Number: 400
National Wholesale
Druggists' Association
P.O. Box 2219. Reston, VA 20195-0219 Fax # 703/787-6930
1821 Michael Faraday Drive. Suite 400, Reston, VA 20190-5348 703/787-0000
Ronald G. Nelson, Chairman of the Board
Ronald J. Streck. President & CE
August 18, 1997
VIA HAND DELIVERY
Patrice Washington
National Telecommunications and Information Administration
Room 4898
14th St. and Constitution Ave., N.W.
Washington, D.C. 20230
Re: Request For Comments on the Registration and Administration of Internet Domain Names Docket No.
970613137-7137-01
Dear Ms. Washington:
The National Wholesale Druggists' Association ("NWDA") and the NWDA Service Corporation ("NWDASC") appreciate
this opportunity to provide comments with respect to the above referenced request for public comments which was published
in the Federal Register on July 2, 1997.
The NWDA is a nonprofit trade association whose active membership includes full-line, full service drug wholesalers
operating about 234 distribution centers nationwide. Its associate members include about 281 manufacturers of
pharmaceutical, biological, biotechnology and radiology products; over-the-counter drugs; general merchandise and sundries;
health and beauty care products; diagnostic devices; home health care products; and medical and surgical supplies and
devices. Other members are suppliers of electronic data processing equipment and services, research and consulting firms,
trade publications, and sales representatives' agencies. The association also includes international members consisting of 30
drug wholesalers and industry suppliers in North and South America. NWDA wholesalers distribute about 80 percent of all
pharmaceutical and health care products sold in the U.S. to 23,000 independent pharmacies; 17,300 chain pharmacies; 7,500
hospital pharmacies; 190 mail order pharmacies; 6,600 food stores; 5,100 mass merchandisers; 1,900 nursing homes; 44,600
clinics; 1,100 HMOs and 2,500 home health providers.
The function of the wholesale drug industry is to provide economies of scale to ensure timely, smooth, safe and cost-efficient
distribution of health care products. Through investments in technology and other added values, the wholesale drug channel
is the most cost-effective means for health care product suppliers to distribute their products.
One such line of value-added services designed to achieve cost-effective distribution are NWDASC's HEALTHCOM(R)
Services. NWDASC's HEALTHCOM(R) Services include an industry-specific business information and communication
network for use NWDA members. Through NWDASC's HEALTHCOM(R) Services, NWDA members can subscribe to
low-cost services for electronic data interchange, various industry-specific databases, various industry specific news
publications and an array of educational services. Use of HEALTHCOM(R) Services facilitates easy and cost-effective
electronic commerce among drug wholesalers and their suppliers which ultimately achieves timely, smooth, safe and cost
efficient distribution of health care products to patients and consumers.
With the advent of the Internet and Internet access being readily available now in the workplace, NWDA and its members
have started to make increasing use of the Internet. NWDA has a home page on the World Wide Web portion of the Internet
(www.nwda.org) which is designed to make readily available information about NWDA, its functions and policies, and
information on the wholesale drug industry in general. Additionally, NWDA utilizes the Internet for transmission of
electronic mail to and from its members to its staff to speed communication.
NWDASC also saw that the Internet could be used as a gateway for members to access the HEALTHCOM(R) network from
their desktop computers. Thus, it also maintains a home page on the World Wide Web (www.healthcom.org). In fact,
NWDASC has recently experienced some of the problems associated with the current domain name system which are the
subject of the Request For Comments. It recently was involved with a trademark infringement litigation involving the entity
which had registered the healthcom.com domain name. Partially as a result of such experiences, it is submitting these
comments for your consideration. We address the issues in the order raised in the Federal Register notice.
1. What are the advantages and disadvantages of the current domain name registration systems?
Domain names are relevant, at least with respect to entities which use the Internet for business purposes, because consumers
perceive them as performing, in electronic commerce, much the same roles as trademarks and trade names have played.
Because consumers use domain names to locate Web resources, companies doing business online want domain names that are
easy for their customers and business partners to remember and that relate to their products or services. Owners of famous
trademarks (such as Coca-Cola) would like to register their trademarks as domain names to help their customers locate their
Internet sites. Moreover, many consumers who do not know the domain name of a company will use the company's
trademarks to try to locate the company's web site.
As a result, domain names are beginning to function in much the same way as a trademark functions--as an indicator of the
source or origin of particular products and/or services and as an indicator of the goodwill associated with a particular entity
and/or its goods/services.
