An Overview of Mercer.com.cn Dispute

By Kevin Nie, China IP,[Internet & Domain]

The case started with a complaint in 2007 at Domain Name Dispute Resolution Center of China International Economic and Trade Arbitration Commission by Mercer, requesting the disputed mercer.com.cn be transferred to it. Meyth, dissatisfied, appealed to Shanghai No. 2 Intermediate People’s Court. Mercer disputed the proper jurisdiction succeeded in removing the case to Beijing No. 1 Intermediate People’s Court, which vacated the arbitration and ruled in favor of Mercer. The case was then further appealed to Beijing Higher People’s Court, which overturned the decision of first instance and sustained Mercer’s request for trade name right, upholding Mercer’s entitlement to the disputed domain name. Meyth’s request for reconsideration to The Supreme People’s Court was denied.
 
Complaint
Complainant: Mercer Human Resource Consulting, Inc.
Respondent: Meyth International Consulting Co., Ltd.
Forum: Domain Name Dispute Resolution Center of China International Economic and Trade Arbitration Commission
Result: Directed transfer of the domain name in dispute
 
Mercer Human Resource Consulting, Inc. (“Complainant”) filed a complaint with the Domain Name Dispute Resolution Center (“DNDRC”) of China International Economic and Trade Arbitration Commission (“CIETAC”) on February 15th, 2007, requesting mercer.com.cn used by Meyth International Consulting Co., Ltd. (“Respondent”) be transferred to Complainant itself.
 
Complainant alleged that it has been using Mercer as trademark and trade name all over the world, including China, and has applied for registration of Mercer in China; that Respondent’s domain name is confusingly similar to Complainant’s business name and trademarks, which is likely to cause confusion; that there has never been any business connection between Complainant and Respondent; that Respondent has no legal rights to and interest in the disputed domain name because it had never been licensed to use the sign of Mercer or applied for trademark registration for Mercer; and that mercer.com.cn has a certain popularity and good will resulting from Complainant’s name and leading status in the trade; and therefore, it concluded that Respondent has obtained registration and use of the domain name in bad faith to promote its human resource services.
 
Respondent rebutted in defense that “mercer” is a dictionary word without special designation or distinctive character; that Complainant’s trade name was (“mei-shi” in Chinese) instead of mercer because business name in English is not officially approved under China’s current laws; that Complainant cannot, regardless of whether it obtains trademark registration, make claims for the domain name without effective prior right to the word because its trademark application was filed on December 8th, 2005 after the domain name and has not been approved for registration as of this arbitration; that Complainant has no prior rights to and interests in the major of the domain name under China’s laws because Complainant had no rights to and interests in “mercer” in terms of trade name and trademark, because China followed the principle of “first-to-file,” and because the two domain names were not “Complainant’s name or mark in which Complainant has rights or interests” under Article 8 of CNNIC Domain Name Dispute Resolution Policy (DNDRP); that Respondent’s use of the domain name was in line with the provisions of laws and should be protected because Respondent has never registered many domain names for profits, has no bad faith in its registration of the domain name and was consequently the legal holder of the name; and that there is no possibility to misleadingly divert consumers because Respondent was radically different from Complainant’s subsidiary in China in scope of business, because Respondent’s scope of business was different from the prescribed classification of goods for protection in Complainant’s application for trademark registration, and because Respondent’s business had nothing to do with the content of Complainant’s website. Therefore, Respondent contended that there were no factual and legal grounds in support of Complainant’s propositions in terms of bad faith.
 
The tribunal of the Center found after trial that Complainant’s complaint met the requirement of subparagraph (a) of Article 8 of DNDRP because both the text and the pronunciation of its trade name were the same as that of the main part of the domain name; that Respondent had no evidence that it had legal rights to and interests in mercer, whereas the requirement provided by subparagraph (b) of Article 8 of DNDRP was satisfied by Complainant; that Complainant and Respondent belonged to the same industry, engaging in managerial & consulting services for talents and enterprises; that Mercer had acquired a certain popularity and commercial value as Respondent’s trade name for many years in China and the world though it had not registered as trademark in China; that a kind of close connection had been established between Mercer and Complainant and its business; that Complainant’s trade name were civil rights and interests protected by China’s laws because “a trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of a trademark” according to Article 2 of Paris Convention for the Protection of Industrial Property; that Respondent ought to have known the popularity and commercial value of Mercer which was owned by Complainant as trade name because it was a professional business in the same industry; that such knowing had been evidenced by its act of using Mercer as its registered domain name which had nothing to do with itself but constituted Complainant’s trade name; that Respondent had bad faith in its registration and use of the disputed domain name. Therefore, the Panel concluded that Complainant had met all requirements provided by subparagraph (c) of Article 8 of DNDRP. Considering the foregoing ascertained facts and reasons, the panel of the Center rendered an arbitral award (No. 0072 of DNDRC Arbitral Award of DNDRC in 2007) that the complaint was sustainable, and mercer.com.cn, the domain name registered by Respondent should be transferred to Complainant. This award was served on May 10th, 2007.
 
