Domain name dispute resolution practice

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Domain name dispute resolution practice

Sergey Medvedev of Gorodissky & Partners provides a guide to the options available when dealing with domain name disputes in Russia

Domain names are powerful branding tools available in cyberspace. Although domain names are not treated purely as IP subject matter, they are functioning as online business source identifiers by helping different companies to do e-commerce and promote their brands on the internet. In practice, domain names receive the status of digital trade marks that serve to identify the activities of companies and/or distinguish their goods/services in various segments of the market.

While the procedure of domain name registration may seem to be quite easy, the domain name life can always be at risk, especially when a particular domain name overlaps with traditional IP rights (such as trade marks) belonging to a third party. As a result, almost every such conflict will inevitably lead to a dispute resolution process involving national and international principles of law/practice. And, in many situations, the domain name dispute will be subject to the jurisdiction of the Russian Federation (Russia), which provides for a solid and efficient system of domain name litigation.

Domain fundamentals

In Russia, there are quite a few laws and regulations providing for the definition of a domain name. Specifically, from the internet-related standpoint, a domain name shall be regarded as a symbolic identification designated for the network addressing in which the domain name system is used (Section 1.1 of the Terms for Domain Name Registration in .RU and .РФ Domains effective as of 12 November 2013 (version dated 20 September 2012)). From the information technology perspective, a domain name shall be considered as a symbolic identification designated for the website addressing on the internet for the purposes of accessing the data on the internet (Article 2 (15) of the Russian Federal Law No 149-FZ dated July 27 2006 "On Information, Information Technologies and Information Protection"). Finally, in the IP-related context, a domain name will be deemed a mode of addressing on the internet (Article 1484 (2)(5) of the Russian Civil Code, Part IV, effective as of January 1 2008). Hence, when reviewing these definitions, it becomes clear that a domain name is an IT asset that represents an individual form of website/data addressing on the internet.

While the era of new generic top-level domains (gTLDs) is being implemented under the aegis of Internet Corporation for Assigned Names and Numbers (ICANN), and some innovative Cyrillic strings have already been launched and delegated (such as .онлайн (.online), and .сайт (.site)), there are a couple of standard domain names in Russia, which should not be disregarded, including the national domains (ccTLDs), as well as the geographical strings, also known as geo-domains (such as .msk.ru, .spb.ru, .sochi.su), and other domains (such as .com.ru, .org.ru, .net.ru, .pp.ru). In terms of a number of registrations, the most popular would be the following national ccTLDs: (i) .ru, (ii) .рф and (iii) .su. Therefore, from a practical standpoint, the majority of local domain name disputes are arising out of or under these particular Russian ccTLDs.

IP issues

Domain conflicts usually happen due to unauthorised registration and use of domain names identical or similar to trade marks and/or company names. Importantly, such trade marks and company names must enjoy legal protection in Russia in order to be enforced. In other words, a trade mark owner shall have a valid cause of action against unauthorised domain name registration/use in the event its trade mark rights have been duly registered in Russia on the national trade mark application level, or extended to Russia through an international trade mark registration. At the same time, a company name owner will have a valid cause of action against unauthorised domain name registration/use if its business name has been registered with the so-called Uniform State Register of Legal Entities (the local registry of companies) for domestic companies, or by operation of the applicable rule stated in Article 8 of the Paris Convention (without additional local registration of a company) for foreign companies.

A foreign company name has to be famous among the relevant customers on the Russian market and actively used in Russian commerce to be asserted in the domain name infringement claim. An unregistered mark, unless it has acquired a special well-known status assigned by the Russian Patent and Trademark Office (RUPTO), will not be enforceable against any unauthorised domain name registration/use. Common law rights, or the rights merely based on the use and reputation of a brand in commerce, are not generally recognised in Russia. Hence, domain name actions will have to be brought under the claims of trade mark and/or company name owners whose IP (exclusive) rights are duly protected and valid in Russia.

