Clifford Gouldson Lawyers

Domain names are changing but why should I worry?

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15/04/2014

Domain name registration has a history of attracting cyber squatters and others seeking to profit from the existing reputation and trade marks of others.  We’ve come to understand that your business’ domain name is a critical part of your business’ intellectual property but once your main domain name is registered most businesses don’t give it further thought.

But domain names are changing again and it’s critical for your business to stay on top of these changes and understand why you should be worried.

Key areas of concern

Over the next few years hundreds of new top level domain names (gTLDs) will be coming online in addition to the .com, .net, .org that we already know. Names like .education, .marketing, .farm, .solutions etc.It is impossible, for example, to yet know how internet users’ browsing habits will change in response to these new gTLDs and whether traffic that currently goes direct to your .com and .com.au sites will divert to some of these new gTLDs.
 
‘Domainers’ (sophisticated, large scale purchasers of domain names) are registering and trading in large volumes of domain names as they would any other commodity. Domainers are not the cyber squatters of a decade ago, they are otherwise respected businesses, such as Fairfax, who deliberately target more generic brands or descriptive trade marks, like “Brisbane City”, which increases the likelihood that trade mark owners will be unable to take back ‘their’ domain names. The volume of domain names registered also makes it harder to develop a new brand and increases advertising costs - users will not find your site organically, and you have to advertise to attract the traffic that previously came to you without effort.

Domain name disputes are on the increase, reaching a peak in 2012 and only falling slightly in 2013.

Domain name disputes are becoming more sophisticated - in the early 2000s, they were mostly between legitimate trade mark owners and cyber squatters. These days they are more complicated, involving clashes between two legitimate rights holders over who has the better rights to a single domain name or suite of names. These will increasingly become a part of business life.  Last year 150 Australian based businesses needed to defend their domain name against overseas based businesses - and those are just the ones that fought it through the ICANN Uniform Dispute Resolution Policy (‘UDRP’), not those that settled, or wound up in the courts.

Help, someone has registered my domain!
 
If someone has got the jump on you and registered a domain that you believe should rightfully belong to your business what should you do?
 
Sometimes it is better to do nothing!  If it is not a domain name that is that important to you eg .biz, or you don’t have a registered trade mark for your name, it may be better just to do nothing for now, while quietly getting your trade mark registration and concentrate on building your own website to better attract traffic.

Negotiate to buy the name!  While sales of trade marks like "invest.com" have been recorded around the $1 million mark, most sell for between $2000 and $8000, which is still less than the cost of legal action in the Federal Court.  We always recommend conducting appropriate due diligence prior to purchase and using a written agreement to record the sale.  Otherwise, you may end up being tagged with the bad faith use of the previous owner in an action brought against your ownership.  In some cases however, the owner may ask for an inflated value, or not want to sell.

File a complaint under the UDRP process for a ‘.com’ domain.

  1. It is quick, taking just a few months to reach a decision.
  2. The domain name is immediately ‘locked’ and cannot be sold on until the dispute is resolved.
  3. All evidence is documentary, so it is cheaper to prepare than a court-based legal action.
  4. No complications with choice of law issues.  If the owner is based in California and you are here in Toowoomba, the domain name will be transferred automatically.

And the downside?

  1. One possible ‘trap’ is that unlike ordinary litigation certain UDRP panels have allowed parties to file as evidence the details of settlement negotiations conducted with the current owner to help prove their case.
  2. However, no damages or costs are awarded.
  3. It is only suitable for retrieving a domain name held by cyber squatters (who have no clear rights to the name and are acting in bad faith).
  4. The burden of proving your case is on you as the complainant, and your case must be detailed and the evidence can be difficult to obtain.
  5. You also need a registered trade mark or a substantial reputation before you can bring your claim.  Where your trade mark is generic ie. involves a place name eg. Laidley Co-op, you may fail to show you have a claim.
File an action to protect a ‘.com.au’ website under the auDRP process. This is similar to the UDRP process described above.  However, the burden of proof on a complainant is a little less, and you can rely on your registered company or business name, or your own personame.  The steps you can take to protect yourself now.

File a lawsuit for Trade Mark Infringement, Passing Off and Misleading and Deceptive Conduct.  Where the issues are not clear cut, eg. a fight over the ownership of the domain name between a former distributor and a business owner, or a dispute over the one domain name between the legitimate owners of two similar trade marks, the UDRP process is not available to you.  This process can be more costly, and take more time, but the remedies available include costs, damages and an order that the domain name be transferred. 

Even without a current trade mark registration, you may be able to show a strong enough reputation in the name to support your claim.  Risks include the difficulty in enforcing an order to transfer where one of the parties is overseas, and ‘cyber flight’ (where the owner transfers it to their ‘cousin’ in Burma just before, or just after they are served with the papers for the lawsuit).

The steps you can take to protect yourself now

Prevention is worth a mile of cure!  Consider where your customers are likely to go to find you on-line and purchase the domain names that reflect your trade marks and brand name and its near variations.  Don’t forget to keep an eye out for the new top level domains coming online!  For example, a business might consider registering the following: cglaw.com.au, cglawaustralia.com.au and cglaw.lawyers.
 
A number of the solutions outlined above can only be utilised effectively if you have registered a trade mark first.  We are fortunate in Australia that where the dispute involves a ‘.com.au’ domain, you can rely on your registered business or company name, but you will still need to show that you have better rights to the domain name than the current owner.  A registered trade mark makes that process a lot cheaper and easier, and your argument for ownership of the domain name a lot stronger.

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