Richmond Journal of Law and Technology

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Cite as: Sean L. Harrington, Cyber Security Active Defense: Playing with Fire or Sound Risk Management?, 20 Rich. J.L. & Tech. 12 (2014), http://jolt.richmond.edu/v20i4/article12.pdf.

 Sean L. Harrington*

Trying to change its program

Trying to change the mode . . . crack the code

Images conflicting into data overload[1]

 I. Introduction

[1]        “Banks Remain the Top Target for Hackers, Report Says,” is the title of an April 2013 American Banker article.[2] Yet, no new comprehensive U.S. cyber legislation has been enacted since 2002,[3] and neither legislative history nor the statutory language of the Computer Fraud and Abuse Act (CFAA) or Electronic Communications Privacy Act (ECPA) make reference to the Internet.[4] Courts have nevertheless filled in the gaps—sometimes with surprising results.

[2]        Because state law, federal legislative proposals, and case law all are in a continuing state of flux, practitioners have found it necessary to follow these developments carefully, forecast, and adapt to them, all of which has proved quite challenging. As the title of this Comment suggests, deploying sound cyber security practices is not only equally as challenging, but also “risky,” which may seem counterintuitive in light of the fact that intent of cyber security programs is to manage risk, not create it.[5]

[3]        Cyber security risks concern exploits made possible by technological advances, some of which are styled with familiar catch-phrases: “e-Discovery,” “social media,” “cloud computing,” “Crowdsourcing,” and “big data,” to name a few. Yet, long before the term “cloud computing” became part of contemporary parlance, Picasa used to store photos in the cloud (where the “cloud” is a metaphor for the Internet).[6] This author has been using Hotmail since 1997 (another form of cloud computing). As the foregoing examples illustrate, the neologisms were long predated by their underlying concepts.

[4]        One of the latest techno-phrases du jour is “hack back.”[7] The concept isn’t new, and the term has been “common” parlance at least as far back as 2003.[8] “Hack back”—sometimes termed “active defense,” “back hacking,” “retaliatory hacking,” or “offensive countermeasures” (“OCM”)—has been defined as the

“process of identifying attacks on a system and, if possible, identifying the origin of the attacks.” Back hacking can be thought of as a kind of reverse engineering of hacking efforts, where security consultants and other professionals try to anticipate attacks and work on adequate responses.”[9]

A more accurate and concise definition might be “turning the tables on a cyberhacking assailant: thwarting or stopping the crime, or perhaps even trying to steal back what was taken.”[10] One private security firm, renowned for its relevant specialization, defines active defense, in pertinent part, as “deception, containment, tying up adversary resources, and creating doubt and confusion while denying them the benefits of their operations.”[11] Some have proposed—or carried out—additional measures, such as “photographing the hacker using his own system’s camera, implanting malware in the hacker’s network, or even physically disabling or destroying the hacker’s own computer or network.”[12]

[5]        Back hacking has been a top-trending technology topic over the past year, prompted in part by the controversial Report of the Commission on the Theft of American Intellectual Property (“IP Commission Report”),[13] and has been debated on blogs, symposium panels, editorials, and news media forums by information security professionals and lawyers alike. One with the potential to grab practitioners’ attention was a panel of attorneys David Navetta and Ron Raether—both well regarded in the information security community—discussing the utility and propriety of such practices. One opined that, if the circumstance is exigent enough, a company may take “measures into [its] own hands,” and that it would, “not likely be prosecuted under the CFAA, depending on the exigency of the circumstances.”[14] The other reasoned that hack back “technically violates the law, but is anyone going to prosecute you for that? Unlikely.”[15] He noted, “[i]t provides a treasure trove of forensic information that you can use,” and continued, “[w]ith respect to the more extreme end of hack back, where you are actually going to shut down servers, I think there is a necessity element to it—an exigency: if someone’s life is threatened, if it appears that there is going to be a monumental effect on the company, then it might be justified.”[16] In 2014 at the most recent RSA conference, where the “hackback” debate continued, the presentation was billed, in part, with the proposition, “[a]ctive defense should be viewed as a diverse set of techniques along a spectrum of varying risk and legality.”[17] And, other commentators have urged that “offensive operations must be considered as a possible device in the cyber toolkit.” [18]

[6]        Most commentators and scholars, however, seem to agree that “hack back” is not only “risky,” but is also not a viable option for a variety of reasons.[19] Hack backs and other surreptitious cyber acts incur the risks of criminal liability, civil liability, regulatory liability, professional discipline, compromise of corporate ethics, injury to brand image, and escalation. One practitioner quoted by the LA Times exclaimed, “[i]t’s not only legally wrong, it’s morally wrong.”[20] James Andrew Lewis, a senior fellow at the Center for Strategic and International Studies, characterized hacking back as “a remarkably bad idea that would harm the national interest.”[21] The Cyber Intelligence Sharing and Protection Act, a major cybersecurity bill passed by the House in April 2013, contained an amendment that specifically provided that the bill did not permit hacking back.[22] Representative Jim Langevin (RI-D), who authored the amendment, explained, “[w]ithout this clear restriction, there is simply too much risk of potentially dangerous misattribution or misunderstanding of any hack-back actions.”[23] Further, the private security firm renowned for its active defense strategies, mentioned ante, has attempted to distance itself from the phrases such as “hack back” and “retaliatory hacking,” preferring instead the broader phrase “active defense.”[24] Another example of the importance of subtleties in word choice may be “Countermeasure,” where some appear to have conflated the word with the concept of active defense.[25]

II. Active Defense Approaches

[7]        Self-defense is not an abstraction created by civilization, but a law spawned by nature itself, and has been justified since antiquity.[26] It has been regarded since the early modern period as available to redress injuries against a state’s sovereign rights.[27] There is little question cyber-attacks against a designated critical infrastructure are attacks against a state’s sovereign rights,[28] because much of civilian infrastructure is both a military and national asset.[29] Accordingly, the focus of 2014 NATO International Conference on Cyber Conflict (“CyCon”) is active cyber defense, including implications for critical infrastructure.[30] Likewise, a project sponsored by NATO’s Cooperative Cyber Defense Centre of Excellence is set to publish a report in 2016 that establishes acceptable responses to pedestrian or quotidian cyber-attacks against nations, whereas its predecessor, regarded as an academic text, focused on cyber-attacks against a country that are physically disruptive or injurious to people and possible responses under the UN charter and military rules.[31] Both works are based on the concepts of self-defense and, under certain circumstances, preemptive “anticipatory self-defense.”[32]

[8]        The questions that scholars, policymakers, information security experts, and corporate executives have struggled with, however, is at what threshold do such attacks warrant the protection of the state,[33] whether a private corporation may respond in lieu of or in concert with protection by the state, and to what extent such collusion constitutes excessive entanglement between the private and public sector. Implicit in these questions is whether the government is willing and able to develop a modern and adaptable regulatory and criminal law framework and to allocate adequate law enforcement resources to confront the problem.[34] Because, at the time of this writing, it is widely perceived that the government is not yet willing and able,[35] victims often do not report suspected or actual cyber-attacks, and have resorted to inappropriate self-help, deploying their own means of investigating and punishing transgressors.[36] As one commentator posits,

With regard to computer crime, some might argue that the entire investigative process be outsourced to the business community. Historically, the privatization of investigations has assisted public law enforcement by allowing them to concentrate on other responsibilities, and has prevented their resources from being allocated in too sparse a manner to be useful.” [37]

Awaiting the ultimate resolution of these questions, American corporations have developed an array of active defense tactics. Below are a few of the more common examples of those, and the corresponding challenges:

 A. Beaconing

[9]        Beaconing is one of the most cited active defense techniques, and one mentioned in the IP Commission Report (along with “meta-tagging,” and “watermarking”) as a way to enhance electronic files to “allow for awareness of whether protected information has left an authorized network and can potentially identify the location of files in the event that they are stolen.”[38] A benign version of beaconing is the use of so-called Web bugs.[39] A Web bug is a link—a surreptitious file object—commonly used by spammers and placed in an e-mail message or e-mail attachment, which, when opened, will cause the e-mail client or program will attempt to retrieve an image file object from a remote Web server and, in the process, transmit information that includes the user’s IP address and other information.[40] This transmission is not possible “if the user did not preconfigure the e-mail client or program to refrain from retrieving images or HTML content from the Internet,” or if the user’s e-mail client blocks externally-hosted images by default.[41] “This information becomes available to the sender either through an automated report service (e.g., ReadNotify.com) or simply by monitoring traffic to the Web server.”[42] In one project demonstrating the use advocated by the IP Commission Report, researchers employed such technology in decoy documents to track possible misuse of confidential documents.[43] So, is beaconing legal?

[10]      The Wall Street Journal (the “Journal”) quoted Drexel University law professor Harvey Rishikof—who also is co-chairman of the American Bar Association’s Cybersecurity Legal Task Force—as saying the legality of beaconing is not entirely clear.[44] Rishikof is quoted as saying, “‘[t]here’s the black-letter law, and there’s the gray area. . . . Can you put a beacon on your data? Another level is, could you put something on your data that would perform a more aggressive action if the data was taken?’”[45] The article went on to suggest more aggressive strategies such as “inserting code that would cause stolen data to self-destruct or inserting a program in the data that would allow a company to seize control of any cameras on the computers where the data were being stored.”[46] The Journal, citing an anonymous Justice Department source, further reported that, “[i]n certain circumstances beaconing could be legal, as long as the concealed software wouldn’t do other things like allow a company to access information on the system where the stolen data were stored.”[47]

[11]      Another important consideration is the fact that beaconing may fall within one of the active defense definitions (supra) as “deception.”[48] Although deception is recognized as both a common and effective investigative technique,[49] the problem is the possibility that the activities of the investigator could be imputed under Model Rule of Professional Conduct 5.3 to one or more attorneys responsible for directing or approving of those activities.[50] Under Model Rule 8.4(c), neither an attorney nor an attorney’s agent under his or her direction or control may “engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.”[51] Although the question of whether deception, as contemplated in Rule 8.4, exists in the context of incident response or network forensics investigations is not well settled,[52] most states have held “[t]here are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation.”[53] A few state bar associations have already addressed similar technology-related ethical pitfalls. The Philadelphia Bar Association Professional Guidance Committee advised in Opinion 2009–02 that an attorney who asks an agent (such as an investigator) to “friend” a party in Facebook in order to obtain access to that party’s non-public information, would violate, among others, Rule 5.3 of the Pennsylvania Rules of Professional Conduct.[54] Likewise, the Association of the Bar of the City of New York Committee on Professional and Judicial Ethics issued Formal Opinion 2010–2, which provides that a lawyer violates, among others, New York Rules of Professional Conduct Rule 5.3, if an attorney employs an agent to engage in the deception of “friending” a party under false pretenses to obtain evidence from a social networking website.[55]

B. Threat Counter-Intelligence Gathering

[12]      One of the most seemingly-innocuous active defense activities is intelligence gathering. Security analyst David Bianco defines threat intelligence as “[c]onsuming information about adversaries, tools or techniques and applying this to incoming data to identify malicious activity.”[56] Threat intelligence gathering ranges from everything from reverse malware analysis and attribution to monitoring inbound and outbound corporate e-mail to more risky endeavors.[57] Some security experts claim to frequent “Internet store fronts” for malware, “after carefully cloaking [their] identity to remain anonymous.”[58] The reality, however, is that gaining access to and remaining on these black market fora requires the surreptitious visitor either to: (1) participate (“pay to play”); (2) to have developed a reputation over months or years, or founded the underground forum ab initio;or (3) to have befriended or been extended a personal invitation by an established member. The first two of these three activities implies that the participant would have co-conspirator or accomplice liability in the underlying crimes. Another risk is, if the site is reputed to also purvey child pornography, a court may find that the site visitor acquired possession (even as temporary Internet cache) of the contraband knowingly, even if the true intent of lurking was to gather intelligence.[59] Another obvious risk is that surreptitious monitoring of hacker sites using false credentials or representations is an act of deception which, for the reasons more fully set forth above, could create disciplinary liability for any attorneys who are involved or acquiesce to the activity.

C. Sinkholing

[13]      Sinkholing is the impersonation of a botnet command-and-control server in order to intercept and receive malicious traffic from its clients.[60] To accomplish this, either the domain registrar must redirect the domain name to the investigator’s machine (which only works when the connection is based on a DNS name), or the Internet Service Provider (ISP) must redirect an existing IP address to the investigator’s machine (possible only if the investigator’s machine is located in the IP range of the same provider), or the ISP must redirect all traffic destined for an IP address to the investigator’s machine, instead (the “walled garden” approach).[61]

[14]      Sinkholing involves the same issues of deception discussed ante, but also relies on the domain registrar’s willingness and legal ability to assist. As Link and Sancho point out in their paper Lessons Learned While Sinkholing Botnets—Not as Easy as it Looks!,“[u]nless there is a court order that compels them to comply with such a request, without the explicit consent of the owner/end-user of the domain, the registrar is unable to grant such requests.”[62] Doubtless they were referring to the Wiretap Act (Title 1 of the Electronic Communications Privacy Act), which generally prohibits unconsented interception (contemporaneous with transmission), disclosure, or use of electronic communications.[63] Further, a federal district court recently ruled that intentionally circumventing an IP address blacklist in order to crawl an otherwise-publicly available website constitutes “access without authorization” under the CFAA.[64] Link and Sancho continue that registrars have little incentive to assist because it does not generate revenue, and note that sinkholing invites distributed denial of service (“DDoS”) retaliation which could affect other customers of a cloud-provided broadband connection.[65] Finally, sinkholing is likely to collect significant amounts of data, including personally identifiable information (“PII”). The entity collecting PII is likely to be subject to the data privacy, handling, and disclosure laws of all the jurisdictions whence the data came.