UDRP principles

One essential distinction of the local domain name dispute resolution practice is that the Uniform Domain Name Dispute Resolution Policy (UDRP) will not apply to Russian ccTLDs, geo-domains and other Russian (third-level) domain names. Also, there are no administrative or arbitration proceedings (similar to UDRP) available under national laws to recapture the Russian domain name. Therefore, judicial proceedings (civil action) remain the only feasible enforcement option for a brand owner to retrieve the infringing domain name, unless the brand owner has had a chance to stop infringement and acquire the conflicting domain name in a non-judicial manner (such as under a cease and desist letter).


"In many situations, the domain name dispute will be subject to the jurisdiction of the Russian Federation, which provides for a solid and efficient system of domain name litigation"


In terms of practice, Russian courts do recognise the three-factor test as offered by the UDRP and will enforce the transfer of the litigious domain name in favour of the claimant, if the latter is able to prove that: (1) the conflicting domain name is identical or confusingly similar to a trade mark in which the claimant has rights; (2) the respondent has no rights or legitimate interests in respect of the conflicting domain name; and (3) the respondent's domain name has been registered and is being used in bad faith. Hence, these basic UDRP principles are extensively used by trade mark owners in Russia in clear-cut trade mark infringement matters when litigious domain names stay blank and operate without any web-content.

There are many advantages of using cease and desist letters before the commencement of a civil procedure, and such enforcement strategy is usually dictated by the following consequences: (1) the infringer will be warned about the infringement at issue, and his/her further ignorance may serve as an additional evidence of the illegal conduct and/or intention to infringe; (2) the infringer may cease the infringement right away and/or transfer the conflicting domain name to the brand owner; (3) the infringer may decide to sell the conflicting domain name and will send an offer to the IP holder which may serve as a valid proof of the infringer's bad faith. However, if the main goal of the brand owner is to get certain monetary relief for the infringement, the tactics of serving the cease and desist letter to the infringer will not be advisable in this regard. In practice, infringers would remain reluctant to pay any money upon demand, unless the court ordered them to do so by way of judgment (upon the establishment of infringement).

Litigants

Legally, the following persons have a standing to sue in Russian domain name disputes: (1) recorded trade mark/company name owners; (2) recorded assignees/successors-in-title; and (3) recorded exclusive trade mark licensees. Unrecorded brand owners, recorded non-exclusive licensees, or other authorised users (such as distributors and agents) are not empowered to enforce IP rights in Russia. Nevertheless, they can join the civil procedure as third parties in order to be able to support the claims of plaintiffs. If the domain name infringement matter is initiated by the valid assignee or exclusive licensee, the appropriate registered assignments or exclusive licences have to be disclosed in the course of litigation.

Because the domain name owner (registrant) solely bears the liability for the choice of the relevant domain name and shall be responsible for potential infringement of third party rights by taking the risk of damages related to such infringement, the civil lawsuit must be filed with the competent court against the domain registrant. If the conflicting domain name has been delegated for operation of a certain website that is offering and selling trade marked (or similar) goods, and/or is involved in business activities similar to those covered by the protected company name, the claim can also be brought against the seller of such goods/services as it bears joint and several liability. Interestingly, as affirmed by local court practice, there is no need to sue domain name lessees (licensees), as domain registrants (lessors/licensors) will not be able to shift their liability for IP infringement by way of contract.

Under the common rule of law, a civil lawsuit has to be launched under the domicile of the defendant. Should a foreign individual or company be recorded as the domain name owner, it might be wise to bring a claim against the national domain registrar (co-defendant), so as to establish the Russian jurisdiction over the dispute at issue. In all other cases, national domain registrars will be normally engaged as third parties in domain conflicts, as they will be in charge of the domain name transfer process after the issuance of the court order in favour of the plaintiff.

Legal remedies

In general, there are many legal remedies available under the Russian law which IP holders can obtain in various IP infringement matters. However, the most popular and consistent remedies in domain conflicts will be: (1) injunctive relief (preliminary and permanent); and (2) monetary relief (regular or statutory damages).