Because the Internet is global in nature, the current administration of domain name registration, with multiple registries with
multiple policies which may differ by country, is not as efficient or effective as it would be with a unified international
registrar. Moreover, the fact that each country has its own registrar which may assign second level domain names under a
country specific top level domain (TLD), such as .uk for the United Kingdom and .de for Germany, increasingly complicates
the use of the Internet. Different individuals can own the second level domain name "cocacola" in different countries under
different TLDs. Or the Coca-Cola Company has to register with each country to prevent others from registering its mark as a
domain name. But, because the Internet is a collective set of computers sharing common communications protocols, any
computer on the Internet, anywhere in the world can communicate by email, host Web pages, or send and receive files with
any other computer linked to the Internet. For the average Internet user, there is no practical or functional difference between
an Internet site with the domain name "cocacola.uk" and one with the domain name "cocacola.de". Each can be as easily
accessed as the other. Thus, consumers may be confused if different entities own "cocacola.uk" and "cocacola.de." An owner
of a famous trademark has to police against use of its mark in all TLDs worldwide.
One advantage of current domain name registration schemes is that the actual registration process is relatively
straightforward. The domain name registration is relatively low in cost. In the United States, for example, it costs $ 100.00
for a registration that is effective for two years. This low cost is unlikely to hinder anyone in their quest to go on-line. Even an
individual could afford it. Under the current domain name registration system, a person desiring the right to use a domain
name will contact the registrar in charge of a particular TLD. The person will submit an application for a domain name with
the desired second level domain coupled with the particular TLD. The majority of the registries assign domain names on a
first-come, first-served basis. The registries will not register a domain name which is identical to one already registered. One
disadvantage of this approach is that the longer one waits to apply for a domain name, the greater the chances that the name
will not be available, particularly if the desired name is a common or popular one. Moreover, the overwhelming majority of
names are registered under the .com TLD and the chances that a desired name will be available for registration under the
.com TLD are lower than under other TLDs.
Because of the expanding use of the Internet, the limited number of desirable TLDs and the growing use of domain names for
a dual function of address/trademark, a number of disputes have arisen between trademark owners and domain name holders.
The disputes that have arisen generally fall into two categories. The first category consists of cases where a third party
purposefully has chosen a domain name which is so clearly associated with another party or is clearly a famous mark such
that its use by the third party can have a detrimental impact on the other party's mark or reputation.
The second category consists of cases where, it is not clear that the third party registered a particular domain name to trade
off of a trademark owner's goodwill. A conflict of this nature could arise where there are two or more entities who own
trademark rights to a certain mark, although for use with different goods/services, for example, the mark "APPLE" for
computers and "APPLE" for records. Under trademark law, it is possible that the two marks may peacefully co-exist. But, in
the Internet environment, there is only one entity who can acquire rights to "APPLE.COM." Which entity has greater rights
to the domain name? The current registration scheme has no way to resolve such a conflict.
As a result of the increasing number of disputes, registries found themselves being pressured to take sides by denying,
granting or suspending a domain name involved in a dispute. Additionally, some parties in a dispute have sued the domain
name registrar in an effort to have the registrar take some action in a dispute. Most domain name registries take the position
that domain names have no legal significance, but are used only to access various sites on the Internet. Domain name
registries were not equipped or funded to perform trademark searches to determine whether conflicts could occur or to
arbitrate disputes.
However, some domain name registries did implement dispute resolution procedures to attempt to address the disputes. These
"dispute resolution policies" do little to actually resolve a dispute between a trademark owner and a domain name holder,
however. For example, the U.S. domain name registrar, Network Solutions, Inc. ("NSI"), has a policy which seeks to avoid
liability on the part of the registrar and to prevent lawsuits against NSI. The domain name applicant, when submitting an
application, must represent that the requested domain name does not interfere with or infringe any rights of any third parties,
that the applicant has a bona fide intention to use the domain name and is not seeking the domain for any unlawful purpose.
In the event of any dispute between the owner of a registered trademark and the owner of a domain name identical to the
mark, if the trademark owner submits proof that its mark was in use prior to the domain name, NSI will place the domain
name on hold, pending the outcome of the dispute.
There are many disadvantages associated with NSI's dispute resolution policy. Neither party will have use of a disputed
domain name until the dispute is ultimately decided through a court proceeding, arbitration or other dispute resolution
procedure. NSI will not declare which party has the right to use the domain name. And, for most entities, court proceedings
are costly and time-consuming and disputes are not always resolved very quickly. Moreover, NSI's policy is the same
regardless of whether the domain name holder is an extortionist or has a legitimate business interest. It does not look at the
equities of a particular situation.
Thus, the disadvantages of the current registration schemes can be summarized as follows. The current desire to use one's
trademarks/trade names as domain names conflicts with a registration scheme which is first-come, first-served, where
identical names are prohibited and where there are a limited number of desirable TLDs. The fact that persons can acquire
domain names with the intent to trade off another's famous trademark or use an Internet site to disparage a trademark owner
has caused harm to the rights of a number of intellectual property owners. Another disadvantage is the multiple registries for
different geographic regions necessitating policing and enforcing activities in multiple jurisdictions. The lack of any one
mechanism for dispute resolution and the ineffectual dispute resolution policies currently in place with certain domain name
registries increases the time and effort necessary to resolve disputes.
