The “UTAH E-COMMERCE INTEGRITY ACT” which was just introduced in December of 2009, passed the Utah Senate last month, was voted into law by the Utah House today.
When I first wrote about this bill in December, it was meet with the usual domainer apathy I see when I write about something that can have huge negative effects on their holdings.
Sine then, the Coalition Against Domain Name Abuse (CADNA) has been lobbying very hard to get this bill passed, even holding a meeting in Washington in support of the bill and to get the ball rolling for a national bill along the same lines.
Well now that the bill has passed both the House and Senate of Utah and just awaits the governors Signature to become law, you might want to take a second look.
The bill among other things “prohibits the registration of domain names under certain circumstances, commonly referred to as cybersquatting and provides civil and criminal penalties for violation.
The bill as a whole is similar to the Snowe Bill introduced in 2008 into the US Senate which seeks to prohibit and provide penalties for phishing, pharming, spyware, and cybersquatting.
As all bills this one is long full of legalese but regarding Cybersquatting the bill states in part as follows:
“A person is liable in a civil action by the owner of a mark, including a personal name, which is a mark for purposes of this section, if, without regard to the goods or services of the person or the mark’s owner, the person:
(i) has a bad faith intent to profit from the mark, including a personal name; and
(ii) for any length of time registers, acquires, traffics in, or uses a domain name in, or belonging to, any person in this state that:
(A) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to the mark;
(B) in the case of a famous mark that is famous at the time of registration of the Domain name, is identical or confusingly similar to or dilutive of the mark; or
(C) is a trademark, word, or name protected by reason of 18 U.S.C. 706 or 36 U.S.C. 220506.
(b) (i) In determining whether a person has a bad faith intent described in Subsection (1)(a), a court may consider all relevant factors, including:
(A) the trademark or other intellectual property rights of the person, if any, in the domain name;
(B) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person;
(C) the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
(D) the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name;
(E) the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;
(F) the person’s offer to transfer, sell, or otherwise assign, or solicitation of the purchase, transfer, or assignment of the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct;
(G) the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct;
(H) the person’s registration or acquisition of multiple domain names that the person knows are identical or confusingly similar to another’s mark that is distinctive at the time of registration of the domain names, or is dilutive of another’s famous mark that is famous at the time of registration of the domain names, without regard to the goods or services of the person or the mark owner; and
(I) the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous.
(c) In a civil action involving the registration, trafficking, or use of a domain name under this section, a court may order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark.
(4) Statutory damages awarded under Subsection (3)(b) are presumed to be $100,000 per domain name if there is a pattern and practice of infringements committed willfully for commercial gain.
You should also note that this bill makes not only is the registrant of the domain name liable, but “the registrant’s authorized licensee, agent, affiliate, representative, domain name registrar, domain name registry, or other domain name registration authority that knowingly and actively assists a violation of this chapter by the registrant.” (just like Safenames got fined for in France)
CADNA understands that if this bill passes in Utah is has national and federal implications.
As we told you in back December, this bill is just the first step in getting a federal law passed akin to the Snowe Bill of 2008.
Here are the comments of Josh Bourne, President of CADNA about the Utah Law:
“””If the Utah E-Commerce Integrity Act becomes law, it will pave the way for serious consideration at the federal level for similar changes”
“Once the United States Congress understands that legislative changes similar to that proposed by Senator Urquhart are good for both businesses and consumers and are especially needed due to our difficult economic times, there should be broad bipartisan support on Capitol Hill.”
“”CADNA is specifically encouraged by the text that expands the liability for cybersquatting activity to include the registrant’s authorized licensee, agent, affiliate, representative, domain name registrar, domain name registry, or other domain name registration authority that knowingly and actively assists a violation of this Act by the registrant.””
This is the usual place in the post where I would plead with you to join and contribute the mighty sum of $295, to the ICA to fight, but that option is now gone, so everyone your on your own.
For all of those that accused me of just using scare tactics talking about a bill that would never pass, notice that this one literally flew through Utah passing in less than 4 months from its introduction with no opposition from any domainer group.
The ICA had no funding to fight this bill.
If your a domainer and live in Utah you better think about relocating, and fast.
This bill has an effective date of July 1, 2010.
Of course if the bill goes national as CADNA is already working hard on, your relocation plans may have to widen.
Yes….this is real bad news. Thanks for reporting it.
Protection from this may be in owning a bunch longtail domains……hopefully . Domains like ChicagoChineseRestaurants,com .
