Intellectual Property: Domain Name Issues in Hong Kong - Term Paper Example

INTELLECTUAL PROPERTY ESSAYS: DOMAIN ISSUES IN HONG KONG 2006 Introduction The global system of domain s is used to facilitate navigation of the Internet. The principle of this system is rather simple: domain name is mapped a numeric Internet Protocol Number corresponding to it. Global nature of the domain name system means that users from any place can access the corresponding online address regardless of their actual location. A decade ago, when the Internet was barely used for commercial purposes, domain names had little, if any, economic value. However, ever increasing role of the Internet as the core stem of the global economy and drastic changes in the international trade mode has turned domain names into very important instruments in business environment. At present domain names represent virtual identities of companies and businesses on the Internet and help create shareholder values in such areas as marketing, advertisement, sales, and protection of intangible assets, improvement of the company's competitive position. Logically, highly increased commercial value of domain names has raised a number of controversial issues with the problem of cyber-squatting being arguably the most important among them. Absolute majority of domain name disputes are the result of cyber-squatting - the practice of pre-emptive registration of existing companies' trademarks or names of famous people as domain names by third parties1. The practice of cyber-squatting rests upon the core principle of the domain names system: the one whom claims to register any domain name which has not been registered yet is given this option and obtains exclusive rights for the newly created domain name. The fact that the cyber-squatters do not have any affiliation with the trademark or name they register as the domain name is neglected by the system. Comparatively low cost and simplicity of a domain name registration procedure (normally, not more that US $50) stimulate the practice of cyber-squatting greatly: one person may sometimes have rights for several hundreds domain names featuring names of serious businesses, corporations or celebrities2. Attractiveness of cyber-squatting rests upon still increasing commercial value of the Internet. Being aware of the economic importance of domain names in contemporary global market, cyber-squatters offer the domain names registered by them to the corporation/person/business involved at much higher price than they paid for registration. In case the offer is not accepted, cyber-squatters may indirectly cause serious economic damage by either attracting customers to their own web-sites by virtue of the company/person's reputation and popularity, or by associating the domain name featuring a recognized business or person name with a pornographic site, for example. Such dilution of values seriously damages intangible assets of a company3. Remedies Available to Trademark Owners in Hong Kong Apparently, given economic value of domain names, Hong Kong, as virtually any country in the world, faces the problem of cyber-squatting. In January 2004 the new Domain Name Dispute Resolution Policy came into force to regulate registration and resolve disputes associated with domain names in Hong Kong. The structure and principles of the Hong Kong Domain Name Dispute Resolution Policy (HKDNDRP) bear much resemblance to US Domain Name Dispute Resolution Policy. Supposedly, this resemblance may be explained by the fact that "physical architecture of the domain name system itself is US-controlled"4. The main objective of the HKDRP is to decrease occurrences of the most notorious practices of cyber-squatting and thus minimize the expenses for resolving associated disputes. Disputes caused by other considerations are reviewed by courts. Therefore, the HKDRP can hardly be viewed as an equivalent of the court system in cases involving domain names: it is rather an instrument to quickly resolve the most obvious cases without costly and slow litigations5. The basic issue underlying absolute majority of the disputes over domain names in Hong Kong is the conflict between trademarks (either registered or non-registered) and domain names. The key question is whether domain names function as trademarks on the Internet or not There are two diametrically opposite points of view on this problem. One of these points advocates technical nature of domain names and Internet addresses comparing them to phone numbers or physical addresses that help us reach people or companies in normal life. Clearly, advocates of this point do not consider domain names as trademarks6. Yet, proponents of the second point of view argue that domain names function as trademarks on the Internet and, therefore, must be granted legal protection under the common trademark law. Functions of domain names in contemporary business environment seem to go further than being mere technical means to reach the company on the Internet. The fact that domain names function as virtual identities of the company strongly