D. Honeypots

[15]      A honeypot is defined as “a computer system on the Internet that is expressly set up to attract and ‘trap’ people who attempt to penetrate other people’s computer systems.”[66] It may be best thought of as “an information system resource whose value lies in unauthorized or illicit use of that resource.”[67] Honeypots do arguably involve deception, but have been in use for a comparatively long time, and are generally accepted as a valid information security tactic (therefore, relatively free from controversy). The legal risks, historically, have been identified as: (1) potential violations of the ECPA;[68] and (2) possibly creating an entrapment defense for the intruder.[69] Neither of these is applicable here, because, respectively: (1) the context of the deployment discussed herein is the corporate entity as the honeypot owner (thus, a party to the wire communication); and (2) the corporate entity is not an agent of law enforcement, and, further, the entrapment defense is only available when defendant was not predisposed to commit the crime (here, a hacker intruding into a honeypot is predisposed).[70] Nevertheless, Justice Department attorney Richard Salgado, speaking at the Black Hat Briefings, did reportedly warn that the law regarding honeypots is “untested” and that entities implementing devices or networks designed to attract hackers could face such legal issues as liability for an attack launched from a compromised honeypot.[71] This possibility was discussed six years ago:

If a hacker compromises a system in which the owner has not taken reasonable care to secure and uses it to launch an attack against a third party, the owner of that system may be liable to the third party for negligence. Experts refer to this scenario as “downstream liability.” Although a case has yet to arise in the courts, honeypot operators may be especially vulnerable to downstream liability claims since it is highly foreseeable that such a system be misused in this manner.[72]

Another honeypot risk is the unintended consequence of becoming a directed target because the honeypot provoked or attracted hackers to the company that deployed it, which hackers might otherwise have moved on to easier targets. Another is that an improperly configured honeypot could ensnare an innocent third party or customer and collect legally-protected information (such as PII). If that information is not handled according to applicable law, the owner of the honeypot could incur statutory liabilities therefor.[73] And yet another scenario is one that, perhaps, only a lawyer would recognize as a risk: “[i]f you have a honeypot and do learn a lot from it but don’t remedy or correct it, then there’s a record that is discoverable and that you knew you had a problem and didn’t [timely] fix it.”[74]

[16]      Finally, there are uses for honeypots which, when regarded as a source of revenue by its owners, have the potential to cause substantial injury to brand image and reputation, and possibly court sanctions: one law firm has been accused of seeding the very copyrighted content it was retained to protect, which the firm used as evidence in copyright suits it prosecuted.[75] Because of these alleged activities, the firm has been labelled a “copyright troll.”[76] The allegations, if proved true, also appear to involve acts of deception, discussed ante, which may subject the firm’s attorneys to attorney disciplinary proceedings.[77] Further, the firm’s attorneys may incur other possible liabilities, such as vexatious and frivolous filing sanctions, abuse of process, barratry, or champerty.[78]

E. Retaliatory Hacking

[17]      A common belief for why corporations have little to fear in the way of prosecution for retaliatory hacking is, “criminals don’t call the cops.”[79] Nevertheless, there is little debate that affirmative retaliatory hacking is unlawful,[80] even if done in the interests of national security.[81] Although there may be “little debate,” there is debate.[82]The views of many passionate information security analysts could be summed up by authors John Strand and Paul Asadoorian, who argue, “[c]urrently, our only defense tools are the same tools we have had for the past 10+ years, and they are failing.”[83] David Willson, the owner and president of Titan Info Security Group, and a retired Army JAG, contends that using “automated tools outside of your own network to defend against attacks by innocent but compromised machines” is not gaining unauthorized access or a computer trespass, and he asks, “[i]f it is, how is it different from the adware, spam, cookies, or others that load on your machine without your knowledge, or at least with passive consent?”[84] Willson provides a typical scenario and then examines the statutory language of the CFAA and offers some possible arguments—but notes his arguments bear stretch marks (and he makes no offer of indemnification should practitioners decide to use them).[85]

[18]      Willson is not alone in searching for leeway within the CFAA. Stewart Baker, former NSA general counsel, argues on his blog,

Does the CFAA, prohibit counterhacking? The use of the words “may be illegal,” and “should not” are a clue that the law is at best ambiguous. . . . [V]iolations of the CFAA depend on “authorization.” If you have authorization, it’s nearly impossible to violate the CFAA . . . [b]ut the CFAA doesn’t define “authorization.” . . . The more difficult question is whether you’re “authorized” to hack into the attacker’s machine to extract information about him and to trace your files. As far as I know, that question has never been litigated, and Congress’s silence on the meaning of “authorization” allows both sides to make very different arguments. . . . [C]omputer hackers won’t be bringing many lawsuits against their victims. The real question is whether victims can be criminally prosecuted for breaking into their attacker’s machine.[86]

Other theories —and assorted arguments bearing stretch marks— analogize retaliatory hacking as subject to the recapture of chattels privilege,[87] entry upon land to remove chattels,[88] private necessity,[89] or even the castle doctrine.[90] Jassandra K. Nanini, a cybersecurity law specialist, suggests applying the “security guard doctrine” as an analogy.[91] She posits that, if private actors act independently of law enforcement and have a valid purpose for their security activities that remains separate from law enforcement, then incidental use of evidence gained through those activities by law enforcement is permissible, even if the security guard acted unreasonably (as long as he remained within the confines of the purpose of his employer’s interests).[92] As applied, Nanini explains the analogy as follows:

If digital property were considered the same as physical, cyber security       guards could “patrol” client networks in search of intruder footprints, and based on sufficient evidence of a breach by a particular hacker, perhaps indicated by the user’s ISP, initiate a breach of the invader’s network in order to search for compromised data and disable its further use. Even more aggressive attacks designed to plant malware in hacker networks could be considered seizure of an offensive weapon, comparable to a school security guard seizing a handgun from a malicious party. Such proactive defense could use the hacker’s own malware to corrupt his systems when he attempts to retrieve the data from the company’s system. Certainly all of these activities are within the scope of the company’s valid interest, which include maintaining data integrity, preventing use of stolen data, and disabling further attack. . . . Similarly, companies may wholly lack any consideration of collecting evidence for legal recourse, keeping in step with the private interest requirement of the private security guard doctrine in general. All hack-backs could be executed without any support or direction from law enforcement, opening the door to utilization       of evidence in a future prosecution against the hacker. [93]

The foregoing theories notwithstanding, what is clear is that obtaining evidence by use of a keylogger, spyware, or persistent cookies likely is violative of state and federal laws, such asthe CFAA or ECPA.[94] The CFAA, last amended in 2008, criminalizes anyone who commits, attempts to commit, or conspires to commit an offense under the Act, including offenses such as knowingly accessing without authorization a protected computer (for delineated purposes) or intentionally accessing a computer without authorization (for separately delineated purposes).[95] Relevant statutory phrases, such as “without authorization” and “access,” have been the continuing subject of appellate review.[96] One federal court, referring to both the ECPA and CFAA, pointed out that “the histories of these statutes reveal specific Congressional goals—punishing destructive hacking, preventing wiretapping for criminal or tortious purposes, securing the operations of electronic communication service providers—that are carefully embodied in these criminal statutes and their corresponding civil rights of action.”[97] At least one court has held that the use of persistent tracking cookies is a violation of the Electronic Communications Privacy Act.[98] Congress is currently considering reform to the CFAA, as well as comprehensive privacy legislation that would, in some circumstances, afford a private right of action to consumers whose personal information is collected without their consent. [99]

[19]      Regardless of the frequency with which retaliatory hacking charges have been brought, one issue that has not yet been included in the debate involves illegally obtained evidence that is inadmissible. This matters because bringing suit under the CFAA or ECPA is a remedy that corporate victims have recently invoked increasingly.[100]

[20]      Another liability —the one most frequently cited— is that of misattribution and collateral damage:

[E]ncouraging digital vigilantes will only make the mayhem worse. Hackers like to cover their tracks by routing attacks through other people’s computers, without the owners’ knowledge. That raises the alarming prospect of collateral damage to an innocent bystander’s systems: imagine the possible consequences if the unwitting host of a battle between hackers and counter-hackers were a hospital’s computer.[101]

Likewise, Representative Mike Rogers (R-MI), sponsor for the Cyber Intelligence Sharing and Protection Act (CISPA) and Chair of the House Permanent Select Committee on Intelligence, warned private corporations against going on the offensive as part of their cyber security programs: “You don’t want to attack the wrong place or disrupt the wrong place for somebody who didn’t perpetrate a crime.”[102] Contemplate the civil liabilities that one could incur if, in an effort to take down a botnet through self-help and vigilantism, the damaged computers belonged to customers, competitors, or competitors’ customers. Aside from the financial losses and injury to brand reputation and goodwill, implicated financial institutions could expect increased regulatory scrutiny and could compromise government contracts subject to FISMA.

[21]      Yet another frequently discussed liability is that of escalation: cybercrime is perpetrated by many different attacker profiles of persons and entities, including cyber-terrorists, cyber-spies, cyber-thieves, cyber-warriors, and cyber-hactivists.[103] Because the purported motivation of a cyber-hactivist is principle, retaliation by the corporate victim may be received as an invitation to return fire and escalate. Similarly, “[e]ncouraging corporations to compete with the Russian mafia or Chinese military hackers to see who can go further in violating the law . . . is not a contest American companies can win.”[104] Conversely, the motivation of a cyber-thief is principal and interest, so retaliation by the target might be taken as a suggestion to move on to an easier target. Because the perpetrators are usually anonymous, the corporate victim has no way to make a risk-based and proportional response premised upon the classification of the attacker as nation-state, thief, or hactivist.

[I]n cyberspace attribution is a little harder. On the playground you can see the person who hit you . . . well, almost always[,] . . . in cyberspace we can track IP addresses and TTPs from specific threat actors, which smart analysts and researchers tell us is a viable way to perform attribution. I agree with them, largely, but there’s a fault there. An IP address belonging to China SQL injecting your enterprise applications is hardly a smoking gun that Chinese APTs are after you. Attackers have been using others’ modus operandi to mask their identities for as long as spy games have been played. Attackers have been known to use compromised machines and proxies in hostile countries for as long as I can remember caring—to “bounce through” to attack you. Heck, many of the attacks that appear to be originating from nation-states that we suspect are hacking us may very well be coming from a hacker at the coffee house next door to your office, using multiple proxies to mask their true origin. This is just good OpSec, and attackers use this method all the time, let’s not kid ourselves.[105]

If, without conclusive attribution and intelligence, the corporate victim is unable to make a risk-based and proportional response, it may be reasonable to question whether retaliatory hacking is abandoning the risk-based approach to business problems exhorted by FFIEC,[106]PCI,[107]and the NIST Cybersecurity Framework?[108] “If we start using those sort of [cyber weapons], it doesn’t take much to turn them against us, and we are tremendously vulnerable,” said Howard Schmidt, a former White House cyber security coordinator.[109]

[22]      Then there is the often overlooked issue of professional ethics—not for the attorney—but for the information security professional.“Ethics,” a term derived from the ancient Greek ethikos (ἠθικός), has been defined as “a custom or usage.”[110] Modernly, ethics is understood to be “[professional] norms shared by a group on a basis of mutual and usually reciprocal recognition.”[111] The codes of ethics provide articulable principles against which one’s decision-making is objectively measured, and serve other important interests, including presenting an image of prestige and credibility for the organization and the profession,[112] eliminating unfair competition,[113] and fostering cooperation among professionals.[114]

[23]      Many information security professionals are certified by the International Information Systems Security Certification Consortium ((ISC)^2®). The (ISC)^2® Committee has recognized its responsibility to provide guidance for “resolving good versus good, and bad versus bad, dilemmas,” and “to encourage right behavior.”[115] The Committee also has the responsibility to discourage certain behaviors, such as raising unnecessary alarm, fear, uncertainty, or doubt; giving unwarranted comfort or reassurance; consenting to bad practice; attaching weak systems to the public network; professional association with non-professionals; professional recognition of, or association with, amateurs; or associating or appearing to associate with criminals or criminal behavior.[116] Therefore, an information security professional bound by this code who undertakes active defense activities that he or she knows or should know are unlawful, or proceeds where the legality of such behavior not clear, may be in violation the Code.

[24]      It would stand to reason that, an organization that empowers, directs, or acquiesces to conduct by its employees that violates the (ISC)Code of Ethics may violate its own corporate ethics or otherwise compromise its ethical standing in the corporate community—or not: when Google launched a “secret counter-offensive” and “managed to gain access to a computer in Taiwan that it suspected of being the source of the attacks,”[117] tech sources praised Google’s bold action.[118]

[25]      Nevertheless, corporate ethics is an indispensable consideration in the hack back debate. The code of ethics and business conduct for financial institutions should reflect and reinforce corporate values, including uncompromising integrity, respect, responsibility and good citizenship. As noted above, retaliatory hacking is deceptive and has been characterized as reckless, and even Web bugs are commonly associated with spammers. Corporate management must consider whether resorting to techniques pioneered by and associated with criminals or spammers has the potential to compromise brand image in the eyes of existing and prospective customers. Similarly, to the extent that financial corporations are engaging in active defense covertly,[119] corporate management must consider whether customers’ confidence in the security of their data and investments could be shaken when such activities are uncovered. Will customers wonder whether their data has been placed at risk because of escalation? Will shareholders question whether such practices are within the scope of good corporate stewardship?

