New Domain Name Registry Asks Trademark Owners to Pay Up or Risk the Consequences

In recent years, the Internet has seen the launch of numerous new top level domain names, i.e., the letter strings to the right of the "dot" such as ".wedding" and "country" that, when combined with a second level domain (the name to the left of the dot) form the domain name as a whole.  This Advisory focuses on one such top level domain, or gTLD: ".sucks".  The .sucks gTLD is especially noteworthy for two reasons.  First, the allocation of .sucks names by the registry chosen to register them has come under US governmental scrutiny.  Second, the very nature of the gTLD .sucks conjures potential defenses not available to registrants of certain other types of names.  Specifically, should the registrant of a .sucks name -- "trademark +sucks" -- point it to a website critical of the trademark owner, is this use of the domain name protected by the free speech doctrine?  

ICANN Requests Federal Trade Commission Scrutiny Into the Allocation of ".sucks"

On April 9, 2015, the Internet Corporation for Assigned Names and Numbers (ICANN), the body governing the registration of domain names, initiated an inquiry into the practices of the Canadian company Vox Populi, the domain name registry that was selected to operate the ".sucks" generic top level domain (gTLD).  In aletterto the Federal Trade Commission, ICANN asked whether the new registry's practice of selling second-level domain names to trademark owners, i.e. trademark.sucks, at exorbitant prices violated any American laws.  The letter, as well as the pricing practices of Vox Populi, have garnered significant attention in the media, and some, including West Virginia Senator Jay Rockefeller, have accused Vox Populi of running "little more than a predatory shakedown scheme." 

The specific practice drawing ire from some trademark owners is Vox Populi's sunrise period pricing.  ICANN mandates that all registries of new gTLDs observe a "sunrise period" of at least thirty days during which trademark owners can register second-level domains incorporating corresponding to their registered marks before domain names are made available to the general public.  So, for example, the sunrise period of ".green" was from December 8, 2014 to February 6, 2015, during which time only those with a trademark registration or other proof of trademark rights could register "trademark.green."  The sunrise period is intended to protect trademark owners from a "race to registration" against domain name registrants who might infringe the trademark owners' rights.  Sunrise services are provided by an entity called the Trademark Clearinghouse. 

Vox Populi is charging trademark owners $2,499.00 per domain registration during the sunrise period for the .sucks gTLD, which ranges from March 30 to May 29, 2015.  This rate dramatically exceeds what domain name registrars typically charge during sunrise periods for registration of domain names within their new top level domain spaces.  Moreover, this rate is far greater than the amount that Vox Populi intends eventually to chargenon-trademark owners for registering any domains with the .sucks gTLD that remain unclaimed at the end of the sunrise period.  One might argue that this puts additional pressure on trademark owners to pay the atypically large fees to register their marks as second level domains, in connection with .sucks, during Vox Populi's sunrise period.

The success of Vox Populi's practices should hinge at least in part on whether trademark owners believe that registrants of second-level domain names in the .sucks gTLD will be able to resist trademark owners' attempts to compel the transfer of those domain names through ICANN's arbitration procedure, as described below. 

Will .sucks Domain Names be Insulated from Challenge by the First Amendment?

All gTLD registries are required to execute an agreement with ICANN implementing ICANN's Consensus Policies, a set of policies that includes an arbitration procedure for resolving domain name disputes known as the Uniform Domain Name Dispute Resolution Policy(UDRP).  In the case of .us domain names, trademark disputes are governed by the substantially identical usTLD Dispute Resolution Policy.  Under Paragraph 4 of both the UDRP and the .usTLD Dispute Resolution Policy, a trademark owner may compel the transfer of a domain name by establishing three things:

1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and
2. The registrant of the domain name has no rights or legitimate interests in respect of the domain name; and
3. The domain name has been registered and is being used in bad faith.

Arbitration panels enforcing the UDRP and analogous .usTLD Dispute Resolution Policy have repeatedly held that a second-level domain string containing a trademark in its entirety is confusingly similar to the trademark even where the domain includes the word sucks.¹  Additionally, arbitration panels state that the gTLD is meaningless in assessing whether a domain name string is confusingly similar to a complainant's mark.²  In other words, in the confusing similarity analysis, "trademark.com" becomes simply "trademark."

In this so-call "gripe site" context, a registrant may argue that its registration and use of a particular domain name should be protected on free speech grounds when that domain name incorporates a trademark and points to a website displaying content critical of the trademark owner.  Arbitration panels deciding domain name disputes have historically focused on several factors: (1) whether anything in the domain name itself distinguishes the domain name from the complainant's mark; (2) whether any aspect of the site to which the domain name at issue points is commercial; and (3) whether the domain name is likely to confuse Internet users.

Several arbitration panels have held that a registrant does not have "rights or legitimate interests" in a second-level domain incorporating the complainant's mark combined with a gTLD, even where the hosted website is devoted purely to non-commercial criticism directed at the trademark holder.³  There, the WIPO panelist concluded that the Respondent did not have any legitimate interest in montyroberts.net because "the right to express one's views is not the same as the right to use another's name to identify one's self as the source of those views".  The focus in the typical case to date -- cases such as Monty and Pat Roberts -- is on the appropriation of a second-level domain name that may confuse Internet users into believing that the domain name is associated with the trademark owner.⁴

In the context of the new .sucks gTLD, it remains to be seen how this analysis will apply.  On the one hand, as described above, arbitration panels have historically disregarded gTLDs in determining whether a challenged domain name is confusingly similar to a trademark.  On the other hand, a registrant other than the owner of the trademark in the second level domain may argue that .sucks may signal that the domain name is not associated with the trademark owner. 

Gripe sites whose second level domain names include more than just trademark combined with a gTLD may still be subject to transfer where arbitration panels find that there are "indicia of bad faith that tend to suggest that criticism was not the respondent's primary motive."⁵  Indicia of bad faith include, but are not limited to:  any attempts by the registrant to sell the domain name to the trademark owner; the registrant's intent to profit by advertising products; or the display of pay-per-click links on the website.⁶  Failure to develop any website whatsoever has also historically been treated as an indicia of bad faith.⁷  In the authors' view, a registrant's pattern of registering domain names including a trademark owner's mark as the second level domain -- whether or not these domain names point to a site critical of the registrant -- may also be a basis for finding bad faith, particularly where the registrant has already been ordered to transfer the domain names repeatedly to the trademark owner.⁸

Trademark owners may also challenge new .sucks second-level domains in actions brought in district courts under the Anti-Cybersquatting Consumer Protection Act, which creates a right of action for trademark owners against those who in bad faith register domain names incorporating a trademark owner's mark.⁹  Unlike actions under the UDRP or the .usTLD Dispute Resolution Policy, the Anti-Cybersquatting Act provides for more than the mere transfer of a disputed domain name; plaintiffs suing under this Act have received up to $100,000 in statutory damages and defendants have even been forced to pay for years of corrective advertising.¹⁰

Barring an intervention from ICANN, the sunrise period for the .sucks domain ends on May 29, 2015, at which point any interested Internet user will be able to purchase second-level domain strings including registered trademarks without proving trademark ownership.  It will then be up to trademark owners to test Vox Populi's pricing practices.  It also remains to be seen how ICANN arbitration panels will treat domain names incorporating the new .sucks gTLD.