Recently, as the Internet has gained phenomenal popularity, domain names, or “addresses” for the Internet, have seen their values soar. Many primary market players in traditional industries have created web sites to grab their share of the vast eBusiness opportunities. However, in an attempt to use their business names, trade names, or trademarks to apply for a domain name, they often find their names or marks already registered. Based on the “first come first” principle, a company can do little but surrender a domain name once it has been registered.

“Domain name snatching” has become a lucrative profession. Some specialized domain name grabbers ask the company whose domain name has been snatched to pay a high price to repurchase the domain name. If rejected, some resort to extortion by offering a company’s competitor the name for a ridiculously high asking price.

When domain names are previously registered by others, a large number of companies choose domain name dispute resolution mechanisms (DRMs) to resolve the issue. In this article, the author will introduce and discuss issues concerning DRMs.
 

I. Settlement of domain name disputes 

When a domain name is pinched and a dispute occurs, the claiming party may choose to settle it through reconciliation (repurchase), domain name arbitration, or domain name litigation.

Risk exists in any litigation or arbitration. Therefore, in most cases, the parties choose to negotiate an agreement to reconcile. If this fails, then the claiming party often chooses domain name arbitration rather than bring the dispute directly to a court.

The procedural and substantial examinations that apply to the litigation process are very strict. Particularly in a domain name disputes involving a foreigner, judicial proceedings may last over one year, not to mention the large costs involved. Compare this with domain name arbitration, which is a fast, civil dispute settlement mechanism. It proceeds in accordance with the domain name arbitration rules formulated by the Domain Name Dispute Settlement Institution. Generally it does not require the parties to be present, and the evidentiary examination is often limited to formal examination. As a result, domain name arbitration often lasts about two months. Additionally, it is only done once, and the arbitral award is final; absent of special circumstances after the arbitral award, the arbitration institution may require the domain name registrar to enforce the award.

The effectiveness of domain name arbitration proceedings depends on the agreement between the domain name registration authority, domain name registrar, and the domain name registrant. Take the .com international domain name, for example. The registrant has, at the very beginning of registering a domain name, agreed to a provision similar to the following: “User further agrees to be bound by the relevant policies, rules and the uniform domain name resolution policy (UDRP) of the domain name authority, including but not limited to any global domain name registrar or CNNIC under ICANN.”

Since domain name dispute arbitration proceedings are based on the rules found in the Domain Name Dispute Resolution Policy, or similar documents from the domain name registration authority, different dispute resolution policies may apply under different domain name registration authorities. The Domain Name Dispute Resolution Policy or similar documents can be found in the details section of their web site.

Moreover, different domain name registration authorities often entrust different arbitration institutions to handle the domain name dispute resolutions for their jurisdiction. For example, ICANN (Internet Corporation for Assigned Names and Numbers), the authority that manages global top level domain names, has accredited:

The Asian Domain Name Dispute Resolution Center [ADNDRC], including its offices in Beijing, Hong Kong and Seoul;

The National Arbitration Forum [NAF];

World Intellectual Property Organization [WIPO]; and

The Czech Arbitration Court.

CNNIC (China Internet Network Information Center), which manages .cn domain names, has accredited:

The Domain Name Dispute Resolution Center of China International Economic and

Trade Arbitration Commission; and

The Hong Kong International Arbitration Center.

Of course, after a domain name arbitration award is given, any party in disagreement may bring the dispute to a trial court or a formal arbitration institution for further arbitration. If the case is accepted by the court or the formal arbitration institution before the domain name arbitration award is enforced, the enforcement will be suspended until an effective judgment is made by the court or the arbitration institution.

II. Factors to determine a domain name dispute

Although arbitration and litigation are two distinctive means to resolve a domain name dispute, they consider similar elements during the judgment. Generally, to win support, the plaintiff needs to satisfy the following:

1. The claimant or the plaintiff enjoys legal rights over the main identifying part of the domain name.

Generally, the registration of domain names follows a principle of “first come, first granted.” Therefore, the petitioner must first be legally entitled to the main identifying part of the domain name. These legal rights may include trademark rights, trade name rights, corporate name rights, or the rights to the name of famous goods or services.
 

To judge the legal rights of the claimant, it is not required that the alphabetical combination in which the claimant enjoys rights be identical to the main identifying part of the domain name in dispute. As long as the two are similar enough to be confusing, the condition is met.
 

For an international domain name, the rightmost suffix is the so-called “general purpose domain” like .com, .net, .gov, or .edu, which represents organizations of different natures. For example, .com represents commercial organizations, .net represents network service providers, .gov represents governmental entities, .edu represents educational institutions, and .name represents personal websites.

