Eric Goldman is an Associate Professor of Law at Santa Clara University School of Law. He also directs the school's High Tech Law Institute. Before joining the SCU faculty in 2006, he was an Assistant Professor at Marquette University Law School, General Counsel of Epinions.com, and an Internet transactional attorney at Cooley Godward LLP. Eric teaches Cyberlaw and Intellectual Property and previously has taught courses in Copyrights, Contracts, Software Licensing and Professional Responsibility. Eric's research focuses on Internet law, intellectual property, marketing, and the legal and social implications of new communication technologies. Recent papers have addressed topics such as search engines and online marketing practices.
ANNOUNCER: Today’s program is brought to you by Traverse Legal. A law firm specializing in internet law, domain disputes, intellectual property and technology company representation. That’s Traverse Legal www.traverselegal.com. Welcome to the Vertio Talk Radio tech spotlight with your host Damien Allen.
PROF. ERIC GOLDMAN: Hi Damien. Nice to talk to you again.
DAMIEN: You too as well. We’ve talked several times on different issues and today we’re going to be speaking about domain name cases that are going on right now in several states and one of the ones that we’re going to be talking about is going on in the state of Illinois and it is ubid.com vs. godaddy.com. For those who don’t know uBid is an online auction service with shopping and such for people that is located and available to American people only. And GoDaddy is an internet domain name registrar and webhosting company which also sells e-business related software and services. This case between uBid and GoDaddy, what strikes a case like this up?
PROF. GOLDMAN: That’s one of the questions that I had. Why is uBid suing a domain name registrar for its activities? But, I would connect this with a couple of the other cases that we’re hoping to talk about today; where other plaintiffs are suing domain name registrars. It seems this may be part of a broader trend; where trademark owners have simply had it with domain name registrars. They’re sick of domain name registrars not doing what they want and so in this case it appears uBid finally had reached its limit and decided to pull the trigger trying to enforce its trademark rights.
DAMIEN: Ok and the allegations and these charges is uBid charges that GoDaddy under tenants of the Anti-Cyber Squatting Protection Act also known as ACPA utilizes illegal internet schemes that generate revenue from the unauthorized usage of uBid’s valuable trademarks. They’re stating that GoDaddy is utilizing either their direct trademark names or a very similar stance hoping to catch people in typos or whatever. This case as well as the Philbrick vs. eNom case where they’re saying that it’s a specific trademark or set of trademarks that is being infringed upon and they’re seeking remuneration or redress for moneys being lost. Now with Philbrick vs. eNom, Philbrick sports in New Hampshire is stating that they’ve been using this particular trademark forever, although it is a persons surname and has been registered under many different things and not necessarily in a straight line time wise. What differs between these two cases with these trademarks?
PROF. GOLDMAN: In some ways they’re very similar cases. In both cases you have a trademark owner saying that the domain name registrar went beyond performing its straight registrar function of selling domain names to customers, but instead used those domain names as a way creating a set of ad inventory that the domain name registrar was advertising for its own account. And in that sense the cases are very similar and I think that they illustrate that domain name registrars are branching out from just being in the business of taking cash from customers for domain names and instead are looking at their domain name portfolio as an advertising asset.
DAMIEN: Now, another case that had been watched and you had blogged upon was Yahoo vs. Online NIC and Verizon vs. Online NIC. How are these two cases similar to the two we’ve been discussing?
PROF. GOLDMAN: My understanding is that Online NIC is particularly disfavored of the trademark owner community as a registrar that bleeds the line between just selling domain names to customers and grabbing domain names for its own advertising inventory. So, in that sense that represents yet another example where trademark owners have squared off with domain names registrars saying that the domain name registrars crossed the line and is profiting from trademarks not from the sales of the domain names, but from selling ads on top of them.
DAMIEN: And when it comes down to this a lot of these companies are also partnered with other companies such as GoDaddy is partnered with Yahoo, or they’re partnered with Google and when you see those ads to the right side of the search page that you’re on that quite possibly that these are direct click links going back to the sites that may or may not be talked about in any of these cases. Is that my understanding?
