Domain name disputes; what’s in a (domain) name?

For most businesses, a web presence is important because it allows customers and prospective customers to find you and the goods and services you offer. In today’s digital age, domain names are valuable business assets.

While many deals for domain names are subject to confidentiality, Business Insider reports that the most expensive domain name only sale was for $13 million, the domain being purchased … sex.com.

What is a domain name?

Domain names are part of the address for websites. A website is information hosted in one location (on a host computer) on the network of computers that is known as the internet.

Each computer/device connected to the internet has its own internet protocol address (IP address). An IP address denotes the location of a computer/device within the internet’s complex computer network.

In short, IP addresses allow the internet to work by enabling data to be shared between the host computer and a computer connected to the network via a browser (an application that can read that particular webpage) 

In order to access the information on any particular website, a user opens their browser (e.g. Google Chrome) and requests access to that webpage by typing in the website’s address.

Clearly, long strings of numbers would be very difficult for humans to remember and it is for this reason that domain names were developed. Domain names should be easily recognisable (and, if you are the registrant, hopefully memorable) labels that indicate ownership or control of a particular web site.

The component parts of a domain name

Each domain name is unique and has 2 parts:

1. top level domain (TLD); and
2. second level domain.

A TLD may either be generic or a country code. For example:

• “.com” (a commercial enterprise), “.biz” (businesses) or “.org” (organisations) are generic TLDs; and
• “.uk” (UK) and “.de” (Germany) are country-code TLDs.

The second level domain is what is generally used to identify a company’s trading name or trade mark.

How do I get a domain name?

The supply chain for domains generally has 3 links, the registry, the registrar and the registrant. The Internet Corporation for Assigned Names and Numbers is the body that oversees the internet’s naming system, accrediting registries and registrars. 

What rights do I obtain?

On acquiring a domain name, you enter into a contractual relationship with the registrar which will provide you with the exclusive right to use the domain name. It is important to note that acquiring the domain name does not, in itself, provide you with an exclusive right to use the name registered as the domain name generally.  

The domain name contract only provides you with the right to stop another person from registering an identical domain name. It does not mean that you can stop another business from using the name elsewhere (for example, in connection with its goods or services).

To obtain such an exclusive right to the relevant name for the specific goods and services that you offer, you must apply for and obtain registered trade mark protection. 

If you do not have registered trade mark protection then operating your business using the domain name as well as selling goods and/or services under the brand name will generate goodwill in that name. This may provide some protection under a common law right known as “passing off” (i.e. an unregistered trade mark). However, passing off is a more difficult and, often, more expensive right to enforce than a registered trade mark. 

Domain name disputes

Given their importance and value, it is unsurprising that domain names become subject to disputes. Wrongdoers in the context of domain names are often referred to as “cybersquatters”. Cybersquatting involves registering/using domain names in bad faith.

As most websites are used for trading activities, a cybersquatter may also infringe a registered trade mark or on the complainant’s passing off rights. However, that will not always be the case because cybersquatting can occur even where the cybersquatter is not acting in the course of trade (for example, gripe sites or an inactive site held for the purpose of seeking payment from a trade mark (registered or unregistered) owner (or a competitor) in excess of the costs of obtaining the domain name).

To formally enforce your rights, you could:

• invoke a domain name resolution process – e.g. the Uniform Dispute Resolution Process (UDRP) for many domains or, for a .co.uk domain, the Nominet Dispute Resolution Service (NDRS); or
• depending on the cybersquatter’s actions, bring a claim for trade mark infringement, passing off and/or defamation.

Uniform dispute resolution process and Nominet dispute resolution service

These dispute resolution processes were introduced to provide registrants with a quicker and cheaper alternative to Court proceedings. The trade-off is the limited remedies available if you succeed with a Uniform Dispute Resolution Process or Nominet Dispute Resolution Service complaint rather than court proceedings.

For a Uniform Dispute Resolution Process or Nominet Dispute Resolution Service complaint, the offending domain name will wither be cancelled or transferred to the complainant.

If the complainant succeeds with court proceedings, damages or an account of profits could also be awarded. Further, if urgent prevention of the alleged cybersquatting is an objective (for example if it is having a significant negative impact on your business), court proceedings have the additional benefit of the ability (in certain circumstances) to obtain very quick injunctive relief to cease the alleged cybersquatting, pending the Court’s final determination on the issue.

For the Uniform Dispute Resolution Process, the complainant must establish that:

1. the domain name is identical or confusingly similar to the complainant’s trade mark (registered or unregistered);
2. the alleged cybersquatter has no rights or legitimate interest in using the name; and
3. the domain name has been registered and is being used in bad faith.

The threshold in respect of the complainant’s rights to the relevant name is deliberately low and a registered trade mark will be sufficient.

The Uniform Dispute Resolution Process sets out non-exhaustive examples/indicators of: (i) an alleged cybersquatter having a legitimate right/interest to register and use domain name; and (ii) bad faith registrations and use.

Legitimate interests include:

• using (or preparing to use) the domain name for a good faith offering of goods or services before notice of the dispute;
• being commonly known by the domain name; and
• making legitimate non-commercial/fair use of the domain name.

Bad faith is indicated by registering the domain name to:

• seek payment from a trade mark (registered or unregistered) owner (or a competitor) in excess of the costs of obtaining the domain name;
• prevent a trade mark (registered or unregistered) owner from obtaining it;
• disrupt a competitor’s business; and
• attract (for commercial gain) internet users by confusion as to the source, sponsorship, affiliation, or endorsement of the website, or of a good or service on the website.

The .co.uk Nominet Dispute Resolution Service is very similar to the Uniform Dispute Resolution Process.

Litigation

In terms of the requirements to succeed with claims for trade mark infringement, passing off and/or defamation, please see the following:

• for passing off and trade mark infringement; and
• defamation

Tips

The following should be considered for protection and enforcement respectively.

Protection

• If you are a start-up or early stage business, it is perhaps worth carrying out a trade mark/domain clearance search to see whether there are any other businesses operating under an identical or similar trade mark or domain name.
• Consider registering a trade mark at the same time as acquiring a domain name to obtain the exclusive right to use the relevant mark for the goods and/or services that you offer/intend to offer.
• Incorporate an effective domain name management system to ensure that you do not miss renewal dates and that the Registry has your up-to-date contact details.
• On acquiring the domain name consider defensive registrations (see example below).

Enforcement

If you come across a cybersquatter, it is worth considering the following:

• What impact are the cyberquatter’s actions having on your business?
• if there is no (or minimal) impact on your business, it may not be worth taking any action at all;
• If there is some but an insubstantial harm, then it may be worth invoking the appropriate domain name dispute resolution process; or
• If it is causing your business to suffer substantial losses or has resulted in the cybersquatter making substantial profits, it may be worth considering legal proceedings; and,
• in all circumstances, taking legal advice.

Before taking any action, it is important to consider intellectual property threats provisions. If your contact with the alleged cybersquatter includes a threat of trade mark infringement proceedings then the alleged cybersquatter may be entitled to bring a claim against you if that threat was unjustified.