Recent changes in the governance of the Internet and, more importantly for intellectual property owners, the management of the Domain Name System ("DNS") have proved to be controversial.

Based upon a perceived need for change in the DNS, on June 5, 1998 the United States Government issued a Statement of Policy on the Management of InternetNames and Addresses ("the White Paper"). This called for the privatization of the DNS "in a manner that allows for the development of robust competition and that facilitates global participation in the management of Internet names and addresses". The need for change in the DNS was seen to arise from 1) dissatisfaction with the absence of competition regarding domain name registrars; 2) the increasing occurrence of conflicts between trademark and domain name owners, and the fact that the mechanisms for overcoming these were seen as expensive and cumbersome; 3) the call from commercial interests for a more formal management structure of the Internet; 4) an increasing desire from non-U.S. interests in participation in the management of the Internet; 5) the need for accountability in the decision of whether to add new generic top-level domain names ("gTLDs") ; and 6) the inappropriateness of U.S. agencies managing and funding commercial enterprises on the Internet. The White Paper also called upon the World Intellectual Property Organization ("WIPO") to develop a process designed to culminate in recommendations concerning domain name issues.

The White Paper resulted in the formation of the Internet Corporation for Assigned Names and Numbers ("ICANN") a private not-for-profit corporation which was requested by the United States Government to take over the governance of the Internet. ICANN, has established By-laws and put in place an Interim Chairman, President, CEO and Board of Directors. The ICANN By-laws call for the creation of Supporting Organizations ("SOs") to develop proposals for the improvement of various aspects of the Internet. The initial three SOs are 1) the Address SO, 2) the Protocol SO, and 3) the Domain Name SO. The SOs serve as advisory bodies and have "the primary responsibility for developing and recommending substantive policies regarding matters falling within their specific responsibilities". Whereas the first two SOs relate to the more technical functioning of the Internet, the Domain Name SO ("DNSO") is of particular interest to the intellectual property community.

Within the DNSO, at present, are six Constituency groups which have been ratified by ICANN:


These Constituency Groups are self-organized and made up of interested individuals and entities. According to the ICANN By-laws "[a]ny group of individuals or entities may petition the Board for recognition as a new or separate Constituency". The Constituency Groups make recommendations to, and select members for, the Names Council, which is responsible for consensus building, and communicating DNSO recommendations to the ICANN Board of Directors.

There are also various advisory committees within ICANN and there will be an At-Large Membership with an as yet to be determined "open and inclusive" membership.

It was foreseen that problems concerning the functioning of this management structure would arise, particularly within and between Constituencies; with respect to geographical limitations on the members of the Board of Directors and the Councils; and with respect to voting structures and consensus building within the SOs and Names Council. Given the initial interest shown by a multitude of groups and individuals in becoming a part of Constituencies, consensus building will be slow and lacking in meaningful action. It remains to be seen whether this system will be a case of "too many cooks spoiling the broth".

On April 30, 1999 WIPO issued a Final Report containing recommendations to ICANN concerning the DNS as envisaged in the White Paper. The recommendations contained in the report relate generally to 1) Best Practices for Registration Authorities; 2) Administrative Procedure Concerning Abusive Domain Name Registrations; 3) Exclusions for Famous and Well-known marks; and 4) New gTLDs.

Following various preparatory meetings, on August 26 1999 a meeting of the ICANN Board meeting in Santiago, Chile adopted a resolution to try to address the issue of conflicts between applicants for gTLD's. Recognizing the problems created by the approval of additional Registrars, the ICANN resolution called for adoption of a uniform dispute resolution policy for accredited registrars in the .com, .net, .net and .org top level domains. Such a policy is to be based on a proposal by the registrars which would require all applicants for registration or maintenance of a gTLD to agree to submission of certain disputes "over the registration and use of any Internet domain name" registered by such an applicant to mandatary administrative dispute resolution. Disputes that are to be subjected to such proceedings are those where another party asserts (i) that a domain name is identical or misleadingly similar to a trademark or service mark in which the complainant has rights; and (ii) that the applicant or person maintaining a registration has no rights or legitimate interests in respect of the domain name; and (iii) that the domain name has been registered and is being used in bad faith. A committee was charged with drafting final rules to be put in place within 45 days.

With the dramatic increase in domain name registrations and the corresponding intellectual property disputes that these have involved, and are likely to entail, ICANN faces a significant challenge in addressing the issues concerning the DNS. Unfortunately, the proposals so far presented to ICANN by the WIPO Final Report appear lacking in definitive guidelines for developing an orderly DNS sufficient to protect the interests of all concerned, most notably in respect of intellectual property. This is particularly true with respect to the lack of concrete proposals concerning the addition of new gTLDs. We believe action should be taken now in these early stages of DNS coordination, which will help to insure that intellectual property interests are adequately protected in "cyberspace".

It is now generally accepted by the intellectual property community that second-level domain names, such as, for example, "IBM" in "IBM.com" can serve the same function as trademarks, particularly "When the domain name includes elements that would be recognized by the public as indicating the source of goods or services of a particular business". As the Internet becomes increasingly commercial, domain names are becoming nearly, if not completely, interchangeable with trademarks in their ability to create goodwill among consumers, and their resultant capacity to sell goods. The WIPO panel has also recognized that there is a "considerable disjunction ... between on the one hand, the cost of obtaining a domain name registration, which is relatively cheap, and, on the other hand, the economic value of the damage that can be done as a result of such registration and the cost to the intellectual property owner of remedying the situation through litigation, which may be slow and very expensive in some countries".

Nonetheless, there appears to be a reluctance, at least on the part of the WIPO panel of experts, to regulate the Internet in a manner similar to that of trademarks, which system has been in place and has arguably been effective for many years. Part of the problem of course stems from the fact that trademark protection is limited both geographically and with respect to the goods and services provided, something which does not yet apply to the allocation of domain names. Another problem is the address or telephone number function of a domain name. Not everyone who wishes their telephone number to spell the word "Smith" can have that number. Nor can everyone who might have a desire or legitimate connection to a particular name for use on the Internet secure the right to that name as its domain name.

Nevertheless, the lack of clear recommendations from the WIPO panel is surprising and disappointing in view of its stated goal of attempting to "avoid having two autonomous systems that live in ignorance of each other-the DNS in cyberspace, and the intellectual property system of identifiers as developed before the arrival of the Internet".

It is believed by some that a significant increase in problems associated with the interplay of domain names and trademarks is imminent, given the "multijurisdictional" nature of the Internet, the rapid increase in domain name registrations and the resultant disputes associated therewith. There is an urgent need for more stringent regulation of the DNS at this still relatively early stage in the growth of the Internet which will allow for the protection of business interests both on the Internet and in the real world.

One of our Senior Partners has been active in the current issues concerning the Internet and has attended meetings in Toronto concerning the DNSO, was a Co-chair of the New York DNSO meeting, and attended the recent ICANN meeting in Berlin. We are available to advise clients concerning I nternet related issues and their effect on business.