Removal jurisdiction
Plaintiff/Appellant: Meyth International Consulting Co., Ltd.
Defendant/Appellee: Mercer (US) Inc. (former Mercer Human Resource Consulting, Inc.)
Forum: Shanghai No. 2 Intermediate People’s Court → Shanghai Higher People’s Court
Result: Removal of the case to Beijing No. 1 Intermediate People’s Court
 
Dissatisfied with the arbitration on the dispute of mercer.com.cn rendered by DNDRC, Meyth International Consulting Co., Ltd. (Plaintiff) initiated a lawsuit against Mercer Human Resource Consulting, Inc. (Defendant) in Shanghai No. 2 Intermediate People’s Court on May 16th, 2007.
 
Defendant raised an objection to the jurisdiction of the SSIPC as improper after the court took the case. Defendant alleged that plaintiff ’s initiation had no necessary facts or legal basis on the grounds that there was property of defendant to be attached since it had a wholly-owned subsidiary, namely, Mercer Consulting (Shanghai) Co., Ltd. (Mercer (Shanghai)). Defendant attested that the property of Mercer (Shanghai) should not be attached because Mercer (Shanghai) was not incorporated or invested by defendant; that the judgment of the case had nothing to do with the execution of property because it is a case of domain name; that the case should be referred to Beijing No. 1 Intermediate People’s Court in the place where DNDRC is located according to DNDRP. Therefore, defendant requested the case to be removed to Beijing and SSIPC agreed.
 
The statutory basis cited by plaintiff is Article 15 of DNDRP which stipulates as follows: “Before a Complaint is filed pursuant to this policy, or during the dispute resolution proceedings, or after the expert panel has rendered its decision, either party may institute an action concerning the same dispute with the Chinese court at the place where CNNIC’s office is located or subject to the agreement between the parties, or submit the dispute to a Chinese arbitration institution for arbitration.”
 
The connecting point for removal to Beijing is that the locality where the disputed domain name was registered is in Haidian District of Beijing. The case was removed to Beijing in accordance with Article 19 of Civil Procedure that the intermediate people’s courts shall have jurisdiction as courts of first instance over the civil cases involving foreign element.
 
Plaintiff alleged that defendant’s claim was contradictory to its statements and evidence; that DNDRC neglected to review the difference between Mercer Human Resource Consulting. Inc. and Mercer Holdings. Inc. due to the assertion of defendant in its complaint that it had a subsidiary in China for business; that such assertion misled DNDRC to accept the complaint; that defendant’s complaint should be rejected since it had no personal interest in the case under the law; that defendant’s objection to the jurisdiction of the Shanghai court was clearly denying that it was not the same subject as Mercer Holdings. Inc. which incorporated the subsidiary; that the rights to and interests in trade name claimed by defendant should not be protected by China’s law regardless of its being ascertained or not according to IP’s territoriality because defendant had no commercial presence in China. In conclusion, plaintiff alleged that the court may render a judgment directly without reaching the merit.
 
Liu Chunquan, plaintiff’s lawyer said in an interview with China IP reporter that “defendant maliciously adopted dilatory tactics in the form of objection to jurisdiction in order to compel plaintiff to spent more money and energy, increase its cost and force it to reach a compromise. This case is a reverse infringement upon domain name in nature. Plaintiff registered and used the domain name in Shanghai. Therefore, the dispute in the case is whether plaintiff’s registration and use of the name is in line with China’s law. Plaintiff considers that the place where the arbitration award was rendered cannot be deemed as the place where the infringing act took place. Otherwise, all cases involving foreign element shall be referred to a Beijing court for jurisdiction, which is obviously inconsistent with DNDRP.”
 
Many legal professionals agree that one party usually raises objection to jurisdiction, intending to increase the other party’s cost in civil lawsuits. This is a kind of litigation technique which has been generally used by the parties with relatively strong economic strength on most occasions.
 
Dissatisfied with the order rendered by SSIPC, plaintiff appealed to Shanghai Higher People’s Court. However, its appeal was rejected and the original judgment was sustained.
 
