What's in a name?If you were to type the URL www.iTunes.co.uk into your web browser, what kind of web site do you think you would connect to?
You would probably expect to find a website owned by Apple offering downloads for your iPod. And you would be right - now. In fact you will be automatically re-routed to www.apple.com/uk/itunes/ where you can select from "more than 1.2 million tracks from all four major music labels".
But ownership of the iTunes.co.uk URL is disputed. In November 2000, over three years before Apple itself registered the domain name "itunes.com", Benjamin Cohen registered the "itunes.co.uk" name. Last December Apple disputed Cohen's right to own the name and referred the matter to the UK's domain name registrar, Nominet.
In March Nominet ruled that Cohen must hand over the name to Apple. Although he was forced to comply Cohen did not give up the fight. First he filed a Freedom of Information Request with the DTI questioning whether Nominet has the legal authority to force him to transfer the rights to the URL. The reply was interesting. The DTI said that they were "not aware of any statutory recognition of Nominet". Now Cohen is seeking a judicial review of the case in the High Court. In his view the way that Nominet handled the dispute was unfair and biased towards big business.
Is Cohen guilty of what has come to be known as "cybersquatting" (registering a popular sounding domain name in the hope that a company who would wish to use the name would have to pay you for it)? Or did he quite legitimately come up with a name that he wanted to use for his business, well before Apple decided to adopt the iTunes trademark? In that case Apple would have to pay him to hand over the URL, in the same way that in 1999 the BBC had to buy the address bbc.com from Boston Business Computing.
In the US the 1999 Anti-Cybersquatting Consumer Protection Act gives companies that feel they are the victims of cybersquatting the right to initiate arbitration proceedings through the Internet Corporation of Assigned Names and Numbers (ICANN). But the law here clearly needs tidying up.
What is the economics angle on this issue (I hope) I hear you ask? Partly this takes us into the area of the economics of trademarks. Nicholas Economides has written the entry on this topic in the New Palgrave Dictionary of Economics and Law (see Economides, Nicholas, (1998), "Trademarks," in The New Palgrave Dictionary of Economics and the Law, edited by Peter Newman. You can view a draft version of the paper at http://www.stern.nyu.edu/networks/trademarks.pdf)
Economides notes that trademarks convey non-analytical information to the consumer about goods on offer. Rather like a brand name a trademark offers a symbol through which the consumer can make a judgment about the likely quality of the product. Trademarks date back to the makers of jewellery in the Middle Ages. A craftsman's work could be identified through his trademark so that a buyer could be sure that he was getting the real thing and not a fraudulent imitation. Later trademarks came to be more widely used for all kinds of manufactured goods to signal the quality that a buyer might expect to get.
Economides notes that for a company a trademark is an investment. The reputation that goes with a trademark is built up over time and consequently firms will wish to protect this investment. Although he notes that there may be some distortionary effects of trademarks (through the wastage of resources in advertising designed to create a positive mental image) he concludes that these are likely to be small in relation to the potential benefits (for both producers and consumers).