III. Alternatives to Retaliatory Hacking

[26]      The obvious argument in support of active defense is that the law and governments are doing little to protect private corporations and persons from cybercrime, which has inexorably resulted in resort to self-help,[120] and those who vociferously counsel to refrain from active defense often have little advice on alternatives. At the risk of pointing out the obvious, one counsels, “‘when you look at active defense, we need to focus on reducing our vulnerabilities.’”[121]

[27]      Alternatives to hacking back are evolving, and one of the more promising is the pioneering threat intelligence gathering and sharing from the Financial Services Information Sharing and Analysis Center (“FS-ISAC”), which collects information about threats and vulnerabilities from its 4,400 FI members, government partners, and special relationships with Microsoft^®, iSIGHT Partners^SM, Secunia, et al., anonymizes the data, and distributes it back to members.[122] In addition to e-mail alerts and a Web portal, FS-ISAC holds regular tele-conferences during which vulnerability and threat information is discussed, and during which presentations on current topics are given.[123] The FS-ISAC recently launched a security automation project to eliminate manual processes to collect and distribute cyber threat information, according to Bill Nelson, the Center’s director.[124] The objective of the project is to significantly reduce operating costs and lower fraud losses for financial institutions, by consuming threat information on a real-time basis.[125]

[28]      Although, as American Banker wryly observes, “[b]ankers have never been too keen on sharing secrets with one another,”[126] dire circumstances have catalyzed a new era of cooperation, paving the way for the success of the cooperative model developed by the FS-ISAC—even before its current ambitious automation project, which has resulted in successful botnet takedown operations.[127] An illustrative example is the Citadel malware botnet takedown, where Microsoft’s Digital Crimes Unit, in collaboration with the FS-ISAC, the Federal Bureau of Investigation, the American Bankers Association, NACHA—The Electronic Payments Association, and others, executed a simultaneous operation to disrupt more than 1,400 Citadel botnets reportedly responsible for over half a billion dollars in losses worldwide.[128] With the assistance of U.S. Marshals, data and evidence, including servers, were seized from data hosting facilities in New Jersey and Pennsylvania, and was made possible by a court ordered civil seizure warrant from a U.S. federal court.[129] Microsoft also reported that it shared information about the botnets’ operations with international Computer Emergency Response Teams, which can deal with elements of the botnets outside U.S. jurisdiction, and the FBI informed enforcement agencies in those countries.[130] Similar, more recent, operations include one characterized as “major takedown of the Shylock Trojan botnet,” which botnet is described as “an advanced cybercriminal infrastructure attacking online banking systems around the world,” that reportedly was coordinated by the UK National Crime Agency (NCA), and included Europol, the FBI, BAE Systems Applied Intelligence, Dell SecureWorks, Kaspersky Lab and the UK’s GCHQ,[131] and another takedown operation that targeted the much-feared Cryptolocker.[132]   Following the FS-ISAC model, the retail sector has taken the “historic decision” to share data on cyber-threats for the first time through a newly-formed Retail Cyber Intelligence Sharing Center (R-CISC),[133] and the financial services and retail sectors formed a cross-partnership.[134]

[29]      Finally, at the time of this publication, a draft Cybersecurity Information-Sharing Act of 2014, advanced by Chairman Dianne Feinstein (D-CA) and ranking member Saxby Chambliss (R-GA), was passed out of the Senate Intelligence on a 12-3 vote, and is expected to be put to a vote in the full Senate.[135] The bill is designed to enhance and provide liability protections for information sharing between private corporate entities, between private corporate entities and the Government, and between Government agencies.

[30]      Yet another promising option is the partnership that critical infrastructure institutions have formed, or should investigate forming, with ISPs. For example, ISPs currently provide DDoS mitigation services that, although not particularly effective in application vulnerability (OSI model layer 7) attacks, are very capable in responding to volume-based attacks.[136] One senior ISP executive proposed to this author, under the Chatham House Rule,[137] the possibility that ISPs may be able to provide aggregated threat intelligence information, including attribution, based upon monitoring of the entirety of its networks (not merely the network traffic to and from an individual corporate client).

[31]      ISPs’ capabilities are, however, subject both to statutory and regulatory limitations, including, for example, the Cable Act,[138] and proposed rules that would restrict the blocking of “lawful content, applications, services, or non-harmful devices,” that may appear to implicate liability-incurring discretion.[139]

[32]      Nevertheless, several researchers urge that ISPs should assume a “larger security role,” and are in a good position “to cost-effectively prevent certain types of malicious cyber behavior, such as the operation of botnets on home users’ and small businesses’ computers.”[140] Likewise, the Federal Communications Commission has defined “legitimate network management” as including “ensuring network security and integrity” and managing traffic unwanted by end users:

In the context of broadband Internet access services, techniques to ensure network security and integrity are designed to protect the access network and the Internet against actions by malicious or compromised end systems. Examples include spam, botnets, and distributed denial of service attacks. Unwanted traffic includes worms, malware, and virus that exploit end-user system vulnerabilities; denial of service attacks; and spam.[141]

N.B., a 2010 study found that just ten ISPs accounted for 30 percent of IP addresses sending out spam worldwide.[142] And, in 2011, it was reported that over 80% of infected machines were located within networks of ISPs, and that fifty ISPs control about 50% of all botnet infected machines worldwide.[143]

[33]      Other options that some companies have pursued as alternatives to the pitfalls of inherently risky threat counter-intelligence gathering discussed above include risk transfer or automated monitoring, both of which rely on outside vendors or subscription services.

[34]      Under the risk transfer approach, a corporate entity may choose to rely on the findings of a private contractor or company without undue concern for how the contractor or firm acquired the information. U.S. companies already outsource threat intelligence gathering to firms who employ operatives in Israel, such as IBM-Trusteer and RSA,[144] ostensibly because these operatives are able to effectively obtain information without running afoul of U.S. law. For legal scholars, perhaps a case to help justify this approach might be that of the famous Pentagon Papers (New York Times v. United States), in which the Supreme Court held that the public’s right to know was superior to the Government’s need to maintain secrecy of the information, notwithstanding that the leaked documents were obtained unlawfully (i.e.,in alleged violation of § 793 of the Espionage Act).[145] Yet, a corporate entity that knowingly—or with blissful ignorance—retains the services resulting from unethical conduct or conduct that would be criminal if undertaken in the U.S. may nevertheless suffer injury to the brand resulting from revelations of the vendor’s actions.

[35]      Under the automated monitoring approach, corporate entities rely on vendor subscription services, such as Internet Identity (IID™), that use automated software to monitor various fora or social media sites for the occurrence of keywords, concepts, or sentiment, and then alert the customer. Variations of these technologies are in use for high frequency stock trading and e-Discovery. An example might be detecting the offering for sale on a site of primary account numbers and related information by a cyberthief, and providing real-time notification to the merchant so that the accounts can be disabled.

[36]      Other promising options include “big data” approach, which is to employ data scientists and software and hardware automation in-house to draw more meaningful inferences from the data and evidence already legally within the company’s custody and control. For example, David Bianco, a “network hunter” for security firm FireEye, suggests allocating resources for detecting, evaluating, and treating threat indicators according to their value to the attacker, which he represents in his so-called “Pyramid of Pain.”[146] Under this model, remediation efforts are directed toward those indicators that are costly (in time or resources) to the attacker, requiring the attacker to change strategy or incur more costs.[147] Bianco proposed this model after concluding that organizations seem to blindly collect and aggregate indicators, without making the best use of them.[148] Vendors, such as Guardian Analytics,[149] FireEye’s Threat Analytics Program,[150] CrowdStrike’s Falcon platform,[151] and HP’s Autonomy IDOL[152] (intelligent data operating layer) are endeavoring to bring real-time threat intelligence parsing or information sharing tools and services to the marketplace

 

III. Conclusion

[37]      Hack back or active defense, depending on how one defines each—and everything in between—consists of activities that are both lawful and unlawful, and which carry all the business and professional risks associated with deceptive practices, misattribution, and escalation. To urge a risk-based approach to using even lawful active defense tactics would be to state the obvious, and the use of certain types of active defense where misattribution is possible, may be to entirely abandon the risk-based approach to problem solving. Moreover, at the time of this writing, a qualified privilege to hack back through legislative reform seems unlikely, and would be difficult because the holder of such a privilege would not only have to establish proper intent, but also attribution. However, the tools, technologies, partnerships, and information sharing between corporations, governments, vendors, and trade associations are promising; they have already proven effective, and are steadily improving.

 

---

 

* The author is a cyber-security policy analyst in the banking industry and a digital forensics examiner in private practice. Mr. Harrington is a graduate with honors from Taft Law School, and holds the CCFP, MCSE, CISSP, CHFI, and CSOXP certifications. He has served on the board of the Minnesota Chapter of the High Technology Crime Investigation Association, is a current member of Infragard, the Financial Services Roundtable’s legislative and regulatory working groups, FS-ISAC, the U.S. Chamber of Commerce “Cyber Working Group,” the Fourth District Ethics Committee in Minnesota, and is a council member of the Minnesota State Bar Association’s Computer & Technology Law Section. Mr. Harrington teaches computer forensics for Century College in Minnesota, and recently contributed a chapter on the Code of Ethics for the forthcoming Official (ISC)²® Guide to the Cyber Forensics Certified Professional CBK®. He is also an instructor for the CCFP certification.

 

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Cite as: Kristin Bergman, Cyborgs in the Courtroom: The Use of Google Glass Recordings in Litigation, 20 Rich. J.L. & Tech. 11 (2014), http://jolt.richmond.edu/v20i3/article11.pdf.

Kristin Bergman*

I.  Introduction 

[1]        The future is now.  Wearable computers such as Google Glass (Glass) have begun entering society—we see people wearing these devices on the streets, in classrooms, at parties, and elsewhere.  Though most of these devices are not yet available to the public at large, there has been much hype over the impact Glass will have on our interactions, privacy, safety, and more.  Although this Article will briefly address such controversial aspects, it will focus more narrowly on the potential utility of Glass in litigation.

[2]        Despite the fear that Glass will somehow destroy the world, Glass, and its counterparts, could revolutionize litigation for the better.  Google Glass is a wearable computer device featuring an optical head-mounted display.[1]  These glasses allow wearers to make phone calls, record videos, and run Google searches, in addition to other tasks, through voice commands and a small touchpad.[2]  First-person point of view recordings taken by Glass will provide valuable evidence to supplement witness testimony by placing the trier of fact—whether judge or jury—in the witness’ shoes.[3]  These recordings can help resolve problems of witness credibility, including bias and memory issues, and will provide more useful evidence than recordings from devices like traditional cameras and cell phones.

[3]        This Article will begin by exploring the evolution and features of Glass and other wearable computers.  It will then speak to the particular utility of Glass recordings with focus on the inconspicuousness, accessibility, and first-person perspective, additionally describing prospective uses for Glass’s recording feature.  This Article will proceed to address how these Glass recordings may be used in litigation and the potential legal obstacles to admitting these recordings as evidence in court.  It will conclude by briefly recognizing how Glass could have been influential in prior cases.

 

II.  Background

A.  An Introduction to Google Glass

[4]        Developing out of Google[x]’s Project Glass,[4] Google Glass is a wearable computer device featuring an optical head-mounted display.[5]  The glasses are lens-free with a rectangular display sitting directly above one’s right eye, next to an embedded camera, with a touchpad and microphone on the right arm of the frame.[6]  The latest version is compatible with prescription eyeglasses or sunglasses, and includes a removable ear-bud.[7]  These augmented reality[8] glasses will allow wearers to send messages, take photos and record videos, run Google searches and translations, look up directions and the weather forecast, and more—all with simple voice commands or a light finger tap or swipe.[9]  According to Google Co-founder Sergey Brin in a TEDTalk[10] in early 2013, Project Glass was motivated by an interest in improving the connections between people, freeing one’s eyes and hands to reduce social isolation.[11]  In this way, Glass is meant to minimize the moments individuals miss by virtue of having their heads down and hands occupied by cell phones, cameras, and other devices.[12]  Glass is meant to, instead, overlap digital information and reality.  Babak Parviz, one of the creators of Google Glass, expanded on this concept, emphasizing the importance of rapid access to information and expressing a hope that Glass would be “‘the major next thing in computing and communication.’”[13]

[5]        Google Glass was initially introduced to the public through a limited release called the Explorer Program.[14]  In February 2013, Google accepted applications for the Explorer Program, in which those interested in testing out Glass submitted a short statement of what they would do if they had the device.[15]  Those selected to participate—roughly 8,000 individuals—were invited to purchase Glass for $1,500.[16]  Since this initial round of production, in October 2013 Google expanded its consumer base by allowing all Explorers to invite three friends to join the Explorer Program, essentially quadrupling the size of the Program.[17] It also held a single-day public sale of Glass in mid-April 2014.[18]

B.  The “Tech” Behind Google Glass

[6]       To best contemplate the utility of Google Glass it is important to have a sense of its capabilities and reliability, and, accordingly, this Article will address some of Glass’s relevant specifications and known security vulnerabilities.[19]  Glass can function without being connected to a network, but many of its features are only supported when connected to a cell phone or home network via Wi-Fi and/or Bluetooth.[20]  The device can store up to twelve gigabytes of information.[21]  In terms of images and video, Glass has a 5MP (five megapixel) camera situated right above the right side of the user’s right eye that can film video up to 720p (high definition).[22]  By default, videos will record for ten seconds, but this duration can be extended for as long as the user would like.[23]  After recording videos and other media, users can upload and share instantly over Google+ or YouTube, as well as manually transfer the media through the Micro-USB port.[24]

[7]        Despite its limited availability, some vulnerabilities have already been discovered.  For example, during the summer of 2013 a security company discovered a threat to Glass from the malicious use of Quick Response (“QR”)[25] codes.[26]  As Glass had been set to automatically execute QR codes when the camera feature was in use, a QR code could force the device to connect to a designated Bluetooth device or Wi-Fi network, or to view a particular website.[27]  In addition, as with computers, it may be possible for third parties to “root” a device—obtaining total control over the device’s system—to plant code or spy on the stored data.[28]  This said, at this time photos and videos cannot be substantively altered from the device itself (aside from deleting), though once uploaded to the cloud or a computer hard drive these materials function no differently than other digital media.[29]  All things considered, Glass is a relatively secure device that produces decent quality recordings.[30]

C.  Counterparts to Google Glass

[8]        Although this Article will focus on Google Glass, it is important to recognize that Glass is not the only wearable computer that may appear in the market over the coming years.  Unsurprisingly, Google’s primary competitors in this market will likely be Apple, Samsung, and Microsoft.  As of May 2014, Microsoft was reportedly testing prototypes for eyewear similar to Glass,[31] and Samsung has applied for two patents in Korea for an electronic type of sports glasses with integrated earphones and the “Earphone,” an ear-mounted computing device strinkingly similar to Glass.[32]  Apple holds a patent for “peripheral treatment for head-mounted displays,” but has not made any announcements regarding its particular device.[33]  Google even faces competition overseas from French startup Optinvent, whose digital eyewear platform, ORA-1, is already available for pre-order.[34]  Other devices may also operate similarly to Glass, but have a specialty purpose such as athletic performance or business use.[35]  The exact specifications for most of these devices have not yet been revealed, so it is difficult to project precisely how similar they will be to Glass.  Nevertheless, all appear to include some point of view recording feature on a hands-free device, such that the arguments and projections made in this Article should be applicable to all.