For a domestic domain name, the suffix consists, in general, of two parts: the “general purpose domain” and the “country domain.” The country domain is the rightmost suffix. The ISO-31660 has fixed country domains for every country, such as “cn,” for China, “us” for the United States of America, and “uk” for the United Kingdom. These suffixes are general features to distinguish a domain name. They do not help when determining a domain name right, and they are not the main identifying part of a domain name. Moreover, the general words or phrases used in a domain name also generally do not constitute the main identifying parts.

For example: the domain name in dispute in Case CND-2005000024 was gotoemerson.com.cn. The complainant was the Emerson Electric Company, which owns the registered trademark “Emerson.” The disputed domain name “gotoemerson.com.cn” is apparently different from the trademark “Emerson,” if we ONLY deal with the two names. However, when we remove the general part, i.e. “.cn,”  “com.cn” or “.net.cn,” from the disputed domain name, what remains is a combination of “go to” and “emerson.” “Go to” means to “direct” or “aim” at something, which is a general descriptive term.  But, “emerson” is identical to the trademark “Emerson,” which is closely associated with the complainant, and to which the complainant enjoys the exclusive right. The combination of “go to” and “emerson”is sufficient to lead the relevant public to believe that the domain name “gotoemerson.com.cn” is related to the complainant, its products, or its commercial activities. As the decisions on many domain name disputes have shown, the disputed domain name that includes “Emerson,” a trademark which has achieved fame, cannot differentiate itself substantially from the trademark by adding the general phrase “go to” before that trademark.

2. The defendant does not enjoy any legal rights over the main identifying part of the domain name

On a wider scale, the relationships between a trademark or trade name and the corresponding domain names are not one-to-one relationships. For example, the trademark “长城” (“changcheng”) may be enjoyed by “长城电器” (Changcheng Electrics), “长城电脑” (Changcheng Computers), and “长城汽车” (Changcheng Motor). However, there can be no more than one “changcheng” domain name with respect to a certain suffix. In this situation, it is probably true that both the complainant and the defendant are entitled by law to the main identifying part of the domain name in dispute.

Considering the principle of “first come, first granted,” if the parties reach a “draw” on the legal entitlement to the main identifying part of the domain name, then the original registrant should continue to enjoy the disputed domain name.
Regarding the responsibility of proof, it is very difficult for the petitioner to prove that the respondent does NOT own a right. Therefore, generally an arbitration expert would, during the trial, request that the defendant prove legal entitlement. If they fail to do so, then the arbitrator would presume that the respondent does not enjoy a legal entitlement.

It should be noted that, in addition to whether the defendant enjoys any “trademark right,” or “trade name right,” or other right clearly provided in law to the main identifying part of the disputed domain name, the expert arbitration team must also see how the domain name had been used before the dispute arose when considering the legal entitlement of the defendant. Article 10 of CNNIC Domain Name Dispute Resolution Policy by CNNIC says:

“Before receiving the complaint, any of the following circumstances may be evidence of the rights to and legitimate interests in the domain name:

1. Your use of the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services;

2. You have been commonly known by the domain name, even if you have acquired no trademark or service mark rights;

3. You are making a legitimate noncommercial or fair use of the domain name, without intent of or commercial gain to misleadingly divert consumers.”
The above provisions are obviously more lenient regarding the legal rights of domain name registrants.

As discussed above, a domain name is a fundamental way to develop one’s eBusiness. It can bring appreciable economic benefits. Consequently, many domain name registrants maliciously register domain names to which others enjoy the prior rights in order to benefit illegally. Some go even further by threatening potential buyers by pointing the domain name they registered maliciously to the websites of the potential buyers’ competitors.

As a result of the long-term practice of domain name dispute settlement, the relevant authorities have concluded several elements that constitute “malice” or “bad faith” in the registration or use of domain names. For example, Article 9 of CNNIC Domain Name Dispute Resolution Policy says:

“Any of the following circumstances may be evidence of the registration and use of a domain name in bad faith:

1. The purpose for registering or acquiring the domain name is to sell, rent or otherwise transfer the domain name registration to the complainant who is the owner of the name or mark or to a competitor of that complainant, and to obtain unjustified benefits;

2. The disputed domain name holder, on many occasions, registers domain names in order to prevent owners of the names or marks from reflecting the names or the marks in corresponding domain names;

3. The disputed domain name holder has registered or acquired the domain name for the purpose of damaging the Complainant’s reputation, disrupting the Complainant’s normal business or creating confusion with the Complainant’s name or mark so as to mislead the public;

4. Other circumstances which may prove the bad faith.”

Similar to the principles that the domain name arbitration authority applies to determine malice, the Interpretation on Several Issues in the Application of Law in Cases involving Computer Network Domain Name Civil Disputes (2001) by the Supreme Court of China says that:  “the court shall determine that a malice exists if the defendant’s behavior is proved as one of the following circumstances:

(1) The defendant has, out of commercial purposes, had a well-known trademark of others registered as a domain name;

(2) The defendant has, out of commercial purposes, registered, used or is using a domain name which is identical or similar to the registered trademark or domain name of the plaintiff, to deliberately confuse his or her own product, service or website with that of the plaintiff and mislead the network users to accessing the website or other online sites of the defendant;

(3) The defendant offered to sell, rent or otherwise transfer his or her domain name at a high price in order to gain unjustified benefits;

(4) The defendant does not use, nor is prepared to use the domain name after registration, but deliberately prevents the owner of the rights to register the domain name;

(5) The other malicious circumstances.”

