A Few Issues in Hearing Cases of Internet Domain Name Dispute

Issue 25 By Liu Xiaojun,[Internet & Domain]

I. How to determine the cause of action for a domain name dispute where a prior right is infringed upon

According to the Rules on Causes of Action for Civil Cases by the Supreme Court of China, effective on April 1, 2008, the causes of action for cases of civil domain name dispute are divided into contract-based disputes, ownership-based disputes and infringement-based disputes. The contract-based disputes cover disputes of registration contract, disputes of transfer contract and disputes of licensing contract. The ownership and infringement-based disputes cover disputes of internet domain name and disputes of computer domain name infringement. As the disputes of computer domain name infringement are “generally disputes where one uses the internet domain name which has been registered by the other person, without the other person’s due approval,”1 and do not include cases where the registration of a domain name infringes upon a prior right, how to decide the causes of action for cases where the domain name application and registration infringes upon a prior right or rights?

In fact, there is already an answer to the question. On June 26, 2001, the Supreme Court of China ratified the Interpretation on Several Issues of Law Application in Hearing Cases of Civil Dispute Involving Computer Network Domain Names (“Judicial Interpretation 2001”). Article 3 of the Judicial Interpretation 2001 says that “the cause of action for a case of domain name dispute shall be determined on the basis of the nature of legal relationship in dispute between the parties and prefixed with ‘internet domain name’; where the nature of legal relationship is hard to determine, the case can be generally referred as a ‘internet domain name dispute’ case”. Therefore, for a domain name dispute involving a contract, the cause of action is “domain name contract dispute”; for a domain name dispute involving ownership, the cause of action is “domain name ownership dispute”; for a domain name dispute involving unfair competition, the cause of action is “domain name unfair competition dispute”; and for a domain name dispute where the nature of legal relationship is hard to define, the cause of action can be directly determined as “domain name dispute”. In judicial practice, if a domain name applied for and registered infringes upon a prior right, the cause of action is determined generally on the nature of the prior right and/or added with unfair competition. If the domain name applied for and registered is a registered trademark of another person, the cause of action is determined generally as a dispute of trademark infringement or unfair competition, or simply a domain name dispute.

It is thus clear that the cause of action for cases where a domain name applied for and registered infringes upon the prior right, the cause of action so determined is not single as it may be either “domain name dispute” or “unfair competition dispute”. The cases are in the same category, but the causes of action are not single. This is obviously disadvantageous for the trial management and judicial statistics. The Rules on Cases of Action for Civil Cases has been formulated in an attempt to address the problem. “For a dispute where the use of a domain name infringes upon the intellectual property right of another person, the cause of action shall be determined on the basis of the legal relationship in dispute between the parties, for example, as a trademark right infringement dispute or an unfair competition dispute.”2 Therefore, if a domain name applied for and registered infringes upon a prior right, the cause of action shall be determined on the basis of the nature of the prior right.

II. How to determine the jurisdiction in infringement disputes involving domain names

There are mainly two circumstances of infringement dispute involving domain names: a. the already registered domain names are infringed upon, such as one that uses the already registered domain name of the other or its main part as his or her corporate slogan or trademark; and b. the domain names applied for and registered infringe upon prior rights, such as one has the registered trademark of the other registered as a domain name. As to jurisdiction, Article 2 of the Judicial Interpretation 2001 says, “for infringement dispute cases involving domain names, the jurisdiction shall rest with the intermediate court where the infringing act occurs or the respondent resides. Where it is difficult to determine the place of infringing act and the residence of the respondent, the place where the plaintiff discovered the computer terminals and/or other equipment for the domain name may be deemed as the place of infringing act.” The provision is a basic rule to determine the jurisdiction over infringement disputes involving domain names. However, there remain two problems with the application of the provision.

First, how to determine whether “it is difficult to determine the place of infringing act and the residence of the respondent”?

