Cyber Squatting: A Virus for Domain Names

“Lies and distortions can be spread, via the Internet, in an inexpensive way, and the effects are astounding”

―Tony Campolo

1.     INTRODUCTION

The Industrial Revolution brought people together with machines in factories, and the Internet revolution brought together people with knowledge and information in virtual communities. And it is an undisputed fact that wealth creation is shifting from a resource to knowledge base. Intellectual Property(IP) is the creation of human intellect. It is in this avenue one needs to locate the status of IP laws and understand the gravity of the role played by the same. IP rights safeguard creators and other producers of intellectual goods & services by granting them certain time-limited rights to control their use. Among such rights one of the important emerging tool is Trademark. Trade marks have been defined as any sign, or any combination of signs capable of distinguishing the goods or services of one undertaking from those of other undertakings.Such distinguishing marks constitute protectable subject matter.[1]A trade mark, like any other sign, has to signify something else rather than itself in order to function as a trade mark.[2]

2.     DOMAIN NAMES

Trademarks are a key element of business success. They allow companies to distinguish their goods and services from those of their competitors, to promote them in the marketplace and to cement customer loyalty.[3] Many businesses, relying heavily on customer website usage, distinguish products through their trademarks, which indicate quality and help develop brand names.Thus, using trademarks as ‘domain names’ helps businesses to create a strong presence on the Internet. It is significant to know that there is no ‘legal’ definition of what a domain name is but to put it simply, a domain name is the Internet equivalentof a telephone number or a geographical address. It is the linguistic counterpart of what we call Internet Protocol (IP) address which is required to find and communicate with computer anywhere in the world “hosting” a websitesuch as yahoo.com, or wipo.int. As this proliferation of definitions suggests, domain names are more than mere addresses. They can be closely identified with the company itself in the sense that customers believe that a domain name should reflect the company name, as the court suggested in Cardservice Int’l v. McGee[4]  (“A customer who is unsure about a company’s domain name will often guess that the domain name is also the company’s name”) and in MTV Networks v. Curry[5]  (“a domain name mirroring a corporate name may be a valuable corporate asset, as it facilitates communication with a customer base”).In the last 10 years, domain names have become a kind of ‘e-commerce marks’ in the online medium.

A domain name,i.e., a “mnemonic” device that makes addresses easier to remember[6],consists of different parts. The first part is known as ‘second-level domain’ (or sub-domain), and is a part that can be chosen by the person registering the name. The end part, which reflects standard term throughout the world is known as ‘top-level domain’ (or domain extension). These are commonly referred to as gTLDs, i.e. ‘generic (or global) Top Level Domains. There are 14 gTLDs: .com, .edu, .gov, .int, .mil, .net, .org, .aero, .biz, .coop, .info, .museum, .name, and .pro and more to be introduced[7]. Many a times, the names assigned may also have a suffix indicating the country of origin, e.g., .in for India, .jp for Japan, etc. These are commonly referred to as ‘Country-code’ Top Level Domains (ccTLDs).The ICANN (Internet Corporation for Assigned Names and Numbers) has played a very important role in getting these new domain names passed. The domain names can be registered by approaching any ICANN accredited registrar.

3.     CYBER SQUATTING

The DNS (Domain Name System) first come-first served policy is a breeding ground for opportunists with neither trademark registration, nor any inherent rights to “pirate” or “squat” over domain names.Cyber squatters are such individuals who ‘attempt to profit from the internet by reserving and later reselling or licensing domain name (incorporating a famous mark) back to the companies’ that own the mark. The Indian Courts have relied on the definition given by the Delhi High Court in Manish Vijv. IndraChugh[8] wherein cyber-squatting has been defined as “an act of obtaining fraudulent registration with an intent to sell the domain name to the lawful owner of the name at a premium”. John D. Mercer also identifies “innocent” cybersquatting, whereby the registrant does infringe a trademark “based on some unrelated interest in the word itself, without intending harm to a trademark owner” and “concurrent” cybersquatting, whereby the registrant uses the same trademark as another commercial entity, but not within a competing industry.[9] According to him “an illegal cybersquatter should be one who acquires a domain name for the sole purpose of obtaining money or other advantage from the trademark owner, with no intent or desire to use the domain name, except as an instrument toward this purpose”.

The practice that’s come to be known as cybersquatting (also known as ‘domain squatting’, ‘domain name piracy’, and ‘cyber piracy’)was started by a few savvy individuals during the early days of theInternet when the Web began to gain momentum. These “entrepreneurs” understood howessential the Web would become and the intrinsic significant value of domain names and registered the names of well-known companies as domain names, with the intent of selling the names back to the companies when they finally woke up. Panasonic, Fry’s Electronics, Hertz and Avon were among the “victims” of cybersquatters.