supports this point of view7. Apparently, Domain Name Dispute Resolution Policy applied in Hong Kong tends to adopt this second point of view on the nature of domain names. Scope of the HKDRP is defined by Paragraph 1: it covers all disputes associated with registration and/or use of the domain names which are managed by Hong Kong Domain Name Registration Company. The HKDRP envisages specific rules for associated procedures and also supplemental rules applied for individual dispute resolution service provider. Currently, there are two dispute resolution service providers in Hong Kong: the Hong Kong International Arbitration Centre (HKIAC) and the Asian Domain Name Dispute Resolution Centre (ADNDRC). The latter is one of the four globally recognized and approved providers of such services in the world, while the first is acknowledged to be the leader in this field in the Asia-Pacific region8. The HKDRP vests the responsibility for resolving domain name disputes on independent Dispute Resolution Service Providers (DRSP) and grants the following remedies in case the DRSP finds the Complaint's case strong enough: "The remedies available to a Complainant pursuant to any proceeding before an Arbitration Panel shall be limited to requiring the cancellation of your Domain Name or the transfer of your Domain Name registration to the Complainant"9. In order to initiate the proceeding the complainant must submit his complaint supported by a burden of proofs to the Dispute Resolution Service Provider. The proofs should demonstrate that the following three conditions envisaged by Paragraph 4 of the HKDRP are present: 1. Domain Name of the respondent is identical or confusingly similar to a trademark or service mark in Hong Kong in which the Complainant has rights; 2. the respondent has no rights or legitimate interests in respect of the Domain Name; 3. the respondent's Domain Name has been registered and is being used in bad faith10. In case all of these three conditions are demonstrated, the Complainant succeeds in the arbitration proceeding and takes advantage of the remedies envisaged by the HKDRP. Problems Encountered Trademark Owners in Enforcement against Infringing Activities in Hong Kong Basically, domain name dispute policy implemented in Hong Kong provides sufficient protection for trademark owners. Furthermore, the overall impression of the policy makes one think it favors trademark owner over disputed domain name holders. Although the history of Hong Kong legal cases and disputes involving domain names is rather short to reveal all the problems both parties might potentially face due to doubtful resolution guidelines, mere analysis of the existing framework for domain disputes resolution in Hong Kong suggests that such problems do exist. The first condition envisaged by Paragraph 4 of the HKDRP includes the phrase 'confusingly similar', but fails to provide either explanation of this term or any method to test and measure it. Consequently, definition of whether disputed domain name is 'confusingly similar' to a trademark or service mark is left at the discretion of the arbitration panel. The second condition of the same paragraph contains a doubtful provision as well. While the fact that the respondent does not have right or legitimate interest over the domain name in dispute is considered as important evidence in support of the complainant's case, there is absolutely no instruction on how the respondent is expected to demonstrate his legitimate interest in or right to the disputed domain name. Then, the Policy provides rather unclear provision on the circumstances that should demonstrate absence of rights and interests of the respondent for the disputed domain name. Paragraph 4(c) outlines the following evidences for the respondent to demonstrate his rights and interests in regard to the domain name in dispute: 1. before any notice to you of the dispute, your use of, or demonstrable preparations to use, the Domain Name or a name corresponding to the Domain Name in connection with a bona fide offering of goods or services in Hong Kong; or 2. you (as an individual, business, or other organisation) have been commonly known by the Domain Name, even if you have acquired no trade mark or service mark rights in Hong Kong; or 3. you are making a legitimate non-commercial or fair use of the Domain Name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trade mark or service mark at issue11. Apparently, these circumstances are examples of bona fide registration and use of the domain name. However, the Policy does not provide any distinct guidelines to be followed by the arbitration panel in making up the decision regarding the respondent's rights and interests. Thus, in disputes involving registered trademarks or domain names that have not been recognized in Hong Kong, the decision is unpredictable: the panel may interpret these bona fide circumstances in a number of ways12. The only difficulty a complainant may face protecting his rights over the disputed domain name is associated with proving the bad faith registration and use. While, for