Domain name claims

Editor's Note: With the fast growth of Internet use, there are a rising number of Internet domain name disputes. The failure of some enterprises to protect their rights by timely registering their domain names opens the door for cybersquatters to register the unprotected domain names.

Fu Haiying, partner of King & Wood's Trademark Group in Beijing, and Xu Ming, an associate of King & Wood's Trademark Group in Beijing, talk about cybersquatting cases and measures to prevent them.

China Business Weekly ran the first part of the article in the last issue. Below is the last part of it. The views expressed here are the authors' own.

Reasons for cybersquatting

In practice, the China Internet Network Information Center (CNNIC) will not perform a substantial examination of domain name registration applications for the purposes of identifying whether the registration infringes upon others' prior legitimate rights. The objective outcome of this is that two similar domain names or domain names that are similar to other parties' trademarks may co-exist and result in confusion among the public.

This is particularly the case for cybersquatting, where the squatters, to increase the value of preempted domain names, will intentionally design the domain names and their related websites to contain similarities in appearance to those of genuine owners. The primary reason that the CNNIC does not conduct substantial examinations is that currently, the Chinese laws have not adapted the concept of "domain name rights".

For trademarks, rights are granted as soon as the trademarks are registered. The owners of the registered trademarks will then enjoy the exclusive rights to use the trademarks and prevent others from using the marks that are identical with or similar to the registered marks in respect of the same or similar goods.

However, domain name registration does not provide equivalent rights to the registrant. Even if an owner has obtained domain name registration for a domain name and is the legitimate owner of that name, it cannot prevent others from registering a similar domain name or identical domain names with different domain name suffixes. Even if a brand and its corresponding domain name have gained certain recognition on the Internet through a certain period of market promotion and trade, the owner of the domain name is still unable to initiate a domain name dispute or civil litigation based on infringement of "domain name rights" against cybersquatters who registered a domain name confusingly similar to that of the registrant and received economic benefits through a "free ride" on the reputation associated with the prior domain name and causing confusion among the public. Under such circumstances, a prior domain name registrant can only take actions against the use of similar domain names through court actions on trademark infringement or unfair competition.

Anti-cybersquatting strategy

The most urgent issue for the majority of enterprises is how to respond to the surge in cybersquatting. Under the current domain name registration and management system in China, enterprises may consider taking the following measures.

Registering principal trademarks or labels with commonly used domain name suffixes.

First, an enterprise should review its trademark portfolio to identify its principal trademarks, important labels, and other secondary and tertiary trademarks that have taken large market shares or are under heavy promotion by the enterprise. The enterprise shall file bulk registration for these marks with the most popular domain name suffixes, such as .com. For newly emerged suffixes, such as .mobi, and Internet keywords or wireless keywords, the enterprise shall consider registering its principal trademarks and labels.

Second, the enterprise should also consider domain name registrations for its Chinese character marks, taking into consideration the rapid growth of Chinese speaking Web users and the balance between the cost of registration and the cost of disputes and litigation. In this respect, the enterprise shall register Chinese character domain names for their principal trademarks and labels.

Proper measures

For those preempted domain names that have been activated, the prior right owner may initiate domain name dispute procedures or litigation, provided that one of the following conditions is satisfied:

(a) The core part of a domain name is identical with or confusingly similar to the registered trademarks or labels of the prior right owner;

(b) The website contents or design under a domain name is identical with or confusingly similar to the website of the prior right owner's website; or

(c) The use of a domain name may cause detrimental effects to the prior right owner's business operation.

While "prior" in the concept of "prior rights" refers to the time period during which a domain name registration is completed, "rights" can have different meanings under different circumstances. For example, for domain names with .cn suffixes and Chinese character domain names, the "rights" shall mean the legitimate and prior civil rights, including trademark rights, trade name rights and company name rights. However, for other domain names, the "rights" only refer to the prior trademark rights. The prerequisite condition for initiating domain name lawsuits is having legitimate and valid civil rights for the domain names.

For those preempted domain names that have been activated but do not cause any negative influences, the prior right owners can consider refraining from taking immediate legal actions but keeping a close watch of such use. One thing to be noted is that the domain name dispute resolution centers only accept .cn domain name disputes and Chinese character domain name disputes within two years of their registration. In other words, any objection on the use and registration of a .cn domain name or a Chinese character domain name can only be brought to the court through civil proceedings within two years after its registration. The time limit on filing domain name disputes should be taken into consideration when a prior right owner decides on the timing for taking legal actions.

For domain names yet to be activated, the prior right owner may regularly monitor its use. Once such domain names are activated, the prior right owner may decide whether to take legal actions accordingly based on the same principles as mentioned above. However, the aforementioned strategies are not immutable; the right owner may also consider taking legal actions against a non-used domain name if the domain name owner actively sells the name to the public and such act has or likely has caused damage to the goodwill or reputation of the prior right owner. Although the cost of initiating a lawsuit is high, it is still advisable for the prior right owner to use such measures to regain its domain names and claim damages against cybersquatters who file bulk applications against a number of prior rights. A favorable decision made by the court can also form a good foundation for future actions.

For some enterprises which do not own any "prior rights" over its trademarks or domain names, the only likely solution to regain their domain names is through the purchase of registered domain names. However, since a domain name can be preempted again during the process of negotiation for purchase, the enterprise that wishes to purchase the domain name should first conduct domain name searches and at the same time register other important domain names before concluding the deal.

Cybersquatting is a diverse topic with many potential issues and approaches. For enterprises, it is important to have a means of protecting their existing rights, retaining the intangible value of their brands, and maximizing this value by utilizing the power of the Internet. Meanwhile, the enterprise should also take corresponding measures against all types of cybersquatting activities.

(China Daily 10/27/2008 page9)