Comments of the U.S. Council for Interantional Business

to the Department of Commerce on the "Proposal to Improve

Technical mangement of Internet Names and Addresses"

We appreciate the opportunity to respond to the Clinton Administration's "Proposal to Improve Technical Management of Internet Names and Addresses", as issued in the Federal Registry notice of 2/20/98. We commend the U.S. government team for the time and attention they have devoted to these critical issues. We believe that the Green Paper addressed many of the key areas of concern to our member companies and offers a useful framework for how each of these areas can be addressed.

The USCIB is a membership organization representing the global interests of American business at home and abroad, with the objective of promoting an open system of world trade, finance, and investment. The USCIB is the American affiliate of the International Chamber of Commerce (ICC), the Business and Industry Advisory Committee (BIAC) to the Organization for Economic Cooperation and Development (OECD), and the International Organisation of Employers (IOE). Through these international business organizations, the USCIB officially represents U.S. business positions both in the main intergovernmental bodies, such as the OECD, the World Trade Organization, and the ILO, and in the U.N. system through the consultative status of its international affiliates.

The USCIB has a keen interest in facilitating the growth and use of electronic commerce. We believe that infrastructure stability, in terms of Internet addressing and domain name systems, coupled with reliable and predictable protection of established trademarks and brand names should be the goal. Consumers must have confidence in electronic transactions through a secure infrastructure and the ability to rely on established brand identities and corporate reputations as guideposts of trust and reliability. Developing this level of consumer trust in transactions will spur electronic commerce and enable new markets to be opened with competition from new entrants by developing a critical mass of e-consumers.

In our comments, we focus most on certain issues raised in the Green Paper: the need to maintain Internet stability, the need to provide predictable and reliable protection for trademarks in online environments and the need to assure an orderly transition of governance. We believe that the following principles could be a useful guide in the transition to private sector governance.

TRANSITION PRINCIPLES

·         Stability:

The U. S. Government's stewardship must end in a responsible manner so that the operational stability of the Internet is not adversely affected by the transition. We also agree that change and evolution in technical management is needed.

·         Competition:

We are in favor of increased competition and, where appropriate, believe that competition should be encouraged and implemented. Some minimized form of government authority will continue to be needed, however, to ensure that trademarks are protected and that recourse is available. Competition is a desirable outcome, but not a means unto itself. The goal of sustainable competition requires a gradual transition period, since many new processes and systems must be tested, and end users will need the system to continue to operate successfully through all the changes proposed.

·         Private, Bottom up coordination

We agree with this concept.

·         Composition of the Board and Related Processes

We agree that the new governance structure should reflect the changing nature of the stakeholders, take into account the increasingly global distribution of stakeholders, and the increasingly commercial nature of the Internet's applications. The composition of the new Board of the new non-profit is a high priority to us. The proposed allocation of "seats" an excellent approach to achieve that "balance". We strongly endorse the approach of ensuring that at least 50% of the Board seats come from the trademark/commercial user sectors.

Global Representation:

The Green Paper makes it clear that global representation is essential, but does not provide a clearly defined approach about how global representation is to be identified and recruited. We look forward to seeing more detailed discussions of this subject and offer the following comments on this subject.

We understand that there are some who question whether the proposed approach of the Green Paper ensures the United States a continuing and undeserved leadership role in the governance of the Internet and in trademarks. We are aware of the concerns expressed by the European Commission, and perhaps others. While we do not discount those concerns, it is our view that the transition period proposed in the Green Paper will provide near-term stability, while ensuring an opportunity to develop an effective approach to address the question of a longer-term global legal authority and related issues involving trademarks.

We agree that global representation is essential in the Board of the new Corporation and acknowledge that an increasing number of users (now close to 33%) are non-US in origin. However, we believe that the Green Paper provides for participation by entities located in other regions, and in other nations, ensuring that the decision-making process is global and representative. We support the need to make every effort to recruit Board participation that is representative of the global nature of the Internet.

We support locating the non profit corporation in the U.S., where the USG has legitimate authority to undertake such transitions; given the legal realities, that seems both a reasonable and essential step. We agree that it may be appropriate to consider methodologies to move some functions to other regions of the world once the transition is complete, and the new corporation is fully stabilized.