 D.  Popularity of Glass

[9]        There has been much speculation over the prospective popularity of Glass, and whether the mass interest in the device that continues to build online will translate into Glass sales and use.  Some suggest that it may more or less disappear from popular culture within a decade.[36]  Apple CEO Tim Cook is among these skeptics, believing that consumers want wearable devices to be light, unobtrusive, and fashionable, and that Google Glass may be targeting the wrong part of the body.[37]  This is supported by a survey conducted by Bite Interactive suggesting that only ten percent (10%) of Americans would definitely purchase and wear Glass.[38]  Alternatively, Robert S. Peck, a financial analyst of SunTrust Robinson Humphrey, projected that the business would be worth over three billion dollars a year by 2017.[39]  In a similar vein, Google Glass was ranked as the United Kingdom’s most anticipated gadget of 2014 in a survey conducted by the Gadget Show.[40]  Which side of this debate will prevail is impossible to predict, though there appears to be more support for the proposition that Glass will catch on and have a significant impact on society, particularly if the price falls in a reasonable range, potentially comparable to that of a tablet.[41]  We will have to until late 2014 for an answer, once Glass is actually released into the market for the general public.[42]

 

III.  The Utility of Glass Recordings

[10]      Over the last several decades, the inherent weaknesses of witness credibility have come to increasing light.  Google Glass recordings, if used to supplement eyewitness testimony, could help to resolve many of these intrinsic concerns about memory and bias that undermine the reliability of witness testimony.  Though other video recordings may do the same, the design and function of Glass makes this device uniquely situated with respect to other videos—namely its first person perspective, inconspicuousness, and accessibility.

A.  Witness Credibility

[11]      Though we now point to scientific studies for such a proposition, recognition of the faultiness and limitations of witness testimony was pervasive in court decisions that predated such studies.  Many people, even judges, can simply invoke common sense, intuition, and hindsight to acknowledge that eyewitness accounts are not—and cannot be—perfect.  This is point has been enunciated in statements made by Supreme Court justices.  To offer just a sample:

“The vagaries of eyewitness identification are well-known; the annals of criminal law are rife with instances of mistaken identification.”[43]

“The crux of the Wade decisions, however, was the unusual threat to the truth-seeking process posed by the frequent untrustworthiness of eyewitness identification testimony.  This, combined with the fact that juries unfortunately are often unduly receptive to such evidence, is the fundamental fact of judicial experience ignored by the Court today.”[44]

“What is the worth of identification testimony even when uncontradicted?  The identification of strangers is proverbially untrustworthy.  The hazards of such testimony are established by a formidable number of instances in the records of English and American trials.  These instances are recent-not due to the brutalities of ancient criminal procedure.”[45]

[12]      The limitations of eyewitness testimony, as recognized by these justices and many others, primarily fall into two categories: (1) the natural fallibility of an individual’s perception and memory; and (2) the mind’s vulnerability with respect to suggestive influences.[46]  This is particularly clear when considering the work of psychologist Elizabeth Loftus.[47]  She has studied the human mind, noting how one’s memory functions from perception through reconstruction:

Early on . . . the observer must decide to which aspects of the visual stimulus he should attend.  Our visual environment typically contains a vast amount of information, and the proportion of information that is actually perceived is very small. . . . Once the information associated with an event has been encoded or stored in memory, some of it may remain there unchanged while some may not.  Many things can happen to a witness during this crucial retention stage.[48]

 In this way, Loftus recognizes some prominent weaknesses in a witness’ memory which would affect the strength of his testimony, supported by countless other empirical studies:[49] (1) an observer cannot possibly take in all of the information available in a scene; and (2) an observer’s memory may shift over time, including what may naturally be forgotten and what may be reconstructed from suggestive procedures.[50]

[13]      Such reliability problems can be significant, particularly given the great deal of weight juries place on witness testimony.  Recent studies have shown that mistaken witness identification was involved in over seventy-five percent (75%) of some hundreds of exonerations (based on DNA testing after a conviction).[51]  Although the use of Glass cannot resolve all of these problems in every case that comes before a court, increased availability and pervasive use of Glass will produce recordings by witnesses that will address these memory limitations.  Glass recordings will be able to corroborate an individual’s testimony, and the availability of such a recording—which can presumably be accessed and viewed at any time—may eliminate a witness’ susceptibility to other suggestive influences.

B.  Distinctiveness of Google Glass

[14]      In addition to the corroborative value of the unbiased recordings, Glass, as a device and for the recordings it produces, is distinctively useful.  Certainly, cameras, cell phones, and tablets are mobile and can record videos.  However, Glass features unique qualities that will produce superior evidence to these other electronics—Glass has a point-of-view camera on a headset and is a relatively inconspicuous and accessible device.[52]

[15]      First, Glass’s camera is fixed on the right side of the glasses, just above the wearer’s right eye.  This allows for simple mobility and a first person perspective.  As technology journalist Kashmir Hill noted when considering the possible use of Glass in capturing the traffic signals in a felony vehicular manslaughter case: “Despite the fact that there seem to be surveillance cameras everywhere, they often seem not to capture all that we wish they would.  But humans wearing cameras would have an advantage over surveillance cameras: the innate ability to turn their heads to look at something important or interesting.”[53]  As these cameras are effectively headgear, they are as mobile as any witness and more stable than a cell phone.[54]  They can capture any incident on film as quickly as the wearer can adjust his head, unlike stable, pre-programmed surveillance cameras.  In addition, the footage allows viewers later on to literally see the witness’ point of view.  Such a first-person point of view will place the jury—or judge—in the witness’ shoes, seeing as much as the witness did.  These jury members may notice things the witness never did, or things he has since forgotten.  They will experience the scene for themselves, allowing them to rely less on oral testimony, which may be biased, altered, or incomplete.  As such, Glass recordings will be more helpful, reliable, and satisfying than witness testimony or other recordings.[55]

[16]      Second, Glass is more accessible than other electronic devices that may record video.  As mentioned above, the camera is built into a headset.  In this manner, it is already out and available for immediate use.  In addition, it can start recording nearly instantaneously; a voice command of, “Ok glass, record a video” will start the recording process.[56]  This ready placement and voice activation means that recording can start in a matter of seconds, providing almost instant footage depending on the wearer’s reaction time.[57]  Even someone with a cell phone or camera relatively available in his or her pocket or purse cannot begin to record video with such speed.  In addition to how quickly recording can begin, Glass is uniquely accessible because it is hands-free.  Indeed, this is one of the selling points for Glass—you can “[r]ecord what you see. Hands free.”[58]  Their promotional video and website suggest how useful this can be when engaging in sports, dancing, playing instruments, and doing construction.[59]  The key is that Glass frees up the wearer’s hands for other uses.  As the Glass wearer may be in the center of the action or even just moving quickly, it may simply be challenging to hold and use a phone or camera.  Furthermore, Glass will encourage people to record a video in situations during which they may otherwise have felt unsafe or uncomfortable to do so, because they will still have full mobility.[60]

[17]      Lastly, the recording feature on Google Glass is relatively inconspicuous.  Though wearing Glass will likely catch the eye, the difference between when Glass is off and when Glass is on and recording is fairly subtle.  Though there are some rumors of an infrared light, in its current edition, there are two main ways for someone to tell if Glass is recording: (1) the small screen is illuminated when it is in use, such as when the user is taking a picture or recording a video, though it does not distinguish such activity from simply looking up directions or running a Google search; and (2) users have to either speak a command or press the touch pad on the side of the frame in order to record a video.[61]  Particularly when Glass first enters the market, it seems unlikely that the general public will be attuned to these fine details.  In addition, depending on lighting, it may be difficult to tell if the screen is illuminated, and it is fairly simple to pass off a tap of the touchpad as scratching one’s head or tucking some hair beyond your ear.  In these ways, someone wearing Glass could simply record a scene without the immediate awareness of those present.  In this way, using Glass as a recording device is less likely to draw attention than using a camera, or even a cell phone.  Chris Barrett, a filmmaker and Explorer who captured the first arrest on Glass, has already experienced this.[62]  At the Jersey Shore to watch a fireworks show, he was able to record a fight that broke out, through to the eventual arrest of the participants.[63]  Barrett acknowledged the crucial role Glass—as opposed to a cell phone—played in recording this break out, saying, “I think if I had a bigger camera there, the kid would probably have punched me. . . . But I was able to capture the action with Glass and I didn’t have to hold up a cell phone and press record.”[64]  This precise inconspicuousness will lead to more recordings, which—privacy concerns aside—will provide evidence that has previously been unobtainable.

C.  Prospective Uses

[18]      The uses for Google Glass in general are endless, and countless of these uses may involve activity that will be the subject of litigation.  The most predictable scenarios involve physical activities that may [at least appear to] occur more or less spontaneously—rioting, fights, trespass, robberies, and even sexual violence.  In fact, Glass has already been used to capture an instance of domestic violence.[65]  Glass recordings may also be especially useful in handling traffic violations; using Glass allows for immediate coverage of traffic accidents—from those involved and onlookers alike—speedy documentation of license plates during hit-and-runs, and more.  Glass could also be used by responders in documentation of an emergency; for example, as one fire chief who is part of the Explorer program noted with respect to using Glass while responding to a fire, “[p]hoto evidence is more reliable” than relying on memory or digging through ashes.[66]  On the other side, any individual may use Glass to record officers and other government officials who respond to emergencies and crimes, essentially monitoring their conduct—particularly police searches and arrests.[67]  Glass has already made its way into operating rooms, and the recordings taken by the attending surgeon would surely be invaluable in medical malpractice cases.[68]  It is even foreseeable that the increased production of family “home” videos, which one of Google’s founders expressed delight in,[69] could be later used as evidence in custody battles.

 

IV.  Using Glass Recordings in Litigation

[19]      In addition to addressing the utility of Glass recordings in litigation, it is important to recognize any hurdles that may complicate or obstruct the introduction of these recordings as evidence in a trial or hearing.  Overall, it is unlikely that any federal evidentiary rules or their state equivalents will prevent the admission of Glass photos or recordings into evidence during litigation.[70]  Some rules may ultimately serve as obstacles to admission, though these rules would not be unique to records produced by Glass or other wearable computers.  In addition, individual state recording laws may limit the introduction of some Glass-produced videos, and efforts to address privacy concerns surrounding Glass may prevent the production of these videos for litigation in the first place.

A.  Introduction of Glass Recordings as Evidence

[20]      The introduction of a Glass recording as evidence would be simple—much like the introduction of another video during trial.  Having prepared the video as any other exhibit, during the testimony of the relevant witness an attorney need only play the video recording—at an appropriate time during the questioning—have the witness authenticate the video clip by acknowledging its accuracy, and then offer the video into evidence.

[21]      At a demonstration trial at the Court Technology Conference 2013 in Baltimore, Maryland, the Center for Legal and Court Technology (CLCT) contemplated this use, through a Glass-like wearable recording device that is based on the shoulder rather than the face.[71]  In this personal injury case, the two parties were pulled over on the side of the road, and as the defendant exited her vehicle, she turned on the device and began recording the altercation that would later become the subject of litigation.[72]  As the CLCT’s script contemplated, the relevant portion of the direct examination and introduction of evidence may proceed as follows:

Q:        Did you have occasion to record that attack?

A:        Yes

Q:        How and why?

A:        I work for a company, Miracle Vision, that is making a personal video communicator a bit like Google Glass.  I was wearing a unit on my right shoulder, and I turned it on when I got out of my car.  I knew that I should make a record of what happened.

Q:        And did you record it?

A:        Yes, but it failed after a few seconds.  I think that I hadn’t kept it fully charged.

Counsel, with judge’s permission, plays Defense Exhibit A.

Q:        Was that an accurate recording?

A:        Yes.

Counsel offers Exhibit A into evidence.[73]

The video clip depicted the plaintiff exiting her own vehicle and approaching the defendant while raising a baseball bat—valuable evidence to support the defendant’s claim of self-defense.  With no other evidence other than oral testimony to indicate who initiated the fight, the video recording in this “he said, she said” scenario—as presented in much litigation—becomes a central piece of evidence in an unclear case.  Glass recordings will be able to provide this same insight and clarity.