As long as the cyber squatter owns the domain name, the trademark owner cannot register its own trademark as a domain name. Consequently, the cyber squatter then extorts the company and offers to sell the domain to the person or company who owns a trademark contained within the name at an inflated price which may be accredited as a sort of ransom. With the domain prices falling and more top level domains (.biz, .cn, .mob and lately .in) getting accredited, cyber squatters are making a lot of illegitimate profits.

TRENDS OF CYBERSQUATTING

One of the several variants is typosquatter, who seeks to profit from controlling domain names, but instead of acquiring an identical domain name to the registered trademark owner, the typosquatter obtains common typographical permutations of domain names surrounding a high traffic site. Typosquatting is presumptive of registration in bad faith.[10] The perceived goal of typosquatting, also called URL hijacking, is to get ‘hits’ from consumers who inadvertently misspell or mistype the name of the famous sites they actually intended to visit and thus is “mousetrapped” in a barrage of advertising windows. In Express Scripts v. WhoisPrivacy Protection Service[11], the complainant Express Scripts was one of the largest pharmacy benefit management companies in North America and operates and maintains the “www.express-scripts.com” website whereas the respondent’s website, at “expresscripts.com”, offers directly competing pharmacy related goods and services through search category headings containing links to various third party vendors, so the Panel orders that the Domain Name <expresscripts.com> be transferred to Complainant.

Further evidence of creativity of Internet ‘entrepreneurs’, is when someone uses a famous trademark in the post-domain ‘path’ of a URL in order to increase the number of visits to its webpage. ‘An effort to capitalize on established reputation’ constituted infringement and dilution of owner’s trademark.[12]Besides, this type of free-riding on another’s mark is routinely held to be actionable in typographical error and metatagging cases. Another variant takes the form ‘trademarksucks’ or adds similar distinguishing words to the trade mark and is purportedly used to convey dissatisfaction with the activities of trademark holder. In 2003[13], it was held that use of the site to make defamatory statements without any supporting evidence indicated bad faith rather than an intention to exercise the ‘right of free speech’. The recent trend is that many savvy web users make it a habit to see if a company ‘sucks’ web site exists before buying a product on-line. For example, if John is about to buy a new pool table from ‘coolpooltable.com’, he first checks to see if ‘coolpooltablesucks.com’ exists and contains any negative feedback.

Some of the other trends include: ‘the porn funnel’ in which a variation of domain name is used to ‘funnel’ traffic into a pornographic web site. Growing practice of registering the names of celebrities, particularly where domain name is used for a pornography site is of great concern[14]; the ‘fan sites’ in which fans anticipated that their idol would become hot property and so they registered the domain names in the hope of extracting commercial benefit. This constitute a registration in bad faith, regardless of the fact that they have never got around to using the domain name[15];‘Renewal Snatching’, if a domain name is not renewed before itsexpiration date and applicable renewal grace periods, cybersquatters frequently purchase that domain at a domain name auction and the owner may be obligated topurchase it from them (at an incredibly high price) and ‘Domain Name Tasting’, domain registrants ‘test’ a domain name for 5 days (the 5day mandatory testing period from ICANN) to determine the visitor traffic thatcan be monetized and then can ‘return’ it if it doesn’t appear as though it wouldcover the cost of the registration. The cybersquatters used to engage inan endless tasting on a particular name, but recent ICANN policies have slowedthat practice.

PHASES OF CYBERSQUATTING LITIGATION

Cybersquatters, typosquatters and other trademark infringers have made the Web a legal minefield. If one looks into the history of adjudication process of domain name disputes, then one may demarcate three phases of domain name dispute resolution.

First, judicial dispute resolution policy under Federal Trademark Dilution Act (FTDA) which gave way to application of ‘likelihood of confusion or deception’ analysis by the courts to adjudicate domain name disputes. Subsequently, the courts also started taking cognizance of the Lanham Act of 1976 in resolving domain name disputes. The rulings in Intermatic v. Toeppen[16] that the respondent, Mr Toeppen’s conduct caused trademark dilution since the registration of the domain name “www. intermatic.com” lessened the capacity of Intermatic to identify and distinguish its goods and services on the internet and the use of Intermatic’s name on the respondent’s web page diluted the value of the mark and in Panavision International, LP v.Toeppen[17] that Toeppen’s conduct diminished “the capacity of the Panavision marks to identify and distinguish Panavision’s goods and services on the Internet”have had a profound impact on the development of cybersquatting case law, as well as on the drafting of the second phase, i.e., ACPA. It was increasingly felt that though the FTDA has been useful in pursuing cybersquatters, but it was not proving to be an effective deterrent as it only reaches dilution of famous marks. Although the FTDA does not require that the aggrieved party prove a likelihood of confusion as to the origin of the information or goods at a given site, it does require the plaintiff to show that the defendant is making commercial use of the mark that is likely to dilute the mark’s distinctive value[18]. It was felt that in order to curb, the Congress must distinguish good-faith cybersquatting from bad-faith cybersquatting.[19]