If this does somehow become Federal law I guess we will have to decide whether to fight, sell out, or run on many of our one word domains and maybe some two word domains.
Ouch!
So where are you relocating to Michael if it becomes national ?
*
I’m totally unsympathetic to the wah wahing of domainers who have failed to police themselves in the matter of typo and cybersquatting and the auction venues that openly and arrogantly selling well-known TM domains.
This is one of the the most ethically-challenged businesses out there, and when someone tries to be an ethical domainer, they get laughed at and scorned. I don’t like government intervention either, but I could see this coming down the pike long ago, at least since 2007.
And now it’s time to pay the piper, and we’re ALL going to suffer for it with much stricter laws than we would have had had the registrars cracked down on the regging of well-known TM’s, and had the industry itself had gone after cybersquatters by reporting them to the registrars and the companies owning the TM.
And, guys, you ain’t seen nuthin’ yet.
*
The Bill virtually covers every eventuality.
The writing is on the wall for domainers.
Time to wake up & smell the coffee.
@ Ms Domainer
To non-domainers, “ethical domainer” is an oxymoron.
They want something you have. Ergo, you are a squatter.
Companies will commonly go for UDRP/litigate to get any domain they like the look of so long as it’s onwed by a ‘domainer’ (=park page, no development) regardless of TM reg’d or not.
But I agree that blatant TM-squatting exacerbated this Bill.
Some domainers (domaining=cottage industry) keep on banging their heads to try to convince themselves and Joe Public that what they do is ‘legit’, ‘ethical’ etc…but in reality, who really gives a schit…?
More wasted time inside the chambers…Still, this is the best news of the day! You know that the only reason it passed is because Utah wanted to again be known for an Internet first. Those domain(ing) in Utah are a handful of SAHM’s or a few geeks trying make a few extra bennies. I cannot wait to see the budget set aside for policing this bill.
BTW…The stats stack up like this: For every one “domainer” in Utah, there are 487 outside of Utah.
“Utah domainers” is an oxymoron . . . or soon will be.
Thank goodness I have my 5 wives to console me. 😉
As a general rule, it will have no effect on most domainers.
As Michael said, –
unfortunately it is the forerunner of federal legislation.
The U.S. has exported so many jobs. I guess a federal law will export some more.
Trademark and trademark typo squatters (can you say .cm) have made a nasty mess for generic investors. They should have paid for ica with all of the millions they made on those trademark domains. Move your generic domains to registrars in Canada and it will offer better protection from frivolous suits from bottom feeders.
Best regards eh. 🙂
Welcome,
That use to be true but the lawyers have figured out that it is easy to file in Northern Virginia where Verisign is located.
Plus, .org is Northern Va., .us/.biz is in Northern Va.
And, Affilias has a Philadephia address.
So, there is no where to run.
Its gets even better. What if you own a real estate domain name, loan, or insurance name.. If .gov decides you can’t use it because it’s confusing to the state mark, then what are you to do? You can’t fight them either. If your trying to sell your name to an end user in that state it is useless to them if the state agency finds it confusing. It will drag you down and all your money with it.
The only thing you can do with it is develop it out of state and sell the leads you get from that particular business. Bunch a BS.
Unless your out of the state and don’t actually have a business inside the state then your lucky. I am moving all my domains out of this state asap. To the republican in Utah 1 of 487, looks like 2 of 487 now. You republican guys all think the same in Utah. Keep dreaming about your Mormon president, and let the church keep bleeding you for 10% of your earnings. Though you have nothing to worry about anyway the “moroni doors” will save you in the end. Don’t worry about this bill, right…….
Why a registrar would want to even accept business in Utah is beyond me. They are so liable with this bill.
How does this bill deal with blogs, twitter, and apps, and google adwords? This bill is basically it’s own form of judges. All about control.
Note if your moving to Utah, no liquor licenses are left, they only give so many per 10,000 residents, so if your looking to open up a resturant, you will want to re-think that also.
Donny
This is the language that scares me.
“In determining whether a person has a bad faith intent described in Subsection (1)(a), a court may consider all relevant factors, including:
(F) the person’s offer to transfer, sell, or otherwise assign, or solicitation of the purchase, transfer, or assignment of the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct;”
This seems to basically eliminate the ability to sell domains, any domains, for a profit if they have not been used in a bona fide manner (as yet to be defined but trending away from parking and mini-sites)
Chip
Your right.
If you park your domains, this which may not be regarded to be a “bona fide offering of any goods or services” by the Utah courts.