2. How might current domain name systems be improved?
There are numerous different views on ways to improve the current system. A person's view of the desired approach is likely
to differ depending on whether that person owns a trademark, whether the trademark is famous, and their desired use of their
Internet site, i.e., for business or personal use.
For example, NWDASC owns a registered service mark and is using its Internet site for business purposes, i.e., to advertise
and promote its business, to provide information about its business, for communication via email, and to actually provide
services through its Internet site. NWDA, as well, uses its Internet site for similar purposes. However, NWDA/NWDASC are
nonprofit organizations with limited resources to police against infringers in a situation where infringers may be using the
mark worldwide, such as via the Internet.
NWDA/NWDASC's proposals focus on making the domain name registration process more akin to the process for
registration of trademarks, but recognizing that the Internet is international in scope.
First, NWDA/NWDASC's proposal calls for the establishment of a new group of TLDs. One TLD would be set aside for
individuals who desire to maintain an Internet domain for purely personal, rather than business uses, for example, a .ind
TLD. Other new TLDs could be tied to the International Classification System for Goods and Services adopted by various
trademark offices worldwide. A TLD would be selected by an applicant based upon the types of goods/services which the
applicant provides to the public. For example, there could be TLDs as follows: .che for Class l-Chemicals (which covers
industrial chemicals, resins, plastics, preservatives, etc.); .pai for Class 2 - Paints (which covers paints, varnishes, lacquers,
etc.); .cos for Class 3 - Cosmetics, and .lub for Class 4 - Lubricants (which covers industrial oils and greases, lubricants, fuels,
etc.).
By adopting more TLDs, different owners of the same trademarks, but for use with different goods, could all have the domain
name of their choice. (This system might solve the current problems associated with situations such as "APPLE" for
computers and "APPLE" for records.) Additionally, it might make policing and enforcing efforts easier for trademark owners
if they have information as to the types of goods/services associated with a particular Internet site.
Another proposal is to have one centralized database which is accessible to all Internet users online which includes
information mapping specific domain names to specific owners and information for contacting the domain name owner
similar to a telephone book. Trademark owners could get information more quickly and perhaps resolve disputes with owners
of offending domain names more quickly. Moreover, such a look-up table could alleviate consumer confusion regarding
sponsorship of a particular Internet site if the table has information as to the site's sponsor and the sponsor's goods/ services
which consumers can review prior to accessing the site. For example, a consumer may not be misled into believing that a site
with the domain name of mcdonalds.cos is somehow affiliated with the McDonald's fast-food restaurants since the TLD .cos
indicates that the site sponsor deals with cosmetics.
It would also be helpful to have information about new applications accessible on-line through a centralized database, so that
potential disputes can be raised at an earlier stage prior to registration and assignment of an actual domain name and
corresponding address.
NWDA/NWDASC also propose that there be only one international registrar and that a domain name registration be effective
worldwide. The country-level TLDs would be abolished under this proposal. In this manner, a trademark owner's necessary
policing and enforcement efforts would be diminished.
NWDA/NWDASC also believe that the registration function should be separated from any dispute resolution function.
Registries do not have means, knowledge or resources to deal with disputes. NWDA/NWDASC further propose that an
international dispute resolution panel be established to arbitrate disputes between domain name applicants and trademark
owners. The panel should be comprised of persons who are recognized experts on intellectual property legal issues.
NWDA/NWDASC support other proposals which suggest that a mechanism be established to arbitrate disputes on-line. The
current procedures for resolving disputes, which include the necessity of bringing court actions, are time-consuming and
costly and are impractical for small companies and individuals. Moreover, there are issues relating to courts' jurisdiction and
ability to enforce judgments with respect to disputes which are international in scope. NWDA/NWDASC proposes that
applicants for domain name registration be required to submit to arbitration any dispute which arises in connection with their
domain name application and that they agree that the special arbitral panel can handle the arbitration.
NWDA/NWDASC urge that you carefully consider their proposals when taking any action with respect to changes to domain
name registration and administration.
If you have any questions concerning these proposals, please feel free to contact James Gosses at NWDASC (Phone:
703-787-6800) or Diane Goyette at NWDA (Phone: 703-787-0000) or you may contact the undersigned (Phone:
202-857-6171).
Thank you.
Sincerely,
Jennifer A. Albert
Counsel for the National Wholesale Druggists'
Association and the NWDA Service Corporation
cc: James Gosses
Diane Goyette