First instance
Plaintiff: Meyth International Consulting Co., Ltd.
Defendant: Mercer (US) Inc.
Forum: Beijing No. 1 Intermediate People’s Court
Result: Judgment for plaintiff
 
The Beijing court took the case on July 2nd, 2009 and conducted a trial on October 16th, 2009.
 
Plaintiff claimed at trial that it had the right to own the domain name according to China’s law. It alleged that Mercer was an ordinary English word with the meaning of “merchants” and “cloth merchants;” that Mercer was neither a well-known trademark nor a registered trade name; that defendant had no exclusive right to use the trademark because its application of mercer as its trademark came after plaintiff ’s registration of the domain name; that defendant had no prior right before the date of plaintiff ’s registration in accordance with China’s law; that plaintiff should enjoy legitimate rights to the domain name according the principle of “first registration for first application;” that plaintiff had no bad faith because it applied only one domain for registration and had no business in competition with defendant. Therefore, plaintiff concluded that the award numbered 0072 of DNDRC Arbitral Award of DNDRC in 2007 should be rescinded because it had incorrect ascertainment of facts and an error in the application of the law. Plaintiff requested Beijing No.1 Intermediate People’s Court to confirm that the domain name should be owned by them.
 
Defendant argued that it had used mercer as its trade name since 1945 and Mercer Holdings Inc., its affiliated company incorporated Mercer (Shanghai) as its whollyowned enterprise in Shanghai in 2000; that they applied mercer for registration as two trademarks in December, 2005 in China and one of them was granted, whereas the other two domain names, mercer.com and mercerhr.com, were registered by defendant; that mercer was a well-known trademark since it had acquired an extensive popularity across China and the world after its being used by defendant as its trade name and trademark for a long period of time; that its rights to and interests in the domain name were legitimate and effective and should be protected; that plaintiff had no rights to and interests in the domain name and or justified reasons for its registration or use of the domain name; and that defendant had an obvious bad faith in its registration and use of the domain name because it was a professional market player in the same industry. Therefore, plaintiff requested the court reject plaintiff’s claims of the action.
 
The court found after review that the lawsuit was initiated by plaintiff after DNDRC awarded that the domain name to be transferred to defendant, hoping that the court may affirm the domain name be transferred to it again; that, under such circumstances, the key to judge whether plaintiff ’s claims was tenable or not depended on the registration and use of the domain name was in line with the law or not, and had constituted tort upon or unfair competition against defendant or not; that the time defendant applied for trademark registration in China was later than the domain name registration; that defendant had no evidence to prove its trademark of mercer had become a well-known trademark in China before the domain name registration; and that there was no way to ascertain the authenticity and legitimacy of the evidences for mercer.com and mercerhr.com submitted by defendant. Therefore, the court concluded that the registration, imitation, translation, or transliteration was not identical with or similar to defendant’s registered trademark; that the public was not likely to be misled by such use; and that bad faith could not be found in the registration or use of the disputed domain name related to the foregoing circumstances.
 
Article 6 of Interpretations of The Supreme People’s Court on Several Issues Concerning the Application of Law to the Trial of Cases of Civil Disputes over the Protection of Famous Trademarks stipulates as follows: “A name of any enterprise registered by the enterprise registration competent authority, or a name of any foreign enterprise used within the territory of China for commercial use shall be ascertained as an enterprise name as stipulated in Subparagraph (c) of Article 5 of The Anti-unfair Competition Law. A shop name in the name of enterprise that has certain market popularity and is acknowledged by the public concerned may be ascertained as an enterprise name as stipulated in Subparagraph (c) of Article 5 of The Anti-unfair Competition Law.”
 
It can be seen from the above-mentioned arguments that the key for both parties to win or lose the case is that whether defendant’s shop name of mercer had certain market popularity or not after it had acquired a high international popularity; and that whether mercer should be ascertained as an enterprise name as stipulated in Subparagraph (c) of Article 5 of The Anti-unfair Competition Law based on such certain popularity.
 
The court opined that it noticed that defendant submitted some evidences related to the popularity of its shop name; that facts could not be ascertained from the evidences related to Mercer (Shanghai) and the registration of its subsidiaries that defendant had publicized and used its enterprise name and shop name in Chinese mainland that the authenticity or legitimacy of the rest evidences could not be established; that most of them could not prove the domain name had been publicized or used by defendant as its enterprise name or shop name in Chinese mainland before plaintiff ’s applied for registration of the domain name; that the court had no way to ascertain that there was certain popularity for defendant’s enterprise name or shop name in Chinese mainland before the date of the application for the domain name registration; that mercer, defendant’s shop name should not be protected as an enterprise name as stipulated in Subparagraph (c) of Article 5 of The Anti-unfair Competition Law; that others could not be prevented by mercer from using it because mercer means textile or silk merchant in Chinese after translation; that bad faith could not be found in the registration and use of the disputed domain name related to the foregoing circumstances. In conclusion, BFIPC ruled that plaintiff’s registration and use of the domain name was not in violation of laws and did not constitute tort upon or unfair competition against defendant.
 