Opinions vary on how to understand “it is difficult”. Some believe that “it is difficult” should be difficult subjectively, i.e. as long as the plaintiff thinks it “difficult” to determine the place of infringing act and the residence of the respondent, the court of the place where the computer terminal or other equipment for the domain name was discovered should have jurisdiction over the case. Others believe that “it is difficult” should be difficult objectively, i.e. the plaintiff must prove that “it is difficult” to determine the place of infringing act and the residence of the respondent, before the court of the place of the equipment discovery can have jurisdiction over the case. In judicial practice, mostly the court of the place where the plaintiff discovered the computer terminals and/or other equipment for the domain name can have the jurisdiction. It is rare that a court to accept a case refuse to hear it on grounds that the plaintiff fails to prove that “it is hard to determine the place of infringing act and the residence of the respondent”.

As a matter of fact, it is inappropriate to absolutely stick to either subjective standard or objective standard, to understand “it is difficult” to determine the place of infringing act and the residence of the respondent. The former standard shakes the basic principle to determine the jurisdiction over infringing actions, and must also lead the basic principle infirm to determine the jurisdiction in civil action. The latter standard, though consistent with the basic principles of civil action and infringing action, obviously does not consider the characteristics of domain name disputes. Therefore, the jurisdictional principle of civil action shall be stuck to, to determine a competent court for domain name cases. If the plaintiff brings an action with the court of the place where he or she discovered the computer terminals and/or other equipment for the domain name concerned, on grounds that “it is difficult” to determine the place of infringing act or the residence of the respondent, he or she should explain the reason and produce the necessary evidence. If the plaintiff has paid quite some effort, but still failed to determine the place of infringing act or the residence of the respondent, or if the cost to determine the place of infringing act or the residence of the respondent is beyond the reasonable cost range that the plaintiff can bear, then the plaintiff may bring an action with the court of the place where he or she discovered the computer terminals and/or other equipment for the domain name.

Second, can the approving registrar be used to determine jurisdiction?

When a domain name applied for and registered infringes upon a prior right, the plaintiff might, while bringing an action against the registrant, list the registrar as a co-respondent, often on grounds that the registrant’s applying for and using the domain name and the registrar’s approving the domain name registration constitute a joint infringement. However, this is not appropriate. China has set up domain name registrars which are uniform nationally. They approve domain name registration mostly on the application of a party. When examining the domain name application, they generally do not examine whether a domain name applied for infringes upon any prior right of another person; otherwise, it will not only reduce much the registering efficiency, but go beyond the authority of the registrars. Actually, mostly infringement disputes involving domain names indicate that the domain names applied for and registered infringe upon the prior rights of others. The act of the infringers not only hinders the prior right holders from applying for the domain names, but can lead to confusion among consumers and cause infringement upon the rights of or unfair competition against the prior right holders. Obviously, the registrars do not have infringing intent neither individually nor jointly with the registrant. Therefore, it is inappropriate that the registrars’ act to approve the domain name registration be determined as a single or joint infringing act.

However, a problem stands out of the judicial practice. When the plaintiff lists registrant and registrar as co-respondents and brings an action with the court of the place where the registrar is located, if the places of domicile for the registrant and the registrar are under different jurisdictions, will the court that accepts the case achieve the jurisdictional power? One opinion says that as the plaintiff has listed the registrar as a co-respondent, the court that accepts the case has the jurisdictional power; if finally the infringement is judged as not existent, the court may dismiss the claims concerned. Another opinion says that as the act of the registrar to approve the domain name registration does not constitute an infringement, the court of the place where the registrar is located does not have the jurisdictional power. In the opinion of the author, in terms of the current laws and regulations, the first opinion is appropriate and has always been stuck to by the judicial body. This is because, after all, whether the registrar’s act to approve the domain name registration constitutes an infringement is dependent upon the result of substantive adjudication, and to determine the jurisdiction is a prerequisite to substantive adjudication. But, as we should see, in this way, cases where plaintiffs indiscriminately choose a court will emerge in large numbers and the courts of the places where registrars are located will witness their cases growing rapidly. Because there is only one uniform registrar in China, that similar cases will swarm into the court of the place where the registrar is locate which will lead to such court coming to have an exclusive jurisdiction, though in a disguised form. Therefore, the second opinion is also appropriate in some way. If obviously the plaintiff deliberately chose an inappropriate court, the court may divide the case into two: for one case, the court may reject the plaintiff’s accusation against the registrar, and the other case may be transferred to a competent court upon application of a party.
However, if the plaintiff accuses only the registrar that the registrar’s approving the domain name registration constitutes an infringement, the court of the place where the registrar is located has the jurisdictional power. Of course, if the infringement is not found through adjudication, the court may directly disaffirm the plaintiff’s claim.

