Cybersquatting consists in the practice of registering domain names using unauthorized third-party trademarks. The cybersquatter may then try to resell the domain names to their rights owners. Some cybersquatters use these “fraudulent” domain names to redirect online traffic to websites distributing similar competing products or services, while other cybersquatters use these domain names to operate websites selling infringing products or services.
The businesses most affected by cybersquatting are primarily fashion brands, followed by banking and finance services, and internet and IT services.
The rights owners can either enter into legal proceedings or opt for an out-of-court procedure to recover or remove the domain names that include their trademarks. Out-of-court procedures such as the ICANN Uniform Domain-Name Dispute Resolution Policy (UDRP) are now widely used as a fast and cost-effective process to recover domain names.
1. Using the UDRP to recover a domain name
The UDRP can be used by rights owners for disputes involving domain names registered abusively using their trademark, and only for domain names with the following generic extensions (gTLDs): .com, .net, .org, but also .aero, .asia, .biz, .cat, .coop, .info, .jobs, .mobi, .museum, .name, .pro, .tel, .travel and new gTLDs. (1)
UDRP cases are handled by ICANN-accredited dispute resolution organizations, including the WIPO Arbitration and Mediation Center (based in Geneva, with an office in Singapore), the National Arbitration Forum (United States) and the Asian Domain Name Dispute Resolution Center (ADNDRC) (based in Hong Kong, with offices in China, Korea and Malaysia). (2)
To be admitted, the rights owner’s complaint must meet three cumulative conditions:
i) Identical or confusingly similar: the allegedly fraudulent domain name must be identical or similar to a trademark owned by the rights owner and create confusion in the mind of the public/consumers ;
ii) Rights or legitimate interests: the registrant of the allegedly fraudulent domain name must have no rights on the domain name and no legitimate interest related to that domain name; and
iii) Registered and used in bad faith: the allegedly fraudulent domain name must have been registered and used in bad faith.
The proceedings are quite simple and include the following steps: a complaint is filed by the complainant, a response is sent by the respondent, the case is reviewed by an expert panel, the expert panel renders a decision and the decision is executed.
The case is usually handled over a period of 60 days. The administrative charges are reasonable and are usually between USD1,500 and USD5,000. The administrative charges are paid by the complainant unless the respondent requests a panel of several experts, in which case the cost is split between complainant and respondent. However, under this process, the complainant cannot request damages. A UDRP decision will either order the disputed domain names to be removed, transferred to the complainant (rights owner), or the complaint may be rejected if it doesn’t meet the three cumulative conditions mentioned above.
In its 2016 annual report, the WIPO claims a 10.5% increase in the number of UDRP cybersquatting cases handled concerning 4,364 domain names, compared to the previous year. (3)
2. The Moncler case: an example of a cybersquatting case handled through UDRP (4)
The Moncler case, held in early 2016, is a good example of cybersquatting and how a rights owner can claim back disputed domain names under the UDRP process.
Moncler, an Italian high end fashion sportswear company owns several trademarks, including the Moncler trademark and several domain names including moncler.com.
Three Chinese individuals had registered fifty domain names including the Moncler trademark (<monclersaleie.com>, <monclersaleireland.com>, <ukmoncleroutlet.com>, <outletmoncleruk2015.com>, <moncleroutletbest.com>, etc.). Most of these domain names led to websites using the same format, wording and pictures from the Moncler official website and selling counterfeit goods. Other domain names led to parking pages offering pay-per-click links, some of which leading to competitors’ websites.
Moncler filed a UDRP complaint with the WIPO Arbitration and Mediation Center to claim back the infringing domain names.
The case was reviewed by the WIPO panel according to the three conditions of the UDRP :
- After confirming Moncler’s rights in the Moncler trademark, the panel found that each disputed domain name contained the full Moncler trademark. The panel held, citing a previous case, that “The fact that a domain name wholly incorporates a complainant’s registered mark is sufficient to establish identity or confusing similarity for purposes of the Policy.”
Most of the disputed domain names also included the word “outlet” which, used with the trademark, was confusingly similar to that trademark.
- Moncler argued that the respondents had no rights or legitimate interests in respect of the Moncler domain names. The respondents had not been authorized to include the Moncler trademark in the domain names or to make any other use of the trademark, and they were using the domain names to sell counterfeit goods online and to refer to activities in competition with Moncler’s activities.
The panel found that the complainant had established its prima facie case. Without any evidence from the respondent to the contrary, the panel held that the complainant had satisfied the second element of the policy.
- The third element of the Policy is whether the domain name was registered and used in bad faith.
Moncler argued that the domain names were used in connection with websites offering counterfeit goods for sale, that the domain names were used in connection with PPC websites (parking pages) containing links to Moncler’s competitors and that by registering 50 domain names using the Moncler trademark, the respondents had engaged in a pattern of conduct that also constituted bad faith.
The panel held that the complainant had satisfied the third element of the policy.
Therefore, the Panel decided that the complainant had met the three conditions of the policy and ordered that the disputed domain names be transferred to Moncler.
The decision was issued on 18 January 2016, less than six weeks after the complaint was filed with the WIPO Arbitration and Mediation Center.
In conclusion, the UDRP process allows to resolve trademarks vs. domain names disputes within a few weeks and for a lesser cost than a full legal procedure. This process is also often used for international cases, when complainant and respondent are located in different jurisdictions. With a UDRP decision, the complainant may get the disputed domain names removed or transferred, without an exequatur process, which would usually be necessary to get a court decision recognized and enforced in another jurisdiction.
However, as mentioned above, a UDRP complaint cannot include a claim for damages and the administrative costs are usually borne by the complainant. UDRP decisions are final, with no appeal process. This is the reason why complainants often choose to file legal proceedings in addition to a UDRP process, and claim damages especially if several domain names are involved and if they also have an intellectual property claim (such a the sale of counterfeit goods), an e-reputation claim or a fraud claim.
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(1) See www.icann.org, Domain Name Dispute Resolution Policies.
(2) Country domain names (ccTLDs) disputes can also be filed with the WIPO Arbitration and Mediation Center under their Domain Name Dispute Resolution Service. Not all ccTLDs are concerned though (see http://www.wipo.int/amc/en/domains/cctld/). Also, for .fr domain names, Afnic, the French registrar and country code manager has launched a domain names dispute resolution policy in 2011 called Syreli (https://www.syreli.fr/)
(3) Report of the Director General to the 2016 WIPO Assemblies
(4) WIPO Arbitration and Mediation Center, Administrative Panel Decision, Moncler S.p.A. v. Yao Tom, Lee Fei & Geriy Wang, Case n°D2015-2244
Bénédicte DELEPORTE
Avocat
Deleporte Wentz Avocat
www.dwavocat.com
December 2016
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