Even if parking is deemed OK, just having an offer link or putting them into say Sedo.com or Snapnames.com would be a solicitation for sale which would put you into this provision.
If you have several domains then your going to be labeled a domainer and fall within this one:
“”the person’s prior conduct indicating a pattern of such conduct””
So if you live in Utah you seriously have to move or risk civil and criminal prosecution, way beyond just losing a domain.
The problem is the same type of bill is going to be heading to Washington.
The best strategy for domain investors is to stick with very pure generic domain names. The Utah bill threatens to over-reach & possibly harm lawful domainers … but it was born to punish blatant trademark infringers.
Once again, legitmate domain investing is not cybersquatting. There is a wide valley that exists between the two. Some people simply drive cars and some people commit grand theft auto. Yes, both groups exist but only idiots would confuse the two.
It has been insinuated that registrars and auction houses bear some responsibility for perpetuating the problem because they have allowed people to list clear TM domains for sale on their platforms. I agree that this has not helped the situation but only made it worse.
However, there are enough grey area domains that the registrars and auction houses can’t reasonably allocate the time and resources to get caught up in deciding which listings are infringing and which are safe. The UDRP has been “the mechanism” for making this distinction, but its panelists range from competent to surprisingly dishonest & agenda driven.
I understand why the legislation exists. But legitimate, above-board domain investors are not represented or protected and no doubt this legislation could be used to exploit lawful domain name registrants.
The need for the ICA is more clear every day. Anyone who cannot recognize the need for domainer representation is being unrealistic and short-sighted. Cybersquatters created this problem, and their actions have jeopardized many lawful, innocent investors.
I don’t mind laws that protect trademark holders. Legit domainers are not against TM protections. TM holders and domainers are not opposing interests. The problem is that ignorant people fail to make the critical distinction between domain ownership vs. cybersquatting. And there is also a cottage industry that actually makes money by blurring this line and who benefit from lumping together domainers with cybersquatters. This makes me sick.
Domainers need representation. With or without this representation, dealing in purely generic domain names is the place to be. US trademark law has significant built-in protections for generic words and geographical locations. International laws and customs are obviously more complex. Bottom line … generic domains exist in an inherently safer niche. And I expect they will remain mostly out of reach for the most. Or else, the boundaries of trademark law will evaporate. And that’s not just a domain name story, that would threaten & cripple commerce in America and abroad.
Menius, I agree.
However, just about any domain is probably a TM infringement.
I’m positive there are many companies in Utah (and U.S.) that go by a prime word or 3 letters. If XYZ Taxi Co. wants XYZ or Taxi, they probably could get them if TM’d and the domains were parked.
I realize the Utah law doesn’t effect anyone not in or doing business in Utah.
It seems the pendulum is swinging away from domain owner rights in favor of anyone who wants to bring a legal challenge. (courts/legal, UDRP/arbitration)
Stop whining, unless you are a “squatter” this has nothing to do with you. If you are holding TM domains then you should have expected this to come and quite honestly you should just write them off and be thankful for the time you had with them.
I have no tolerance for people who knowingly register TM’s in the hope to make a buck.. It’s always been shady and underhanded at best. Instead of crying over your cereal about this why not go do something unique for once and stop making the world think that all domainers are scum bags.
You have got to be kidding me. Is this a joke?
I wouldn’t presume that this law will only affect domain registrants/registrars residing in Utah.
It probably won’t be long before we see an action brought under it against an out of state entity, based on a theory that they are directing the domain to Utah residents and that provides sufficient jurisdictional nexus.
That would still leave open the question of enforcing a Utah judgment against an out of state entity, but there may well be a TM holder somewhere who thinks it is worth getting a Utah court decree for whatever leverage it provides. Stay tuned. (And if it doesn’t provide leverage, CADNA will cite that as proving the need for federal legislation.)
@Jessee :: I agree, we are on the same page regarding domainers doing the right thing and staying off of TMs alltogether.
I think what some of the posters are concerned about, and rightly so, is the abuse of the coming legislation.
No matter how had your try to keep your nose clean, and I do mean good people like ourselves making a concerted effort to do so, there are too many stories already of same-people being bitten by the system as it is presently established.
That is not whining, that’s life experience.
Trusting well-meaning but uninformed legislatures to run things out of their ken is a bad idea.
Who stands to profit from CADNA? There is always money behind a lobby, who is that money?
