Trademarks vs. Domain Names: Solutions to Cybersquatting

If the invention of the printing press ripped us from the tribal village and made us enter the global village by establishing the Gutenberg Galaxy (McLuhan), the creation of the internet has opened the doors to a new world of communication: the Internet Galaxy (Castells). Like the printing press at the time, the internet has transformed business practice (on a larger scale, if possible). Companies’ relationships with their suppliers and customers, their management, their production process, their collaboration with other companies, and their financing have all had to be rethought in light of the new society that the internet has created. Proper use of the internet has become a fundamental source of productivity and competitiveness for all kinds of companies.

Naturally, companies’ trademarks couldn’t be left out of this technological earthquake.

While business owners who started their operation in the global village saw the scope of their label, trade name or brand limited to the geographic area where their establishments were located, business owners who operate in the Internet Galaxy don’t need to invest in a physical location in order to be visible. By simply creating a website, their offer can reach anywhere in the world that has internet access. However, they still need to differentiate their products from those of the competition in the market, and therefore must first be identified by means of a trademark.

Domain names have become a de facto online trademark of a company. It is true that strictly speaking, a domain name formed by the DNS (Domain Name System) is just a “mask” created so that the electronic alphanumeric address that enables communication between computer equipment (Internet Protocol) is easier to remember. However, despite the fact that its initial purpose was not to differentiate between goods or services in commercial traffic, it is undeniable that the use of a domain name identical to or confusable with a trademark can harm the trademark owner. For that reason, trademark law has extended the protective mantle of ius prohibendi, which all trademark owners have, to include the use of the trademark as a domain name (art. 34.3 e) of Spanish Law 17/2001 of 7 December, on Trademarks).

In fact, the courts consider domain names to fulfill the function of a trademark online: “Insofar as they serve to identify and locate, by individualizing and differentiating one business owner or their establishment from others, and allow it to be located by search engines, they fulfill a typical function of a trademark; and when domains are used as advertising platforms, catalogs and showcases, they fulfill the same functions as trademarks in the online market, giving rise to “online trademarks”, which may infringe upon the exclusive right conferred by the trademark” (Rulings of the Provincial Courts of Barcelona, Section 15, from March 20, 2014 and December 4, 2013).

Despite this equation between trademarks and domain names, each has a different legal nature, and therefore, it is logical that conflicts arise from their coexistence.
Thus, the ease of registration and the first to file principle which assigns the domain name to the first to request it, regardless of whether they are the owner of a trademark right over an identical or similar name, have given rise to the phenomenon of “cybersquatting” or registration in bad faith. Following Lobato, there are several practices grouped under this generic name:
 
  • Registration of a well-known trademark as a domain name for the purpose of obtaining compensation from the owner.
  • Competition by obstruction: the registration of a competitor’s trade name as a domain name in order to prevent them from being able to use it.
  • Registration of “oops!” domains: the registration of names similar to those of well-known trademarks in order to attract customers who mistype the name of said trademark into a search engine.
 
Although few companies opt to take legal action against a bad faith registration (problems in determining international jurisdiction, the high cost of the process, and difficulties in executing a possible favorable judgment are some of the difficulties that dissuade them from attempting it), the courts haven’t kept out of such conflicts. The solutions they have adopted are rooted in trademark law and the field of unfair competition.
 
In the first case, we have already seen how article 34.3 e) of the Trademark Law expressly provides for the prohibition of the use of a domain name when it is identical or similar to a trademark, when there is a risk of confusion with it, or when the principle of specialty covering goods or services that are identical or similar to those marketed with the protected trademark is infringed.
 
The courts have also applied Spanish Law 3/1991 of January 10, on Unfair Competition (LCD in Spanish), since the cybersquatting behaviors described below may constitute other types of more specific infractions (Agustinoy):
 
  • An act of confusion or deception: when the cybersquatter not only registers the domain, but also develops a website with the intention of impersonating the trademark owner and attracting their clientele (art. 6 and 9 LCD).
  • An act of exploitation of another’s reputation: obtaining a profit from the visits of users who are attracted as a result of the use of the domain name (art. 12 LCD).
 
However, as we said, few companies opt for the legal route, especially since ICANN (Internet Corporation for Assigned Names and Numbers), the non-profit entity that manages the DNS, has adopted a regulation for conflict resolution especially aimed at cases in which domain names have been registered in bad faith. This regulation is called the UDRP (Uniform Dispute Resolution Policy), and was approved by ICANN on August 26, 1999, followed by a regulation on October 24, 1999. Also applicable are the World Intellectual Property Organization Supplemental Rules for Uniform Domain Name Dispute Resolution Policy, which went into effect on December 1, 1999. 

Article 4.a of the UDRP establishes the elements the trademark owner must prove in order to secure the transfer of the domain name in question in their favor:
 
  1. The existence of a trademark that is identical or similar to the domain name.
  2. The absence of rights or legitimate interests with respect to who has registered the domain name.
  3. Bad faith in the registration and use of the domain name by the registrant.

The duration of the proceeding is approximately 45 days, and starts with the filing of a petition with the dispute-resolution service provider designated by ICANN (for example, WIPO). The people in charge of resolving these conflicts (a group or panel of experts) are named by the entity providing such services, which establishes the requirements necessary to be part of a group of experts. 

If the petition is considered valid, ICANN will order the transfer of the domain name in favor of the complainant or the cancellation of the domain.

The nature of this proceeding is not arbitral, but administrative. In no case does it preclude the possibility of the parties going to the courts in the event of not obtaining a favorable resolution. 

As can be seen, there are effective solutions to cybersquatting. In the world of the Internet Galaxy, it turns out to be naïve and dangerous to rely solely on the power of a trademark without ensuring its online presence by establishing an identical domain name.
 
Luis Ramírez
Partner at ICN LEGAL

931 596 272