SBA: Office of Advocacy -World Intellectual Property Organization

Before the
World Intellectual Property Organization
Geneva, Switzerland

In the Matter of
WIPO Internet Domain Name Process
RFC-3

Draft Comments of the
Office of Advocacy
U.S. Small Business Administration

The Office of Advocacy of the United States Small Business Administration ("Advocacy") submits these Draft Comments on the World Intellectual Property Organization’s ("WIPO") Interim Report on the Internet Domain Name Process ("Interim Report), in the above-captioned proceeding.

Congress established the Office of Advocacy in 1976 by Pub. L. No. 94-305 (1) to represent the views and interests of small business within the Federal government. Its statutory duties include serving as a focal point for concerns regarding the government’s policies as they affect small business, developing proposals for changes in Federal agencies’ policies, and communicating these proposals to the agencies.(2) Advocacy also has a statutory duty to monitor and report on the Commission’s compliance with the Regulatory Flexibility Act of 1980 ("RFA"), (3) as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), Subtitle II of the Contract with America Advancement Act.(4)

Advocacy believes that the Interim Report contains many proposals which far exceed what is necessary to counter cyber-pirates or cybersquatters and should not be adopted. Also the recommended jurisdiction submission requirement is far too broad. Furthermore, Advocacy is concerned that the proposals would unlawfully expand the rights of large trademark holders and would have an undue detrimental effect on small businesses who are not infringing on trademark rights.

Alternative Dispute Resolution Process Is Overinclusive and Unnecessary

After reviewing the proposed alternative dispute resolution process, Advocacy believes that the mandatory arbitration process is overinclusive in its effect and is unnecessary in accomplishing the goal of combating cybersquatters. Instead, Advocacy recommends that WIPO remove the mandatory arbitration process in its entirety and rely upon the court litigation to determine trademark infringement.

Advocacy believes that the alternative dispute resolution process is overinclusive in its protection of trademark holders rights. The recommendations in the Interim report amount to a de facto expansion of trademark rights far beyond current law. Advocacy acknowledges that trademark holders have certain rights that are protectable at law. However, as WIPO states in the Interim Report, the rights of trademark holders should be neither expanded nor contracted as part of the domain name dispute resolution process.(5) Advocacy believes that large trademark holders can threaten small business registrants and individuals, who are not violating anyone’s trademark, with the process recommended in the Interim Report to force them to surrender their domain name.

Advocacy asserts that the proposed alternative dispute resolution process ("ADR") is unnecessary to protect trademark holder’s rights. To Advocacy’s knowledge not a single cyber-squatter has prevailed in court. The value of litigation to trademark holders can be seen in the comments to RFC-2.(6) In response to these comments, WIPO maintained the parties’ right to court litigation even if they take advantage of the ADR. (7) Advocacy asserts that the ADR is unnecessary when coupled with the availability of court litigation. In fact, allowing a complainant to arbitrate the validity of a domain-name registration and then challenge that validity in court if the arbitration is unsuccessful, subjects the domain-name registrant to double jeopardy. The arbitration settles nothing since its decision can be litigated de novo. The only practical effect that Advocacy can foresee is to lengthen the time-frame of dispute resolutions and to increase greatly the cost of being involved in a dispute.

Because of the success of court litigation and the opportunity for abuse by large trademark holders, Advocacy believes that the mandatory arbitration process should be not be recommended in WIPO’s final report. Instead, disputes should be resolved using existing trademark law in national courts. This process has been effective to date and Advocacy seems no reason to believe it will be otherwise in the future.

Jurisdiction Over Registrant Should Be Limited

Advocacy is also concerned that the submission to jurisdiction requirement in the Interim Report could have a significant impact on a substantial number of small entities. As part of the registration process, WIPO proposes that the domain-name applicant submit to jurisdiction in its country of domicile and to the country where the registration authority is located.(8) Advocacy was unable to determine from the text of the Interim Report whether the definition of registration authority included the registry, the registrar, or the Internet Corporation for Assigned Names and Numbers ("ICANN"). At the regional hearing in Washington, D.C. held on March 10, 1999, several trademark associations and trademark holder representatives proposed that submission to jurisdiction be required at all three of the locations and one proposed expanding jurisdiction to the country where the harm occurred.

Advocacy recommends a much more narrow submission of jurisdiction. Due to the global nature of the Internet, a requirement for submission to jurisdiction in a country where the harm occurred would permit a suit to be brought in any country in the world. Even requiring jurisdiction where the registrar, the registry, and ICANN are located could permit suits to be filed in four different countries. Advocacy believes that an applicant only be required to submit to jurisdiction in the country of its domicile and to the country where the registrar the applicant is using is located.

Advocacy believes that this submission to jurisdiction is fair, because the applicant must make an affirmative act to register and hopefully will soon be able to choose among many different registrars for one convenient to it. Therefore, the applicant will know exactly in which countries it is subject to jurisdiction. Also, ICANN will retain some modicum of control over jurisdictions through its registrar accreditation, which can be used to prevent cyber-pirates from registering in jurisdictions that do not recognize trademark protections.

Narrowly Tailor the Famous and Well-Known Marks

Advocacy is concerned that the proposed recommendations in the Interim Report on famous and well-know marks could be used to illegitimately expand the rights of trademark holders. Because well-known marks have not been defined,(9) Advocacy believes that any rights given to well-known marks should be suspended until the term is defined. Also, well-known marks are often only given protection to when a confusingly similar mark is used in the same goods and services. The general top level domains ("gTLDs") do not differentiate between different services, and the domain name is often unrelated to whether commercial activity is undertaken.(10)

Advocacy is greatly concerned that the typical limitations on the protection famous and well-known marks are absent on the Internet – such as geographic limitations and same goods and services limitations. Because of this unbalancing effect of the technology, Advocacy recommends that any protection given to famous and well-known marks be limited in scope. Advocacy recommends that the six requirements proposed in the Interim Report by held to a high standard.(11) Furthermore, famous marks which include a generic word, such as "Bell," should not be allowed to exclude all other applicants from using that word if they are not offering the same goods and services.

Conclusion

Advocacy is greatly concerned that the ADR proposed in the Interim Report is overbroad and unnecessary and would have an undue detrimental effect on small businesses who are not infringing on trademark rights. Therefore, Advocacy believes that the mandatory arbitration process should not be recommended to ICANN. Also, Advocacy believes that submission to jurisdiction should be limited to the applicants home country and the country of the registrar. Finally, Advocacy encourages WIPO to limit the protections given to famous and well-known marks because of the inherent vagueness and lack of limitations that would normally be imposed.

Respectfully submitted,

Eric E. Menge
Office of Advocacy
U.S. Small Business Administration
409 3^rd St., S.W.
Suite 7800
Washington, D.C. 20416
Phone: 202-205-6949
Fax: 202-205-6928
E-mail: eric.menge@sba.gov

March 19, 1999

ENDNOTES

1. Codified as amended at 15 U.S.C. її 634 a-g, 637.

2. 15 U.S.C. ї 634c(1)-(4).

3. Pub. L. No. 96-354, 94 Stat. 1164 (1980)(codified at 5 U.S.C. ї 601 et seq.).

4. Pub. L. No. 104-121, 110 Stat. 857 (1996)(codified at 5 U.S.C. ї 612(a)).

5. Interim Report of the WIPO Internet Domain Name Process, <http:wipo2.wipo.int> (last visited March 19, 1999) at iii (rel. December 23, 1998).