Max
“”The best strategy for domain investors is to stick with very pure generic domain names. The Utah bill threatens to over-reach & possibly harm lawful domainers … but it was born to punish blatant trademark infringers.””
It was born to punish blatant trademark infringers as was UDRP and WIPO but we see everyweek generic domains taken based off of a trademark somewhere in the world.
Geo domains, 2 letter, 3 letter domains have been taken away from their owners, Yesterday 7days.com got taken.
The US income tax started off as a 1% top rate.
This is the nature of laws, things start one way and end completely different.
“”Once again, legitimate domain investing is not cybersquatting.”
What you or I would consider cybersqatting and what CADNA considers it varies widely
It has been insinuated that registrars and auction houses bear some responsibility for perpetuating the problem because they have allowed people to list clear TM domains for sale on their platforms. I agree that this has not helped the situation but only made it worse.
“This is going to change. You already saw that France has held a registrar liable for a registration that infringed on a mark in yesterday’s post and fined them.
I believe you will see this in the US within the next 3 years
“”The need for the ICA is more clear every day. “”
Unfortunately that ship has sailed. Domainers that wouldn’t part with $295 a year will soon find themselves facing fines and possible jail time paying legal fees in excess of that $295 not per year but per hour.
Jessee
Problem is EVERY dictionary word, 2 and 3 letter combination and every phrase or saying you have every heard is trademarked somewhere in the world.
Just check out some of the recent decisions we have written about
@small domainer said “However, just about any domain is probably a TM infringement.”
Good points. Not only do many generic words hold a TM at USPTO, the trend is increasing with USPTO commonly issuing marks with the “Standard Character Claim” for a Mark Drawing Code. On a world scale it is even more common to see common words used as marks.
There is of course nothing legally wrong with issuing a mark with Standard Character Claim to a company that runs business using the mark with a meaning other than its commonly accepted generic meaning (i.e., the claimed mark is not descriptive of their product or service). For example, consider the word “sex”. It has four registered marks that use the Mark Drawing Code of “Typed Drawing” (old term for Standard Character Claim used in Madrid protocol):
RN: 2683821 (February 4, 2003, “decorative refrigerator magnets”)
RN: 2757591 (August 26, 2003, “Paperweights”)
RN: 2655176 (November 26, 2002, “aromatherapy oils”)
RN: 2859640 (July 6, 2004, “tobacco products”)
These all have 1A for Current Filing Basis. Three of the marks are on the Principal Register, while one (2655176) is on the Supplemental Register.
The point being: It seems almost everything generic has been claimed as a registered TM, and in many cases these claims are showing up in the Principal Register with Standard Character Claim. IMHO, I think the courts (and UDRP actions) are allowing “TM Squatting”.
Hawaiian:
“”Who stands to profit from CADNA? There is always money behind a lobby, who is that money?”””
http://www.cadna.org/en/members
* American International Group, Inc.
* Bacardi & Company Limited
* Carlson / Carlson Hotels Worldwide / Carlson Restaurants Worldwide
* Dell Inc.
* DIRECTV, Inc.
* Eli Lilly and Company
* Goldman, Sachs & Co.
* Harrah’s Entertainment, Inc.
* Hewlett-Packard Company
* Hilton Hotels Corporation
* HSBC Holdings plc
* InterContinental Hotels Group
* Marriott International, Inc.
* Morgan Stanley
* New York Life Insurance Company
* Nike, Inc.
* Verizon Communications Inc.
* Wells Fargo & Company
* Wyndham Worldwide Corporation
npcomplete
Let’s not forget that it not just trademarks in the US but almost anywhere in the world that can be the basis for a transfer of a domain.
Just in the last weeks we have seen domains taken away based on trademarks from Mexico, German, Japan and other countries.
@MHB Oh, holy crap.
MHB:
Yep, agree completely. In fact I mentioned that in my comments above:
“On a world scale it is even more common to see common words used as marks.”
This makes it difficult for people trying in good faith to run a clean business… given all of the “TM Squatters”. sigh. There really is no “pure play generic” safe from TM abuse attacks. You can certainly win some of these frivolous attacks, but that too is expensive for the respondent.
Too bad it isnt retroactive or DirectNIC and all of its shell companies, including Parked.com, would be out of business LIKE THAT! Oh the joy.
@MHB: Well, just stop doing business the those whining bunch of babies. Its as simple as that. No business = lost sales = no revenue = bye bye…
@Chip: That means Godaddy and the rest, who, after you purchase your domain name, park it themselves and slap ads on them, are just as guilty. This will be overturned, like that sham health care crap they’re about shove down our throats.
