mark, trademark or trade name, domain names are subject to the same principles as those more traditional forms of intellectual property. For example, a domain name that consists entirely of a generic word or phrase for the goods or services being sold by a particular e-business will not be protected as a trademark or trade name in most jurisdictions. Thus, if your e- business offers a service through which car dealers can advertise the availability of particular used cars, and you have chosen the domain name, "carsforsale.com," under the laws of most countries you will not be able to claim any trademark rights in the domain name "carsforsale.com." Someone else will be free to operate a competitive e-business under the domain name "carsforsale2.com" or "cars-for-sale.com" without violating any laws or regulations. However, the use of a domain name that is based on a trademark or trade name otherwise protectable under trademark and unfair competition laws can infringe trademarks registered outside of the home country of your e-business or can be challenged as unfair competition around the globe, wherever your e-business reaches.

How to Protect Your Domain Names, Trademarks and Trade Names in Cyberspace

If you want to prevent competitors from using the same or a similar domain name to that of your e-business, select one that is not a generic or descriptive term for your goods or business. Register all available variations of that principal domain name in order to prevent others from registering similar domain names, particularly if you have chosen a generic or descriptive term for your domain name. File applications to register your important trademarks in those countries from which you hope to draw new customers for your business.

If you have already registered your brick-and-mortar trademarks in your home and other countries, you may or may not have to register a domain name that is based on an already registered trademark or service mark. This depends on how you are using your domain name in your website.

In a subsequent issue of this newsletter, we will explore the particular problems associated with trademark infringement on the internet.

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