In Pace with the Rapid Development of Domain Name

By Anne Zhang, China IP,[Internet & Domain]

Up to the end of June 2011, there were a total of 7.86 million domain names in China according to the latest Statistical Report on Internet Development in China from China Internet Network Information Center (CNNIC). Technically, the domain name is merely an address for connecting various computers on the Internet; yet they form bridges between Internet users and website owners, which therefore carry tremendous economic value.
According to foreign web media, the domain name of Brazil.com was sold at 500,000 dollars (nearly 3,400,000 yuan), breaking the record of 400,000 dollars kept by Payment.com and Payments.com.
Other domain names on the top selling price list include brax.com (80,000 dollars or 540,000 yuan), hugh.com, frisky.com, udk.com and farsi.com, with selling price varying from 20,000 dollars to 80,000 dollars.
Moreover, good results have been achieved in the sales of national top-level domain names in many countries. In China, .cn and .net have won relatively good market prices, such as ozmo.cn (5,000 dollars, about 35,000 yuan) and cgm.net (12,000 dollars, about 80,000 yuan).
The above figures are the embodiment of the value of domain names. Some experts agree that there will be an increasingly fierce competition in domain name purchasing due to its expansion in quantity and homogeneous competition.
Yahoo Inc., owner of the registered trademark of Yahoo in the U.S. Patent and Trademark Office, disputed a domain name www.yahoocom.com, confusingly similar to its registered trademark. Moreover, Yahoo indicated that the domain name was used for domain parking to seek advertisements out of bad faith. Therefore, Yahoo requested for arbitration to acquire the domain name. The arbitration tribunal awarded the domain name to Yahoo.
Microsoft disputed a domain name perumicrosoft.com which was confusingly similar to its trademark, also on basis of bad faith, as the domain name had been resolved to a website under construction, and that the respondent’s use of the disputed name in bad faith had infringed upon Microsoft’s rights to trademark. Therefore, Microsoft requested arbitration to acquire the disputed perumicrosoft.com. The defendant failed to respond. The arbitration tribunal rendered a decision that perumicrosoft.com should be transferred to Microsoft after reviewing of the three constitutive requirements submitted by Microsoft, namely, infringement upon trademark, bad faith in registration and use, and no evidence for reasonable use of such domain name.
Disney, the world’s largest entertainment group, submitted a complaint to the United States National Arbitration Forum (NAF), hoping to acquire five disputed domain names. Disney has registered its trademark and patents all over the world. Its trademarks, such as “Mary Poppins” and “Hannah Montana,” were being confusingly similar to five domain names respectively, which were used by the respondent’s in bad faith. Two of them were used by commercial websites and resolved to the website of Disney Broadway (Marypoppinstickets.org, hannahmontanaticketsonline.com, and littlemermaidticketsny.com) in order to make profits. Therefore, Disney applied for the transfer of the five domain names to it. The respondent made no response and Disney succeeded in the arbitration.
As far as China is concerned, there are many loopholes in laws and regulations for domain name settlement, which have inevitably resulted in many disputes in the past decades.
The first domain name dispute lawsuit in China was heard by Beijing No. 2 Intermediate People’s Court in August 1999. From then on, many domain name disputes were brought into courts. The typical cases in this regard included Guangdong Kelon Electrical Holdings Co., Ltd. vs. Wu Yongan (Kelon case), Shijiazhuang Fulande Enterprise Development Co., Ltd. vs. Beijing Mitianjiaye Technology Trading Co., Ltd. (PDA case), Procter & Gamble Company vs. Beijing Guowang Information Co., Ltd. (Ikea and Whisper cases), Procter & Gamble Company vs. Beijing Tide Electronic Engineering Corporation (Tide case), Procter & Gamble Company vs. Shanghai Chenxuan Intelligence Technology Development Co., Ltd. (Safeguard case), E. I. Du Pont De Nemours and Company vs. Beijing Guowang Information Co., Ltd. (Dupont case), Pfizer Inc. vs. Shenzhen Newsnet Co., Ltd. (Viagra case) and others.
According to Luo Dongchuan, head of China Institute of Applied Jurisprudence (CIAJ) of The Supreme People’s Court of China, most of the domain name dispute cases were entertained and heard as civil infringement cases. Due to the current Internet situation that domain names are indicated by English letters, most of these lawsuits are brought by foreign companies, especially internationally well-known companies, and all cases were almost prosecuted for trademark violation or unfair competition.
 