example, Chinese Domain Name Dispute Resolution Policy requires proofs of either bad faith registration or bad faith use of the domain name in dispute (CPDRP), Paragraph 4a of the HKDRP prescribes to demonstrate both the bad faith registration and the bad faith use of the disputed domain name13. In many cases the need to prove both registration and use in bad faith may be very difficult. The most illustrative case in this regard is Telstra Corporation Ltd. v. Nuclear Marshallows dispute which was reviewed by WIPO Arbitration and Mediation Center. The panel followed Uniform Dispute Resolution Policy (UDRP) that, similarly to the HKDRP, required the complainant to prove both bad faith registration and bad faith use of the disputed domain name . Although the panel decided to transfer the disputed domain name to the complainant, they had difficulties trying to establish the bad faith use: the respondent did not in fact use the domain name - the holding was passive14. Comments as to Reforms or Amendments: Comparative Analysis The ongoing process of international economic integration requires establishment of the global market economy based upon balanced and reasonable legislation effective at both national and international levels. Apparently, intellectual property law must be paid primary attention in this regard. World Trade Organization (WTO), which provides the guidelines for the legal framework of international IP legislation, requires intellectual property law adopted at national level be effective enough to operate at the international level as well. Hong Kong is a founding member of WTO and its domestic framework for domain name disputes resolution follows the requirements of this organization. Hong Kong domain dispute resolution policy currently in force establishes mechanism for invoking an arbitration panel to resolve disputes on the domain name registration and use. This mechanism is commonly acknowledged to be the best alternative in this regard: it is less expensive, much faster and less complicated method as compared to the court trial15. However, the country does not have any legislation in place covering the registration and use of domain names, comparable to the corresponding US legislation, for example. As a result, in cases that can hardly be resolved within the framework of existing DRP Hong Kong courts lack legal guidelines to follow. US legislation covering the issue of domain name infringements is vast. The Trademark Dilution Act passed in 1995 and the Anticybersquatting Consumer Protection Act passed in 1999 coupled with the traditional trademark and unfair competition laws ensure effective protection of trademarks in US courts. While the Trademark Dilution Act and the Unfair Competition Act are not specifically intended to apply to domain names, the can be effectively used to resolve domain name disputes in the court and protect registered and unregistered trademarks16. On the contrary, the Anticybersquatting Consumer Protection Act (ACPA) was elaborated specifically for the purpose to establish a civil course of legal action to protect trademarks against infringers "who, in bad faith, "register, traffic in, or use" a domain name that is identical or confusingly similar to the mark owner's distinctive or famous mark; or dilutive of its famous mark; or a mark, word or name specifically protected by federal statute"17. The ACPA provides trademark owners with an opportunity to request monetary compensation for damages caused by unlawful domain registration. In some cases the amount of compensation may include attorney fees, apart from lost profits and other costs. The award of statutory damages is limited to $1,000 - $100,000 per one domain name18. Up to now, no equivalent of the ACPA has been adopted in Hong Kong. Consequently, the Hong Kong courts can only follow the general rules in awarding the winning party. However, in many cases the monetary relief is not likely to compensate for all the damages suffered by the trademark owner, although the 'looser pays' principle is followed by the Hong Kong courts: in practice, the award does not exceed 60-70 percent of the actual damages due to specific assessment approach practiced by the courts19. The ACPA also adds clarity to the interpretation of term confusingly similar thus improving the quality and reliability of court decisions. In the Northern Light Technology, Inc. v Northern Lights Club case the defendant drew the court's attention to the fact that the term confusingly similar used in both the ACPA and UDRP required mere direct comparison between the trademark and the allegedly infringing domain name20. However, traditional trademark law required more complex procedure of comparison (known as the test of likelihood of confusion) in cases involving trademark infringement in physical world. Consequently, the court established eight assessment criteria to define confusing similarity: "similarity of marks, similarity of goods (or services), relationship between the parties' advertising, classes of prospective purchasers, evidence of actual confusion, defendant's intent