Driven by privacy concerns, the Canadian Internet Registration Authority ("CIRA") is pushing ahead with implementation of its new Whois Policy despite resistance from trademark owners and other IP rights holders. Once implemented (likely in late fall of 2006), an individual Registrant of a .CA domain name (as opposed to a Registrant who is a corporate entity) will be able to cloak his or her identity unless they opt to disclose it. This is so, even if the .CA domain name links to a commercial website. Disclosure can be forced only in certain limited circumstances, for example, pursuant to a court order, search warrant and the like.

Trademark or other IP rights owners who believe an individual Registrant is cybersquatting or otherwise infringing their rights will have no way to find out an individual Registant’s identity, to contact such a Registrant directly to try to work out a settlement or to properly assess the likelihood of a successful dispute resolution proceeding (called a CDRP proceeding). CI RA have rejected their own Consultant’s recommendation that CDRP Complainants should have access to the identity of an individual Registrant, subject to various safeguards. CIRA’s suggested solution is to permit a Complainant to file rebuttal evidence on the issue of legitimate interest, in response to the evidence, if any, filed by an individual Registrant on that issue. Filing additional evidence on the issue of bad faith will require permission of the dispute resolution panel.

A potential Complainant under this new system will have a risky and expensive decision to make - whether to commence a CDRP proceeding without a crucial piece of information - the identity of the individual Registrant. Because the Complainant is required to submit its Complaint and evidence and incur the fees inherent in doing so before the Registrant has an opportunity to respond, the risk is that the Complainant will find out only after the Registrant files his or her evidence, that he or she indeed has a legitimate interest in the domain name - which if the Complainant had known that from the outset, the CDRP might have been avoided altogether.

The new Whois Policy will also alter the way in which potential Complainants obtain a list of other .CA domain names owned by a Registrant. This is important because one of the three ways of proving bad faith in a CDRP proceeding involves providing evidence that a Registrant has a pattern of registering domain names that include trade-marks of other parties. Under the current system, a potential Complainant can obtain such a list without the Registrant knowing that the request for that information was made or that the requested information was provided. Under the new Whois Policy, a Registrant will be advised within ten days that such a request was made, the identity of the requestor and the information provided.

It’s interesting to note that CIRA’s new Whois Policy doesn’t contain a commercial purpose exception such as the one that applies to .co.uk domain names. Under the .co.uk system, Nominet, which is the UK equivalent of CIRA, is permitted to release the Whois details of an individual Registrant where the domain name links to a commercial website. Another difference is that the .co.uk Whois policy is set up as an opt-out system, requiring the individual Registrant to request anonymity, which is the opposite of CIRA’s new opt-in Whois Policy, where anonymity is the default starting point.

In a related development, CIRA is currently seeking public input on how to implement its new Whois policy and is seeking to hire a consultant to complete a review of the CDRP process and recommend options for change.

In a further related development, ICANN, the body that oversees the almighty .com, .net and .org top level domains, is currently contemplating instituting similar changes to its Whois Policy, again to the hue and cry of most trademark and IP rights owners as well as law enforcement agencies.

Businesses and regulators are actively debating how to balance competition, patents and industry standards in a networked, global marketplace.

This August, the United States Federal Trade Commission¹ (FTC) released a unanimous decision In the Matter of Rambus, Inc.² that provides useful guidance in this debate.

Historically, regulators have favoured free market competition for its tendency to fill the marketplace with the right goods, in the right quantity, at the right price. However, this arrangement works best for commodities, where reasonable substitutes are readily produced by competitors and easily available to consumers.

In an increasingly networked economy like ours, however, consumers benefit not only from using products by themselves, but also from using products in concert with other consumers. For example, although I don’t much care what breakfast cereal you eat, I do care that we all drive cars on the same side of the road, that our telephones and computers communicate reliably, and that our television sets form a large common market for advertising-supported programming.