Respect, recognition, and protection of trademarks:

As major trademark holders, our members are experiencing problems already in dealing with cyber-fraud, cybersquatting, and efforts to dilute their famous brands. We recommend that additional attention and focus should be given to ensuring that trademarks are recognized and protected and to how best to deal with trademark conflicts. Therefore, we endorse the need for a study on these issues as outlined in the Green Paper and look forward to supporting such an effort.

Trademark holders are also encountering a serious problem with the use of false information provided to the registrar when obtaining the domain name, thus making it difficult or impossible for the trademark holder to serve the holder of the conflicting domain name.

We are very concerned that two areas of high priority be addressed in this transition period and beyond: 1) ensuring that trademarks are recognized, respected, and protected in an effective and affordable manner with a uniform and standardized approach (across all domains) to dispute resolution of conflicts, and 2) that the negative consequences on consumers of increased confusion is minimized.

We therefore urge that effective steps be taken to explore harmonization of trademarks, including recognition of trademarks in domain names via WIPO. We ask that the U.S. government explore harmonization efforts with the European Commission, and with other governments, including Australia, Canada, Japan, and with WIPO's Director General, Dr. Idris Kamil.

Creation of new gTLDS

We support the concept of separation of the registry and registrar functions, as recommended in the Green Paper, and share the concern expressed about promoting competition at the registry level. Cautions have been raised about the proposed addition of simultaneous multiple gTLDs, due to problems which arise in trademark conflicts and the resulting confusion to consumers. We think this area should be approached with great care so as not to disrupt either the marketplace or the trademark system. We therefore support the concept of a careful and phased introduction of a modest number of competing registries during the transition period. This phased and limited introduction will enable the recommended study to take into

account what happens when new gTLDs are introduced.

Resolution of Trademark and Governance Issues

Overall, we are pleased with the thoroughness represented by the Green Paper and the approach it takes with many of the key areas; however, as we have noted, more attention needs to be devoted to the impact upon trademarks and consumers of the governance decisions. We believe that governance and transition decisions must take into account the potential for disputes involving trademarks and domain names.

There is a synergistic nature between decisions involving governance and decisions about ensuring protection of trademarks, and managing disputes for trademarks and domain names. The issues of governance decisions, composition and number of Board members, choice of national law, and authority to enter new gTLDs into the Root Servers all significantly impact trademarks and must be addressed with an awareness of their synergistic nature.

Both the trademark and governance issues require the highest priority of attention and resolution of these outstanding issues should be encouraged in the near term.

Comments on Appendix 2

Appendix 2, as drafted, is a good starting point in establishing minimum requirements to which all registries must adhere. Registries, and their interaction with Registrars, play an important role in ensuring both the stability of the Internet and the protection of trademarks. We question the advisability of placing so much reliance on WIPO for Trademark enforcement since no international law exists to back it in this area. We propose the following:

·         In addition to WIPO look to other established dispute resolution fora, such as the ICC International Court of Arbitration, to provide users with the ability to choose between reliable fora.

·         The trademark dispute resolution process should be identical for all registries and input from trademark owners/industry working groups should be solicited in the development of this process.

·         Trademark owners' interests must be fairly represented on the proposed Board of Directors through sufficient participation of trademark holders and commercial users on the Board.

We also endorse the concept of the proposed study to evaluate the effects of adding new generic Top Level Domains and related dispute resolution procedures on trademark owners. We take note of the fact that substantial work has already been undertaken in this area by WIPO and that a history of discourse in this area already exists within the Trademark Community. We expect that the proposed study will take notice of, and build upon, this previous work.

This study should address a variety of issues, including but not limited to the following:

1.       The number of gTLDs which should be introduced;

2.       Whether the establishment of a trademark clearance process is necessary and how it might be developed and implemented across multiple registrars;

3.       Whether a searchable database is needed, and how it might be funded and supported;

4.       Identifying what information from Domain Name databases should be accessible for "clearing" of trademarks;

5.       Whether Domain Name registrants should be required to provide certain information and certify its validity, under appropriate penalty, such as, loss of the domain and /or name and monetary sanctions if false information is used;

6.       Identifying and evaluating known effective dispute resolution mechanisms and whether additional protections should be established by the registries; and

7.       Focusing on choice of law or jurisdiction and trademark infringement liability for registrars, registries, and technical management bodies.

We believe the study should be undertaken with the participation of: (1) individuals and organizations responsible for trademark protection in individual corporations; (2) individuals and organizations concerned with the commercial growth and functioning of the Internet; and (3) consumers/users of the Internet for commercial delivery of services and products.

Submitted March 23, 1998