Out-Law Legal Update
Individuals advised to check whether they can still claim entrepreneurs' relief
Out-Law Guide | 16 May 2005 | 12:42 pm | 14 min. read
Domain names have become precious commodities as the internet has no boundaries and no closing hours and unlike trade marks each domain name is unique. This means there can often be some pressure to be the first to register a domain name, and this can lead to disputes on the "right" to register. As a result domain name disputes can arise.
Domain names and disputes are managed according to policies set by ICANN (Internet Corporation for Assigned Names and Numbers).
ICANN passes over responsibility for the registration of domain names to registrars. There are over 1,500 accredited registrars each with their own policies and procedures for registering, maintaining and handling domain names. Registrars are determined not to be included or accept liability for any dispute. The courts have maintained this protection for registrars.
Disputes concerning so called generic Top Level Domains (gTLD) such as .biz, .com, .info, .name, .net, and .org. are managed by an ICANN-authorised dispute resolution service provider.
Disputes concerning country code Top Level Domains (ccTLD) such as .co.uk, .fr (France), .de (Germany) are managed by the individual country registry. Nominet is the registry for the UK.
Registration is on a first come first serve basis. Simply because you have a registered trade or service mark, have a registered company name, or have been using a trade name for a lengthy period of time does not mean that another person with a legitimate reason for registering the domain and who uses it in good faith must give it up. One example of this is the Prince Sports case in which Prince Sports tried in vain to have the domain www.prince.com transferred from Prince Computers in the UK.
Companies with trade marks have tried to bully legitimate registrants out of attractive domain names, this has sometimes been called Reverse Domain Name Hijacking and damages can now be awarded in the US under the US Cybersquatting Act for such practice.
These are common disputes. Cybersquatting involves the registrant having registered a name, or names in most cases, in bad faith to gain some commercial advantage. This can involve trying to sell it back to a party it knows would be interested in having registration of the domain name for an inflated price or more commonly using it to direct traffic to their website or the website of a trade competitor of the trade mark holder in return for payment of a commission.
Sites such as www.natwestsucks.com or www.stopecg.com have been problematic. Arbitrators and the courts have been inclined to order the transfer of the offending domain name particularly if there is some bad faith or a lack of legitimate use. Reasoning for this has been that a non-native English speaker may not disassociate the "suck" from the trade mark holder's mark.
However, it has been shown that those registering a domain name incorporating a known trade mark and using the domain name to host a website to air legitimate grievances against the trade mark owner can successfully defend the registration of such a domain name. To be successful in using the dispute resolution process to acquire these domain names the trade mark holder must demonstrate the registrant has acted in bad faith perhaps by demonstrating some attempt to extract a commercial gain from the trade mark holder.
In a case involving www.stopecg.com, a valid site airing discontent at the business practices of the travel guide publisher European City Guide, the domain name was not transferred. Here it was contended that a prudent person would know that the site was criticising the company and that these were not the views of the company itself. Therefore there was no bad faith or disparagement of the trade mark. This highlights the problems that can arise with the domain name dispute process notably that inconsistent decisions arise as decisions do not have to be followed in subsequent cases.
It may be that multiple domain names have been registered in a number of jurisdictions. If so it is likely to prove costly to retrieve all the domain names. Therefore, it may be advisable to prioritise which domain names you find particularly objectionable, e.g. it is advisable to prioritise domain names that are likely to lose you business or damage your reputation or that are registered for territories where you plan to trade.
If the domain name is not vital it may not be worth contesting. However, it is worthwhile monitoring the registration date and registering the domain name if the owner lets the registration lapse.
It may be that a letter requiring the registrant to cease and desist using the domain name may be enough to prompt them to transfer it for no payment or for no more than out of pocket expenses, to avoid further legal action.
However the registrant is unlikely to transfer the domain name if it is registered for a legitimate reason or for the purposes of extorting a large sum of money from a brand owner. Negotiating a price for the acquisition of the domain name may be the commercially prudent solution, as a quick acquisition may prove cheaper and quicker than any litigation or dispute resolution procedure.
The owner of the domain name may agree, probably for a small sum, to have a link which directs internet traffic that has mistakenly arrived at their site, back to your website. As an alternative, a disclaimer may be displayed on their website stating that it is in no way connected to your website/business. This is more likely if the registrant has not registered the domain name in bad faith or is involved in an unrelated trade which does not compete with yours.