The court ruled on December 28th, 2009 that the domain name shall be owned by Mercer (Shanghai) in accordance with Article 64 of Civil Procedure Law of the People’s Republic of China, and Article 4 of Interpretations of The Supreme People’s Court on Application of Laws in the Trial of Civil Disputes over Domain Names of Computer Network.
 
Second instance
Appellant: Mercer (US) Inc.
Appellee: Meyth International Consulting Co., Ltd.
Forum: Beijing Higher People’s Court (BHPC)
Result: Judgment for appellant
 
Mercer (US) Inc. (Mercer U.S.) refused to accept the judgment of the lower court and appealed to Beijing Higher, People’s Court, which conducted a hearing on July 21st, 2010 after accepting the case on April 7th, 2010.
 
He Fang, the lawyer at Beijing Lusheng Law Firm, acted on behalf of Mercer U.S.. He told China IP reporter that the key in the procedure of second instance was still whether defendant’s business name should be protected as an enterprise name as stipulated in Subparagraph (c) of Article 5 of The Unfair Competition Law or not.
 
Mr. He said that Mercer U.S. lost the case in the first instance because of its insufficient evidences. Therefore, six more new pieces of evidence were introduced in the second instance. The higher court admitted these six pieces of evidence and ascertained the facts proved on the grounds that some of the evidence could be accessible at China’s libraries despite that they were circulated abroad, but not in China.
 
Another point of controversy in the procedure was whether the evidence submitted at trial below might be reintroduced to the higher court as new evidence upon notarization or legalization.
 
The higher court concluded from the evidence of the present case that Mercer U.S. applied for prior registration of mercer.com and mercerhr.com; that 美 世 and mercer were the business names of Mercer U.S. and its affiliated companies and used by them in China before the registration of the domain name though they had the meaning of silk merchant; that 美 世 and mercer had acquired an extensive popularity in the concerned public in China by way of the foresaid use and Mercer U.S. has had rights to and interests in 美世 and mercer; that the concerned public would be inevitably misled by the simultaneous use of the domain name and mercer.com or mercerhr.com since the business of Mercer U.S. was identical with or similar to that of Meyth International Consulting Co., Ltd. (hereinafter referred to as Meyth); that Meyth had no evidence that it had prior legal rights to and interests in the domain name or the main part of mercer, had justifiable reasons for its registration or use of the domain name, and there were other circumstances sufficient to show it had no bad faith; and that Meyth had commercial purposes in its registration or use of domain names identical with or similar to Mercer U.S.’s previously registered domain names; that it can be concluded from such registration and use that Meyth had intentionally confused with Mercer U.S.’s services, or websites, to mislead the network consumers to visit its own websites. Therefore, BHPC concluded that Meyth’s registration and use of the domain name had constituted unfair competition and the domain name should be owned by Mercer U.S.; and that the decision below shall be amended because the law was incorrectly applied in the decision though the facts were clearly established on the basis of evidence submitted in the first instance.
 
However, lawyer Liu Chunquan, the agent of Meyth, raised questions as follows: The evidences and facts are almost the same in the two instances. The court of the first instance ruled that mercer could not be protected under law because the distinctive character cannot be evidenced by its general meaning, whereas the court of the second instance concluded that it should be protected because distinctiveness had originated from its being used. Just as admitted by BHPC that the facts were clearly ascertained with the exception that the law was incorrectly applied, then, he would like to ask the reason for its almost opposite verdict to that of the first instance without inclusion of the notarized evidences.
 
Guan Yuying, the researcher at Institute of Law of China Academy of Social Science (CASS) told China IP that the higher court BHPC is right in its judgment. Yes, mercer is an ordinary English word. However, its meaning will become distinctive when it is involved in consulting and human resource services. Mercer has acquired certain popularity in comparison with concerned competitors and relevant professionals in China when it became a disputed domain name after Meyth’s registration. Meyth is a market competitor providing the same or similar services. Why did it choose mercer, a Greek English word which had no relation to itself and is similar to its competitor? Why not chose Meizhi (Meyth’s Chinese spelling) or other combination of alphabets with similar pronunciation or spelling to its shop name?
 
