Omnibus Appropriations Bill Holds Hidden Treasures For E-Commerce

Buried in the reams of paper that U.S. President Bill Clinton signed this week to complete the federal budget for fiscal year 2000 are e-commerce-friendly tidbits such as a ban on cyber-squatting and an order to examine the issue further.

The cyber-squatting bill bars the intentional registration of domain names that are identical to or deceptively similar to a distinctive trademark. The practice has become a common way to profit in the increasingly-crowded domain name registration game, as individuals or companies register dozens of popular names and resell them to others.

In addition to prohibiting such name registration, if the domain name represents a trademarked company or product name, the new law gives the trademark owners the power to sue the so-called cyber-squatter or, if that person cannot be located, the domain name registrar that allowed the registration of that name. The domain name registrar must make a good-faith effort to investigate a potential domain name’s trademark status to avoid culpability.

Personal Names Also Under Scrutiny

In a new twist, the law now also includes a requirement that the Secretary of Commerce, the Patent and Trademark Office and the Federal Election Commission study the use of a domain name that includes the personal name of someone other than the owner of that domain name.

The agencies are instructed to determine whether such misappropriation of a person’s name should also qualify for protection under the cyber-squatting law or another federal regulation. Similar to the provision governing trademarked names, the new study will consider how to protect personal names from resale by others for financial gain or with the “malicious intent to harm the reputation of the individual or the goodwill associated with that individual’s name,” the law states.

The agencies are also instructed to find a way to prevent or prohibit the registration of domain names that include the personal names of government officials, candidates and potential candidates for federal, state or local political office in the United States. Particularly, the law seeks a way to prevent the use of such domain names “in a manner that disrupts the electoral process or the public’s ability to access accurate and reliable information regarding such individuals.”

The study, tacked onto the cyber-squatting bill by a conference committee of legislators from the Senate and the House, did not appear in earlier versions of the bill that passed those chambers. The agencies are instructed to conduct the study by next May and make recommendations on how the policies of the Internet Corporation for Assigned Names and Numbers (ICANN) could be adjusted to address these issues.

The Department of Commerce, which established ICANN a year ago to privatize the domain name registration process, is instructed to work with ICANN to develop procedures to resolve disputes over registration of a personal name as a domain name.

Tackling Taxation

Among other tidbits buried in the budget law, the State Department appropriations measure attaches the much-debated U.S. dues payment to the United Nations to the hotly-contested Internet taxation issue.

Although the United States continues to push for a voluntary ban on Internet taxes around the world, the new U.S. budget law adds a financial incentive for the world’s largest international alliance — the United Nations — to support that stance.

Under the new law, “None of the funds appropriated or otherwise made available in this Act for the United Nations may be used by the United Nations for the promulgation or enforcement of any treaty, resolution, or regulation authorizing the United Nations, or any of its specialized agencies or affiliated organizations, to tax any aspect of the Internet.”

The new law also contains a $1.4 million (US$) appropriation for the Advisory Commission on Electronic Commerce to continue its Congressionally-mandated inquiry into Internet taxation issues in the United States.

The group is charged with reporting recommendations to Congress by next summer to address state and local governments’ claims that they are losing vital local sales tax revenue to companies that do business on the Internet across state lines.