B.  Evidentiary Hurdles

1.  ESI and Existing Evidence Rules

[22]      As Glass recordings are stored in the cloud, they will likely be treated as electronically stored information (ESI) and after meeting basic evidentiary requirements would be admissible.[74]  There are surprisingly few decisions dealing with the admissibility of ESI, but of those that exist, Judge Grimm’s opinion in Lorraine v. Markel American Insurance Co.[75] before the United States District Court for the District of Maryland best articulates the relevant rules for evaluating ESI.[76]  Noting that whether ESI is admissible involves a series of inquiries, Judge Grimm set forth:

Whenever ESI is offered as evidence, either at trial or in summary judgment, the following evidence rules must be considered: (1) is the ESI relevant as determined by Rule 401 (does it have any tendency to make some fact that is of consequence to the litigation more or less probable than it otherwise would be); (2) if relevant under 401, is it authentic as required by Rule 901(a) (can the proponent show that the ESI is what it purports to be); (3) if the ESI is offered for its substantive truth, is it hearsay as defined by Rule 801, and if so, is it covered by an applicable exception (Rules 803, 804 and 807); (4) is the form of the ESI that is being offered as evidence an original or duplicate under the original writing rule, of [sic] if not, is there admissible secondary evidence to prove the content of the ESI (Rules 1001-1008); and (5) is the probative value of the ESI substantially outweighed by the danger of unfair prejudice or one of the other factors identified by Rule 403, such that it should be excluded despite its relevance.[77]

 Most of these rules would not be any more challenging to satisfy using recordings from Glass as opposed to other evidentiary materials.  As such, relevance under Rule 401[78] and probative value versus prejudicial risk under Rule 403[79] will not be addressed by this Article.

[23]      With respect to authenticity, Glass recordings seem like a hybrid.  Because of the way Glass functions with automatic uploading, these recordings may be viewed as a more traditional video recording or more like electronic information.  Under Rule 901(a), “[t]o satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.”[80]  Rule 901(b) goes on to give examples of evidence that satisfies this 901(a) requirement.[81]  As ESI, it may be possible that the metadata automatically attached to the Glass recordings would be sufficient to prove its authenticity, though it may be necessary to secure testimony from a witness with knowledge— presumably the wearer—to secure this.[82]  The easiest way for the party introducing the Glass recording to satisfy Rule 901 is to produce a witness with knowledge—one who recognizes the scene (and sound) depicted by the Glass recording—to attest that the recording is what it is claimed to be.[83]  Based on the fact that Glass is a head-mounted device, it is likely that this will be easy to arrange as the creator of the video would also be an eye witness, probably already solicited to testify.

[24]      Glass recordings would also need to satisfy the original writing requirement, more commonly referred to as the “best evidence” rule.  Rule 1002 states that “[a]n original writing, recording, or photograph is required in order to prove its content unless these rules or a federal statute provides otherwise.”[84]  With recordings automatically synched with Google cloud storage, it may be difficult to determine what is “original” in the colloquial sense.  In all likelihood the initial data or “original” is the recording existing on the Glass device itself, which is effectively useless in that form it cannot be viewed by anyone other than the wearer.  Fortunately, the Federal Rules of Evidence take a broader approach, defining original as “the writing or recording itself or any counterpart intended to have the same effect by the person who executed or issued it.  For electronically stored information, ‘original’ means any printout—or other output readable by sight—if it accurately reflects the information,” including the negative.[85]  As this Rule is primarily concerned with the alteration of evidence, the copy of the recording that is automatically uploaded to the cloud would be considered such a “counterpart.”  If courts are unwilling to consider this more accessible video recording as an original, it should qualify as a duplicate.[86]  Pursuant to Rule 1003, “A duplicate is admissible to the same extent as the original unless a genuine question is raised about the original’s authenticity or the circumstances make it unfair to admit the duplicate.”[87]  As an identical copy of the recording is uploaded with no opportunity for alteration, it would certainly reflect the original recording accurately, and there is nothing about the Glass synching process that would invite skepticism.

2.  The Inadequacy of Existing Hearsay Rules

[25]      Though some of the recordings taken by Google Glass will present no hearsay problems, there will inevitably be recordings captured by Glass with that are highly probative yet may amount to inadmissible hearsay.  Though these recordings, like cell phone recordings, may fit into any number of the twenty-plus hearsay exceptions provided for in the Federal Rules of Evidence, this piecemeal application instead highlights a need for a hearsay rule that better accommodates digital photos and videos captured by mobile and wearable recording devices.

[26]      Hearsay means “a statement that: (1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement.”[88]  In other words, hearsay is an out-of-court statement offered to prove the truth of the matter asserted in the statement, and it is inadmissible in court.[89]  As a preliminary matter, then, there must be a statement made by a person.  Many photos and recordings taken by Glass will not meet these preliminary requirements, and as non-hearsay they will not be susceptible to exclusion under Rules 801 and 802.  Furthermore, they may be admissible as a declarant-witness’ prior statement, an opposing party’s statement, a present sense impression, a record of regularly conducted activity, or under one of the other numerous hearsay exceptions.[90]  However, not every recording will be covered by these exceptions, and therefore this otherwise valuable evidence may be excluded.

[27]      Hearsay rules are based on a concern over reliability.[91]  Law Professor Laurence Tribe noted that out-of-court statements are considered suspect because of “the four testimonial infirmities of ambiguity, insincerity, faulty perception, and erroneous memory.”[92]  Importantly, we are concerned with the in-court witness’ inability to and potential disinterest in providing a faithful account of the out-of-court statement.  Admission of Glass recordings, however, is likely to be faithful to this purpose, encouraging truth-seeking.  Glass recordings greatly reduce issues of ambiguity, insecurity, perception, and memory.[93]  The statements are preserved in these recordings, capturing them accurately and including context as well inflection, mannerisms, and other indicators of sincerity and meaning.[94]  In this way, the exclusion of Google Glass recordings under the existing hearsay rules may be illogical, or at least inconsistent with hearsay’s goal.

[28]      Law Professor Jeffrey Bellin’s proposal for an eHearsay (also called an eSRP) rule captures the need for hearsay rules to adjust to a world in which more social interactions and communications are recorded digitally, which will only increase as wearable technology becomes increasingly ubiquitous.[95]  In particular, he proposes to add another hearsay exception, stating that the following type of statements are not excluded as hearsay where a declarant is not available as a witness:

 

Recorded Statement of Recent Perception.  A recorded communication that describes or explains an event or condition recently perceived by the declarant, but not including: (A) a statement made in contemplation of litigation, or to a person who is investigating, litigating, or settling a potential or existing claim; or (B) an anonymous statement.[96]

With respect to a “recorded conversation,” Bellin proceeds to clarify that “[a]nything memorialized by mechanical or electronic means as the speaker communicates counts as ‘recorded’ for purposes of the eSRP exception.”[97]  On its face, Glass recordings would appear to fit—they electronically memorialize communications.  However, as the article focuses on textual digital statements rather than statements recorded in an audiovisual form, it is not entirely clear whether this exception as proposed would extend to Glass recordings.  Considering the increased prevalence of audiovisual recordings—from short Vine video clips to extended Glass recordings—it should.  Such an inclusive eHearsay rule would go a long way in addressing the reliability of Glass recordings.

C.  Relevance of State Recording Laws

[29]      Beyond these evidentiary rules, other considerations may affect the introduction of these recordings as evidence, including the legality of the acquisition of the recording.  For example, state recording laws will play a role in the recordings captured by Google Glass.  As of May 2014, eleven states are two-party consent states, which means that all parties to a communication must consent to being recorded, while the remainder are one-party consent states in which the consent of a single party to the conversation is generally sufficient to make recording lawful.[98]

[30]      It is certainly foreseeable that some recordings captured by Glass will violate these recording laws—though many will not be illegally obtained.  If an individual’s recording violates one of these laws, however, it can often still be admitted as evidence (though to some degree this may be a question of the judge’s discretion when considering relevance and prejudice under Rule 403).[99]  More likely, a state may have a law on point involving the admission of recordings taken without the parties’ knowledge.  This varies by state, but both one- and two- party consent states have codified provisions limiting the use of recordings of conversations as evidence.[100]

[31]      In terms of particular subject matter, individuals may proceed, with caution, when using Glass to record officers.  Though the issue will not be addressed in depth here, it is likely that Glass will be used to record officers.[101]  It is important to note that four federal circuits have recognized a First Amendment right to record police officers performing their duties, though this right is typically qualified as an individual cannot interfere with the officer’s performance of their duties or violate generally applicable laws.[102]  Overall, though not the most prominent issue, the lawfulness of these Glass recordings cannot be ignored when considering the ability to admit—and the frequency of admitting—these recordings as evidence in litigation proceedings.

D.  Legal Concerns Involving Availability

[32]      As with much technological innovation when first introduced, Glass and other wearable computers are subject to criticism and concern.  Most of the concerns that have arisen to date relate to privacy and safety, and how they are addressed may affect the availability and prevalence of Glass recordings.

[33]      Those privacy concerns raised relate to both traditional vertical notions of privacy, from the government and corporate bodies, as well as a more horizontal notion of privacy from one’s peers.[103]  These anxieties center around the great amount of conduct that may be preserved in photos or film, often without the knowledge of the actors, as well as the government’s and Google’s access to these materials.  Three primary general concerns have been raised.  First, because the recording feature on Glass is rather inconspicuous, this may threaten an individual’s ability to have anonymous interactions, not to mention the unauthorized recording considerations.[104]  Second, without legislation to secure safeguards, it may be possible for government agents to access the Glass data without being held accountable for this privacy invasion.[105]  Lastly, because this data is stored on Google’s cloud servers, Google has complete access to much personal data.[106]  Many others have expressed a fear that Glass will employ a facial recognition feature, but Google has firmly renounced such an attribute.[107]  Congress[108] and authorities from several nations around the globe[109] have expressed their concerns to Google, but legislation addressing these fears has been minimal.  More action has been taken locally, where businesses have banned customers from wearing Glass on their premises, including banks, bars, casinos, and more, primarily based on privacy, safety, and security grounds.[110]

[34]      Legislatures have been less hesitant to respond to the debate over the use of Glass while driving, concerned that Glass poses the same safety hazards as cell phones.[111]  New Jersey, New York, and West Virginia—and even the United Kingdom—have all proposed legislation banning the use of wearable computers, such as Glass, by drivers.[112]  With the first reported traffic violation for wearing Glass while driving in California in late October, 2013,[113] it appears likely that more states will move towards proposing similar statutes.[114]

V.  Conclusion

We can expect an onslaught of new wearable computer product devices such as Google Glass and others that are still only rumors, including eyeglass-mounted computer systems, head-mounted computers, Apple’s iWatch, and other smartwatch devices.[115]

—Judge Herbert B. Dixon Jr.,

Superior Court of the District of Columbia

[35]      Wearable computing is not going away—whether it takes the form of Google Glass or other head-mounted gear, smartwatches, or other devices we cannot yet imagine.  Technology will keep developing, so rather than solely fearing these changes, the legal system and its participants should acknowledge their potential utility.  Glass, as it becomes more available to the public, will expand the base of what individuals choose to and are able to record.  Even more than cell phones, Glass and its counterparts will enable photos and videos to be taken that could serve as invaluable evidence in many hearings and trials.

[36]      This past summer, one blogger posited this question—what would have happened if Trayvon Martin was wearing Google Glasses?[116]  Though most responders recognized that it was unlikely that the expensive technology would have been available to Martin himself,[117] it becomes more believable that George Zimmerman, or a potential onlooker in a similar situation, could have been wearing a pair.  “If one of them said, ‘Ok, Glass, record a video’ at the start, the jury would have had irrefutable evidence of what happened – the key piece missing from the Zimmerman trial.”[118]  This may not be conceivable yet, but it is not difficult to imagine similar circumstances in the future wherein a Glass recording would be as influential in litigation and the pursuit of justice.[119]  In the meanwhile, let us embrace this new technology, learn  its features, capabilities, and limitations, thoughtfully consider  privacy implications, and work with attorneys, judges, and technologists, to make its transition into the courtroom a smooth one.

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 Cite as: Joseph P. Smith III, The Tangled Web: A Case Against New Generic Top-Level Domains, 20 Rich. J.L. & Tech. 10 (2014), http://jolt.richmond.edu/v20i3/article10.pdf.

 

Joseph P. Smith III*

“If we had a reliable way to label our toys good and bad, it would be easy to regulate technology wisely.  But we can rarely see far enough ahead to know which road leads to damnation.”[1]

I.  Introduction

[1]        Is the “dot-com” era over as we know it?  On June 13, 2012, the Internet Corporation for Assigned Names and Numbers (“ICANN”) revealed the list of applied-for new generic top-level domains.[2]  Top-level domains are the words at the end of a website’s address, such as <.com>.  ICANN is a non-profit organization responsible for managing the Internet’s system of unique identifiers, including domain names.[3]  ICANN describes itself as the definer of “policies for how the ‘names and numbers’ of the Internet should run.”[4]  It is structured on a multi-stakeholder model including “registries, registrars, Internet Service Providers (ISPs), intellectual property advocates, commercial and business interests, non-commercial and non-profit interests, representation from more than 100 governments, and a global array of individual Internet users.”[5]  ICANN contracts with generic top-level domain registries and registrars to manage the Internet’s domains.[6]  Each registrar is required to enter into a register accreditation agreement with ICANN, which gives registrars the ability to register new domains.[7]

[2]        The list of new generic top-level domains is staggering—ICANN received nearly 2000 applications for the new domains by March 2012.[8]  With the expansion of generic top-level domains, domain registrars and large corporations like Google and Apple jumped at the opportunity to own a piece of the expanding Internet.[9]  Currently, only a few generic top-level domains are used by the masses—<.com>, <.org>, <.gov> for example.  However, new generic top-level domains add nearly limitless terms, including <.app>, <.music>, and <.esq>.  The amount of applicants paying the $185,000 application fee suggests that companies are confident that an Internet expansion will be successful.  To date, ICANN has delegated over 250 new generic top-level domains.  But debate continues as to the value and dangers of massively broadening the available generic top-level domain names available.