The user may be in breach of its ISP's terms and conditions, particularly if the site is being used for illegal or immoral purposes. You could then bring this to the ISP's attention and ask them to suspend the site. Although, the ISP cannot transfer the domain name to you, the registrant may be more willing to transfer the domain name for a reasonable sum if holding on to the domain proves more trouble than it is worth.
When a person registers gTLD the Uniform Dispute for Domain Names Resolution Policy (UDRP) is automatically incorporated into the registration agreement. Some country code top level domains (ccTLDs) such as .mx (Mexico) and .ro (Romania) have also opted into the UDRP. Complaints can be filed with one of four of bodies, the largest of which is WIPO. Countries not using ICANN's UDRP may use a different form of dispute resolution, e.g. Nominet for .uk domain names. The processes for these will depend on the rules of that country's registry; however they are often similar to the ICANN procedure. If no dispute resolution procedure exists you may have to issue court proceedings.
The UDRP process is relatively quick, with decisions given between 30 - 60 days of filing the complaint. It is also reasonably cheap with UDRP costing around $1,500 for a single panellist and $3,000 for three panellists for a complaint involving up to five domain names. (for cases involving .uk domain names the Nominet adjudicator's fees are £750 plus VAT).
With the dispute resolution procedures there are also no jurisdictional issues, which is useful as a lot of registrants are not UK-based. Another advantage is that filing a complaint will also temporarily prevent the registrant from transferring a domain name to any third party until a decision has been reached.
Panellists are not bound to follow previous decisions and can be uncertain and inconsistent. Each decision is based on its facts. For example, www.barcelona.com was transferred to the city authorities despite being used in connection with a legitimate business, whereas www.stmoritz.com or www.mexico.com were not transferred to the city authorities. In the latter case WIPO ruled that the Mexican Tourist Board was guilty of reverse domain name hijacking. However, to improve the consistency of decisions WIPO launched a new internet information tool in March 2005 containing precise trends and analysis of decisions to enhance the predictability and certainty of decisions.
Decisions using the UDRP are also not binding on courts and proceedings can be initiated after the panel has given its judgment. Unlike court action damages and costs are also irretrievable and arbitrations have no power to issue emergency injunctions. The proceedings or decisions cannot be kept confidential unlike other ADR mechanisms, despite several attempts by complainants to achieve this. This could be an important consideration as a company may wish to avoid adverse publicity especially in relation to "gripe" sites.
(1) Identical to or confusingly similar. The domain in dispute must be identical to or confusingly similar with a name, trade mark or service mark in which you have rights. Note this can cover unregistered trade marks such as names of well known personalities, e.g. the author Jeanette Winterson or names that have acquired distinctiveness through their use.
(2) No legitimate rights or interests. The registrant must have no legitimate rights or interests of its own in the disputed domain name. Legitimate use is broadly when the domain name is being used (or planning to be used) in connection with a bona fide offering of goods and services before the registrant is aware of the dispute.
Authorised distributors or licensees have been held to have legitimate rights, with unauthorised users or those claiming to be an official site not having legitimate interests. But occasionally the arbitrator will give the registrant the benefit of the doubt, particularly if the domain is a generic word or the registrant has a reasonably plausible use, e.g. www.sting.com. Other problematic areas in relation to legitimate interests are fan sites for celebrities. These are generally thought to be legitimate except where they are being used for commercial gain.
(3) Bad faith. The disputed domain must have been registered and used in bad faith. Both these elements of bad faith must be proved. The UDRP has set out a non-exhaustive list of what constitutes bad faith. These include the following:
Nominet will order the transfer of .uk domain names provided you can show that you have a right (whether or not registered trade mark rights) in the name which is identical or similar to the domain name and that the registrant's registration is an 'abusive registration'. Much like the UDRP's bad faith requirement, Nominet will consider a registration abusive if it has been registered or used in a way that creates an unfair advantage or is unfairly detrimental to the complainant's rights. Much the same behaviour that indicates bad faith in UDRP decisions will also constitute an abusive registration in Nominet's procedure.
The Nominet procedure involves various stages. The first step is a non binding, confidential and without prejudice mediation to resolve the dispute. Failing this a decision will be made by an individual expert. In some circumstances, the losing party then has the option to appeal to a panel of three experts or initiate court proceedings.
