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SOPA Could Shutter Registrars and other Domain Name Industry Intermediaries

The Internet Commerce Association has just sent a letter to senior members of the House Judiciary Committee regarding the likely unintended but potentially devastating impact of H.R. 3261 (“SOPA”) as introduced upon ICANN-accredited registrars and other participants in the broad domain name industry, as well as upon the domain registrants who use those services. Registrants, for example, might find it impossible to renew domains due to the extrajudicial termination of payments services sanctioned by the proposal, or to complete domain sales or transfers. Further, many of the domain name industry companies subject to potential payment and advertising service termination under the bill might lack the income to pursue their legal rights, and could well be forced into bankruptcy.

This potential impact arises because, while domain names are subject to trademark law, the Anti-Cybersquatting Consumer Protection Act (ACPA) as well as ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP) place the responsibility for domain name infringement upon the domain registrant and look at a variety of factors, particularly the actual use of the associated domain, before reaching a determination as to whether infringement exists.

ICA believes that SOPA, as introduced, creates the strong possibility that trademark rights holders will seek to have payment and ad services terminated to registrars and other domain name intermediaries based upon the allegation that they are facilitating the use of domains that constitute “counterfeit marks” in and of themselves, without reference to actual use or available defenses. This potential shifting of “cybersquatting” responsibility from registrants to registrars and other domain name intermediaries, as well as the failure to incorporate the more comprehensive and nuanced analysis of the ACPA and UDRP, appears unjustified and unwise—and could lead to the shutdown of these domain name intermediaries and the associated termination of critical domain-related services to millions of registrants engaged in non-infringing uses of their websites.

A key portion of the letter states:

ICA must oppose SOPA as introduced.

While a principal and worthy intent of the legislation is to curtail the Internet sale of counterfeit hard goods to U.S. individuals and businesses, scant attention has been given to its potential effect on the hundreds of highly competitive domain registrars accredited by the Internet Corporation for Assigned Names and Numbers (ICANN), as well as upon other intermediary participants in the domain name ecosystem—including “parking” companies that arrange for the display of click-through ads on domains, domain hosting companies, and domain auction and resale websites that facilitate the operation of a thriving secondary free market in domains.

Our concerns are heightened by the fact that SOPA would facilitate the termination of payment and ad services to a website—including the website of an ICANN-accredited registrar or other domain industry intermediary—before any judge had reviewed the factual allegations brought against it much less determined whether such allegations, if true, would constitute a violation of trademark law.

Such a result would not only be devastating to the companies operating through such websites but to their customers, who might find it impossible to renew valuable domains in a timely manner—potentially resulting in the unjustified closure of their own web-based business—or to complete domain transfers or sales that were in process at the time the allegations were levied.

We therefore urge the Judiciary Committee to give careful attention to the potential impact of SOPA upon the domain name industry and to amend the legislation to clarify that the mere fact that an industry participant facilitates the de novo registration of a domain, or its renewal, transfer, or sale, or provides other domain-related services, cannot give rise to an allegation that it is involved with unlawful activities concerning goods or services bearing a “counterfeit mark”.

The letter also expresses concerns that the introduced legislation needs substantial narrowing and is not required to effectively address infringement on websites subject to U.S. court jurisdiction, and will also have negative effects on cybersecurity and on the availability of venture capital for innovative Internet startups.

The full text of the letter is available at the ICA website.

By Philip S. Corwin, Senior Director and Policy Counsel at Verisign

He also serves as Of Counsel to the IP-centric law firm of Greenberg & Lieberman. Views expressed in this article are solely his own.

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