in adopting the mark, and strength of the mark"21. The Hong Kong courts lack similar clarity in defining confusing similarity and the HKDRP does not include any detailed guidelines for this term too. The US approach is more preferable than the one to be implemented by Hong Kong courts and dispute resolution service providers: absence of transparency in defining confusing similarity may seriously complicate the process of dispute resolution and/or lead to unfair decision, while balanced and clear cut criteria are likely to speed up resolution of domain name disputes and reduce the probability of unfair decision being made. Poor development of legislative basis for domain name disputes resolution is reflected in the HKDRP. Paragraph 4(k) of the UDRP establishes availability of court proceedings for both the complainant and respondent: "The mandatory administrative proceeding requirements set forth in Paragraph 4 shall not prevent either you or the complainant from submitting the dispute to a court of competent jurisdiction for independent resolution before such mandatory administrative proceeding is commenced or after such proceeding is concluded"22. Absence of similar provision in the HKDRP is most likely due to the fact that the courts desperately lack express guidelines to deal with domain name cases. However, an important advantage of the HKDRP over, for example, Chinese policy is that it includes, similarly to the UDRP, the bad faith provision on the part of compliant. Under the UDRP and HKDRP a complaint is considered to involve bad faith when the goal of complainant is to strip the domain name registrant of a domain name without any serious reasons for doing so. The term for this behavior is 'Reverse Domain Name Hijacking' (RDNH). Rule 1 of the UDRP and HKDRP defines the term "Reverse Domain Name Hijacking" as 'using the Policy [the UDRP] in bad faith to attempt to deprive a registered domain-name holder of a domain name"23. In other words, RDNH is an attempt undertaken by "a trade mark holder, in bad faith, to take control of a domain name from another, who is not in breach of trade mark laws, and who has a legitimate interest in the name"24. Although the UDRP has been criticized by many specialists for not adequately addressing the problem of RDNH25, in cases involving reverse hijacking it grants the respondent at least some protection. There are several illustrative cases that demonstrate why the RDNH provision is important for the respondent. For example, in the known case of Goldline International, Inc. vs. Gold Line, the holder of 'Goldline' trademark filed a complaint against the respondent - individual operating under several business names one of which was 'Gold Line Internet'. Correspondingly, the domain name registered by the respondent was 'goldline.com'. In response to the complaint the respondents insisted that the complainant attempted RDNH. The panel decided that "Complainant has failed utterly to establish two of the three elements of the Policy: that Respondent lacks legitimate rights or interests in the domain name "goldline.com", and that Respondent registered and is using the domain name in bad faith. The Panel therefore denies the Complainant's request that the domain name be transferred from Respondent to Complainant and declares that the Complaint was brought in bad faith and thus constitutes Reverse Domain Name Hijacking"26. In Deutsche Welle v DiamondWare Limited case the panel's ruling also favored the respondent citing Reverse Domain Name Hijacking attempted by the complainant: "the majority view is that the allegation of reverse domain name hijacking is made out and that the Complaint was brought in bad faith and constitutes an abuse of the administrative proceeding"27. Apparently, in both cases the panel acting under the UDRP had some guideline to form it opinion on whether the compliant attempted reverse hijacking or not. Similar guidance is provided under the HKDRP which, apparently, improves reliability of decisions being made. By contrast, the probability is that same cases might have been viewed differently under domain disputes resolution policies containing no such guidelines. For example, Domain Name Dispute Resolution Policy of China (CNDRP) does not cover any reverse domain name hijacking by the complainant28. Consequently, in domain name disputes which "the panel is at wide liberty in forming its views on the issues of bad faith and the respondent's rights and interests in the absence of express guidance. Also, without the protection of along the approach in paragraph 4(c) of UDRP, domain names under CNDRP may be more exposed to the risk of reverse domain name hijacking"29. Possible Solutions to the Problems within the Existing Hong Kong Legal Framework Although Hong Kong implements rather effective Domain Name Disputes Resolution Policy, there are still several areas in which improvements/amendments can be made. Firstly, the country obviously lacks effective and enforceable legislation covering the issue of domain name infringements. In fact, the legal framework available for resolution