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etoy, a collective of European Internet artists, lost the first round of its battle with eToys, the Santa Monica, CA based online retailer. On November 29, 1999, judge John P. Shook, Superior Court of the State of California (L.A.), issued a preliminary injunction which prevents the artists from doing the following:
1. Operating a web site with the domain name www.etoy.com;
2. Using, displaying or otherwise exploiting in anyway the domain name www.etoy.com in connection with the digital hijack;
3. Selling, offering to sell, soliciting offers to purchase shares of unregistered shares "etoy stock" to any person in the United States or in California;
4. Representing that the mark etoy is a registered trademark until and unless a registration for said mark is issued.
This preliminary injunction, backed by a $10.000/day fine for noncompliance, vindicates eToys.com's claims even though the accusations normally "wouldn't pass a giggle test", as the Village Voice  wrote.
The main motive behind the retailer's attack is clearly visible: the fear of loosing customers who mistype the URL. To illustrate the dangers that the artists pose the retailer's business, eToys presented a letter from an outraged shopper: "My grandson was looking for toys for his birthday and brought this to my attention. Are you completely nuts. What an irresponsible thing to show young children. We will never buy from you again." What had happened was that the boy hit the etoy site where he was offered with the navigational choice to "travel the old fashioned way (html only)" only to be told on the next page "We do not support the old fashioned way . . . get the fucking flash plugin!" A rather simple joke but eToys didn't laugh, it filed a law suit.
The facts of this case couldn't be more clear. etoy registered its domain name in October 1995, more than two years before eToys which registered its domain in November 1997. At that time etoy had already achieved considerable notoriety and turned its domain name into a "brand." For its pioneering online performances etoy received wide recognition in the art world (among others, in 1996 the Golden Nica, the Ars Electronica price for best Internet art). Thus, etoy cannot be accused of cybersquatting -- registering a domain name with the intent of selling it to a legitimate trademark holder. Given etoy's clear indication as an art project, it is also difficult to charge it with maliciously confusing visitors about the real nature of the site. Unless, and this is what makes this case so outrageous, if challenging the viewers preconceptions is considered malicious in itself. And this is exactly the reading eToys wants to enforce.
Rather than viewing the site in its proper context, eToys' lawyers interpret everything literally. "Fucking", then, is no longer a commonly used expletive, but it's the description of a pornographic act. So is the image of a female breast pierced with acupuncture needles and the caption: "It's the same wind that pollinates the flowers that destroys the house." Digital hijack, a project used to demonstrate, a few years back, how easily search engines could be spoofed and how primitive the algorithms were that created the ranking of the search results, is now nothing but terrorism: hijack. Selling shares for the etoy.Corporation--a statement that plays off the status of Internet-based art which cannot produce objects suited for the art market as well as off the increasing commercialization of the Net--is now portrayed as securities fraud.
Given that each of these "shares" is a uniquely designed poster, almost half a square meter in size, this charge is preposterous. But so are the others, individually and even more when taken together. Trademark issues do not mix with child protection which has no connection to securities fraud. While these arguments seem incoherent, they resonate well with two very strong currents in contemporary American culture: the paranoia of child abuse and the popular obsession with playing the stock market. etoy is branded as violating the rules in both areas. But these are only skirmishes to gain an easy injunction, the real issues are to be found somewhere else.
What is at stake here is the following: Can a powerful corporation, eToys' market capitalization floats somewhere around $6 billion, push aside any initiative, regardless of its legitimacy, simply because it is likely to impact negatively on the all important bottom line? And it's not the case that etoy suddenly sprang out of nowhere, threatening an established company. When eToys registered it domain name and decided to build a business on this name, it would have been due diligence to check out activities of the neighbours, etoy. This court case is not about unfair use of domain names, or child protection, or securities fraud, as eToys wants to play it. It is about an attempt of big business interests overrunning all other interests and (civil) rights and transforming the Internet into a medium as tightly controlled and business-dominated as commercial TV.
This case could set a consequential precedence for two issues. First, what set of legal rules does apply to such conflicts, Californian, US federal, or international law? This is far from clear at the moment. On the one hand there is ICANN , the international organization set up to regulate the development of the domain space. Their Uniform Dispute Resolution Policy, which has been passed but is not yet enacted fully, seems to support the legitimacy of etoy's use of the domain name. But this legislation has yet to be tested in court. On the other hand, the US Senate has passed, as part of the Satellite TV Viewers Act, regulation that will permit to bring everyone to court in the country where the domain name has been registered, that is, in the US for all .com, .org, and .net domains. How these two regulations relate to one another, or how conflicts between them can be settled, is unknown and likely to be established in very long and expensive litigation. Good for lawyers with corporate budgets, bad for artists.
The second, and most fundamental, issue is about freedom of speech. Is Internet content in general, and domain names in particular, protected by the first amendment or can deep-pocketed claimants use fuzzy terms such as "trademark dilution" to get their way?
So far, etoy has been defiant. They rejected an offer to sell its domain name for US$ 530'000 (most of which would have been paid in volatile eToys shares). While this might seem like a lot of money, in the Internet world of inflated prices, this is peanuts in relation to the $ 7.5 million that eCompanies paid recently for the generic domain name business.com.
etoy is still online and accessible, but only through their IP number http://126.96.36.199:8080. But this is not enough. etoy is determined to fight for its legitimate domain name. In the meantime, a fast growing network of supporters, the TOYWAR.community, has created a site, www.toywars.com, to support their struggle. To finance its rising legal costs, etoy is still selling shares of its project, though, at the moment, not in US, the land of the free.
Judge Shook, very accommodating for eToys, has set the next date in court for December 27, 1999. The injunction could be overturned, but by then the all important Christmas shopping season will have passed without further interruption and outraged grandfathers.