Therefore in a networked economy, compatibility and standardization generate added value, and thus cooperation between competitors can sometimes be good for the economy. When competitors agree upon an industry standard, they can produce interoperable products that consumers can more easily compare and choose between, without getting locked into the proprietary technology of any one competitor. Cooperation can produce commodification.

Complicating the balance still further, sometimes even monopolies can be good for the economy. For example, a patent encourages investment in invention by empowering a patent owner to prevent all others from making, using, or selling his invention for a limited period of time. However, subject to the patent rights, all others are free to copy the invention, learn from the invention, find new applications for the invention, and derive new inventions from the invention, all of which behaviours fuel healthy competition and create new opportunities and new ways to satisfy old needs.

In this environment, it can be very difficult for companies to know what constitutes anticompetitive or unfair behaviour. Classically, collusion between competitors has been considered inappropriate; however, cooperation to set standards is encouraged. Classically, aggressive competition between competitors has been considered desirable; however, in a cooperative standard-setting environment, some self-interested behaviour can be considered anticompetitive or unfair.

The FTC offers some recent guidance in resolving this conundrum.

In the United States, the offense of monopoly under §2 of the Sherman Act has two elements:

1. the possession of monopoly power in the relevant market; and

2. the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident³.

   The FTC took pains to emphasize that:

   From the earliest days of Section 2 jurisprudence, courts have held that unilateral conduct, absent an "anticompetitive" or "exclusionary" element, is benign – even if it creates or maintains monopoly power, or is dangerously likely to do so – because "the successful competitor, having been urged to compete, must not be turned upon when he wins." As the Supreme Court noted in Spectrum Sports, Inc. v. McQuillan, "[t]he law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.⁴

In exploring the hazards of cooperation, the FTC considered ground rules that encourage a fair outcome for members of standards setting organizations and an efficient outcome for the marketplace:

Rambus became a member of a standards setting organization called the Joint Electron Device Engineering Council (JEDEC), which was tasked with setting standards for memory chips for use in computers and other devices within a collaborative framework that included a Policy Statement setting various ground rules for behavior. The FTC found that:

The FTC concluded that in sum, this conduct amounted to exclusionary conduct in contravention of §2 of the Sherman Act.

The FTC emphatically concluded that Rambus had violated both §2 of the Sherman Act and §5 of the Federal Trade Commission Act; however, the consequences of that violation remain uncertain because the FTC will consider remedies in a future phase of the proceedings.

What is clear is that companies participating in SSOs must have a sophisticated understanding of these dynamics in order to strike the best balance between cooperative and competitive behaviours.

¹ http://www.ftc.gov

² http://www.ftc.gov/os/adjpro/d9302/060802commissionopinion.pdf

³ United States v. Grinnell Corp., 384 U.S. 563 (1966)

⁴ In the Matter of Rambus Incorporated, FTC (2006), Docket No. 9302, Majority Opinion, p.28

⁵ In the Matter of Rambus Incorporated, FTC (2006), Docket No. 9302, Majority Opinion, p.4

⁶ In the Matter of Rambus Incorporated, FTC (2006), Docket No. 9302, Majority Opinion, pp.34-35

⁷ In the Matter of Rambus Incorporated, FTC (2006), Docket No. 9302, Majority Opinion, p.50

⁸ In the Matter of Rambus Incorporated, FTC (2006), Docket No. 9302, Majority Opinion, p.68

Neil Melliship, Larry Munn and Karen Monteith will collaborate on the recently launched Canadian Trademark Blog.

Neil Melliship is chair of Clark Wilson LLP’s Technology and IP group and a Registered Trademark Agent. He actively speaks and writes on trade-mark issues. Larry Munn is chair of the firm’s Privacy Law group and a member of our Technology and IP group. His practice includes trademark and licensing issues, and complex trademark disputes. Karen Monteith is a Registered Trademark Agent with our Technology and IP group. Her practice includes searching and clearing trademarks; drafting, filing and prosecuting trademark applications and initiating opposition and expungement proceedings.

For more information, please visit www.trademarkblog.ca.