China’s domain name dispute resolution mechanism
The bulk of domain name disputes are handled by non-judicial fora because there is no specific statute for regulation in this regard. In China, CNNIC functions as State Internet Network Information Center. As a nonprofit management & service institution established on June 3rd , 1997, CNNIC operates according to laws under the auspices of the Ministry of Information Industry in business and of Chinese Academy of Sciences in administration. Its primary responsibilities include administration of domain name registration, IP addresses and AS numbers allocation and management, directory database services, Internet addressing technology development, Internet survey and other related information services, international exchanges and policy researches and so on.
CNNIC has, as China’s country code top-level domain names administrator, been operated under the rule of managerial regimes and models in line with internationally practices. CNNIC is in charge of managing and maintaining the central database, designating registration service agencies, and providing users with domain name registration and resolution services. Meanwhile, it also appoints private dispute resolution agencies as dispute resolution institutions, releases and implements relevant dispute resolutions and procedures, adopts an online dispute resolution method of expert accountability, which, through online complaint, online defense and online decision, effectively deals with disputes caused by maliciously registering and using domain names. Moreover, the decision made by dispute resolution agencies should be implemented by its designated domain name registration service institutions. As a result, CNNIC has established a non-governmental mechanism for disputed domain name settlement in addition to lawsuit in China.
In China, domain name disputes are settled by the Domain Name Dispute Resolution Center (DNDRC) of China International Economic and Trade Arbitration Committee (CIETAC), which was approved by China Chamber of International Commerce/China Council for the Promotion of International Trade and established by CIETAC in 2000. DNDRC is committed to providing clients with alternative dispute resolution (ADR) services in the field of IP and IT. Currently, DNDRC is responsible for dispute settlement related to domain name and IP right according to commission and authorization from Internet domain name regulatory agencies at home and abroad.
DNDRC is headed by one director and two deputy directors, and implements the system of Chief Meeting, which is the highest decision-making body. It has a Secretariat, which is responsible for daily routine under the leadership of the Secretary-General. DNDRC has formulated procedural rules and regulations for dispute settlement, and set up a roster of experts in order to carry out the system of expert team responsibility independently and impartially. Equipped with modern office facilities, scientific management system, and a special website, DNDRC can deal with all procedural matters related to domain name dispute online.
The scope of business of DNDRC is as following:
According to CNNIC’s designation, it is responsible for the dispute settlement with the involvement of .cn/Chinese character in accordance with Domain Name Dispute Resolution Policy promulgated by CNNIC on September 30th, 2002.
DNDRC is the only body for the dispute settlement of Internet Keyword under the authorization of CNNIC in accordance with Internet Keyword Disputes Resolution Policy (CNKRP) promulgated by CNNIC in August, 2011.
According to the designation of the Internet Corporation for Assigned Names and Numbers (USA) (ICANN), DNDRC is one of the world’s four dispute resolution institutions, and acts as the Beijing Secretariat of Asian Domain Name Dispute Resolution Center (ADNDRC). It also provides resolution service for the settlement of generic Top-Level Domains (gTLDs), including .com .org, .net. and others, in accordance with Uniform Domain-Name Dispute-Resolution Policy (UDDP) promulgated by ICANN on August 26th, 1999.
 
Disputes get more and more complex
Over the course of time, the domain name disputes have become more and more complex in recent years with the astonishing development of Internet.
However, most people did not pay enough attention to the value of domain names at the early stage of Internet economic development. Therefore, a few persons registered many domain names with the same names as registered trademark by cyber piracy and resold them to the right holders to registered trademark to make profit. In May, 1998, the State Administration for Industry & Commerce (SAIC) requested CNNIC to register 32 well-known trademarks which had not been registered under .com.cn in order to prevent cyber piracy of these trademarks. From then on, more and more people have become aware of the value of domain names with the fast development of  Internet economy. The dispute has thus become a part of commercial competition. There are many examples in the regard. Some persons apply for the same domain name with the same trademark; some persons apply for the same domain name with same trademark though they do business in different industries, resulting in disputes; some persons apply for domain name which is confusingly similar to trademarks; some persons apply for domain names by hitchhiking or weakening the difference between different trademarks; some persons apply for domain name infringing upon other’s good will, and etc.. Internet has increasingly infiltrated into our life, therefore, the value o f domain names not only has something to do with commercial units, but should be consistent with the requirements of social interest. Some foreign companies have registered almost all of commonly used English family names as domain names. It may not be safe to say that they have infringed upon other’s right to the domain names, however, it is obviously necessary to take social interests into consideration when solving the similar disputes (especially in the absence of explicit regulations). At present, China’s domain name disputes are mainly referred to the former two circumstances.
China’s Internet Domain Name Dispute Resolution Mechanism is mainly designed to solve disputes resulting from registration or use with bad faith. It is easy to make a judgment when a .cn complaint is applied except those cases involving “registration or use with bad faith.” Therefore, the key for the establishment of a complaint depends on the ascertaining of bad faith in practice.
(a) The person shall be found that he has bad faith in his application for domain name registration where he registers a domain name in order to make profit which is identical with or confusingly similar to other’s business signs or brands, and he knows he has no justifiable rights to and interests in such signs or brands and he knows or ought to have known the existence of such signs or brands.
(b) The person shall be found that he has bad faith in his application for domain name registration where he has no intent of put the registered domain name into use for a long period after registration in specific cases.
(c) The disputed domain name holder shall be found he has bad faith where he, 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.
(d) The disputed domain name holder shall be found he has bad faith where he 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.
In addition, DNDRP also stipulates that the disputed domain name holder shall be found he has bad faith where the purpose for registering or acquiring the domain name is to sell, rent or otherwise transfer the domain name registration to obtain unjustified benefits.
It should be pointed out that bad faith in domain registration and use is not limited to the above mentioned acts. The panel has the right to ascertain whether the disputed domain name holder has bad faith or not according to specific conditions and facts in specific cases.
 