"If the main goal of the brand owner is to get certain monetary relief for the infringement, the tactics of serving the cease and desist letter to the infringer will not be advisable"


Preliminary injunctions and temporary restraining orders, if granted, will ordinarily extend to different bars, including the prohibition to transfer the litigious domain name to a third party domain registrant, the prohibition to transfer the litigious domain name to a third party domain registrar as well as the prohibition to cancel the litigious domain name, while the court proceedings are pending. Permanent injunctions and final enjoinments, if obtained, will typically relate to termination of the claimed infringement (that is, illegal use of the trade mark and/or company name) and/or cessation of administration of the conflicting domain name by the defendant. As a result, the plaintiff will be given the so-called preemptive right to register the litigious domain names it its own name in order to become a new/valid domain name owner. Unfortunately, no automatic transfer of the litigious domain name will occur under the ruling of the court.

Damages may also be claimed and awarded in domain conflicts. While regular damages are used rarely in practice, because they are regarded as burdensome legal remedies, 'monetary compensation' (equivalent to the US concept of statutory damages) will be fairly common.

Indeed, to get regular damages the brand owner must prove the following factors: (1) the amount of sustained damages (such as lost profits) by disclosing the appropriate method of calculation of the same; (2) the fact of IP infringement by proving the illegal activities of the infringer; and (3) the nexus between damages and illegal activities of the infringer. If one of these factors is omitted or cannot be demonstrated by the plaintiff, damages will not be awarded by the court. At the same time, to receive statutory damages (that is, monetary compensation) the plaintiff has to prove the fact of the claimed IP infringement only. And, it is not required to disclose any documentation by showing the method of calculation of its losses, even though it may be useful up to a certain extent for the purposes of substantiation of the exact amount of the claimed monetary compensation.

By force of law, there are three avenues which IP holders can select and follow when seeking to obtain statutory damages in trade mark infringement matters, including in domain conflicts: (1) an amount between ₽10,000 ($150) and ₽5 million ($75,000)); (2) double the cost of the counterfeit goods; or (3) double the cost of the lawful (licensed) trade mark usage (Article 1515(4) of the Russian Civil Code, Part IV, effective as of January 1 2008). The choice of the appropriate option will be normally vested with the trade mark owner, although in the absence of a large quantity of counterfeits being purchased from the website under the litigious domain name, and/or the underlying recorded licence agreement with the appropriate licence fees, the trade mark owner will have to stick to the very first scenario as described above, and the court will finally decide on the concrete amount of award relying on the nature of infringement.

Additional comment

Domain name disputes will usually happen for several reasons. One IP holder, referring to the unlawful trade mark/company name registration and use as well as "limitation" of its IP rights, may find the alleged trade mark/company name infringement as the main basis for action. Another brand owner will just base its claims on the doctrine of bad faith (unfair competition) and the concept of threat of infringement. The other rights holder will find the unauthorised domain registration and the use of the posted web content as impairment of its business reputation. As a result, every domain name litigation procedure will depend on the legal grounds at issue as well as the circumstances surrounding the case. Of course, qualifications and experience of lawyers representing the litigants should not be neglected.

Sergey Medvedev, PhD, LLM

Medvedev

 

Sergey Medvedev is a senior lawyer, trade mark and design attorney with Gorodissky & Partners. He graduated from the Moscow State Institute of International Relations in 2006 as an international lawyer. He completed the LLM in IP program at the John Marshall Law School (Chicago, USA) and received the degree of master of laws in 2007. He successfully presented a dissertation at the Russian State Academy of Intellectual Property (Moscow) in 2012 and has worked as an intern at the law firm Ladas & Parry (Los Angeles, USA), and the law firm Partridge IP Law (Chicago, USA).

Sergey joined Gorodissky & Partners in 2007. He advises clients on various matters related to legal protection, ownership, acquisition, exploitation, licensing, securitisation, litigation and enforcement of IP rights in Russia and the CIS. He litigates and enforces IP rights in Russia. He combats unlawful/unauthorised use of IP and illegal content on the internet, represses unfair competition and false advertising, tackles parallel imports and grey market goods and fights against counterfeits and piracy. He represents the interests of clients in court and with law enforcement agencies. Sergey has an active practice in resolving domain name disputes in Russia.


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