Cyprus: Domain Name Disputes

The selection and protection of a domain name may be the most important detail in the creation of a web site. Domain names function as the address for a web site, and disputes over domain names have become more common and more heated as the popularity of the Internet grows.

This article is not about "cybersquatting." The term cybersquating has been adopted by a few US courts and several commentators to describe the practice of registering domain names that correspond to unique and famous trademarks. The domain name registrant obtains the domain name with the hope of extorting money from the trademark owner in exchange for a release of the domain name.

As already mentioned, domain names are simply the addresses of the Internet. E-mail is sent and web pages are found through the use of domain names, e.g. web address of Cable News Network is www.cnn.com, while Larry King might have an e-mail address such as larryking@cnn.com. Of course, domain names are more than just addresses, since they can be selected by the "addressee" and are usually closely associated with a particular service or product.

Domain names are divided into hierarchies. The top-level of the hierarchy appears after the last dot (‘.’) in a domain name, i.e. .com where the domain name is owned by commercial enterprise, .org for non-profit organizations, .net for network and internet related organizations, .edu for colleges and universities, and .gov for government entities. Recently, seven new generic top domain names were approved (.aero, .biz, .coop, .info, .museum, .name, .pro) and are expected to be available by the end of 2001. [Incidentally, defying the authority that governs Internet names, a California startup (New.net) began selling web addresses early March, 2001 based on twenty new and unsanctioned suffixes including .kids, .travel and .xxx].

In addition to these generic domain names, each country has been given a unique top-level domain name, e.g. .uk for the United Kingdom and .gr for Greece. It is not compulsory for anyone to use these unique top-level domain names.

The disputes that arise over domain names involve "second level" domain names (‘cnn’ in the address www.cnn.com). Two identical second level domain names cannot coexist under the same top-level domain.

Prior of December 1999, a company called Network Solutions Inc. (NSI) was almost solely responsible for the registration of second level domain names for the most top-level domains (.com, .net, .org). As of December 1999, the ability to register was spread among many registrars.

These registrars are accredited by the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organization formed specifically to control Internet domain name management and similar functions. Following NSI’s precedence, all of these registrars assign names on a first-come, first-serve basis, and do not do any checking before assigning a new domain name.

Obviously, having a domain name that is the same as their company name or the name of one of their products can be an extremely valuable part of establishing an Internet presence. After a search to see if the desired domain name is taken or not, the company files an application with the appropriate agency.

When a company finds that the domain name corresponding to their corporate name or product trademark is owned by someone else, the company can either choose a different name or fight to get the domain name back from its current owners. When a dispute arises, the parties may turn to the courts or, take advantage of the Uniform Domain Name Dispute Policy (UDRP) that has been developed by ICANN (this policy has replaced the much maligned dispute policy of NSI).

While courts have the power to award control and ownership over domain names (just as they have authority to award control and ownership over any other property), the judicial process is, in general, notoriously slow and inexperienced in this field. Also, a possible court order suspending the web side until final judgment (or further order) could have an adverse effect on either party. Such an action could have the effect of shutting down the entire business of a domain name owner; and if the court fails to find actual trademark infringement, the party causing the suspension could be found liable for the damages resulting from such suspension. These, without regard for the age-old trademark criteria that would normally require a court to examine (although widely accepted that domain names were not meant to function as trademarks, they have become irrevocably enmeshed in trademark law).

Alternatively, the UDRP is used by all accredited registrars. Under this new policy, a trademark owner can initiate a relatively inexpensive procedure to challenge the existing domain name. In order to prevail, the trademark owner must show:

1. That the trademark owner owns a trademark [either registered or unregistered (use, without registration, entitles the user to "common law trademark rights)] that is the same or confusingly similar to the registered second level domain name.
2. That the party that registered the domain name has no legitimate right or interest in the domain name; and
3. That the domain name was registered and used in bad faith.

If all three points are successfully proven in the administrative proceeding, then the domain name can either be cancelled or transferred to the complainant.

The domain name owner can prove a legitimate right in a domain name by showing, amongst others:

• use or preparations to use the domain name in connection with a bona fide offering of goods or services prior to any notice of the dispute;
• that the domain name owner has been commonly known by the second level domain name;
• that the domain name owner is making legitimate noncommercial or fair use of the domain name, without intent of (i) commercial gain, (ii) misleadingly diverting consumers, or (iii) tarnishing the trademark at issue.

Bad faith may be proven by a trademark owner in a number of ways, including by showing that the domain name owner:

• registered the domain name primarily to disrupt the business of a competitor;
• is attempting to attract users to a web site for commercial gain by creating a likelihood of confusion with the trademark owner’s trademark;
• registering the name primarily for selling or transferring it for a price greater than out of pocket expenses (cybersquatting);
• engaged in a pattern of registering trademarks of others to prevent the use of the domain name by the trademark owner (a favorite of environmental organizations).
• Some of the factors considered to determine whether or not there is a likelihood of confusion between the domain name and the trademark are:
• the similarity between the trademark and the domain name. Names can be similar in three ways: appearance, sound and meaning;
• similarity between the associated goods and services- not only those described in the Web site, but also those that can be obtained through the web site;
• the Internet, unlike traditional trademark law, which requires a comparison of the geographic region in which each trademark is used, tends to break down geographic boundaries. However, depending on the circumstances this factor may apply nonetheless;
• the strength of the trademark. Obviously, some trademarks are entitled to less protection than others. If the trademark owner can show that relevant consumers were actually deceived by the conflicting domain name, then the infringement case is greatly enhanced. Evidence of actual confusion can be a strong indication that the domain name is confusingly similar to the trademark;
• the intent of the party that registers the domain name. For example, a clear attempt to derive benefit from the trademark owner’s goodwill won’t pass unnoticed (cybersquatting).

Of course, after the trademark owner makes the requisite showing to initiate the administrative resolution procedures, the domain name owner can stop the process by filing a complaint in a court of competent jurisdiction. In fact, either party can avoid the UDRP provisions and elect instead to resolve the dispute in court.

Domain names are presently the coin of the realm on the Internet. New technologies may eventually render domain names obsolete, but present Internet technology, both on the Internet itself and on the desktops of users, relies largely on domain names as identifiers of the source or affiliation of Internet websites.

As for the law and Internet community? They are challenged to develop new procedures and legal rules that adequately address the equities involved.