Australia: Joining The Dot Coms In The Legal Web Of Domain Names

Domain names, the unique strings of characters used to identify addresses on the Internet, are hot property. The recent high profile sales of domain names like wine.com, business.com and autos.com for amounts reaching well into the millions has made this clear. While domain names do not fall into any of the classic categories of intellectual property, they are often equally valuable to companies and raise a complex set of legal issues which are only just beginning to come to the attention of courts and legislators in Australia and around the world.

All email addresses and world wide web addresses use domain names. Let's say there is a large American company called Largeco Inc. It has registered the domain name ‘largeco.com’. The homepage of its website could therefore be at www.largeco.com and the general manager's email address may be headhoncho@largeco.com. Like phone numbers, no two domain names can be alike, as the domain name identifies a unique site on the Internet. However, the value of securing a commercially important domain name is much more than having a catchy phone number. Whereas a consumer wanting to find Largeco's phone number could simply look in the telephone directory or call an operator service, there is currently no comprehensive equivalent listing of these services on the Internet.

The consumer could use one of the ‘portal’ sites (such as Yahoo or NineMSN) which arrange links to other websites into categories. The difficulty for the consumer here is working out which category to look under, particularly when looking for companies whose diverse operations cover everything from salami manufacturing to a booking service for professional clowns. Even if the consumer does know which category to check, there is no guarantee that the portal site will have a link to the company's website.

Alternatively, the consumer could try a ‘search engine’ (such as Google or Yahoo - the latter is an example of a site which is both search engine and portal) to try to find references to Largeco on the Internet. The trouble here is that these searches can generate an enormous number of ‘hits’, many irrelevant. The consumer may have to look through pages of links to news articles about Largeco or competitors' sites which have used technical means of tricking the search engine (which is simply a software program) into thinking it has found a site about Largeco or scientific sites discussing the new form of gum bacteria, largecophococcus, which just happens to be nicknamed ‘largeco’.

Faced with these inefficient means of locating the Largeco website, the consumer is likely to instead try typing in the address ‘www.largeco.com’, in the hope that it is the correct site. Luckily it is. But now Largeco is wanting to set up another website for its Australian operations, and its searches find that the domain name of choice, largeco.com.au, has already been registered. Largeco contacts the person to whom the domain name is registered, who asks for A$200,000 to give up the domain name.

This sort of scenario is all too common in cyberspace and has generally resulted from ‘cybersquatting’, the practice whereby people deliberately buy popular names and then attempt to sell them to interested parties. The situation where cybersquatters target other organisations' trading names (like Largeco's) will be the main focus of this article. Disputes can also arise where two or more companies which have a legitimate claim to the same name attempt to register similar or identical names, but this would not normally be classed as cybersquatting.

Much of the reason for domain name disputes occurring has been the way in which the popular ‘.com’ domain names are allocated. The US organisation, Network Solutions Inc (NSI), allocates these domain names on a ‘first come, first served’ basis. This is regardless of whether the domain name has any connection to a trade mark or other trading name. This practice has meant that it has been possible for cybersquatters to buy up domain names on a grand scale.

However, the situation is different in for Australian com.au domain names. The organisation which allocates com.au names, Internet Names Australia, (‘INA’) has a more restrictive policy. Domain names usually have to be derived from a commercial entity name such as an Australian registered company or business name. The registrant must also be trading in Australia. This latter requirement can cause problems for foreign-based companies like Largeco. Notably, a registered trade mark is neither a requirement nor a guarantee of registering a domain name in the com.au domain at present.

Let's assume that ‘Largeco’ is a registered trade mark in Australia. In the case of trade marks registered in Australia, the Trade Marks Act (‘the Act’) offers some protection. Trade marks are defined in the Act as signs used to distinguish goods or services dealt with or provided in the course of trade. In the domain name context, the type of ‘signs’ at issue will be words.

The rationale behind the trade mark system is to protect ‘brands’ of goods and services. But as we have seen, domain names now operate in this same field, but without any formal alignment with the trade mark system. It is clear that registration of a domain name does not, of itself, give any rights against the holder of a registered trade mark. What protection does Australian trade mark law give to the trade mark owner who finds that the aligned domain name has been registered by another?

One difficulty is that trade marks have geographical restrictions since they are required to be registered in each country where they are used. The Internet is a global medium which does not recognise geographical boundaries. While this article focuses on Australian law, it is worth noting that the laws of other countries may also be of some relevance to domain name disputes with an Australian aspect and complex jurisdictional issues may need to be considered.

The Act prohibits the use as a trade mark of a sign that is substantially identical with or deceptively similar to, the registered trade mark in relation to any of the 42 categories of goods or services in respect of which the trade mark is registered. This may be a problem for Largeco if the person who registered ‘largeco.com.au’ is not operating the website in relation to goods or services in a category for which Largeco has registered its trade mark.

Otherwise Largeco would need to show that its trade mark is ‘well known in Australia’ in order to obtain trade mark protection. The Act offers protection for well known marks where a substantially identical or a deceptively similar mark is used on unrelated goods. If this is likely to indicate a connection between the unrelated goods or services and the registered owner of the mark, and adversely affect the interests of the registered trade mark holder, then there will be a trade mark infringement, and the registered owner may enforce its rights.