of domain name disputes has been elaborated to cover traditional trademarks and competition in physical world, not in the cyberspace. The best way to adopt an adequate legal framework is to rely on existing US legislation, namely the ACPA which seems to be the most effective legal tool dedicated to domain name disputes in the world up to date. Moreover, Hong Kong already has an experience of using the UDRP to create the country's own Domain Name Disputes Resolution Policy. Adoption of appropriate and effective legislation will create an opportunity to further improve the existing framework for domain name disputes resolution. The first thing to mention in this regard is granting monetary compensation for domain name infringing activities: the HKDRP provides not option for the trademark owner to get any compensation, except for transferring or cancellation of the infringing domain name. The UDRP envisages the same remedies, but it also stimulates the parties to opt for court proceeding in cases when they are not satisfied with the Arbitration Panel's decision and/or request for monetary compensation. As a result, the owner, whose trademark rights have been infringed have the right for substantial compensation. No similar mechanism is available within the existing Hong Kong legal framework. Despite reverse hijacking provision, the HKDRP can hardly be considered registrant-friendly: it seems to favor the complainant over the respondent. Amending the Policy to grant the registrant better protection than under the current provisions may help to achieve the happy medium between the rights of both complainants and respondents. This can be done by adding further clarifications to the HKDRP provisions on how the respondents should demonstrate its legal rights for the domain name under dispute, what is the exact meaning of confusingly similar, what evidences the respondent must provide to demonstrate bona fide registration and use of the disputed domain name, etc. REFERENCES 15 U.S.C. 1125(d) [available at http://www.aipla.org./html/S.1948IS.html ] Abel, S M. (1999) "Trademark Issues in Cyberspace: The Brave New Frontier", Michigan Telecommunication Technology Legal Review, 91 Chan, G. (2005) "Domain name protection in Hong Kong: flaws and proposals for reform", International Journal of Law and Information Technology, 13(2): 206-242 CNNIC Domain Name Dispute Resolution Policy (CNDRP) [effective as of 30th September 2002] retrieved March 2 from http://www.cnnic.net.cn/html/Dir/2003/11/20/1380.htm Barrister, G.S. (2004) "Domain Name Protection in China: Practice under the Current Regime", Murdoch University Electronic Journal of Law, Volume 11, Number 3 [available online from http://www.murdoch.edu.au/elaw/issues/v11n3/soo113_text.html ] Burkard, P. (2000) "Remedies Against Unlawful Domain Names A Comparison of Recent Developments under US and German Law", West Virginia Journal of Law and Technology, Volume 5, Issue 1, Article 1, retrieved March 2 from http://www.burkardlaw.com/hainfeld/nss-folder/unlawfuldomainnames1/Remedies.PDF Hong Kong Domain Name Registration Company Limited Domain Name Dispute Resolution Policy (HKDRP) [effective as of 26th January 2004] retrieved March 2 from http://www.hkirc.hk/eng/legal/dispute_resolution_policy.html Mueller, M. (1998) 'Trade marks and Domain Names: Property Rights and Institutional Evolution in Cyberspace' online article retrieved March 2, 2006 from Syracuse University School of Information Studies official web site at http://istweb.syr.edu/mueller/study.html Munden, Richard A.J (2001) 'Reverse Domain Name Hijacking': Setting the Limits of Trade Mark Protection in Cyberspace" Oxford University White Paper 17994 [available at http://users.ox.ac.uk/edip/munden.pdf] Osborn J M (2000) 'Effective and complementary solutions to domain name disputes: ICANN's Uniform Domain Name Dispute Resolution Policy and the Federal Anticybersquat ting Consumer Protection Act of 1999', Notre Dame Law Review, 76: p.209. Internet Corporation for Assigned Names and Numbers Uniform Domain Name Dispute Resolution Policy (UDRP) [effective as of 24th October, 1999] retrieved March 2 from http://www.icann.org/dndr/udrp/policy.htm Walker L A (2000), 'ICANN's Uniform Domain Name Dispute Resolution Policy', Berkeley Technology Law Journal, 15: p.289. WIPO Arbitration and Mediation Center (2000a) "Deutsche Welle v DiamondWare Limited" Case No. D2000-0003 [available at http://arbiter.wipo.int/domains/decisions/html/2000/d2000-1202.html ] WIPO Arbitration and Mediation Center (2000b) "Telstra Corporation Limited v. Nuclear Marshmallows" Case No. D2000-0003 [available at http://arbiter.wipo.int/domains/decisions/html/2000/d2000-0003.html] WIPO Arbitration and Mediation Center (2001) "Goldline International, Inc. v. Gold Line" Case No. D2000-1151 [available at http://arbiter.wipo.int/domains/decisions/html/2000/d2000-1151.html ] Wu, R. (2001) "New Rules for Resolving Chinese Domain Name Disputes - A Comparative Analysis", JILT 2001 (1) [available online at http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/2001_1/wu/ ] Read More