[3]        ICANN touts many benefits of the new generic top-level domains, while ignoring the many consequences that outweigh these benefits.  These benefits include greater trademark protection for brands, a more competitive online market, and the ability for niche online markets to flourish.  However, those benefits look less appealing when weighed against the negatives, including conflicts with principles of trademark law, increased difficulty for the Federal Trade Commission in prosecuting online fraud, necessity concerns, and ethical issues between ICANN and new generic top-level domain applicants.

[4]        This article’s purpose is to provide a general understanding of the legal and financial implications of the new generic top-level domains.  By looking at the history and functionality of generic top-level domains, the reader will hopefully have the requisite background to understand the implications of adding new top-level domains.  The article discusses the following topics.

[5]        Section III of this article examines the positive and negative implications of introducing new generic top-level domains.  This section discusses ICANN’s stated policy goals in introducing new generic top-level domains, it addresses the potential benefits of introducing new top-level domains based on economic and trademark rationales, and it analyzes the negative implications of introducing new generic top-level domains and why these negative effects outweigh any positives.  Specifically, it dismisses ICANN’s argument that new generic top-level domains are necessary, exposes the conflict between private ownership of generic top-level domains and trademark law, discusses the detrimental effect new generic top-level domains will have on the FTC’s ability to prosecute online fraud, and addresses the persistent ethical concerns raised by the apparent conflicts of interest between ICANN officials and new generic top-level domain applicants.

[6]        Section IV of this article proposes three remedial measures that attempt to alleviate some of the problems addressed in Part C of section III.  It proposes that ICANN implement a small pilot program rather than continue its plan of examining the roughly 2000 applications it received for new generic top-level domains, that ICANN increase the transparency of the organization in two ways, and that ICANN tweak its Trademark Clearinghouse procedure to balance the power between trademark owners and Internet users.

II.  A Domain Names Primer

[7]        To understand the implications of ICANN’s introduction of new generic top-level domains, an introductory discussion of the history of top-level domains is helpful.  This section will first answer the question “what is a domain name and how does it work?”  Next, it discusses the development of legal rights attached to domain names and domain ownership.  Finally, the article will examine where a domain name is located for the purposes of jurisdiction and review of the two types of domain name dispute resolutions, and discusses the applicability of each.

A.  What is a Domain Name?

[8]        A domain name in simple terms is the combination of words and numbers that lead an Internet user to a website.[10]  The Internet allows users to look up websites through its Domain Name System (“DNS”) using a uniform resource locator (“URL”) to direct users to specific websites.[11]  The DNS uses a tree-like hierarchy to organize URLs.[12]  Commonly, a URL has three parts: a protocol (or third-level domain), a server name (or second-level domain), and a resource ID (top-level domain).[13]  For example, Google’s URL is <www.google.com>.  The most common protocol is <www>, which is an abbreviation for World Wide Web.[14]  To the right of the protocol is a domain name.[15]  A domain name is a combination of alphanumeric characters used by an Internet browser to identify a website.[16]  In the Google example, <google> is the domain name.  To the right of the domain name is the top-level domain.[17]  A top-level domain is used to categorize websites.[18]  In the Google example, <.com> is the top-level domain.  The two most common types of top-level domains are generic top-level domains and country code top-level domains.[19]  Generally, country code top-level domains are two-letter identifiers; e.g., <.fr> for France.[20]  Because country code top-level domains are not changing, this article will focus on generic top-level domains.  Top-level domains expanded only slightly in the early years of the Internet.  In the 1980’s, the Internet only had seven generic top-level domains: <.com>, <.edu>, <.gov>, <.int>, <.mil>, <.net>, and <.org>.[21]  In 1995, the Federal Networking Council (FNS) birthed the modern Internet when it passed a resolution defining it as a “the global information system that is logically linked together by a globally unique address space.”[22]  Within a year, the Internet became the world’s fastest communicator of news, entertainment, and research.  In 2001-2002, seven additional generic top-level domains were introduced: <.biz>, <.info>, <.name>, <.pro>, <.aero>, <.coop>, and <.museum>.[23]  At the same time users were discovering the power of the Internet, businesses were discovering the increasing value of domain name ownership.  For example, the domain <www.business.com> was sold for $7.5 million in 1999.[24]  As businesses realized the value of domain name ownership, domain name disputes quickly followed.

B.  Domain Name Ownership

[9]        During the initial advancement of domain name law, a “personal property” theory was developed by courts to determine who owns a domain name.  The Supreme Court of Virginia set the stage for this theory’s proliferation, becoming the first court to consider whether property rights attach to domain names in Network Solutions, Inc. v. Umbro International, Inc.[25]  The issue in Umbro was whether the contractual right to use a domain name can be garnished to settle a default judgment.[26]  After receiving a default judgment against Canada Inc., Umbro filed suit in Fairfax Circuit Court against the domain registrar Network Solutions as a garnishee of Canada Inc., the debtor.[27]  Network Solutions responded that it had no money or other garnishable property belonging to the Canadian debtor and that the domain names registered by the debtor were non-garnishable contracts.[28]  The lower court found that the debtor’s domain names were “valuable intangible property” subject to garnishment, and ordered Network Solutions to deposit control of the domains to the court.[29]  The Supreme Court of Virginia did not reach the issue of whether the domain name was a form of personal property because Network Solutions acknowledged that it was during oral argument;[30] however, the case nonetheless enabled subsequent judicial opinions to explore the personal property theory of domain ownership.

[10]      After Umbro, federal courts began adopting the “personal property” theory of domain name ownership.  In Kremen v. Cohen, the Ninth Circuit treated a domain name as analogous to a document.[31]  Gary Kremen lost his domain, <sex.com>, when a bankruptcy lawyer sent a fraudulent letter to Network Solutions claiming that Kremen wished to abandon the domain.[32]  Kremen subsequently filed suit against Network Solutions in the Northern District of California.[33]  The district court granted summary judgment in favor of Network Solutions, holding, in part, that the domain was “intangible property” to which conversion does not apply.  Kremen appealed to the Ninth Circuit.[34]

[11]      On appeal, the Ninth Circuit reversed the district court and held that California case law allowed a claim of conversion for any species of property, including domain names.[35]  Network Solutions argued that no property right existed because the domain is refreshed every twelve hours as the information is broadcast online.[36]  The Ninth Circuit rejected this argument by an analogy to shares of stock, reasoning that “[w]hether a document is updated by inserting and deleting particular records or by replacing an old file with an entirely new one is a technical detail with no legal significance.”[37]  This rule allowed Kremen to successfully argue that his domain was his personal property and thus within the scope of California conversion law.[38]

[12]      Because domain names are personal property, each domain name must have an owner.  However, before any ownership rights will attach, the domain name must be registered.[39]  To register a domain name, an interested party must submit an application containing a potential top-level and second-level domain to a registrar.[40]  If the application is registered, it is added to the registry’s WHOIS database.[41]  ICANN defines the “registered name holder” as the person whose name appears in the WHOIS domain database.[42]  Courts have also considered the issue of domain name ownership, and have generally followed the ICANN definition.[43]

C.  Physical Location of Domain Names and Dispute Mechanisms

[13]      With the addition of numerous generic top-level domains, it is increasingly important to understand how domain owners can protect their trademarks online.  After accepting the theory that domain names are personal property, the next question to be answered is where domains are located for lawsuit purposes.  Congress answered this question through legislation interpreted by the courts.  The Anti-Cybersquatting Consumer Protection Act (“ACPA”)[44]  provides evidence of Congress’ acceptance for the “personal property” theory of domain name rights while also establishing the location of domain names.[45]  Under the ACPA, a person is liable for improper domain registration if that person registers a domain that infringes a valid trademark under certain conditions.[46]  First, the alleged infringer must have a bad faith intent to profit from the trademark.[47]  Second, the alleged infringer must register, traffic in, or use a domain name that is identical or confusingly similar to the trademark, or dilutive of the trademark if the mark is famous.[48]

[14]      The ACPA provides for in rem jurisdiction of domain names “in the judicial district in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name is located.”[49]  The Second Circuit interpreted this language as showing Congress’ intent for domain names to exist as intangible property located in two locations: (1) at the location of the domain name registrar, and (2) at the location of the registry.[50]

[15]      The ACPA provides one mechanism for resolving domain name disputes, while the alternative option is an administrative action brought under ICANN’s Uniform Domain-Name Dispute-Resolution Policy (“UDRP”).  The UDRP requires parties to submit to a mandatory administrative hearing when the following three conditions are met: (1) the respondent’s domain name is identical or confusingly similar to the complainant’s trademark; (2) the respondent has no legitimate rights or interests in respect to the domain name; and (3) the respondent’s domain name has been registered and is being used in bad faith.[51]  First, UDRP resolution is faster (and likely cheaper) than litigation under the ACPA.[52]  There is no discovery process and a large percentage of URDP complaints go unanswered.[53]  Complainants are additionally advantaged by the fact that the UDRP panels have not allowed the assertion of equitable defenses.[54]  If successful, the only remedy provided by the UDRP is cancellation of the respondent’s domain name and transfer to the complainant.[55]

[16]      While litigation pursuant to the ACPA affords complainants much broader remedies than the UDRP, it also requires the costs and difficulties of traditional litigation.  A successful ACPA plaintiff will have the option of statutory damages and temporary or permanent injunctions.[56]  In certain cases, a court may also award costs and reasonable attorney’s fees.[57]  However, an ACPA complainant must first establish in personam jurisdiction.[58]  Defendants can also raise the equitable defenses otherwise not allowed under the UDRP.[59]  The ACPA and UDRP are not mutually exclusive options; a concurrent ACPA suit is permissible with a UDRP action.[60]

 

III.  The Arguments For and Against New gTLDs

[17]      Now that ICANN is delegating new generic top-level domains, the stage is set to analyze their positive and negative effects.  ICANN champions the introduction of new generic-top level domains, claiming that widespread expansion of generic top-level domains will benefit businesses and consumers.  It has ignored, however, many real concerns expressed by its own advisory board, the United States Federal Trade Commission, and interested parties from around the world.

[18]      This section examines the positive and negative implications of introducing new generic top-level domains.  First, this section examines the policy rationales supporting ICANN’s introduction of new generic top-level domains.  Then, it discusses the potential benefits of introducing new top-level domains based on economic and trademark rationales.  Finally, an analysis of the negative implications of introducing new generic top-level domains demonstrates why these negative effects outweigh any benefits.

 A.  Policy Rationales for Expansion

[19]      ICANN offers five policy justifications for offering new generic top-level domains.  For the reasons set forth below, these policy rationales are lackluster at best.

[20]      According to ICANN, the expansion is consistent with all prior expansions of generic top-level domains.[61]  In essence, the expansion is happening because all prior expansions have been successful.  Additionally, ICANN claims that “[t]here are no technical impediments to the introduction of new top-level domains as evidenced by the most recent addition of the two previous rounds.”[62]  In other words, because the new top-level domains were introduced smoothly, the introduction of 2,000 more top-level domains will also work smoothly.

[21]      ICANN also claims that expanding the domain name space to accommodate more scripts and symbols in top-level domains will give end users more choices about the nature of their presence on the Internet.[63]  For example, Chinese users will now be able to use Chinese symbols in their domain names.[64]  This will allow the domain owner to create a web address that is targeted only towards users who can understand the language.

[22]      Further, ICANN asserts that “[t]here is demand for additional top-level domains as a business opportunity.”[65]  As I will discuss in detail in Part B below, the <.com> domain is almost monopolistic with its dominance online.  ICANN assumes that by introducing more top-level domains, the additional choices for domain registrants will decrease the power of the <.com> top-level domain and lower prices for consumers.

[23]      “No compelling reason has been articulated to not proceed with accepting applications for new top-level domains.”[66]  While the accuracy of this statement is subjective to say the least, ICANN believes that new top-level domains will do nothing but good for the Internet as a whole.  It will also fill ICANN’s pockets with roughly $30 million in surplus application fees; an issue discussed in detail in Part C below.

B.  The Benefits of New gTLDs

[24]      New generic top-level domains will have some benefits as they are added to the Internet.  Prior to the expansion, the Internet had only twenty-two generic top-level domains.[67]  ICANN and supporters of the new generic top-level domains advocate for new generic top-level domains for four reasons.  First, it will give companies increased brand control and presence online.  Second, it will increase top-level domain competition by spreading market power.  Third, it will allow for the creation of niche marketplaces, thus lowering consumer search costs.  Finally, the difficult application process will ensure high-quality applicants administer new generic top-level domains.

1.  Brand Control

[25]      One reason ICANN advocates for new generic top-level domains is that it will increase brand control for companies.[68]  A company’s branding could benefit from new generic top-level domains in a few different ways.  For example, a company with the financial strength and capability can operate its own <.brand> generic top-level domain and control all usage of its trademark in domain names.[69]  By owning its own top-level domain, a company can reduce the amount of characters needed to find certain products within a brand’s website.  Rather than <www.amazon.com/kindle>, Amazon could direct its users to <kindle.amazon>.  It could do the same for each product its offers within its <.amazon> top-level domain.  Additionally, consumers from any country could potentially find a company with its own top-level domain more easily because as long as the consumer knows the brand name, a consumer can type <.brand>.  According to ICANN, both of these benefits to trademark owners outweigh any potential risk of increased cyber-squatting.[70]

2.  Increased Competition

[26]      ICANN advocates for new generic top-level domains because it will spread market power away from the <.com> top-level domain and thus increase competition.[71]  In a letter to the United States Department of Commerce, the Department of Justice’s Antitrust Division advised that as of 2008, VeriSign, the owner of the <.com> generic top-level domain had significant market power.[72]  The DOJ was concerned that because the <.com> domain was so powerful, it raised concerns of whether Verisign had developed a monopoly on domain names.[73]  The DOJ concluded that the introduction of new generic top-level domains would shift some of that market power away from <.com>.[74]  By doing so, consumers and potential registrants would see the benefits through more competitive pricing and increased variety.[75]  Whereas previously companies such as Verisign have been able to set prices for domains within the <.com> top-level domain, now successful applicants can offer lower prices and help decrease Verisign’s market power.  Therefore, it is plausible that new generic top-level domains will help increase competition and decrease the price of domain names online.

