Are domain name registrars responsible for intellectual property infringement?

Tags:  Dell  ICANN  domain tasters  domain name registrars  trademark  safe harbor  domainers 

A recent case filed by Dell against a number of domain tasters and their registrars attempts to hold the registrars liable for infringing some of Dell’s intellectual property.  The claims that are relevant to domain name registrars allege that at least 3 registrars created a chain of registrars who took advantage of the ICANN 5 day redemption period to profit off Dell’s trademarks.  Dell alleges that these registrars allowed domain tasters to redeem domain names at one registrar and subsequently register it at an affiliated registrar.  This would preserve the taster’s interest in the domain name, and allow the affiliated registrars to share in any click through revenue created by the registration of the name.

Without going into the technical legal arguments raised by this case, a suit against domain name registrars has serious implications for hosts and other internet infrastructure providers.  Dell’s arguments are very similar to copyright infringement claims made in the early days of the web:  that those who facilitated the infringement of the copyrighted work were liable as third parties since they facilitated the infringement, and profited from it through the fees they collected.  While the facts in Dell’s case are pretty sensational (a chain of registrars profiting off a nuance in ICANN rules), the case shows that transparent attempts to exploit legal loopholes, are often only temporarily successful.  In this case, setting up a chain of (allegedly) related registrars to profit off of a registered trademark merited a swift response from Dell.

So what does this mean for hosts and other Internet infrastructure providers?  The first lesson is that the doctrine of third party liability for intellectual property infringement is alive and well.  This means that you need to remain aware and vigilant about your business activities.  This vigilance is important particularly in the area of trademarks, where, unlike copyrights, there is no “safe harbor” for businesses who are simply links in the chain of bad acts of customers or third parties.  A second lesson relates to Domaining.  While initially a suspect business, domaining has become a legitimate part of the Internet.  Hosts and other Internet infrastructure providers need to be aware that registering domain names involves a different risk assessment than other business efforts.  Because domainers tend to be very creative in their business, and business creativity often requires a higher level of legal analysis, those who provide business services to domainers need to examine whether the processes and procedures they have put into place effectively isolate the risk that these new customers may pose to their business.  

David Snead is a lawyer whose practice is focused on internet infrastructure providers. In his eleven years in this practice, he has represented clients including multinationals, middle tier hosting companies, and two guys, a server, a T-1 and a huge MasterCard balance. A long-time WHIR contribut... (Read full bio)

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Comment by Anonymous on Wednesday, December 12, 2007

Hi fellow David. :)

I think the possibly more relevant question is "how much responsibility should we hold registrars accountable for for intellectual property infringement?". Naturally the registrars themselves are going to say, "No, we shouldn't be held liable for such, and there are existing laws already dealing with this."

There are at least 2 contributory trademark infringement suits I recall at the top of my head: Lockheed Martin and Size Inc., both vs. the original NSI (now Network Solutions LLC). Both complainants lost.

Anyway, the big registrars like Go Daddy, eNom, Network Solution (but of course!) or even Moniker are aware of this. Not that they're not going to be sued anyway if someone's up to it.

IANAL, though. Just happen to be interested in this. :)

Comment by Anonymous on Friday, December 14, 2007

I wonder if Dell should go a bit further and sue the ISPs, colo centers and... themselves! After all, they sell computers that are used to facilitate all of those infringing domains. And don't forget those who operate copper mines -- And the infringe-enabling manufacturers of the equipment used to mine the copper. And the payroll companies that provide checks to the employees that make the equipment that... Ridiculous.

Thanks for the pointer Snead.

Comment by Anonymous on Wednesday, December 19, 2007

Tom -

I agree. In essence Trademark owners should go after the actual infringers. However, if you set up a chain of companies that is specifically designed to profit off a customer's infringing activity, that changes the analysis.

Comment by Anonymous on Wednesday, December 19, 2007

I must admit that I'm not a big fan of the sway in laws that favor TM holders so perhaps that influenced my comment. But following the law (or at least precedence) I would have to agree that setting up companies for the purpose of infringing requires a different look at things.

Can't seem to get my disdain for the current system out of the way when looking at issues. Will try harder in the future as long as you keep provoking thought.

Comment by Anonymous on Friday, December 28, 2007

I understand the issue at hand, however i don't believe hosts/registrars should be held liable. It is impossible for these companies to determine whether a domain infringes on a company trademark/copyright or not. It should be the responsibility of the registrant to do this work and if said trademark or copyright is infringed upon then it should be taken up with the registrant not the company that is providing the service. Furthermore, if said domain is infringing on intellectual property, then the registrar should be given ample notice and be able to contact the customer in regards to the situation. In regards to setting up registrars in an attempt to profit off of infringement acts; then that Registrar should be held responsible since the ethical boundaries have been crossed and knowingly wrong doiong a company is bad business and i would not want to do business with that company anyways.

Comment by Anonymous on Wednesday, January 02, 2008

I agree with this. Problems like this should be dealt with at the source, not by trying to manipulate copyright and trademark laws.

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