PROF. GOLDMAN: Yeah. It raises a really interesting question notice that Yahoo’s on one side of the case when it comes to the Online NIC case, but that it’s on the other side of the case in the case of Yahoo, the eNom case. That these search engine parking programs are complicated on one hand Yahoo is saying we have valuable trademarks so we don’t like people making money off of them, on the other hand Yahoo is saying we’ve got this program hey we’ve got domain names whether they’re trademarked or not bring them here we’ll help you cash in. And there’s a little bit of discomfort I think about these parking programs whether they’re actual legitimate programs, legitimate ways of taking inventory of consumer ad impressions and converting them into socially beneficial advertising or if they’re just a way of someone saying a trademark owner has generated valuable rights on the part of in generating consumer interest and some registrars are getting some action off the top of their own profit.
DAMIEN: The primary function of a registrar is to setup the domain name for a client. Say I want damienallen.com. I would go through a registrar to get that domain registered in my name and make that my own personal property on the internet and am I correct in this assumption?
PROF. GOLDMAN: Yeah. So when I think about domain name registrars, I think that domain name registrars are just retailers of domain names. They’re the store fronts where customers who want to purchase a domain name can come and pick them up at retail. That over simplifies things a bit and the main over simplification is that even if domain name registrars are retailers they’re all competing with each other to make the sale of the same unique asset. In other words, each domain name is available in the pool for all domain name registrars to sell, but only one’s going to get the sale. And so, that’s created some incentives for domain name registrars to try and game the system, try to get possession or control over domain names to pull them out of the pool that’s available for all the registrars and horde it for itself so that it can either make the sale directly and make the profit from the sale or to put it into its inventory so that it can generation its ad impressions for people who might consider that domain name.
DAMIEN: So this has become, again, a speculation deal. Sooner or later somebody’s going to want www.ericgoldman.com whether it’s you or not.
PROF. GOLDMAN: One way that domain name registrars can cheat the system is by grabbing domain names that are ultimately going to sell, putting them exclusively in their inventory, gaining possession over them, such that when the customer ultimately emerges that wants to purchase that domain name there’s only one registrar in the business. I think that’s less likely to be the outcome than in situations that we’re seeing with cases like the GoDaddy or the eNom case where effectively the registrars are just saying once I get a domain name into my network and pulled it out of the pool I have the opportunity to use that as a way of generating ad inventory and I’m going to take the cash that I have this name in my possession or in my inventory and it has commercial value.
DAMIEN: Now with the uBid vs. GoDaddy, there’s a long list of name allegations that uBid is throwing into this case in the state of Illinois. If its typo squatting or cyber squatting on these pages whether there’s ad revenue being generated, how do they prove, or what tenants of the ACPA will allow them to collect remuneration for this?
PROF. GOLDMAN: Well the Anti-Cybersquatting Consumer Protection Act wasn’t designed to cover things like domain name parking programs. It was designed to cover the abuses of the 1990’s which involve people grabbing domain names, putting them into their own personal portfolio and then trying to resell those to somebody who thought that they would rather have possession of the domain name. And so, the Anti-Cybersquatting Consumer Protection Act contemplates a set of behavior that doesn’t look very much like the types of domain name parking programs that are at issue here, where a domain name registrar is saying I have this domain name, I’m going to keep it in my inventory and I’m going to sell ads on top of it. And so, it’s very hard to parse exactly how the Anti-Cybersquatting Consumer Protection Act sits to that behavior, because it wasn’t written to deal with that. We do have at least one case where the court said that a parking style program did constitute a violation of the Anti-Cybersquatting Consumer Protection Act. But, we only have one case in one sense. I’m only aware of one that squarely addresses the type of behavior that we have here and so it remains open whether or not the doctrine will be robust enough to apply to this behavior.
DAMIEN: Now we have been talking beforehand about Verizon vs. Navigation Catalyst Systems. What’s so particular about this case?