III. How to determine infringement or unfair competition involving domain names

According to the Judicial Interpretation 2001, the respondent’s applying for and using a domain name or other acts involving domain names shall be decided as infringement or unfair competition, if: (1) the civil rights and interests that the plaintiff requests for protection are legitimate and valid; (2) the domain name of the respondent or its main part constitutes a copying, imitation, translation or transliteration of the famous trademark of the plaintiff, or is identical with or similar to the registered trademark or domain name of the plaintiff, which is sufficient to cause confusion among the relevant public; (3) the respondent neither enjoys any right to the domain name concerned or its main part, nor has any proper reason to register and use the domain name concerned; or (4) the respondent has bad faith in registering and using the domain name concerned. The bad faith of the respondent in registering and using the domain name concerned can be determined if: (1) the respondent has, out of commercial purposes, had a well-known trademark of another registered as a domain name; (2) the respondent 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 respondent; (3) the respondent offered to sell, rent or otherwise transferred his or her domain name at a high price in order to gain unjustified benefits; (4) the respondent does not use, nor is prepared to use the domain name after registration, but deliberately prevents the owner of the rights from registering the domain name; or (5) the other malicious circumstances. However, the respondent can be found as not containing bad faith, if the respondent produces evidence to prove that the domain name that the respondent holds, before the dispute occurred, had achieved a certain fame and can distinguish itself from the registered trademark and/or domain name of the plaintiff, or to prove other circumstances that the bad faith did not exist. It ought to be said that the Judicial Interpretation 2001 provides a basis on which we can judge whether a respondent’s registering and using a domain name constitutes infringement or unfair competition. However, there are some issues to be discussed in the judicial practice.

(I) Determine the bad faith of transferees

If a registrant maliciously registered a domain name and then transferred it to another person, then how to determine the bad faith of the transferee? Generally, the transferee should be determined as in bad faith if he or she knowingly accepted the domain name. As to the distribution of the burden of proof, if the plaintiff proves that the registrant had bad faith in registering the domain name, the transferee may be requested to prove that he or she accepted the domain name in good faith. If the transferee fails to prove this, a judgment may be given that the transferee was in bad faith in receiving the domain name. In the domain name dispute concerning java.com.cn, 3 the respondent, Sun Microsystems was a corporation registered and incorporated in the United States on September 17, 1986. It was internationally famous in information technology. In 1997, it obtained the exclusive right to “JAVA” as a registered trademark in China. The goods in respect to the registered trademark is Category 9 computer software. The third party, Yunxiao Tianyi Company registered maliciously the disputed domain name, java.com.cn on February 15, 2005, and on October 24, 2006, transferred it to the plaintiff, Chen Liang. Following the complaint from Sun Microsystems, on May 21, 2007, the domain name dispute resolution center decided that the domain name “java.com.cn” that Chen held be transferred to Sun Microsystems. Chen argued that he obtained the disputed domain name in good faith and claimed legal rights in the disputed domain name on grounds that his father was running a special travel service to the Java islands.