Guomei Electrics Company vs. Hao Peng is a typical domain name dispute case that has been heard by a court of law. In determining whether the defendant had malice in that case, the judge concluded the following: “the factual findings show that the defendant, Hao Peng, does not enjoy any prior right or interest to ‘guomei.’ Also, the defendant, Hao Peng, fails to present to the court evidence that he has any justified reasons to register or use the domain name. Also, the defendant, Hao Peng, stated on his website to transfer or rent the said domain name at 20,000 Yuan, and actually transferred the domain name, guomei.com to another. These facts are sufficient to prove that the defendant, Hao Peng, was malicious to register ‘guomei’ as a domain name.”

III. Points to note in domain name disputes

1. A positive attitude

As discussed above, domain names play an extremely important role on the Internet. Therefore, either domain name registrants, or those believing their rights have been violated by others through domain name registration, should adopt a positive attitude towards domain name disputes.

A company whose trade name, trademark, or well-known good name is snatched, or an individual whose name is snatched, should timely seek the help of a domain name dispute resolution mechanism and try to regain their own domain name rights. Otherwise, the domain names that were snatched may cause big trouble, or even huge financial loss, to that company or individual.

Certainly, we also find that some multinational corporations have recently used their powerful legal and financial resources to maliciously rob Chinese domain name registrants of their previously registered domain names. This reverse-theft behavior has met with positive reactions from some domestic domain name holders. The positive reactions have brought good results, such as the cases of icq.com.cn and mtv.com.cn.

However, there are still many domain name registrants who adopt a negative attitude towards domain name complaints by multinational companies. Some do not even file an answer. This puts the domain name registrants in a very disadvantageous position. The expert team for domain name arbitration cannot stop the hearing and judgment simply because the respondent does not present an answer. Often, the expert team believes that the negative attitude of the respondent is acquiescence to the allegations provided by the complainant and, consequently, the expert team becomes more inclined to sustain the complaint.

2. Correct reactions to an arbitral award

The procedural rules of arbitration (the arbitration proceedings in China are similar to those in other countries, except for a few details) say that the arbitral award shall be enforced if, within the stipulated period after the arbitral award is given, no proof is presented that the case is accepted by a competent court of law or a formal arbitration institution.

Therefore, after he or she receives the arbitral award, the winning complainant should watch closely whether the other party brings the case to court of law or a formal arbitration institution. If not, the complainant may, without delay, request the domain name registrar to enforce the arbitral award.

If he or she believes that the decision really lacks fairness, the losing respondent may use his or her procedural rights and bring the case to a court of law or a formal arbitration institution, in order to stop the enforcement of an unjustified decision.
 
IV. Suggestions on how to avoid domain name disputes

In domain name transactions, transferees are probably most often harassed by domain name disputes. This is because after a transaction is completed, the transferor receives the cash for the domain name and incurs almost no risk thereafter. By contrast, the transferee will probably face domain name dispute proceedings if the main, identifying part of the domain name falls within the protection of a trademark or trade name to which others are entitled by law.

As the Internet becomes more generalized and Internet technology continues to progress, the vision for the development of domain names is widening. As personalized domain names, Chinese domain names, and new suffixes for international domain names are constantly emerging, this brings more opportunities for domain name snatchers, as well as more legal research subjects in the domain name dispute field. These problems and issues require concerted efforts by all the participants in the domain name system to formulate appropriate counter-policies.

First, national governments and their domain name authorities should take measures necessary to prevent domain name snatching from spreading unchecked. Also, the rules for domain name registration management and the rules and procedures for domain name dispute resolution should be improved and perfected, to prevent domain name disputes from welling up as a result of any newly emerging domain names.

Second, well-known companies and individuals should attend to the protection of their legal rights in the domain name field. The most effective way to stop potential snatchers is to have their own domain name registered before the snatchers do so.

Finally, those who “invest” in domain names should be advised to avoid complaints or lawsuits by the owners of the applicable rights by making justifiable investments and NOT registering brands or trade names to which others enjoy the legal rights.

About the author:
Yu Guofu is the lawyer of Sam & Partners Law Firm.
 
                                                                                       (Translated by Ren Qingtao)