Tucows 2012 Annual Report Download - page 25

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The law relating to the use of and ownership in intellectual property on the Internet is currently unsettled and may
expose us to unforeseen liabilities.
There have been ongoing legislative developments and judicial decisions concerning trademark infringement
claims, unfair competition claims and dispute resolution policies relating to the registration of domains. To help protect
ourselves from liability in the face of these ongoing legal developments, we have taken the following precautions:
• Our standard registration agreement requires that each registrant indemnify, defend and hold us harmless fo
r
any dispute arising from the registration or use of a domain registered in that person’s name; and
• Since December 1, 1999, we have required our resellers to ensure that all registrants are bound to the UDRP
as approved by ICANN.
Despite these precautions, we cannot be assured that our indemnity and dispute resolution policies will be
sufficient to protect us against claims asserted by various third parties, including claims of trademark infringement and
unfair competition.
New laws or regulations concerning domains and registrars may be adopted at any time. Our responses to
uncertainty in the industry or new regulations could increase our costs or prevent us from delivering our domain
registration services over the Internet, which could delay growth in demand for our services and limit the growth of our
revenues. New and existing laws may cover issues such as:
• pricing controls;
• the creation of additional generic top level domains and country code domains;
• consumer protection;
• cross-border domain registrations;
• trademark, copyright and patent infringement;
• domain dispute resolution; and
• the nature or content of domains and domain registration.
An example of legislation passed in response to novel intellectual property concerns created by the Internet is
the ACPA enacted by the United States government in November 1999. This law seeks to curtail a practice commonly
known in the domain registration industry as cybersquatting. A cybersquatter is generally defined in the ACPA as one
who registers a domain that is identical or similar to another party’s trademark, or the name of another living person,
with the bad faith intent to profit from use of the domain. The ACPA states that registrars may not be held liable for
registration or maintenance of a domain for another person absent a showing of the registrar’s bad faith intent to profit
from the use of the domain. Registrars may be held liable, however, if they do not comply promptly with procedural
provisions of the ACPA. For example, if there is litigation involving a domain, the registrar is required to deposit a
certificate representing the domain registration with the court. If we are held liable under the ACPA, any liability could
have a material adverse effect on our business, financial condition and results of operations.
If Internet usage does not grow or if the Internet does not continue to expand as a medium for commerce, our
business may suffer.
Our success depends upon the continued development and acceptance of the Internet as a widely used medium
for commerce and communication. Rapid growth in the uses of, and interest in, the Internet is a relatively recent
phenomenon and its continued growth cannot be assured. A number of factors could prevent continued growth,
development and acceptance, including:
• the unwillingness of companies and consumers to shift their purchasing from traditional vendors to online
vendors;