South Africa: Domain Names - The High Court Has Its Say

Domain names and trade marks are inextricably linked. The reason for this is simple – when a company needs to decide on a name at which it wants people to find it on the Internet, it generally opts for one of its own trade marks. As a result, the issues that crop up in trade mark disputes often crop up in domain name disputes too. Although there's an added complication with domain names – unlike trade mark registrations, domain name registrations are not limited to particular product areas or particular countries.

When domain names first appeared on the scene, disputes as to who was entitled to the registration of a particular name were handled by the courts, usually by way of trade mark infringement or passing-off proceedings.  But now there are Alternative Dispute Resolution (ADR) procedures that relate to the various domain names. So, for example, disputes regarding .co.za domain names are handled by way of the ADR procedure that was established by the Regulations passed under the Electronic Communications and Transactions Act (ECT Act) 25 of 2002.  These disputes are heard by either a single adjudicator or a panel of three adjudicators – the adjudicators tend to be experts in trade mark law.

The ADR procedure that we have ensures that the normal first-come-first-served system does not always apply to domain name registrations. It provides that a company that is aggrieved by a .co.za domain name registration can lodge a complaint if the domain name registration is ‘abusive'.  The Regulations say that a domain name registration may be abusive for a number of reasons, for example if it takes unfair advantage of another party's rights, if it is intended primarily to frustrate the rights of another party, or if it is used in a way that's detrimental to another party's rights. The right in issue can be a registered trade mark right, or a common law right derived through use.

The Regulations go on to list certain factors that might indicate that a registration is abusive. These include the fact that it was registered specifically to disrupt another party's business or prevent another party from registering the name, or the fact that it's used in a way that suggests a connection with another party's business.  Factors that might indicate that it's not abusive include the fact that the person who registered it is making genuine commercial use of it.  Over the years there have been a large number of ADR decisions and well-established trade mark principles are frequently applied.

As a result of the ADR procedure, domain name issues seldom make it to the High Court. This makes the recent Gauteng North High Court decision in the case of Day Ni (Oded Dayani) v Talium Investments (Pty) Ltd and 4 others worth looking at. This was a review of a decision of a panel of adjudicators and it is, as far as I'm aware, the first such review to be heard by the High Court.  The court concluded that the decision of the panel of adjudicators was sound and that it should stand. Although the review dealt with what are basically procedural matters, the decision is interesting for a number of reasons.

First, the court recognised that trade mark principles are applicable in domain name disputes.  The case dealt with the issue of whether or not domain name registrations for the names kingo.co.za and kingonumbers.co.za were abusive.  The panel had held that the registrations were abusive and that they should be transferred to the complainant – this was based on the finding that, even though the registrant had got in first with a domain name registration, the complainant had stronger rights to the trade mark Kingo through use, whereas Kingonumbers would be seen as a natural extension of Kingo. The review court used this quote from the panel's decision: ‘The crux of this decision is who owns “Kingo”? It is settled law that the person who has appropriated a mark for use in respect of goods or services as a trade mark, may claim to be the proprietor. Legal precedent defines “appropriation” as the origination, adoption or acquisition of a mark (Victoria's Secret v Edgars Stores Limited 1994 (3) SALR 739 (A).' The court also used this quote from the Victoria's Secret case, where the Appeal Court said this:  ‘In determining which of the competing applicants should prevail, the guiding principle is encapsulated in the maxim ...he has the better title who is first in point of time. ...In a situation in which competing applications for the registration of the same or similar marks are filed in the RSA, the general rule is, that all else being equal, the application prior in point of filing, should prevail and be entitled to proceed to registration.  In a “quarrel' of that kind, “blessed is he who gets his blow in first.'''

The second reason why the decision is interesting is because it makes it clear that the same robust considerations that apply to High Court proceedings apply to ADR proceedings.  What had happened here was that the complainant had filed a complaint (or dispute), the registrant had filed a response, and the complainant had filed a reply to that response – this is the normal procedure. In the review proceedings, however, the registrant complained that the complainant had introduced new facts in the reply, and that the adjudicators had relied on these new facts without giving the registrant an opportunity to deal with them.   But the court was unimpressed, saying that the complainant had never sought permission from the adjudicators to contradict what was said in the reply, nor to submit a further response. This despite the fact that the ADR Regulations do make provision for the filing of further evidence or documentation in appropriate cases.

Which leads us on to the third reason why the decision's interesting. The court thought that it was very relevant that the complainant had been represented by an attorney in the ADR proceedings, that the attorney had not objected to the further evidence or sought leave to respond to it, and that no explanation had been offered for this oversight. The court quoted from the very old case of Salojee v The Minister of Community Development 1965 (2) SA 135 (AD), where the Appeal Court said this: ‘There is a limit beyond which a litigant cannot escape the results of his attorney's lack of diligence or the insufficiency of any explanation tendered... The attorney, after all, is the representative whom the litigant has chosen for himself and there is little reason why... the litigant should be absolved from the normal consequences of such a relationship, no matter what the consequences of the failure are... If he relies upon the ineptitude or remissness of his own attorney, he should at least explain that none of it is to be imputed to himself.'  So yes, what the court's saying very clearly is that you need to have a good attorney on your side, from the outset.