Second, judicial dispute resolution under Anti-cybersquatting Consumer Protection Act (ACPA), the monumental step taken by the USA, amended the Trademark Act of 1946 to make liable in a civil action by the owner of a mark (including a personal name protected as a mark) any person who, with a bad faith intend to profit from that mark, registers, traffics in, or uses a domain name which, at the time of its registration, is identical or confusingly similar to a distinctive mark; dilutive of a famous mark; or is a protected trademark, word or name. The Act also creates an in rem action against offending domain names-an important new option for trademark owners when federal courts don’t have in personam(i.e. personal) jurisdiction over the domain name registrant in consort with protection of personal names[20] along with remedies which include injunction, forfeiture or cancellation of domain name[21], actual damages or profits, or elective statutory damages of between $ 1,000 and $ 100,000 per domain name[22].

The ACPA was first used in Sporty’s Farm LLC v. Sportsman’s Market, Inc.[23] to uphold an appeal decided under the FTDA.The case involved dispute over the domain name “sportys.com” between two competing aviation supply corporations. The Court concluded that it did not need to decide whether “sporty’s” was a famous mark, as was necessary under the FTDA, because it was an inherently distinctive mark, satisfying a qualitative test that can be applied before a mark has been used. The domain name “sportys.com” was indistinguishable from “sporty’s” because domain names cannot contain apostrophes, and thus met the ACPA test of ‘confusingly similar’, if not ‘identical’ and also evinced a ‘bad faith intent to profit’ as articulated in ACPA.This Act has been put to varied uses: to block parody website (PETA v. Doughney[24]); to protect free speech (Northland Insurance Co. v. Blaylock[25]); in bad faith registration (Mattel Inc. v. Internet Dimensions, Inc.[26]) and against typosquatters (Electronics Boutique Holdings Corp. v. Zuccarini[27]). However,critics of the ACPA complain about its failure to account for the global reach of cyberspace, and the Act reads as if the Internet were confined to the U.S. and its potential to restrict free speech. This is because the ACPA is domestic law rooted in “traditional” law and does not attempt to pioneer a new kind of law beyond its own jurisdiction. Even though the ACPA is a milestone in the regulation of cyberoffences and provides a useful blueprint for similar regulations.

Last, ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP), the most remarkable events in the past, particularly for solving international legal problems originating through the nature of the borderless internet on the one hand and intellectual property rights of some users on the other hand, was the foundation of the ICANN (Internet Corporation for Assigned Names and Numbers) in 1998 as a worldwide internet administration and the introduction of UDRP (Uniform Domain Name Dispute Resolution Policy) on the recommendation of WIPO on December 1, 1999 for effective and cost saving international domain name disputes.The UDRP is designed to solve disputes which usually arise when registrant has registered a domain name identical or confusingly similar to the trademark with no rights or legitimate interests in the name and has registered and used the domain name in bad faith.[28]UDRP is described as an “expedited administrative proceeding” whereby the holder of trade mark rights initiates a complaint by filing one with any of the four approved[29] dispute resolution provider.

In Bennett Coleman & Co Ltd. v. Steven S Lalwani^[30] and Bennett Coleman & Co Ltd. v. Long Distance Telephone Company^[31] (combined), the arbitration panel of WIPO gave the decision in favour of the plaintiff, asking the respondent to transfer the domain name to the plaintiff. In this case, the respondent had registered domain names “www.theeconomictimes.com” and “www.thetimesofindia.com” in the United States, which are the trademarks of the plaintiff. These two domain names were similar to the names of the Plaintiff’s websites www.economictimes.com and “www.timesofindia.com” and the respondent’s websites using the domain names similar to the plaintiff, redirected the users to a different website “www.indiaheadlines.com” which provided India related news. The WIPO judgment recognized the fact that the complainant had a very substantial reputation in their newspaper titles arising from their daily use in hard copy and electronic publication. In India itself, wrongfully adopting the titles so as to mislead the public as to the source of publications or information services would in all likelihood amount to the tort of passing off. The reputation was the result of actual use and was the crux of the complaint. The panel held that the respondent had no rights or legitimate interest in the domain names and the registration was done in bad faith, in an intentional attempt for commercial gain and to attract internet users by creating a likelihood of confusion with the complainants marks as to the source, sponsorships, affiliation or endorsement of those web sites and the services on them.[32]