There is another common sense that China has been in pursuit of “first registration for the first application” in terms of China’s country code toplevel domain names (ccTLDs) registration. However, such registration can not be used against the prior right. Mercer was registered as generic top-level domain (gTLD) previously and it can be easily to get to know through a random search on internet. It is also a common sense that an enterprise engaged in the same industry should make every effort to not to confuse with other market players because of similar domain name, not to mention that Mercer U.S. has evidences to sustain its popularity. Therefore, enterprise should be honest and bear bona fide in its mind in registration. Coincidence will be very difficult to prove when dispute arises.
 
Lawyer Ma Yuanchao, the deputy director of the Information Network and Hi-Tech Research Committee of the Shanghai Bar Association is in support of BHPC’s judgment for the protection of domain name registration. However, he said that such registration should not be protected by purely exploitation of right to trade name. He suggested that right holder should initiate a lawsuit under the cause of action of unfair competition against the holder of the domain name.
 
BHPC made the judgment of last resort on December 16th, 2010, according to which Beijing No.1 Intermediate People’s Court judgment of the first instance was rescinded, and Meyth’s claim rejected.
 
Petition for reconsideration
Petitioner: Meyth International Consulting Co., Ltd.
Respondent: Mercer (US) Inc.
Forum: The Supreme People’s Court (SPC)
Result: Petition denied
 
Meyth petitioned to The Supreme People’s Court on March 29th, 2011 for reconsideration after BHPC rendered its judgment of last resort. The Supreme People’s Court formed a panel for reconsideration and inquired both parties on June 21st, 2011.
 
The Court held that the key to hear the case is to ascertain which party shall be the owner of the domain name; that Mercer U.S. needs to establish Meyth’s registration and use of the domain name has constituted tort upon or unfair competition against itself in order to prove its claim that it shall be the owner of the domain name; and that the case should be tried in accordance with Article 4 of Interpretations of The Supreme People’s Court on Application of Laws in the Trial of Civil Disputes Over Domain Names of Computer Network.
 
According to the Court’s Interpretations, Mercer has been a part of Mercer U.S.’s business name, and has become the sole signal which can be distinguished from its name after its name was changed into Mercer Human Resource Consulting, Inc. in 2002. It can be concluded that Mercer U.S. has acquired certain popularity in the fields of human resource and consulting service. Mercer Shanghai, an affiliated company of Mercer U.S., was incorporated in Shanghai in 2000. Mercer U.S. had set up branches or offices in Beijing, Nanjing and other places and had won a good reputation in its business in China before the domain name registration. As an affiliated company, Mercer (Shanghai)’s use of mercer, the shop name of Mercer U.S., undoubtedly improved and expanded the popularity of the shop name though there is no financially affiliated relation between Mercer (Shanghai) and Mercer U.S.. Mercer should be protected as a shop name of Mercer U.S. as stipulated in Subparagraph of Article 5 of The Anti-unfair Competition Law since it has acquired certain popularity.
 
As far as Meyth’s question on BHPC’s admission of new evidence introduced by Mercer U.S. in the second instance, the Court held that BHPC made no mistakes in its admission of such evidences because it was the amendment of evidences submitted in the first instance to a certain extent, such as notary certifications to be added in terms of domain name inquiry, all of the evidences having close relation to the facts of the case, and no evidence that can prove that Mercer U.S. had intentional or gross negligence in its submission of these evidences in the second instance. The Court also held that it is not necessary to have foreign periodicals notarized when they can be publicly inquired at domestic libraries though there are evidences from abroad. The Court rules the higher court did not err in its admission of such evidences though it is not appropriate for BHPC to ascertain them as evidence developed in China where there is no opposite evidence submitted.
 
The Supreme People’s Court ruled that Meyth, as a competitor engaged in human resource in the same industry, ought to have known that mercer is the business name of Mercer U.S. with prior popularity and it has no legitimate rights to and interests in mercer as a consequence; that there are no justified reasons for Meyth’s registration and use of the domain name because there was no relation between the general meaning of mercer, including silk merchant, and human resources and Meyth; that Meyth has an obvious bad faith intent in its use of the domain name in the business field basically identical with that of Mercer U.S. though it acquired the domain name through transfer; that Meyth’s acts can easily mislead the concerned public and constitute unfair competition; and that the foregoing judgment can not be influenced by the fact that it acquired the domain name through transfer. Therefore, SPC affirmed that the decision below shall be sustained because the facts have been clearly ascertained and the law was correctly applied, and that Meyth’s reason for retrial is untenable and shall be rejected.
 
SPC rendered an order to deny Meyth’s petition for reconsideration, bringing the case to an end.
 
(Translated by Yuan Renhui)
 

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