Legal Concerns on the Web: Domain Names

Whether a business has a site on the World Wide Web is regarded by some as a litmus test for measuring a company’s marketing savvy and technological prowess. For many businesses, it remains to be seen whether establishing a presence on the Web will result in increased market share and sales. Nevertheless, companies and individuals are pouring onto the Web to explore the potential new opportunities for electronic commerce and worldwide access to customers that the Web affords.

This article, and subsequent articles that will appear in this column, will highlight some of the areas of legal concern any business operating a Web site – or contemplating doing so – should be aware of as it attempts to exploit the Web’s commercial potential.

For someone to be able to view your company’s Web site on the Internet, you need to have a Web “address” or URL (uniform resource locator) that can be accessed by someone from a PC using Web browser software such as Netscape, Internet Explorer, Mosaic or others.

If your Web site resides on an Internet service provider’s machine, your business can save costs by having a Web address that does not have its own specific “domain name” or “.com” address. An example is “http://www.cl.ais.net/lawmsf”, which identifies a company’s site (“lawmsf”) as residing on an Internet provider’s machine (in this case, the service provider’s domain name is “ais.net”).

Having one’s own company-specific domain name, however, has become quite in vogue. Accordingly, many businesses and individuals are scrambling to reserve and register unique domain names which readily identify them. Examples of such Web addresses include “http://www.sony.com” or “http://www.microsoft.com”. Domain names must be registered with Network Solutions, Inc., part of the government sponsored InterNIC project. Instructions are provided at “http://www.internic.net”.

Assuming your company’s choice of domain name is available, i.e., someone else has not registered it with Network Solutions, what used to be free is now a business expense. As of September, 1995, Network Solutions began to require an application fee of $100 and maintenance fees of $50 per year starting at the second anniversary of the registration. While these prices are not exorbitant, this new policy caused shudders throughout the Internet community because the good old days when everything on the Net was free now appeared numbered.

Failure to pay the maintenance fee will result in your company’s domain name ceasing to operate, thus effectively shutting down your Web site. If the maintenance fees are not paid within two months after the expiration date, your company’s domain name will be placed on the list of domain names available to the public. Network Solutions provides e-mail and postal notice of maintenance fees being due to the addresses originally provided upon registration of the domain name. For companies which use the Web infrequently, it is important to monitor the status of your domain name registration and keep your address information with Network Solutions up to date to ensure that you receive the maintenance fee notices.

Choice of a domain name involves more than selecting a name not already registered with Network Solutions by someone else. A domain name can function as a trademark or service mark, which is a term or symbol used to create an exclusive association in the marketplace between a company and the goods and services it sells. If your choice of domain name is so similar to another company’s domain name, or other trademark or service mark, that it is likely to cause confusion among consumers, your company may be subject to allegations of trademark infringement. For instance, if your company is an Illinois-based camera retailer, you wouldn’t want to choose the domain name “nikon-illinois.com” for your Web site. While this address does not currently exist on the Web and thus might be capable of registration with Network Solutions as a domain name, Nikon, Inc. would have good grounds to allege trademark infringement because of the strong rights it has in its name in connection with anything photographic.

Simply determining whether a domain name is available for registration with Network Solutions is not enough. Companies should have trademark searches performed with the assistance of competent legal counsel to determine whether their choice of domain name creates the potential for liability for trademark infringement. Thomson & Thomson, the research organization used by many trademark attorneys, has recently begun to include relevant Web domain names in its trademark searches.

Not surprisingly, Network Solutions and InterNIC require parties registering domain names to indemnify and defend them (frightening words for any business) against any lawsuits and damages arising out of disputes over domain names. However, if your company is a non-profit entity prohibited by charter from providing this type of indemnity, a special exemption from this requirement may be obtained.

Subsequent articles will focus on other areas of legal concern relating to Web sites, including avoiding copyright infringement with respect to the materials your company places on its site and advertising considerations.

This article is provided for general informational purposes only and does not constitute legal advice. Please consult a competent attorney to discuss your particular situation.

Attorney Eric Freibrun specializes in Computer law and Intellectual Property protection, providing legal services to information technology vendors and users. Tel.: 847-562-0099; Fax: 847-562-0033; E-mail: eric@freibrun.com.

February 1st, 1996|