Recently, complainants found success in other similar cases like The Coca-Cola Company v. Private Registration[33], the domain name involved- “mycokerewads.com”; PayPal, Inc. v. Daniel Benel[34], the domain name involved- “mypaypal.com”; Miss Universe L.P., LLLP v. Andre Miron[35], the domain name involved- “missuniverscanada.com”; L’Oréal v. Tina Smith[36], the domain name involved- “kerastasehaircare-uk.com”;Glasgow 2014 Limited v. Vipin Kumar, Yajas Web Solutions[37], the domain name involved in the dispute was- “2014commonwealthgames2014.com”, etc.

As on August 9, 2013, around 26909 cases have been handled by the WIPO.[38]For any dispute resolution mechanism to reach up to this stage in the last thirteen years is a laudabletriumph.

4.     INDIAN APPROACH

In India, victims of cybersquatting have several options to combat cybersquatting. These options include: sending cease-and-desist letters to the cyber squatter; bringing an arbitration proceeding under ICANN’s rules; or bringing a lawsuit in state or federal court.

In order to resolve disputes related to .IN domain names NIXI has evolved an Alternative Dispute Resolution mechanism namely .INDRP (.IN Domain Name Dispute Resolution Policy) based on the Indian Arbitration & Conciliation Act, 1996 and the principles given under the UDRP of ICANN.[39]

There is no provision in the current Information Technology Act in India to punish cyber-squatters, at best, the domain can be taken back. Though there is no legal compensation under the IT Act, .IN registry has taken proactive steps to grant compensation to victim companies to deter squatters from further stealing domains. In the absence of an explicit legislation, Indian courts apply provisions of the Trade Marks Act, 1999 to domain name disputes. The Court in Satyam Infoway Ltd v. Sifynet Solutions Pvt. Ltd.[40] further observed that: “As far as India is concerned, there is no legislation which explicitly refers to dispute resolution in connection with domain names. But although the operation of the Trade Marks Act, 1999 itself is not extra territorial and may not allow for adequate protection of domain names, this does not mean that domain names are not to be legally protected to the extent possible under the laws relating to passing off“.

The first case that came up before the Indian Courts was Yahoo! Inc. v. AkashArora[41]in which an attempt was made to use the domain name “yahooindia.com” for Internet related services as against domain name i.e. “yahoo.com”, The Court observed that usually the degree of the similarity of the marks is vitally important and significant in an action for passing off for in such a case there is every possibility and likelihood of confusion and deception being caused. When both the domain names are considered, it is crystal clear that the two names being almost identical or similar in nature, there is every possibility of an Internet user being confused and deceived in believing that both the domain names belong to one common source and connection, although the two belongs to two different concerns.

Other instances where the Indian Courts have restrained the defendants from using such domain names are: Rediff Communication v. Cyberbooth&Anr[42] (the domain name involved was “radiff.com” which was similar to “rediff.com”)Tata Sons Ltd. v. Manu Kosuri[43] (restrained the defendant from using domain names like “jrdtata.com”, “ratantata.com”, etc.); Times Internet Ltd v. M/S Indaitimes.Com & Another[44] (permanent injunction was granted for using “indaitimes.com” domain name similar to the complainant’s “indiatimes.com”) and even punitive damages are granted so that the trafficking in the domain names can be discouraged in Mr.ArunJaitley v. Network Solutions Pvt. Ltd. and Ors[45]for using “www.arunjaitley.com” and further held that “domain names are protected under the law of passing off with a personal name being no exception. Right to use a personal name is superior to that of the commercial right of using the trade mark and thus the entitlement to use it as a trade mark or domain name vests with the person having its personal name”.

Besides, since the global expansion and acceptance of UDRP is a testimony of its simplified procedure, easier accessibility and arbitral transparency, a growing number of Indian companies have chosen to settle their domain name disputes through the UDRP.

In MarutiUdyog v. MarutiInfotech[46], a complaint was filed with WIPO over a dispute relating to the domain name “maruti.org.” MarutiUdyog, a well-known car manufacturer, proved that the trade mark “Maruti” was associated with its products and that a person of average intelligence and imperfect recollection would be led to believe that the domain name was associated with them Moreover, the respondent sought to sell the domain name to the complainant for valuable consideration The WIPO panellists, therefore, held that there was a clear intent on the part of the respondent to make unmerited profit from the registration of the domain name and transferred the name to MarutiUdyog.

