Introduction
A recent decision concerning the registration of domain names under the Uniform Dispute Resolution Policy (UDRP) involving the domain <trademe.com> illustrates how hard it can be for New Zealand businesses to protect their IP from cyber squatters overseas, and the need for defensive IP protection strategies.
The case
The disputed domain name <trademe.com> was owned by Vertical Axis Inc. It owned over 10,000 domain names and was in the business of using them to generate revenue from paid search advertising.
Trade Me Ltd complained to the World Intellectual Property Organisation (WIPO) Arbitration and Mediation Centre, which administers the UDRP. It argued that Vertical Axis was cyber squatting on the domain in order to make money through advertising on the site by taking advantage of the goodwill built up in the brand and auction site at <trademe.co.nz>.
To succeed in its claim Trade Me was required to establish three elements under the UDRP Policy:
1. That <trademe.com> is identical or confusingly similar to Trade Me’s trade marks.
Trademe.com was found to be identical to Trade Me’s mark .
2. That Vertical Axis had no rights or legitimate interests in the domain name.
It was found that <trademe.com> was not being used fairly and it was an unfair monopolisation of the domain name with intent for commercial gain by misleadingly diverting customers from trademe.co.nz.
Despite thisit was also found that the words “trade” and “me” are both commonly used descriptive phrases and that Vertical Axis had a good faith belief that the value in <trademe.com> derived from its descriptive qualities rather than its specific trade mark value.
3. That the respondent registered and is using the name in bad faith.
Trade Me had trouble proving that the domain name had been both registered and used in bad faith. It was found that at the time of registration of <trademe.com>, Vertical Axis would not have been aware of Trade Me’s business. One of the relevant factors was the geographical restrictions Trade Me placed on its members with the requirement that they be from either Australia or New Zealand. It was also important that Trade Me’s first trade mark registration was acquired two years after Vertical Axis registered the domain name.
Although Vertical Axis was intentionally using <trademe.com> to attract internet users for commercial gain by creating confusion, there was not enough evidence to show “objective” intention. Therefore, relying on “subjective” intention, Vertical Axis obviously said that it did not intend to create confusion.
Despite the reservations of the arbitrator, Vertical Axis won the case because Trade Me was not able to prove that at the time of registration that Vertical Axis knew of Trade Me and intentionally sought to take advantage of its goodwill.
Domain name dispute resolution policy in New Zealand
New Zealand has its own procedure similar to the UDRP to resolve disputes involving .co.nz domains. It is administered by InternetNZ and the office of the Domain Name Commissioner. Under this policy a complainant must show on the balance of probabilities that:
(a) it has rights in respect of a name or mark which is identical to or similar to the domain name, and
(b) the domain name in the hands of the respondent is an unfair registration.
Unlike the UDRP, this test does not require proof of bad faith at the time of registration of the domain name, and therefore the NZ procedure is more able to strike the right balance between allowing legitimate registrations, and disallowing those registrations that are made with intent to profit from the goodwill built up in a name by someone else.
In New Zealand a complainant could also claim under the Fair Trading Act and in passing off.
Implications for New Zealand businesses
The Trade Me case demonstrates that it can be hard to prove that a registrant of even an identical .com domain name is cyber squatting. It will be harder for companies that do not have goodwill outside New Zealand, and whose trade names are at the descriptive end of the spectrum. Therefore, if you plan on expanding your business overseas, you should take defensive steps to register the relevant domain names and trade marks.