3.  Creation of Niche Marketplaces

[27]      ICANN claims that new generic top-level domains will allow for new online business models by creating niche marketplaces that decrease consumer search costs.[76]  For example, as more companies began selling digital copies of music online, the top-level domain <.music> could plausibly become the domain under which all companies offer their services.  Apple could use <itunes.music>, Google could use <google.music>, and Amazon could use <amazon.music>.  This arrangement would benefit both the user and business because the user would be able to find multiple online music sellers more quickly, and the visibility of each music seller would be greater as well.  Smaller companies who only offer services in a single market would also benefit from the creation of new niche marketplaces their exposure to consumers would be increased.  By searching for the specific top-level domain like <.music>, a user will not only find Apple’s music store, but can also shop for lesser known music stores which may have previously been too difficult to find within the broad <.com> domain.  With niche marketplaces, both consumers and businesses can benefit by decreased search costs.

4.  Qualified New Registrars

[28]      Because the application process is so grueling, ICANN is ensuring that only qualified applicants will administer new generic top-level domains.  ICANN’s “gTLD Applicant Guidebook” contains directions to apply for a new generic top-level domain.[77]  The period in which to apply for a generic top-level domain was January 12 through April 12, 2012.[78]  After submission, applications are reviewed in three stages.

[29]      The first stage of the review process requires the applicant to meet a set of administrative requirements before any substantive review of the application commences.[79]  The application is then posted on ICANN’s website for a public comment period lasting sixty days.[80]  During this comment period, the Government Advisory Committee may also notify the applicant that the generic top-level domain may be problematic, either because it violates international law or concerns other sensitive issues.[81]

[30]      Next, the “Initial Evaluation” period begins in which the application is reviewed to determine: (1) if it will cause any problems with the structure of the DNS, and (2) if the applicant is capable of managing the generic top-level domain.[82]  These two requirements will help ICANN determine whether a potential generic top-level domain will crash the Internet.

[31]      Besides its own review of each applicant, ICANN also created formal public objection period for approximately seven months after it posts the list of completed applications that occurs during the initial evaluation.[83]  If an objecting party meets the standing requirement, ICANN will hear objections.[84]  This will allow the public to voice any concerns that ICANN may have missed.

[32]      Finally, if the applicant survives the preceding periods, the application moves into a “transition to delegation” period.[85]  During the transition to delegation, the applicant must enter into a registry agreement with ICANN.[86]  At this time, ICANN and the applicant will contract to operate the top-level domain in the same manner that all current top-level domains operate.  The applicant must also perform a “technical set-up,” where it shows that it can operate a functional top-level domain before the domain is entered into ICANN’s database.[87]  If the applicant meets all of these requirements, the domain becomes eligible for entry into ICANN’s generic top-level domain database.[88]

C.  The Negative Implications of New gTLDs

[33]      While there are positives, the negative implications of introducing new generic top-level domains far outweigh these positives.  The following subsections discuss four distinct reasons that ICANN should not introduce more new generic top-level domains at this time.  First, ICANN’s own Government Advisory Committee has questioned the necessity and likelihood of success for new generic top-level domains.  Second, by issuing new generic-top level domains to private companies, a core principle of trademark law is violated.  Third, the FTC has warned ICANN that new generic top-level domains will greatly increase the difficulty of prosecuting cases of online fraud.  Finally, ICANN’s actions regarding the introduction of new generic top-level domains, thus far, have raised serious ethical concerns about the organization’s ability to fairly oversee the project.

1.  Doubts of Necessity

[34]      Many doubts have been raised about whether the new generic top-level domains are even necessary.  ICANN advocates for the new generic top-level domains out of a business necessity due to scarcity of second-level domains within the current generic top-level domains.  This necessity is questionable and regardless of the fact that ICANN has offered no evidence to support this claim, two counter arguments significantly undercut the validity of the claim.  First, ICANN’s own Government Advisory Committee (“GAC”) chairman openly questioned the necessity for new generic top-level domains in a letter to ICANN’s Chairman of the Board in 2007.[89]  Second, the Supreme Court rejected a similar argument with regard to colors as trademarks in Qualitex Co. v. Jacobson Products. Co., an argument that also can apply to domain names.[90]

[35]      In a letter to ICANN’s former Chairman of the Board, the former GAC Chairman raised apparently continuing concerns by the GAC about the introduction of new generic top-level domains.[91]  At the outset, the chairman noted that the “threshold question has not been answered whether the introduction of new gTLDs provides potential benefits to consumers that will not be outweighed by the potential harms.”[92]  The GAC chairman noted that in 2006 the ICANN Board of Directors requested an economic benefit analysis study of new generic top-level domains, which at the time of the letter had yet to occur.[93]  He was also concerned that the introduction of new generic top-level domains would lead to a creation of monopolies rather than an increase in competition.[94]  The GAC warned that a likelihood of “end user confusion” could result from the introduction of new generic top-level domains, which I further discuss in the “Trademark Concerns” section below.[95]  The GAC chairman criticizes ICANN for its failure to address the lack of awareness of the new generic top-level domains by many smaller businesses and Internet users as a whole.[96]  The GAC chairman urges ICANN to simplify the application and objection process, and also be more transparent about how it intends to the spend the predictably large surplus earned from application fees.[97]  Based on all of these issues, it becomes clearer that ICANN has not established a necessity for new generic top-level domains.

[36]      ICANN fails to make a valid argument that the new generic top-level domains are running out of space for new second-level domains when it is compared to a similar argument made about trademarks.  In 1995, the Supreme Court rejected an argument that scarcity should bar colors from trademark protection.[98]  The respondent in Qualitex argued that the array of colors is limited and therefore colors should not be afforded trademark protection to prevent any unfair competition.[99]  The Court dismissed the argument, noting that the mixing of colors could produce nearly limitless choices for competitors to use in their own products.[100]  Compared to the color argument in Qualitex, ICANN’s concern of second-level domain scarcity should be questioned.  Second-level domains are composed of both numbers and letters.  The potential combinations of numbers and letters in second-level domains are nearly limitless.  While a random assortment of numbers and letters may not make a good domain, ICANN cannot claim that the domains are running out.  Moreover, unless trademarks themselves are running out, it does not logically follow that <.com> cannot be added to each newly registered mark.  While the same trademark is sometimes issued for completely separate products, in that situation the trademark owner could use the trademark name and product type as its domain name.  For example, Delta is a trademark for both faucets and airlines.  While <delta.com> can only be used for one company, the other could merely adopt the domain <deltaairlines.com> or <deltafaucets.com>.  Under this scrutiny, ICANN’s claim of scarcity should be given little credence.

2.  Conflict with Trademark Law

[37]      ICANN’s introduction of new generic top-level domains conflicts with the well-established trademark doctrine that prevents ownership of generic terms.  Domain names are treated under the law as extensions of trademark rights, but are even more exclusive in the sense that once the domain is issued, no one else can use it.[101]  The rationale behind excluding generic marks is that if one person owned the rights to a generic term, it would prevent a competitor from using the term that identifies its product.[102]  Examples of generic terms include lamps, cars, etc.  Because of this similarity, trademark rights are a prerequisite for suit under ACPA or the UDRP to remove infringing domain names.[103]

[38]      Courts use a “levels of distinctiveness” test to determine if a mark is eligible for trademark protection.[104]  There are four levels of distinctiveness.[105]  Generic marks are terms used to identify a particular type of product, and are never available for trademark protection.  Trademarks lower consumers’ search costs, allow the owner to develop goodwill in his company, and provide marketing advantages.  An important notion of trademark law is that trademarks identify a producer of goods or services, not a type of goods or services.[106]  Trademark rights exist through use, but only distinctive marks are available for trademark protection.[107]  Both the UDRP and ACPA require trademark ownership for a complainant to succeed in a domain name dispute,[108] and with this fact in mind, the next section will explain why the new generic top-level domains violate these principles.

[39]      ICANN accepted applications for hundreds of generic terms as new generic top-level domains.[109]  These new domains include <.art>, <.computer>, <.pizza>, and <.restaurant>, just to name a few.[110]  While most of the new generic top-level domains have not yet been opposed, seven generic top-level domains are being hotly contested by Amazon and Google, exemplifying why generic terms should not be sold to private companies.  By allowing these companies to own generic terms as part of generic top-level domains, the company will have an online monopoly on a generic term and could lead to serious issues of unfair competition.

[40]      For example, if Amazon operates the <.app> top-level domain and refuses to allow Google to register a domain under <.app>, Google is unable to compete in the <.app> marketplace.  Google and Amazon have both bid on the domains <.app>, <.cloud>, <.game>, <.movie>, <.music>, and <.play>.[111]  All of these terms would fall within the generic category of Zatarains’ levels of distinctiveness test.[112]  The Zatarains court was worried about disadvantaging competitors by allowing generic terms to be trademarked, but ICANN seems to have done the complete opposite.  Both Google and Amazon make legitimate use of the term “apps.”  Either one would be significantly disadvantaged if they were no longer allowed to use the term.  If Amazon were given trademark protection in the term “app,” Apple would likely be an infringer unless it shut down its “App Store.”  Luckily, Zatarains foresaw this result, and courts across the United States followed this example to set the boundaries of trademark rights.  While a trademark on a generic term is not identical to ownership of a generic titled top-level domain, the economic effects would be quite similar.

[41]      ICANN announced that the creation of niche’ marketplaces as one of its objectives in creating new generic top-level domains.  Assuming this becomes common practice, the generic top-level domain owner would presumably license a second-level domain to any interested companies offering products in the niche.  But take Amazon for example, who is asserting itself as the only permissible user of the <.app> top-level domain.[113]  Amazon is only one of many companies who provide “apps,” yet it intends to own the entire <.app> registry and prevent any other company from using it.  Specifically, Amazon claims in its application that<.app> may not be delegated or assigned to third party organizations, institutions, or individuals.[114]  Amazon is purporting to own the <.app> top-level domain and prevent others who offer “apps” from participating in the new marketplace.  Amazon is claiming a trademark right, vis-à-vis its exclusion from others in using a generic term and in effect will have a monopoly in the <.app> marketplace as warned by the GAC in 2009.[115]

3.  Enforcement Concerns

[42]      The Federal Trade Commission (“FTC”) offers a third opposition to the new generic top-level domains because new domains will magnify the already difficult challenge of protecting consumers from online fraud.[116]  In a letter to the CEO and Chairman of ICANN’s Board of Directors, the FTC addressed its concern over the effects new generic top-level domains will have on FTC enforcement of online fraud prevention.[117]  The FTC warned that “[f]raudsters will be able to register the misspellings of businesses, including financial institutions, in each of the new gTLDs, create copycat websites, and obtain sensitive consumer data with relative ease before shutting down each site and launching a new one.”[118]  The FTC also expressed concerns that the potential for bad actors to obtain and operate top-level registries will significantly increase, even with ICANN’s background check procedures.[119]  ICANN has already proven to be negligent in its management of the WHOIS database, in turn obstructing FTC investigations into the owners of fraudulent websites.[120]  The FTC suggested that ICANN make certain changes to protect the public from the dangers of new generic top-level domains.  It urged ICANN to implement the new generic-top level domain program as a pilot program and only approve a small number of the initial generic top-level domains.[121]  The FTC encouraged ICANN to hire more compliance staff to strengthen its contractual compliance program.[122]  It also recommended that ICANN develop a new program to monitor the consumer issues bound to arise from the implementation of the first round of new generic top-level domains.[123]  Additionally, the FTC requested that ICANN assess its application’s risk of consumer harm as part of the application review process.[124]  Finally, the FTC advised ICANN to improve the accuracy of its WHOIS databases, potentially including a registrant verification procedure to help the FTC locate and prosecute bad actors.[125]  I will advocate for some of these recommendations in Section IV of this article.

4.  Ethical Concerns

[43]      Beyond the substantive concerns of the introduction of new generic top-level domains, advocates have raised serious ethical concerns about ICANN’s Board of Directors.  In 2011, two members of the ICANN Board joined for-profit domain holding corporations within a month of leaving ICANN.[126]  Because the ICANN bylaws have no restrictions on the Board members after they leave, their employees are more susceptible to conflicts of interests when moving to private companies.[127]  Criticisms of ICANN’s ethics policies are worldwide and continuing, and are evidenced by a letters sent to ICANN from many new generic top-level domain applicants.

[44]      Applicants for the <.africa> top-level domain have continually notified ICANN of a conflict of interest between a competing applicant and ICANN’s Government Advisory Committee.  On July 18, 2012, DotConnectAfrica (“DCA”) advised ICANN as to this conflict.[128]  DCA noted that a member of ICANN’s GAC also sat on the Board of Directors for KeNIC, a corporation competing with DCA for the <.africa> top-level domain.[129]  DCA provided evidence that the GAC Board member has publicly opposed the DCA in various discussions about the <.africa> top-level domain, and it requested that she remove herself from the GAC where she played a role in determining what new generic top-level domains applications are accepted.[130]  Even more troubling is the attachment to the DCA email—a prior email dated April 7, 2011 raising the same concerns about the same GAC Board member.[131]  If this conflict was an isolated incident it would be less severe, but the problem is more widespread.