These provisions require that the trade mark be used in connection with goods and services. Therefore, to protect a domain name, the domain name would have to be used in this context. That is, the domain name would have to be associated with the goods and services (eg it could be part of the advertising for the goods and services). However, where a domain name is merely used as an address label, these provisions may not be effective.

Passing off is the longest-standing and most established cause of action in this area internationally. In fact, the system of registered trade marks developed out of the principles of passing off. To successfully bring an action for passing off, a plaintiff is generally required to prove three key elements:

• that reputation or goodwill exists in the name;
• that the defendant (cybersquatter) made a misrepresentation as to affiliation or endorsement under that name; and
• that damage to the value of the plaintiff's name and reputation resulted.

As far as domain name disputes are concerned, the greatest hurdle of these three tends to be the element of misrepresentation. Typically, the cybersquatter may post a disclaimer on the website, explicitly rebutting any implicit representation of endorsement which may be raised by the use of the domain name. Thus, there is no misrepresentation as to the identity or affiliation of the defendant's website, and the plaintiff therefore has no recourse under passing off.

However, the recent UK decision in the One in a Million case may foreshadow a shift towards a relaxation of the technical rules of passing off in this context. The defendants in that case admitted to registering a collection of domain names, including 'cadburys.com', 'spicegirls.com', 'burgerking.com' and 'marksandspencer.com'. These domain names were not in use as active websites (and thus there could be no misrepresentation to the public at large), but the defendants did admit to offering the domain names for sale at a substantial sum to the trade mark owners. The plaintiffs were successful and obtained orders that the defendants take steps to have the disputed names assigned to the plaintiffs. In relation to passing off, the Court held that the mere existence of the domain names created a risk of deception to consumers and stated that:

This injunction, ordered pre-emptively to restrain the threat of passing off, constitutes a significant expansion of the doctrine and may be used more often in the resolution of cybersquatting disputes.

NSI's laissez-faire approach to domain name allocation has given rise to a multitude of cybersquatting and other domain name disputes. In an attempt to equitably and expeditiously resolve these disputes, the Internet Corporation for Assigned Names and Numbers (‘ICANN’) recently adopted a Uniform Domain Name Dispute Resolution Policy (October 24, 1999) for names in the top-level .com, .net and .org domains. The Policy, together with its associated Governing Rules, prescribe a set of principles and procedures which are to be applied in resolving disputes between domain name registrants and aggrieved third parties. Essentially, the Policy allows for a complainant to institute mandatory administrative proceedings with an administrative panel appointed by an ICANN-authorised dispute resolution provider. The proceedings would require the complainant to establish that:

• the registrant's domain name is identical or confusingly similar to a trade mark belonging to the complainant;
• the registrant has no legitimate interests in respect of the domain name; and
• the domain name has been registered and is being used in bad faith.

If successful, the complainant may be assigned the domain name by order of the panel.

The first case decided under this policy was delivered on 14 January 2000 in the case of World Wrestling Federation v Michael Bosman. Bosman, a resident of California, registered the domain name www.worldwrestlingfederation.com with Melbourne IT. Melbourne IT provides registration of top-level domain names in Australia. Melbourne IT was directed to transfer registration to the World Wrestling Federation because Bosman showed bad faith by registering the name and then attempting to sell it at a price that exceeded his investment of time and money.

In addition to these independent proceedings provided for by the ICANN Policy, the United States Government late last year passed the Anticybersquatting Consumer Protection Act, to make any person who registers, traffics in or uses in bad faith a domain name which is identical or confusingly similar to a registered trade mark, civilly liable to pay the owner of that mark damages in the range of US$1,000 to US$100,000.

While the Australian Government recently participated in an international workshop on cybersquatting, there is no such legislation currently effective or proposed in Australia. However, INA's Allocation Policy for com.au names does provide for a dispute resolution procedure. The procedure requires the complainant to first send notice of the dispute to the administrator, then proceed to negotiation and conciliation with the administrator and any third parties and finally, if necessary, to refer the dispute to a commercial disputes centre (all parties agreeing to be bound by the ruling of the arbiter). The INA procedure is far less detailed than ICANN's and is not specifically limited to disputes relating to trade marks.

Both the ICANN and INA dispute resolution procedures outlined above do not have exclusive jurisdiction, and either party may still reserve the right to prosecute the matter through the traditional court system.

Given the lack of both legislation and case law in Australia, the law relating to domain names remains uncertain. As the number of disputes rises with the soaring popularity and commercial significance of the Internet, constant new developments are likely and will need to be closely monitored. Meanwhile the rush to register domain names will continue and companies should be mindful that if they do not register their desired domain name first, there may be no easy legal recourse. For greater certainty companies should ensure that their domain names are supported by appropriate registered trade marks.

This article provides a summary only of the subject matter covered, without the assumption of a duty of care by Freehill Hollingdale & Page. The summary is not intended to be nor should be relied on as a substitute for legal or other professional advice.

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