In the case, Chen Liang, before the domain name transfer, did not enjoy legal rights or interests in the main part of the disputed domain name; although he said that he obtained the disputed domain name with the objective to run the travel service business, he failed to produce the sufficient evidence. Considering the high reputation that “JAVA”, the registered trademark of Sun Microsystems enjoys, Chen should reasonably have known that Sun Microsystems enjoys the prior rights and interests in “JAVA” trademark. Also, Chen knew that the registrant registered the disputed domain name in bad faith. That Chen received the disputed domain name should be found as in bad faith. Finally the court decided that the disputed domain name be owned by Sun Microsystems.

(II) Determine the reasonable origin

To register as domain names the corporate names, trademarks or their main part of others which have achieved fame may constitute infringement or unfair competition, except that the registration has a reasonable origin. Here, the reasonable origin includes that the registrant has used for a long time and achieved a fame in using the corporate names, registered trademarks or unregistered famous trademarks. In judicial practice, if a registrant used previously a trademark in Chinese and then applied for a domain name in a foreign language, the court must address such questions as whether the trademark in Chinese sufficiently corresponds with the domain name in the foreign language, and whether the Chinese trademark can be a fair reason for the domain name registration.

In the domain name dispute case concerning reddevil.com.cn, 4 the respondent, Red Devil, INC (or “红魔鬼公司” in Chinese) was a corporation incorporated in the United States in 1926. It dealt mostly with paints, tools and chemical products. In 1997 and 2000, Red Devil obtained the exclusive right to the trademark, “Red Devil and graph”, in China and the goods that were approved to use the trademark included Category 17 fillers and sealants and Category 8 putty knife. The plaintiff, Hongmo Paints Company was incorporated on June 13, 2002. It deals mainly with water-based paints and building materials. The legal representative, Yang Yi registered and obtained the exclusive right to the trademark “红魔” (No. 3169222) on September 7, 2003. The goods that are approved to use the trademark included Category 2 paints and coatings (end of the goods). Hongmo Paints was granted the exclusive right to use the trademark. On May 12, 2004, Hongmo Paints registered the disputed domain name - reddevil.com.cn. On July 11, 2006, the domain name resolution center arbitrated that the disputed domain name be transferred to Red Devil. The plaintiff brought an action with the court on grounds that as Hongmo Paints holds the registered trademark “红魔” of Yang Yi, and therefore enjoys legal rights and interests in and has no bad faith in using the disputed domain name. It requested the court that the disputed domain name be repossessed by it.

In the case, Red Devil obtained the corporate name and the registered trademark earlier than when the disputed domain name was registered. It enjoyed legal and valid prior civil rights and interests in the main part of the disputed domain name, i.e. “reddevil”. The registered trademark “红魔” that Hongmo Paints uses is different from “reddevil” – the main part of the disputed domain name. The two are not regarded as identical by the general public which is used to Chinese characters in China. In other words, that the disputed domain name reasonably originated from “红魔” cannot be proved. Also, the time that Hongmo Paints obtained the exclusive right to “红魔” is later than Red Devil developed its legal rights to “Red Devil” trademark. Therefore, the Chinese trademark “红魔” of the plaintiff cannot be used to prove that the plaintiff certainly enjoys the rights to “Red Devil”, that is, the plaintiff does not enjoy any right to “red devil”, the main identifying part of the disputed domain name. The plaintiff does not have fair reasons to register the disputed domain name. Finally the court decided that the disputed domain name be owned by Red Devil.

(III) Is laches available as defense to domain name infringement?

If a registrant does not seek for damages against or tacitly consent to another person’s using the domain name of the registrant, but there is no written domain name licensing agreement between the two, when the registrant transfers the domain name, can the transferee investigate into such another person’s using the domain name and seek for damages? In the opinion of the author, the transferee has the right to only investigate into another person’s using the domain name which occurs after rather than before the domain name transfer. Of course, the tacit consent of the registrant cannot naturally extend with the transfer of the domain name.