In Madhuri Dixit Nene v. VG Online[47]the Panel orders that the disputed domain name “madhuridixit.net” be transferred to the Complainant Mrs.Madhuri Dixit Nene, a famous Indian film actress whose career spans almost three decades and is the owner of and proprietor of several trade mark registrations in India for the trademarks MADHURI DIXIT (with her image) as a composite mark, after satisfying all the 3 elements i.e., first, the disputed domain name is identical or confusingly similar to a trademark, second, the respondent has no rights or legitimate interests in respect of the disputed domain name, and third, the disputed domain name has been registered and used in bad faith.

Similar recent instances of cybersquatting where the cybersquatter have been deprived of using the disputed domain name like: MakeMyTrip (India) Pvt. Ltd. v. Raj Kumar / PrivacyProtect.org[48](the defendant was restrained from using the domain name“makemy-trip.com”)Volkswagen AG v. AdityaRoshni[49](the disputed domain name was “vwr32.com”); WIPRO Limited v. Igarashi,Katsuhisa[50](the domain name involved was “wiprocorporate.com”); Google Inc. v. Shahzad Ali[51] (the panel ordered the domain name “pakistanadsense.com” to be transferred to the complainant).

5.     CONCLUSION

Since domain name which gives the identity of the person, goods and service in the cyber-society as that of trademark in meta-society, it is very important to find proper authority for registrations and regulation of domain name system. Though there is ICANN providing for the UDRP along with WIPO as an arbitrator and leading accredited domain name dispute resolution provider on one hand, and legislation like ACPA in USA on the other hand, there is need of an effectual remedy for redressing cyber-squatting.

The most obvious solution to preventing a typosquatter from using a trademark as a domain name is for trademark owners to register as many variations of their domain names as possible.The Online Dispute Resolution could also be one of the effective dispute redressal mechanisms if provided with proper legal clamps[52].The “internal” solution in US is proving one method of mass action which is affecting the balance of power between right-owner and their opponents i.e., the Notice-and-Take-Down procedures for controlling improper content on the Internet by requiring site-closure or changes through the intervention of Host Service Provider, however, it too is capable of over-enthusiastic application[53].Another proposal, and one which has found many advocates is one which calls for the expansion of the numbers of gTLDs that are currently available. Some have even called for specific proposals to have a specific gTLD for registered trademarks and for specific classes of business.[54]

Some other suggestions regarding Indian context are: New and Rigid Legislation-There is an urgent need to draft a new legislation in India which would expressly deal with domain names. The lack of a direct law furthers cyber squatters’ cause as they can easily find loopholes in the law which would exonerate them from any trial. Furthermore, resorting to the archaic law of trademarks would mean a lot of time being wasted in the trial courts and in the virtual world where time is of utmost essence, this is very harmful leading to the extinguishment of the right claimed[55]; Independent Adjudicatory Body-The US national arbitration forum and the Czech arbitration court[56] should be taken as examples and a parallel body needs to be set up in India; Revamping INDRP-The problem with it being a policy is that it is not mandatory to follow, hence the regime is lax. The need of the hour is to make it more compliant with UDRP and give it the shape of law; Arbitration-All arbitration decisions of the WIPO Arbitration and Mediation Centre should be made binding in India under the Arbitration and Conciliation Act 1996. This way ICAAN and WIPO decisions will ease the overburdened Indian court system; Registrar’s responsibility-Finally, in the light of still ever-increasing rate of cybersquatting in India and other countries, it is important to make a concerted effort by registrars to address and curb it at the registration level itself by looking into the claim of the person and doing some back ground checking on it rather than just blindly allocating domain names. In the present scenario, many commercial organisations which are entering the field of Internet commerce are now choosing their domain name first, before embarking on a programme of trademark registration so that they do not have to tackle the virus of cybersquatting.

It seems probable that most jurisdictions will face similar issues, and will resolve them in similar ways. However, there are as yet no clues as to how the law will, or should, deal with registration by non-commercial organisations or persons, who by definition cannot be guilty of trademark infringement. These matters will need to be dealt with under the UDRP or its national equivalent, or by commercial negotiations and corporate takeovers.

Ultimately, it is increasingly important to implement methods that will prevent cybersquatters from profiting from the reputation, good name or trademark of third parties, and equally important to balance the public’s right not to be deceived and that is why if the trademark law is broadened to give extensive rights to trademark owners this can open a can of worms by assigning them rights which they might not be entitled to.

Really, the Internet has changed how people live, work, play, learn and LITIGATE.

Submitted by:

SHIKHAR AGARWAL

B.A., LL.B. (Hons.), 3^rd Year

Jamia Millia Islamia University, New Delhi