Cybersquatting: Where to Go?

Issue25 By Harry Yang, China IP,[Internet & Domain]

On July 16, 2008, the China Internet Network Information Center (CNNIC) launched the Global Upgrading Action of Chinese Domain Names, by announcing that “.中国” domain names would formally enter the global Internet in 2009, by which time, for the first time, Chinese characters will be written into the global root domain name system to be accessed directly by Internet users globally.


The inauguration of each domain name suffix will lead to an outburst of registrations. According to the European Commission, the number of registrations reached 300,000 within the first 100 minutes after “.EU,”the top level domain name of the EU, was opened to EU residents. To prevent registration rush of “.中国” domain names, CNNIC has done some preparatory work. For example, it says that during the Global Upgrading Action, all registered users of “(existing Chinese characters).cn” will automatically receive their corresponding “.中国” domain names, in the hope to protect existing domain names from cybersquatting. In fact, cybersquatting is a profitable trade in China, with somewhat professional investors in this cybersquatting business. The CNNIC Implementing Rules for Domain Name Registration provides that only entities, not individuals, may apply to register domain names in China (“.CN” for example). However, this disputable provision will likely fail to lessen people’s passion towards domain name registration through various means. Of course, domain name service providers, the brokers on the Internet, may be the biggest winner. 

More and more people begin to recognize the economic value of domain names. The 22nd Statistical Report on the Internet Development in China, which was released by the CNNIC on July 24, 2008, shows that by July 22, the number of Chinese domain names reached 14,850,000, in which “.CN” domain names reached 12,188,000, which exceeded the number of “.DE” domain names for Germany, thus becoming the largest country-code, top level domain names in the world. The report also notes that by the end of June 2008, the number of netizens in China had reached 253 million, surpassing, for the first time, that of the United States to become the largest in the world. This lays a basis for the growing development of Chinese domain names. 

Currently, academic circles have not formed a consensus as to whether domain names are intellectual properties. The World Intellectual Property Organization (WIPO) in its 1994 report declined to take management responsibilities of domain names by creating “new rights of intellectual property.” Yet, the controversies and disputes out of domain names, be they in the form of trademark infringement or unfair competition, are nonetheless closely related to intellectual property rights. To resolve the problems resulting from trademark squatting, the Internet Corporation for Assigned Names and Numbers (ICANN) issued the Uniform Domain-Name Dispute-Resolution Policy (UDRP) in 1999, which provided industrial rules to resolve domain name disputes. However, most domain name arbitrations are received by the WIPO Arbitration and Mediation Center. Since the UDRP was issued in December 2007, the WIPO Arbitration and Mediation Center has received 12,334 UDRP or UDRP-based cases involving 22,301 separate domain names. This shows that WIPO has applied the existing protection of intellectual property to the Internet field.


According to the WIPO Gazette, 2,156 cases on cybersquatting were filed with the WIPO Arbitration and Mediation Center in 2007, an increase of 18% more than in 2006. “These increases confirm that ‘cybersquatting’ remains a significant issue for rights holders,” said Mr. Francis Gurry, WIPO Deputy Director General when discussing such a rapid increase. This shows that cybersquatting has become an international issue. In China, a domain name dispute may be resolved by the Domain Name Dispute Resolution Center of the China International Economic and Trade Arbitration Center Commission (CIETAC), a domain name arbitration organization duly appointed by the CNNIC appointee, which arbitrates in accordance with the CNNIC Domain Name Dispute Resolution Policy. The CIETAC Domain Name Dispute Resolution Center is a nongovernmental organization first authorized by the CNNIC to resolve disputes on Chinese domain names using the CNNIC Domain Name Dispute Resolution Policy and other relevant rules. However, its decision is not formal, and it cannot award damages. If a party disagrees with the arbitral award decision, that party may take action in a court having jurisdiction, or proceed with formal arbitration. Of course, the parties may also bypass the arbitration proceedings and go directly for judicial remedies by filing a lawsuit with a court of law. As a matter of fact, among the domain name dispute resolution mechanisms, the industrial and commercial administrative offices also have the power to intervene with cases where domain names and trademarks conflict with each other. Therefore, a party in trademark infringement may resort also to administrative means to resolve the dispute.


Moreover, for cases of civil disputes involving computer network domain names, opinions vary as to whether cybersquatting constitutes an infringement upon a trademark or unfair competition. This invites controversy. In June 2001, the Supreme Court of China issued the Interpretation on Several Issues of Law Application in Hearing Civil Dispute Cases Involving Computer Network Domain Names (“Judicial Interpretation of Domain Name”), attempting to clarify circumstances of trademark infringement involving Internet domain names and eBusiness. For an act that “the domain name of the defendant or its main part constitutes a copying, imitation, translation or transliteration of the famous trademark of the plaintiff, or is identical with or similar to the registered trademark or domain name of the plaintiff, which is sufficiently misleading to the relevant public,” if the defendant is judged to have bad faith, then such an act may be decided as an infringement upon trademark. As to what acts involve bad faith, the Judicial Interpretation of Domain Name also provides judgment criteria. However, the Judicial Interpretation of Domain Name says that an act which constitutes unfair competition may be governed by Article 4 of the General Rules of Civil Law and Paragraph 1, Article 2 of the Unfair Competition Law. The two provisions regulate civil behavior and operators who must “follow the principles of voluntarity, equality, fairness, and good faith.” This shows that “good faith” is one of the basic principles to determine unfair competition. However, the Judicial Interpretation of Domain Name does not provide clear criteria on how to decide whether cybersquatting constitutes a trademark infringement or unfair competition. Possibly, judges may need discretion in the practice of judicial hearings. Also, the Judicial Interpretation of Domain Name fails to further define so-called “Reverse Domain Name Hijacking” – the malicious trademark registration of a domain name of others which are very creative and well-known.


Although China is gradually improving her domain name legislation, cybersquatting acts and actions are not lessening, but are instead growing. To search for the root causes, some deep-rooted social problems cannot be overlooked, in addition to the economic drive to act. This edition of Special Focus attempts to use several perspectives to unveil what social and legal issues lay behind cybersquatting.

                                                                                                                                                                                                                         (Translated by Ren Qingtao)

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