In the domain name dispute concerning chinadns.com,5 the third party, Li Wei registered the disputed domain name “chinadns.com” on December 25, 1998. The respondent, Xin Net Technology Corporation had been using continuously the disputed domain name since July 1999. Later Li transferred the disputed domain name, chinadns.com, to Jiang Qun. According to the written agreement, the plaintiff, Jiang, would become a valid registrant to chinadns.com since January 29, 2003. In March 2003, Jiang brought an action with the court, requesting that Xin Net Technology Corporation stop using the disputed domain name.

In the case, Xin Net Technology Corporation had, based on the tacit consent of Li Wei, been continuously using the domain name, chinadns.com, which was registered by Li  However, as the two did not conclude a licensing agreement, nor agreed on the term of use, Li has the right to request at any time that Xin Net Technology Corporation stop using the domain name. After becoming the registrant to chinadns.com, Jiang Qun has the right to decide whether to allow Xin Net Technology Corporation to continue using the domain name in dispute. Whoever is the registrant, that Xin Net Technology Corporation used the disputed domain name to run a website was within the law until being notified by Li or Jiang to stop using the disputed domain name. However, considering that Jiang expressly said to the court that he (or she) would not allow Xin Net Technology Corporation to continue using the disputed domain name, Xin Net Technology Corporation should immediately stop using the disputed domain name. Although Xin Net Technology made a huge input of work and money to publicize the disputed domain name and will incur losses if it stops using it, the company has to bear the legal consequences on its own, because this is the consequence that the company did not conclude a written agreement with Li on the use of the domain name in a timely manner during the long period of using the disputed domain name. Finally the court judged that Xin Net Technology Corporation stop using the disputed domain name.

(IV) About “reverse domain name hijacking”

As a product of computer technology and Internet technology, domain names have a relatively short history. They emerged in China less than 20 years ago. In comparison, the history of trademarks and corporate names can be traced back to about 1,000 years. The infringement disputes of intellectual property concerning domain names are mostly infringement upon the trademarks and domain names that others have used previously. The infringers attempt to intercept the good will of the prior trademarks and corporate names through domain name registration. However, a reverse tendency has emerged recently. This is the “reverse domain name hijacking”, i.e. to register as trademark the well-known domain names of others before such other people can do it. The registrants attempt, through trademark registration, to intercept the good will of a domain name that is famous in some way and that another person have been using.

The Trademark Law of China provides for a first-to-file principle in trademark registration, with additional protection for prior rights. That is, when a trademark that is applied for and granted infringes upon a prior right, or one registers a trademark that another person has been using and that is influential in some way, through cheating or other unjustified means, the trademark should not be approved and registered, or if already approved and registered, it should be canceled legally. For the reverse domain name hijacking, if it can be proved that the trademarks were registered through cheating or other unjustifiable means, the trademarks may be canceled in accordance with the current Trademark Law.

Endnotes:

1. Understand and Apply the Rules on Case of Action for Civil Cases by the Supreme Court of China, Chief Editor: Cao Jianming, the Court Press, First Edition, February 2008, P211.
2. Idem
3. The computer network domain name dispute of Chen Liang v. Sun Microsystems, the Civil Judgment GAO MIN ZONG ZI No. 183 (2008), the Higher People’s Court of Beijing; the case can be found at http://bjgy.chinacourt.org/
4. The computer network domain name dispute of Shanghai Hongmo Company Ltd. v. Red Devil Inc. of the USA, the Civil Judgment GAO MIN ZONG ZI No. 189 (2008), the Higher People’s Court of Beijing; the case can be found at http://bjgy.chinacourt.org/
5. The computer network domain name dispute of Jiang Qun v. Beijing Xin Net Technology Corporation, the Civil Judgment GAO MIN ZONG ZI No. 605 (2004), the Higher People’s Court of Beijing; the case can be found at http://bjgy.chinacourt.org/


About the author:
Liu Xiaojun is a judge of the Intellectual Property Division, the Higher Court of Beijing.
                                                      
                                          
                                                                    (Translated by Ren Qingtao)

 

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