PROF. GOLDMAN: That was the first and perhaps only really on point case that dealt with large scale domaining activity for a customer of registrars was grabbing lots of domain names of some words with typographical versions of trademarks and put them in a portfolio and merchandise that portfolio. The Court in that case said that the large scale domaining system violated the Anti-Cybersquatting Consumer Protection Act. It’s possible that a court dealing with cases like the uBid v. GoDaddy case will take a look at the Verizon v. Navigation Catalyst Systems case, for example, and say these are pretty similar situations, even though GoDaddy is a registrar, they still are doing the same basic sets of activities that are at issue in the earlier Verizon case, and therefore, we have some examples of how we might conclude that GoDaddy violated the Anti-Cybersquatting Consumer Protection Act. It’s only one case. It was a District Court case from about a year ago, and it’s not until like the courts are going to follow that one particular case, so I think it remains the question about how the Anti-Cybersquatting Consumer Protection Act governs things like domain name parking programs given that we really don’t have a great body of case law governing it.
DAMIEN: Now with Verizon’s lawsuit v. OnlineNick, they’ve received a record $33,000.000 judgment against them, but yet you say it’s a public gesture. Is this going to be “we’ll try these cases, but nothing will come from them other than a brief bit of publicity” and saying “Hey, don’t do this and someone else will find a way around the system?”
PROF. GOLDMAN: We’ve seen a number of domain name lawsuits that have resulted in significant judgments in favor of the plaintiff and against the defense but often it’s because the defendant just doesn’t show up in court and says “good luck in getting any cash out of me. You’re going to find me, and I’m not going to make myself particularly easy to find.” I don’t put a lot of stock in those types of results because they might make a nice looking press release, but they don’t really give you a good sense about the true economic consequences of a win in court. A $33,000,000 judgment that remains uncollectable is actually probably worse off than having gone to court. You still had to spend all the money to win the lawsuit and you end up getting bumpkiss.
DAMIEN: With cases like this, what do you see the future of cases like this and other people having these complaints versus their online registrar? What do you see coming up in the future with this? Will there be a more clearer, defined set of rules that will allow us to not see cases like this or is it pretty much the skies the limit and people are going to find their way around it?
PROF. GOLDMAN: You know, I personally point the finger at ICANN. I think that ICANN has not really been able to do a good job defining the boundaries of what it means to be a registrar and what the responsibilities of a registrar are and has not done a particularly aggressive job about cleaning up when registrars go broke, when they cut corners or otherwise try to gain the system for their economic profit. One possibility is that ICANN will do a better job policing all of its downstream retailers, registrars to get them to conform their behavior. Otherwise, what we’re going to see, I think, is that registrars are going to continue trying to take advantage of their strong position at generating domain name portfolios to grab more domain names and look for more ways to convert them into ad inventory that profits the domain name registrar. If that’s the case, then I think we’re going to see a lot more battles between trademark owners and registrars and possibly seeing the trademark owners going after registrars’ customers, but now if it’s the registrars who are really the ones trying to skim off the profits for themselves, then it becomes the target for the trademark owners. I don’t see any easy ways of resolving those disputes through the court system based on existing law, but I do think there will be a way to resolve it if ICANN decides to crack down a little bit more on registrar behavior.
DAMIEN: Then it comes down to we need a new set of rules that are equal for all.
PROF. GOLDMAN: Certainly a new set of rules would help clarify things. It’s not entirely clear that a new set of rules would be any more intelligent than the system we have today. Again, if we’re talking about ICANN proceedings, ICANN has a spectacular capacity to do really goofy things, so we could get new rules, but they may not really solve the problem. But in either case, there will be resolution. It might just be that it takes a while for the courts to work it through or might be that we find a way for registrars to rethink the business that they’re in in ways that force us to answer the question quicker.
DAMIEN: It’s always another hot debate, and more answers will be coming hopefully soon in the future. We thank you very much for joining us today, Eric.
PROF. GOLDMAN: It was my pleasure. Thank you very much.
DAMIEN: You’ve been listening to Traverse Legal Radio. My name is Damien Allen. Everybody have a great afternoon.
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