Domain name registration organization gets involved in the disputes
Beijing Zhengpu Science & Technology Development Co. Ltd. sued CNNIC and Alibaba.com on the grounds that its Chinese domain name was registered by Alibaba Group holding Ltd.. This is the first time that CNNIC became a defendant in IP right case related to domain name. This case tells us that people often focuses on the infringer and infringed parties, but ignores another important party involved—the Domain Name Registration Organization (DNRO). A DNRO is in charge of domain name registration and unwilling to be involved in any domain name disputes. however, DNROs have frequently been involved in domain name disputes as defendant across the world with the increasing awareness of the domain value and increasing number of domain disputes.
In a domain name dispute in Britain, two companies named “Pitman” got into a huge dispute because of a British DNRO’s computer systematic failure. In February 1996, Pitman Publishing Ltd. registered the domain name of  pitman.cp.uk without setting up its website. In March 1996, Pitman Training Ltd. applied for the same domain name to Nominet, a British DNRO. Due to an accidental systematic fault, the domain name of Pitman Publisher was canceled, and then Pitman Training Ltd. got it and set up its website in June. In December 1996, Pitman Publishing Ltd. learned about Pitman Training Ltd.’s website, and got in touch with the latter and Nominet at once, intending to regain the right to use that domain. When Pitman Training Ltd. filed a lawsuit immediately after that, a system failure has put the British DNRO in an embarrassing situation.
The above-mentioned case results from a mere technical problem. DNROs never expect that they will face IP disputes and legal liability now and then. Lockheed Corporation, the leading aircraft manufacturer, had its service trademark “Skunk Works” registered under the field o f “engineering & technical consulting, and consulting services related to design, construction, equipment, commercial and military aircrafts and consulting services for related equipments.” Nonetheless, similar domains associated with “Skunk Works” began to spring up since the domain name of “skunworks.com” was registered in 1994. Lockheed thus constantly lodged claims, disputes and even protests through the dispute process of Network Solutions, LLC (NSI), before finally sending a letter to NSI to request a list of domain names containing “Skunk Works” and a list of common misleading deviations. NSI said it could not provide such a list. Then Lockheed sued against NSI for a series of causes of action, including trademark infringement, unfair competition, trademark dilution and co-infringement.
DNROs have a wide range of duties and functions, including technical management, review, maintenance and service, dispute settlement and others related to domain name. When performing these duties, these organizations may find themselves involved in such domain disputes due to some inappropriate behaviors for the most part.
Dr. Xue hong, from China Foreign Affairs University, pointed out that DNROs’ liability and risks depend on their being regarded as civil subject or administrative organ. If they were civil subjects, they shall bear all the damages suffered by the registrant resulting from its services. If so, DNROs can not afford and exist because it is a nonprofit organization. If they were administrative authorities, they shall bear less liability. In fact, domain name registration is just like an administrative license and the relationship between the registration organization and the registrant is that between the registration administrative authority and an administrative relative person. The damages to the administrative relative person caused by the mistakes of administrative authority can be dealt with in accordance with the relevant compensation regulations of the country, in which way nevertheless, the DNROs should be defined in law as an administrative authority, and compensation funds should be established through special financial allocation. Therefore, DNROs, such as CNNIC, will encounter quite a few institutional barriers in the future.
 
(Translated by Yuan Renhui)

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