[45]      On July 6, 2012, the CEO of BRS Media exposed another conflict of interest on the GAC with regards to the <.radio> top-level domain.[132]  According to the letter, the European Broadcasting Union (“EBU”) was admitted to the GAC while it has a pending application for the <.radio> top-level domain.[133]  The BRS CEO requested that the EBU step down from its position on the GAC Board immediately to resolve the glaring conflict of interest.[134]  In light of all of these problems, ICANN should implement certain remedial measures to help alleviate these concerns.

 

IV.  Remedial Measures for New gTLDs

           [46]      As it seems unlikely that ICANN will heed the advice of the FTC and its own GAC, this section offers three remedial measures that ICANN could take now to address some of the concerns expressed in Section III above.  First, ICANN should implement a small pilot program rather than continue its plan of examining the roughly 2000 applications it received for new generic top-level domains.  This proposal is supported by evidence of success in similar pilot programs created by the United States Patent and Trademark Office, and suggestions by the Federal Trade Commission.  Second, ICANN should increase the transparency of the organization in two ways.  ICANN should release publicly a detailed plan that explains how ICANN plans to spend its expected $30 million surplus from the new generic top-level domain applications.  Additionally, ICANN should expand its conflicts of interest policy to include related committees and organizations participating in the application process.  Finally, ICANN cancel the Uniform Rapid Suspension mechanism, which creates an even higher likelihood of trademark bullying without any new protections for domain users.  These proposals are discussed in detail below.

 A.  Implementation via a Pilot Program

[47]      ICANN needs to implement the new generic top-level domain through a pilot program to minimize any negative effects, rather than hastily introduce thousands of top-level domains.  ICANN noted in the “gTLD Applicant Guidebook” that it can add a maximum of 1000 new generic top-level domains per year.[135]  During its four-month application period, ICANN received 1,930 applications.[136]  With 2,000 applications to review, a perfect implementation of these new generic top-level domains would take two years.[137]  This two-year period, however would be assuming that ICANN is actually able to add 1000 new generic top-level domains per year.  During this time, ICANN will presumably accept more applications and develop a backlog of new generic top-level domains.

[48]      ICANN should narrowly implement the new generic top-level domains.  To mitigate the risks noted above in Section III, ICANN should begin by implementing only a small number of uncontested generic top-level domains owned by experienced registries.  By choosing uncontested generic top-level domains, it will lessen the possibility of legal action.  Experienced registries will likely have fewer growing pains while administering a new generic top-level domain.  The resources ICANN planned to use implementing mass new generic top-level domains can instead be spent on analysis of the pilot generic top-level domains and use this knowledge to better craft the full-scale new generic top-level domain program.  If the results of the pilot program are promising, ICANN will already have thousands of applications to review and implement.  At the same time, it can accept new applications in good faith, with the pilot program serving as a model for the likely success of further expansion.  If the pilot program proves unworkable, ICANN will have saved an enormous amount of resources by limiting its implementation to the piloted generic top-level domains.

[49]      ICANN should use The United States Patent and Trademark Office (“PTO”) as a model for implementing the new generic top-level domains as a pilot program.  The PTO constantly introduces changes to its procedures through pilot programs and its efforts have been successful.[138]  For example, The PTO introduced the “Enhanced First Action Interview Pilot Program” in October of 2009.[139]  Because of the program’s success, the PTO has extended the program three times and now expanded the program to all technologies.[140]  Based on these expansions, the PTO has proved the workability of pilot programs on large-scale technological applications, and ICANN should follow the PTO’s lead.

B.  Increased Transparency

[50]      ICANN must also address the ethical concerns of various interested parties by increasing the transparency of its operations.  It can do so in the following ways.  Regarding its surplus applications profits discussed above in Section III, ICANN should issue a detailed public statement explaining how it will allocate the funds earned from the new generic top-level domain program.  Additionally, ICANN should conduct a full-scale review of all parties with any say in the new generic top-level domain application process, and remove anyone with even tenuous conflicts of interest.

1.  Allocation of Funds from the new gTLD Applications

[51]      ICANN expects to net $140 million from the new generic top-level domain program according to its budget that it released for the fiscal year of 2012-13.[141]  As a non-profit, ICANN receives special tax treatment in exchange for it not earning a profit for its owners.[142]  However, in its budget, ICANN only forecasted revenues based on the assumption that it would receive 500 new generic top-level domain applications.[143]  In fact, the application number is closer to 2,000.[144]

[52]      Because of the greater number of applications, ICANN’s budget must be adjusted upward to account for those numbers.  Based on ICANN’s budget methodology for the 500 applications, the 2,000 applications will net ICANN of $337 million, while predicting a likely operating cost of $156 million.[145]  It budgets another $150 million in operating costs, leaving a surplus of roughly $30 million on this single round of new generic top-level domain applications.[146]  Obviously, ICANN cannot make $30 million in profit and continue to remain a non-profit business.  According to the budget, ICANN plans to “initiate a policy development process to define with the community the purpose and mechanism of administration of such excess” with any surplus that remains.[147]  This statement is vague so I suggest the following as to how ICANN should spend its surplus and remain a non-profit.

[53]      With a conservative estimate of $30 million in surpluses, the time has come for ICANN to define the mechanism of administration of such excess.  First, ICANN should analyze how best to lower costs for applicants.  As a non-profit, ICANN should not be charging more for its services than required to recoup costs.  After recouping its costs, ICANN should use some of the surplus to initiate a cost-effectiveness study for the first round of applications and use the findings to lower application costs.

[54]      ICANN should also use some of the surplus to strengthen the WHOIS database and hire more compliance staff, as recommended by the FTC is its letter to the Board.[148]  The FTC noted in its letter to ICANN that both the WHOIS database and the amount of work for the compliance staff will change dramatically as a result of the 2000 new top-level domain applications.[149]  The WHOIS database will have to be updated constantly to add all of the new second-level domain registrant information under each new generic top-level domain.[150]  This job will be handled by the compliance staff.  Therefore, ICANN will clearly need to hire many more compliance staff members if it hopes to add the new generic top-level domains efficiently and effectively.[151]

 2.  Conflicts of Interest Program

[55]      ICANN needs to develop a comprehensive ethics review program to address the persistent issues raised by various interested parties.  On August 20, 2011, the Washington Post published an article exposing a “revolving door” conflict of interest problem with two members of the ICANN Board of Directors.[152]  The article detailed the quick transition from an ICANN board-member to a director of a private-sector company with active applications for new generic top-level domains.[153]  This board-members move was questioned as a conflict of interest because he had previously had direct access to the success of his new company’s top-level domain application.[154]  Further, his former colleagues at ICANN are more likely to choose his company’s application with all else being equal.

[56]      In response to the Washington Post article, Oregon Senator Ron Wyden wrote a letter to the United States Department of Commerce and National Telecommunications and Information Administration calling for stricter regulations on the ethical obligations of ICANN.[155]  The Senator has raised concerns about the lack of oversight regarding former ICANN employees transitioning to private firms with generic top-level domain applications.[156]

[57]      As a likely result from the mounting governmental and media pressures, ICANN announced a new conflict of interest policy on May 6, 2012.[157]  The policy is comprehensive in theory, mirroring standard corporate conflict of interest policies.  The policy encourages all members of any ICANN affiliated organization to disclose any conflicts of interest it has with current top-level domain applications.[158]  This policy is ineffective, however as evidenced by the two conflicts of interest noted subsequent to the May 6, 2012 adoption of the policy and discussed in Section III above.  At least two separate Advisory Committee conflicts of interest have been discovered subsequent to ICANN’s new conflicts of interest policy.[159]  Both of these conflicts involved members of the GAC also having an interested stake in new gTLD applications.[160]

[58]      To rectify the more recent conflicts of interest, ICANN needs to require members of its Government Advisory Committee to adhere to a strict conflict of interest policy, rather than merely “encourage” it.[161]  Exemplifying ICANN’s failure to remedy this issue, ICANN held an ethics and conflicts of interest panel in June of 2012 and failed to address any concerns about GAC.[162]  Note that this date is after the letter from Senator Wyden and after the DotConnectAfrica scandal discussed above in Section III.  ICANN must address the GAC concerns immediately if it plans to continue reviewing the remaining applications.  To address this ethical concern, ICANN should institute a mandatory background check of all GAC members and cross-reference those findings with every applicant for the new generic top-level domain.  Under this simple approach, the issues addressed by DotConnectAfrica and Senator Wyden will happen without a bad faith act from an individual.  Therefore, at the very least, ICANN will not be turning a blind eye to the shady dealings happening legally within its own organization.

C.  Removing the Rapid Uniform Suspension Mechanism

[59]      Finally, ICANN should restructure the Trademark Clearinghouse procedure to balance protection of trademarks with usability of the Internet for both providers and users.  To best balance the interests of trademark owners and without overburdening registrars or users, ICANN should remove the Rapid Uniform Suspension mechanism.

[60]      The Trademark Clearinghouse is a database of trademarks from all over the world for use in the new generic top-level domain program.  The Trademark Clearinghouse is designed to protect the rights of trademark owners.[163]  Currently, the Clearinghouse offers one adversarial dispute proceeding for trademark owners called the Rapid Uniform Suspension mechanism.[164]

[61]      The Uniform Rapid Suspension (“URS”) mechanism is unnecessary and gives too much power to trademark owners.  Because the UDRP already serves the same function as the URS, albeit at a slower pace, the URS serves no other purpose than to allow a trademark owner to bully domain registrants who cannot afford to quickly respond to the complaints.

[62]      According to ICANN, the URS was created to compliment the UDRP by providing trademark owners with a quick resolution to clear-cut trademark infringement by suspension of the infringing domain.[165]  Filing a URS complaint will cost a trademark holder $500 dollars.[166]  The complainant must allege in his complaint entitlement of relief based upon: (1) the registrant’s domain is identical or substantially similar to the complainant’s valid trademark that is in current use; (2) the registrant has no legitimate right or interest in the domain name; and (3) the domain was being registered and used in bad faith.[167]  The complaints are reviewed by an administrative review to determine if it meets the above threshold requirements.[168]  If the panel determines that the complaint satisfies the requirements, it will issue “Lock Notice” with the registrar of the domain within two days of the complaint’s filing.[169]  Within twenty-four hours, the registrar will lock the domain and notify both parties.[170]  The registrant has fourteen days to respond to the complaint and, similar to a UDRP response, no affirmative defenses or discovery requests are permitted.[171]  Unlike the UDRP, the remedy for a URS complaint is a suspension of the website for the remainder of its registration period but not a transfer of the domain to the complainant.[172]

[63]      ICANN has not offered any convincing reasons to add the URS and it should not be implemented for the following reasons.  The UDRP complainants already have a 90% success rate.[173]  With this much success, it is hard to argue that a more trademark-friendly mechanism is needed for even faster resolutions.  Moreover, as the UDRP thresholds are easy to meet and without allowing respondent’s the ability to raise affirmative defenses, a defendant has even less of a chance of success.[174]

[64]      The quick and cheap process of URS will only decrease the chances even further for any successful defense.[175]  The URS complaints will cost approximately $500 to file, as opposed to the $4000 or more under the UDRP and will not require an attorney to prosecute the complaint.[176]  The lesser cost of URS complaints will likely lead to an increase of URS filings as compared to UDRP filings.

[65]      To make matters worse, the two-day review period will increase the likelihood of administrative error.  More errors will lead to more appeals and a greater waste of resources.

[66]      Based on ICANN’s URS Update presentation in October 2012, the main objective of the URS is to give trademark owners quicker remedies for infringement.[177]  While the URS will clearly promote that goal, it will also waste resources that could be better spent improving transparency or implementation of the new generic top-level domain program itself.

[67]      Overall, the URS does not offer enough benefits to outweigh the negative implications of giving trademark owners such a powerful adversarial option for domain disputes.  Without any statistics to justify the addition of a quicker dispute mechanism, ICANN should continue to direct complainants to the UDRP or ACPA for dispute resolution.

 

V.  Conclusion 

[68]      The Internet has afforded businesses and consumers the ability to interact with unbelievable speed and convenience.  Domain ownership allows businesses to take their storefront directly to the consumer, whether at home or anywhere else with an Internet connection.  The original generic top-level domains undoubtedly help users immediately identify whether the site they are visiting is for-profit, non-profit, educational, or part of the government.  However, the introduction of thousands of new generic top-level domains will likely blur the distinctions of these top-level domains and cause much more detriment than any potential benefit they could provide.

[69]      New generic top-level domains will have some benefits for Internet users.  They could lead to increased brand control and better marketing opportunities for businesses.  New generic top-level domains could increase competitiveness by spreading the market power of the <.com> domain, likely affording consumers more options at better prices.  They may also create niche marketplaces for products and community groups, which could lead to lower search costs for consumers and increased visibility for smaller businesses.

[70]      The negative implications are more concrete, however, and far outweigh any of the potential benefits to new generic top-level domains.  ICANN’s own Government Affairs Committee doubts the necessity or economic benefit of introducing new generic top-level domains.  The private ownership of generic terms as top-level domains creates a conflict with existing trademark law and could lead to unfair competition.  The FTC warns that new generic top-level domains will increase the already difficult task of policing and prosecuting online fraud.  Evidence also shows unethical actions taken by ICANN officials that raise serious questions about the fairness of new generic top-level domain applications.

[71]      Regardless of the potential consequences, new generic top-level domains are coming in droves.  New generic top-level domain applicants should expect a slow and expensive process throughout their pursuit.  New domain registrants should expect trademark owners to have more power than ever in suspending registered domains if the domain is similar to a registered trademark.  ICANN should expect to earn much more money than allocable under its proposed budget to remain a non-profit.  The media should expect at least a few more conflicts of interest to arise between ICANN advisory board members and new generic top-level domain applicants.  Above all else, everyone should expect a tangled web as the intricacies of thousands of new generic top-level domains are introduced to the Internet. 

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