Ron Hay is a media and entertainment lawyer at the Toronto law firm of McMillan Binch and a member of the KNOWlaw Group. This article was prepared with the assistance of Caryl Silver.

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It has been a year since we launched our series about the Internet. During that time, the Net has made some progress towards living up to all of its hype. Key to future development will be increased speeds as well as further advancement of encryption technologies allowing for the secure transfer of credit card information over the Net, a development that no doubt will add to the lure of the Net as a big home shopping network for goods and services.

To date, however, the Web remains primarily a promotional tool. This is good news to producers of media product, whether those products be television programming, feature films, newspapers, magazines or software. The cost of establishing and maintaining a Web site can be a fraction of other advertising and promotional channels. It is for this reason that the number of companies joining the Web continues to grow at an astonishing rate.

Domain names

To make it easy to find (and remember) them, firms want their Internet address, known as a ‘domain name,’ to be the same as, or an abbreviation of, their corporate name, trademark or trade name. Each domain name reflects a unique numerical computer address.

.com or .ca

One has a choice to make when registering a domain name – to register under the more common u.s. ‘.com’ system or under the Canadian ‘.ca’ system. The u.s. ‘.com’ is much more widely used and provides more of a global presence. However, if the ‘.com’ domain is already taken, a ‘.ca’ suffix is an alternative, although global visibility may be compromised.

Virginia-based Network Solutions is responsible for managing domain names with the ‘.com’ suffix, and the CA Domain Registrar in Vancouver is responsible for the ‘.ca’ suffix.

In the u.s., Network Solutions, also known as Internic, checks the availability of the proposed domain name and, if available, can formally register it within a few weeks.

Since domain names were, and still are, handed out on a first-come, first-served basis, more and more companies are surprised to learn that their names, and even registered trademarks, are unavailable. Since 1994, more than 200,000 commercial entities have registered unique domain names, despite the $50 annual domain name maintenance fee (registration costs $100, but covers two years of registration) that was imposed last summer.

Problems

Domain name registration has created all kinds of problems for users and lawyers alike. Unlike a trademark, a domain name can only be registered once and that registered name has effect worldwide.

Under trademark law, the same trademark can co-exist for different ‘wares and services,’ as long as there is no confusion between the two uses. For example, a company selling books might be able to use the same trademark as a company providing financial services. However, domain names cannot be separated into separate categories nor be shared for different uses.

Trademarks registration operates on a country-by-country basis – the same trademark for a particular service might be owned by one company in Canada, by another company in the u.s. and by yet another company in the u.k. Yet the Internet knows no borders. As such, while there might be hundreds of valid trademark registrations worldwide for a very popular trademark such as ‘Acme,’ there is only one ‘acme.com.’ Unrelated businesses with the same trademark, and even similar businesses in different countries, may be in competition for the same domain name.

Confusing and similar names

Although corporate loss of a desirable domain name may simply be coincidence or bad luck, others may try to register domain names to preclude their use by competitors. Although Internic now attempts to block obvious efforts to scoop a competitor by registering that competitor’s trade name as its own (Sprint Communications once attempted to register mci.com), such behavior remains a threat.

Alternatively, confusingly similar names may be registered to market similar products, as long as there are no registered trademarks of variants of registered trademarks.

Under Canadian trademark law, an application to register McDonald’s as a trademark in connection with a restaurant would surely be rejected by the Trade-marks Office, as it would cause confusion with the existing McDonald’s trademark. However, until Internic changes its policies to prohibit confusing registrations, companies like McDonald’s will have to turn to the courts to facilitate their battle against someone using a confusing domain name.

Trademark infringement?

If a domain name is used in a manner that could cause confusion with a registered trademark, the unauthorized user might be the target of a lawsuit. For example, a Web page marketing goods or services under a domain name the same as another company’s trademark in connection with the same or similar services might be liable for trademark infringement. The trademark holder would need to prove that consumers would be confused into believing that the trademark owner was affiliated with the site.

An April California court decision held that traditional trademark doctrine could be used to prevent others from using registered trademarks as domain names in such circumstances. However, if the domain name was being used to market completely unrelated products, it would be a much more difficult task for the trademark owner to establish that the use of the domain name caused confusion among the public.

InterNIC policies

Last July, Internic developed policies and guidelines to deal with, and hopefully avoid, some of the domain name and trademark disputes. The company made it clear that it was not able or required to screen requested domain names for possible trademark violations.

The new policies require applicants to warrant that (i) they’ve set up an Internet site for the domain name (to deter parties from registering names solely to harass others); and (ii) to the best of their knowledge, the domain name does not violate a registered trademark anywhere.

Applicants must also indemnify Internic from any claim relating to the domain name. Finally, the guidelines provide procedures to allow registered trademark owners to challenge others using their trademark as a domain name. Disputed domain names can be put ‘on hold’ pending the outcome of legal proceedings.

There is a definite shift towards giving priority to the first to have registered a trademark – key to proving this first use is to have a trademark registration in hand.

Several judicial decisions and pending lawsuits in the u.s. are trying to sort out priority issues regarding trademarks and domain names. Many domain name disputes settle, but seldom without incurring corporate headaches.

CA domain name registrar policies

The Canadian policy has not developed to the same level as that of its American counterpart. The policy states that it is the applicant’s responsibility to ensure that it has the right to use the proposed name. The policy further states that ‘registering a domain name does not confer any legal rights to that name; you should consider registering a trademark if you have not already done so.’

Disputes between parties regarding the use to a domain name ‘are to be settled between the contending parties using normal legal methods.’ The registrar has final authority over all matters relating to registration and use of the name.

The future?

No doubt these issues will continue to sort themselves out, both through changes in policy by those responsible for domain name registration and by the courts. However, it is more important than ever to register trademarks, rather than relying on the ‘common-law’ protection gained by long-term use. If a domain name dispute arises, the timing of trademark registration, and of the domain name application, may be decisive.

Checklist

– Consider marketing options available for your producer on the Internet.

– Check if your ideal ‘.com’ domain name has already been taken at //rs.internic.net, click registration services and complete the Whois query form. Canadian domain names can be searched at //www.canet.ca/ canet/index.html.

– If your name isn’t being used as a domain name, ensure that it is registered with the Trade-marks Office and consider applying for a domain name as soon as possible.

– If your name is already assigned, brainstorm variations. If one seems applicable and hasn’t been taken, apply for the name and consider trademark registration.

– Negotiations or litigation over the domain name may be possible but expensive – would it be worthwhile? Consult a lawyer.

– When developing names for new products, check current domain names as well as doing a trademark search.

(This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice on any particular situation.)