Maybe the US govt needs to study the events that led to the FIRST revolution……. 😉
MHB — I’m a little confused about your comments concerning ICA. IIRC, you indicated previously that ICA had a budget of $100,oo0 – $150,000 (I don’t remember the exact amount), but that domainers refused to pay the $295 fee to join ICA, so they no longer have a lobbyist/legal counsel. Is that correct?
It seems odd to me that in an industry that boasts people/companies earning tens of millions of dollars each year on parking revenue (not to mention domain sales), that even just a few of the bigger domainers couldn’t fund ICA.
Don’t misunderstand. I’m not saying that the big domainers should have to pay and the little guys should get a free ride. But from a practical perspective, the big guys have so much more to lose, it seems foolish and shortsighted not to continue ICA’s efforts. In a perfect world, all domainers would participate and contribute. But since we don’t live in a perfect world, it seems like the big boys would be well served to spend the money and protect their interests.
Do I misunderstand?
Lou
The former budget of the ICA was over $200K, maybe over $300K when it had an executive director. I’ve never been on the board to I have never been privy to the exact numbers.
In January at the TRAFFIC show while I was sitting in the RickLatona.com auction was the first time I learned that Mr. Corwin contract with the ICA ran out on December 31.
Several domainer have since sent in contributions but I don’t know what the present status of the Association is.
But the association missed the time to lobby against this bill which was only introduced in December just a couple of weeks before his contract ran out.
The big boys are contributing but many of these “big Boys” don’t live in the US so they aren’t going to go to jail.
Personally in case you missed it, MostWantedDomains.com was just named in a Harvard study as having one of the 25 lowest incident of typos, so we are fine as well.
The trouble is being caused by the smaller guys and you want the bigger guys to pay for it all, may of which don’t even live in the US.
Well, looks like they’ve got every possible angle covered with that bill, which will no doubt have other far reaching interpretations to suit their needs……EEEK
I’m glad I don’t live in Utah, I’m even more glad I have’nt invested hundreds of thousands in domains…things are going to hell in a hand basket pretty rapidly.
Looks like Corporate America is making moves to manipulate, control and steer the Internet round to thier exact way of thinking and domainers are in their firing line.
…maybe those news articles of some domainers making tens of millions of dollars per year has really p***** them off!
ref > “The trouble is being caused by the smaller guys and you want the bigger guys to pay for it all, may of which don’t even live in the US.”
Pool is not little, Namejet is not little, Snapnames is not little and neither are all those registrars yet they all consistantly promote and sell off previously tasted TM & Typo names to whoevers willing to buy them….they dangle them infront of everybodies eyes and hope they get a bidding war going….monkey see monkey do ! 🙂
(I know you have contributed big bucks to ICA)
..I don’t think that its as simple as us little guys expect you “big rich guys” to pay for everything, the masses often don’t have the right skills and need leaders to lead by example and in a way that also represents them and gives them a voice, do that and more will support and follow suit….there’s safety in numbers, but only if the leaders value the followers.
At the moment it’s not happening…the domain industry is leaderless !
Gazzip
“”Pool is not little, Namejet is not little, Snapnames is not little and neither are all those registrars yet they all consistently promote and sell off previously tasted TM & Typo names to whoever willing to buy them””
Wrong.
Pool, Namejet and Snapnames are not registrars and are not effected or subject to the bill.
All these service do is try to get expired domains that other people ask them to get.
So simply they are not subject the law.
You keep wanting to put the responsibility on those that are not directly effected by the law.
“The trouble is being caused by the smaller guys and you want the bigger guys to pay for it all, may of which don’t even live in the US.”
My comments were in relation to what you said above about the smaller guys being the cause.
I did’nt say they were registrars but they do take a cut in the money from the sale of their “partner registered domains” when they are sold on their platforms, they do put TM names on their homepages and in their email drop lists which encourages some people to buy those same names….they don’t have to…its a choice they make.
While they may not be subject to the law (ie: the bill above) they are playing a part in why bills like this are made. We all do to some degree, big players and small, registrars, tasters, auction houses.
I don’t “want” to put the responsibility on anyone in particular – it is what it is, I’m not making anything up here 🙂
Please don’t take my post as any sort of attack on their service, it is not, but don’t just blame the little guys for all the trouble, that’s not true !
Yeah for trademark owners!
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Great post. Its about time this bill was passed. Trademarkers win 1 finally.
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