South Africa: The ICANN’s And CANT’S Of New gTLDs

Last Updated: 10 October 2013
Article by Dale Healy and Jani Cronje

A domain name offers a business an address in the global marketplace known as the internet. It is not surprising that the limited options available in existing top level domains (TLDs), has grown increasingly problematic.  For example, should a leading intellectual property firm wish to register its name, ADAMS & ADAMS, as a domain name in the .com top level domain, the fact that auctioneers trading in Iowa Falls, Unites States of America had already legitimately registered the domain name, would preclude the firm from doing so.  Of course, an alternative domain name could still be used by the firm, in the .com top level domain or in any other top level domain and so the firm would not necessarily be precluded from advertising on the internet entirely.

The fact remains that there are only so many inventive ways to spell certain words and so many TLDs within which to register a domain name.

The approval by ICANN's Board of the new gTLD programme in 2011, may have resolved the problem.  The new gTLD programme will allow for hundreds of additional TLDs to be added to the options already available to the public. As a matter of interest, 6 different entities have applied for the new TLD .law.  As a result, it may be possible for Adams & Adams to register the domain name in the future. 

An interesting question, however, arises.  What would be the position if a proprietor's trade mark were to be designated as a new TLD?  More to the point, would the delegation of the trade mark as a TLD constitute trade mark use by the Registry administering the TLD or by the Registrars allocating domain names within the TLD to prospective Registrants?  The answer to this question is one factor that will determine whether or not the Registry or Registrars could be held liable for trade mark infringement.  Much will, of course, depend on the facts of the particular case and this discussion is merely hypothetical.  The proprietors of well-known trade marks can rest assured that ICANN has made provision for the protection of the rights of interested parties.  This paper does not deal with the safeguards that ICANN has put in place, but only with the legal position if a trade mark proprietor did not avail itself of these safeguards for whatever reason.

In this hypothetical set of facts, should the proprietor of the trade mark own a registration in a class covering services identical or similar to "delegating or administering a domain name", the infringement provisions of sections 34(1)(a) or 34(1)(b) of the Trade Marks Act become applicable.

Under both sections, a requirement for infringement is that a mark be "use(d) in the course of trade".  Our Supreme Court of Appeal in Verimark (Pty) Ltd v. Bayerische Motoren Werke AktienGesellschaft 2007 (6) SA 263 (SCA), in considering the provisions of section 34(1)(a), held that if use of a trade mark creates the impression of a material link between the product and the owner of the mark, there is an infringement, otherwise, there is not.  Incidental or background use of a trade mark will not constitute use of a trade mark in the course of trade.

It is conceivable that the use of a trade mark as a gTLD (as an alternative to the use of a trade mark as part of a second level domain name), will, in the minds of consumers, create an impression of a material link between the domain name and the owner of the trade mark used as the TLD.  Very few people will appreciate that a TLD is administered by a registry and not by, for example, the registrant of the domain name.

In other words, the  use of a TLD incorporating a registered trade mark by a Registry and Registrars in South Africa, may infringe the rights of a trade mark holder in terms of section 34(1)(a) or section 34(1)(b) of the Trade Marks Act. 

In addition, section 34(1)(c) of the Trade Marks Act may, also, be applicable.

Section 34(1)(c) was enacted to prevent the dilution of a well-known trade mark (ie. use of the mark in relation to goods or services not covered by the relevant registration).  The requirement of "use in the course of trade" under section 34(1)(c) means use in the course of any trade.  It may, therefore, be possible to argue that use of a well-known trade mark to provide a new top level domain, for example .NIKE, constitutes use of the trade mark in the course of trade.  A Registry and Registrars will administer and offer for sale the new .NIKE domain and members of the public are able to "buy" a domain name ending in .NIKE, for example,

The fact that use of a well-known trade mark may constitute use of the trade mark in the course of trade by a Registry and Registrars, however, does not immediately mean that they can be held liable for trade mark infringement under section 34(1)(c).  The other requirements of section 34(1)(c) also have to be met for liability to be established.  The issue of proving economic harm immediately springs to mind.

The question now arises, whether the administration of a TLD incorporating or consisting of a well-known trade mark by a Registry and the registration of second-level domains by Registrars, will likely cause the relevant proprietor economic harm.  This is unlikely to be the case.  The mere existence of the domain .NIKE, will not mean that the proprietors of NIKE will suffer a loss of sales.  Although it may be argued that unfair advantage is being taken of the reputation in NIKE (in that registrants will apply to register a domain name in that domain), the existence of the domain itself, is unlikely to cause a loss to the proprietor of NIKE. 

It is far more likely that the registration and use of a second level domain name (the classic domain name infringement scenario), will result in a proprietor of a trade mark suffering a loss of sales.   In Dan River Mills Inc. v. Shalom Investments (Pty) Ltd (unreported decision WLD 7 November 1969) it was held that the common law principle, whereby liability for a delict attaches not only to the person actually committing it, but also to anyone who instigated, aided or abetted its commission or authorised another to commit it on his behalf, applies to the statutory wrong of infringement under the Trade Marks Act.  Apart from the question of whether a Registry or a Registrar is liable for trade mark infringement, the question arises whether in registering a domain name incorporating a trade mark, they are nevertheless committing a delict by aiding and abetting a registrant to infringe the proprietor's rights (if infringement by the registrant can be established).

There seems to be no reason why the Registry or Registrar could not be guilty of committing a delict.  A Registry and subsequent Registrars are not legally obliged to apply to administer the new TLD containing the trade mark.  It is not a responsibility imposed on them by legislation.  It is a commercial decision taken, for which they will receive compensation.  Ultimately, the registrant is only in a position to infringe trade mark rights, as a result of the Registry and Registrars' election to administer the relevant domain.

Of course, when considering the issue of aiding and abetting in this context, the conduct of the registrant has to be taken into consideration.  The likelihood of confusion and/or deception (a requirement for infringement set out in section 34 of the Trade Marks Act), also has to be considered.  The likelihood of confusion and/or deception will depend greatly on the facts and will vary from case to case.  However, if the conduct of the registrant amounts to infringement, the Registry and Registrars may well be liable.

Interested parties can peruse the applications made for new TLDs online on ICANN's website.  There are a multitude of applications.  Early indications are that unscrupulous entrepreneurs have not applied for TLDs incorporating well-known trade marks.  Or, it may just be that the precautionary measures implemented by ICANN, have deterred bad-faith applications.  It would, however, be interesting to hear a court's view on whether the incorporation of a trade mark in a TLD and the subsequent use of the TLD by Registries and Registrars could possibly attract liability (as trade mark infringement or delict).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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