Dear ICA Members,
The clocks have been changed and spring rain is hopefully bringing spring flowers to your neck of the woods. But as we change seasons and look forward to the second quarter of 2009, the Internet Commerce Association has been working hard to ensure the drizzle in DC doesn’t develop into a thunderstorm for domain owners.
In this issue of the ICA newsletter, we pass along some legal news from court rooms around the United States. While the ICA spends much of its time fighting to ensure legislation or regulation from Washington does not affect the rights of domain owners, it’s the normal wheels of justice turning in small and big town court rooms across the country that often have the biggest impact on our members.
By providing you with relevant legal updates in our monthly newsletter and at InternetCommerce.org, it’s our hope that you can let us know what developments concern you the most and help you make smarter decisions for your business.
Best Wishes,
Jeremiah Johnston
President, Internet Commerce Association
ICA Update
-As tax time nears, we will be sending an email to members with information regarding tax deductions related to ICA membership fees. Federal lobbying activities must be deducted from the portion of fees used for operating expenses, and once we close the books on 2008 that information will be distributed to members.
- Watch your inbox or mail box for your 2009 Membership Renewal Form. Questions regarding memberships can be sent to contact@internetcommerce.org. Your renewal is crucial to keeping the ICA on the beat when Congress is in session or when ICANN reps are meeting to change the rules once again.
- Michael Rosebrook, has been appointed ICA Treasurer by the Board of Directors. A graduate from Boston College with a focus on finance and accounting, Michael comes to the ICA after stints working with Smith Barney and Sedo.com. As cost controlling and budget tracking become ever more important for non-profits like the ICA, we look forward to Michael’s help and thank him for volunteering his time.
Legal Update
Can a domain owner claim a laches defense in a TM Case?
A U.S District Court of Appeals recently decided that a plaintiff’s six-year delay in filing a claim for trademark infringement was not unfair and should not prevent the plaintiff from bringing a lawsuit against the defendant. In 1996, the plaintiff launched a business to provide DSL and dial-up Internet Services in Northern California. The plaintiff registered the domain is-west.com to promote its business. In 1998, the defendant started his own business which also offered dial-up Internet Services in the same Northern California market. The defendant registered the domain ispwest.com in connection with his business. In 2005, the defendant expanded his business to include a DSL service making his business even more similar to the plaintiffs. Shortly after the defendant expanded his business, the plaintiff sued the defendant for trademark infringement because it believed that the defendant’s domain name was similar to their own.
The defendant argued that by waiting six years to sue, the plaintiff’s actions were unfair and should prevent the plaintiff from bringing the lawsuit. The Court agreed that the plaintiff’s delay was unreasonable but held that it was not necessarily unfair. The Court stated that the plaintiff should have sued in 1998 since the companies offered comparable services in the same geographical area under a similar name. However, the Court also noted that the delay was not so unfair as to prevent the plaintiff from suing six years later. In order to show that the delay was unfair, the defendant domain owner had to prove that its expenses focused on brand promotion in the trademark ISPWest. If the defendant could have shown that he spent a large sum of money in promoting his business under the ISPWest mark, then the six year delay could potentially be unfair. Since the defendant’s expenses went to the expansion of his customer base and technology instead of associating his company with the ISPWest mark, the Court did not see the six year delay as unfair and ruled in favor of the plaintiff.
What are the new standards for the service of process in a domain case?
In February, the U.S. Federal District Court in California held that serving a formal complaint to an international defendant may be done via e-mail. The usual means of service are via registered international mail and international courier, but the Court has said that e-mail may now be used in a narrow set of circumstances as an alternative option when other accepted methods do not prove effective. The Court clearly laid out that an e-mail to an address listed in a domain’s WHOIS record, in addition to international mail and international courier, is sufficient service when the international entity does not have a designated U.S. representative, the traditional means of international mail and courier have not been effective, the plaintiffs were able to deliver service documents to defendant’s listed contact address with WHOIS, and plaintiffs can establish that the e-mail address has been used to communicate with the defendant on prior occasions. The decision has expanded the possibilities for aggrieved plaintiffs who feel they have been left without a remedy in the past due to an inability to properly serve the defendant at a physical address.
How are the standards for jurisdiction developing in U.S. courts?
Especially in matters related to domain law, the threshold question of whether a U.S. court has proper authority (jurisdiction) to hear and decide a case involving an international party becomes a core issue. In basic terms, in order to have proper authority over the international party, the party must have engaged in business or “reached into” the locality of the court’s jurisdiction to the extent that the party could fairly be expected to litigate any problems that arise out of their business activity in that jurisdiction. The issue is trickier with internet/domain activity than with traditional brick and mortar businesses and depends heavily on the circumstances of each dispute. The U.S. District Court of Washington, however, recently addressed the issue and granted jurisdiction over a foreign national when it involved a domain owner that had engaged in:
- knowingly dealing in domain names in that relevant U.S. state;
- operating a web site accessible in and registered through a registrar based in the relevant U.S. state, and
- using the site to directly market trademarked products and services to the residents of the relevant U.S. state.
This decision has now clearly laid out that a plaintiff in the U.S. can force a foreign national to be called into court under U.S. law for their presence and business activities in the U.S. This decision proves particularly important in the internet and domain arena, as the courts are now saying to the international community that parties are not exempt from our due process because they are located outside the U.S. and operate “invisibly.”
Does a trademark automatically transfer when domains change hands?
In March, the U.S. District Court for the Western District of Washington held that a court may order trademarks used in conjunction with a series of domain names to be involuntarily transferred and liquidated alongside the domains, regardless of the fact that the trademarks have goodwill attached. The court recognized that a trademark has no existence apart from its good will related to the goods and services, but further stated that domains admittedly make up a considerable part of the good will associated with a mark, and the extent to which the good will consists of the domains is a factual question. The court’s decision illustrated that in situations in which a string of domains MUST be transferred, the trademark is therefore not transferred independently, but may be forcibly transferred along with domains, leaving other ‘good will’ behind. In a world of trademark and domain conflict, this court clarified that there are circumstances where the domains can dictate the proceedings related to trade marks, rather than trademarks always dictating the transfer of domains.
PLEASE NOTE: the legal updates provided in the ICA newsletter are for informational purposes only and do not constitute legal advice. Please consult your attorney for more information on these or other topics.
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