This may well be the best course of action if no bad faith is displayed, bad faith is difficult to prove or you want to pursue costs and/or damages from the Registrant for their use of your mark. It should be noted that due to the international nature of the internet, care should be taken to ensure that the court used is the appropriate forum with the appropriate choice of law.
Damages or an account of profits can be awarded in court actions. Brand owners can also claim back the costs of bringing proceedings where successful. However, it is likely that many individual registrants may not have sufficient assets to cover the costs of losing in court, not to mention the difficulties of tracking the registrant down. The court also has the power to issue injunctions against any future registrations of offending domains or in emergencies if it is convinced there is a real risk of damage to the claimant's business.
In general these include the cost and length of proceedings. However, where it is a clear case of cybersquatting, the issue can be dealt with by summary judgment thus reducing delay and, if an application for costs from the squatter is successful, eliminating the cost to the brand owner.
Registered trade mark owners can issue a claim under the Trade Marks Act 1994 to prevent another person using a sign in the course of trade that is identical or confusingly similar to a registered trade mark or to prevent any use of a trade mark, provided that it would be detrimental to the character or repute of the mark or takes an unfair advantage of it.
If the domain name does not have an active website or is not being used to sell goods or services, it may be more difficult to prove that the trade mark is being used "in the course of trade". It may also be difficult to prove unfair advantage, although the increased hits on a website could be said to increase the domain name's value. It may be easier to establish "detriment" to the distinctive character or reputation of the mark.
The principles regarding passing off in domain names were laid down in the "One in A Million" case. To establish passing off three factors must be established:
If defamatory material has been posted on the website a defamation action could be raised. However, it may be difficult to track down the person responsible and they may have limited resources. Although the aggrieved person could demand that the ISP remove the defamatory material, failure of the ISP to remove it may make them liable. (See our articles on Defamation; Liability of ISPs)
There are a number of steps that can be taken to protect domain names.
Registering every available domain name extension is not always possible or necessary even for multinational organisations. Registrations of ccTLDs and gTLDs should be targeted to the markets in which either the company will operate or the trade marks will be used, or where the risk of infringement by cyber squatters is high. Many jurisdictions have registration requirements that make it very difficult for organisations not operating in that jurisdiction, or not holding trade marks covering that jurisdiction, from registering a domain name there. The risk of falling prey to a professional cyber squatter is not high, however a competing business with similar trade mark rights covering that jurisdiction may still acquire the domain name(s) before you.
If a name is commonly spelt incorrectly it may be advisable to register the misspellings in order to prevent typosquatters.
If you do not already have a registered trade mark it is worthwhile registering your domain name as a trade mark. This is likely to be successful where the domain name is distinctive or has acquired some distinctive character through prior use. Having a registered trade mark would assist in any dispute resolution procedures to retrieve a similar domain name from another registrant.
New extensions are being introduced on a yearly basis. China's domain .cn may be a suffix worth registering considering the potential market for goods and services in China. Steps are being taken to make internationalised domain names more widely available which include characters from non English languages that were not previously allowed. Where the risk posed by "Phishing" trips (scam emails sent to individuals by entities posing as well known companies) is high, it is advisable for a company to register its name using the non-latin characters. This is because where a domain name uses a mixture of latin and non-latin script it will appear to the reader to be the legitimate web address of the domain name owner but will in fact take visitors to a wholly different IP address, where a mock-up site of the legitimate trade mark holders site could be set up. It is prudent for a company to register its name using the new characters or in new languages being introduced, particularly if they have a presence where that language is popular.
It is good practice for one company to have responsibility for ensuring all domain names for a group are re-registered, as the Washington Post found out when it caused havoc with their email system when they forgot to re-register www.washpost.com. This would also prevent what is called "porn-napping" which occurs when porn sites are set up on domain names when registrations have lapsed, one famous case being www.tourdefrance.com.
It is a good idea to actively monitor and regularly check if any similar domain names have been registered. There are services available which will actively monitor all new registrations and renew all your domain names.
A search could be done to ensure that any newly registered domain names are not infringing any trade marks as a trade mark holder may be able to order the transfer of the domain names, particularly if it is an undertaking in a similar trade/business.
See also: Domain name disputes services
Out-Law Legal Update
Individuals advised to check whether they can still claim entrepreneurs' relief