Small Business

Dot-Biz: Points to Ponder


By Karen E. Klein On Oct. 1, a new Internet address reserved exclusively for commercial use is scheduled to go live. The dot-biz top-level domain (TLD), which refers to the characters that follow the "dot" in an Internet domain name (such as the existing dot-com, dot-net, and dot-org) adds both new opportunities and potential problems for entrepreneurs already on the Web, as well as those thinking about taking their business online.

Smart Answers spoke to Ivan Hoffman, an Internet-law and intellectual-property attorney practicing in Los Angeles, about what entrepreneurs should know about dot-biz, what steps they should take to register with the new domain, and how to protect existing trademarks. Hoffman (ivan@ivanhoffman.com) has additional information posted on this topic on his Web site, www.ivanhoffman.com/domain2.html.

Q: When did the dot-biz entity come about, and why was it conceived?

A: Dot-biz was added to the Internet's root-server system in June. The Internet Corporation for Assigned Names & Numbers (ICANN) (www.icann.org), a nonprofit corporation formed to assume responsibility for administration of Internet protocol, granted administration of the dot-biz TLD to a company called NeuLevel Registry Service (www.nic.biz), which will create and maintain the database of dot-biz domain names. Dot-biz is one of seven new TLDs that are being added to the Internet, including .info and .name, because there has been so much activity in the past few years that basically every word in the language has been reserved as a domain under the existing dot-com, dot-net, and dot-org TLDs.

Q: What problems do small-business owners need to be aware of about dot-biz?

A: Trademark owners, including both registered and common law trademark owners, face the same issues regarding domain-name "squatters" as with the dot-com and other domains, so they need to be aware of that issue first.

Q: What are domain-name "squatters"?

A: These are people, also known as "cybersquatters," who register domain names using established trademarks with the express purpose of sitting on them until the trademark owners decide to establish a Web presence. When the trademark owners find their name snapped up, they contact the squatter, who offers to sell back to them something they already own by virtue of a "real-world" trademark. Up until a couple of years ago, the only way the trademark owner could deal with the problem was to sue the squatter or make a deal with him. Considering it might cost the owner $10,000 or $15,000 to get an injunction in federal court against the squatter, it was cheaper to negotiate and pay something -- say, $5,000 -- to get the name back. A lot of people made money that way.

Q: Can they still do it?

A: They can't get away with it so easily now. In the past couple of years, laws have been passed protecting trademarks and common-law rights to trademarks on the Internet. Those have made cybersquatting much less lucrative, but some people still try it -- and with a new TLD coming into use, I suspect some of those people will come out of the woodwork.

Q: What should businesses do to stop them?

A: If you already have your own domain -- whether a dot-com, dot-net, or dot-org -- you should strongly consider registering the dot-biz version of it. By preemptively registering the new extension, you may save yourself considerable time and money in legal fees fighting over the dot-biz version down the road.

Q: If your business is working fine with a dot-com TLD, do you really need to reserve the dot-biz version? Isn't that just extra expense and trouble?

A: No, not really. Your rights are limited to the use of your mark in what is called the secondary-level domain, meaning that part of a domain that comes before the dot-biz (or dot-com, dot-net, etc.). If someone is using your mark in a manner that infringes on your rights, it does not matter which of the TLDs they are using. The law requires trademark owners to enforce their own rights, so if you allow someone to infringe on your mark and you don't take action to stop them, you may lose the rights to your business name. With these new TLDs, there is an additional burden placed on the trademark owner to enforce his rights.

Q: What about dot-com businesses whose name is not officially trademarked? Does this burden apply to them also?

A: Yes. If you haven't registered your business name as a trademark, you can still claim rights of trademark by using the name in commerce.

Q: Should business owners -- particularly on the Net -- register their trademarks in any event?

A: Sure. If you claim rights in a mark but have not registered it with the U.S. Patent & Trademark Office, you should do this immediately. Rights in trademark are considerably stronger with registration. Go to the Patent

Office home page (www.uspto.gov) for how-to information.

Q: How does a business owner go about reserving her dot-biz domain name?

A: You go to NeuLevel Registry Service (www.nic.biz) and look for their list of approved registrars -- companies that have been given the green light to take applications for dot-biz domain names. There are 75 companies now in the process of taking applications, including Register.com, Network Solutions (www.networksolutions.com), and AllDomains.com. September 17 is the deadline to apply for a dot-biz domain that will be up and running when the TLD goes live on Oct. 1, although you can always register after that. The dot-biz TLD will be restricted to business use, meaning it will be granted to applicants with the purpose of exchanging goods, services, or property of any kind, serving in the ordinary course of trade or business, and/or facilitating that exchange of commerce and business.

Q: Why is this such a hot-button issue?

A: First of all, the development of the Internet is moving along so very quickly that legislation and legal decisions are playing catch-up all the time. In the real world, there is law that has been around for hundreds of years that is codified in every state to cover just about every issue that gets raised. When it comes to Internet practice, there's none of that overarching body of law to fill in the gaps.

Second, in the real world there can be a lot of different businesses operating under the same trademark, unless they are in the same industry or the same geographic area and it is likely to cause their customers confusion.

A "Trademark" shoe company can co-exist with a "Trademark" pasta company, for instance, without a likelihood of confusion, which is the legal standard.

On the Net, however, there's only one "trademark.com" -- no matter what industry you're in or where your company is physically located. So the rights to your name and the need to protect it from unscrupulous people becomes much more important, especially with the dot-biz TLD, since it is exclusively for business use.

Q: What happens if you find out that someone else has grabbed your dot-biz domain before you get around to it?

A: You may be too late, unless you have trademarked that name or feel you can claim rights to it because you've used it in commerce for a length of time. In that case, you can either write to [the cybersquatter] directly or have your lawyer write a nasty lawyer letter making all the necessary noises and demanding they turn it over to you. If the other side is reasonable and you've got a good case, it usually goes fine. If they resist out of ignorance, or they're trying to drive a bargain with you, then you would have to file an action under the Uniform Domain Dispute Resolution Policy (UDRP) and try to block them from using your name. But we hope that people will protect themselves before that has to happen. Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


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