Domain disputes

The effects of cybersquatters towards domain owners

Cybersquatters – names may differ in different countries – means those in Hong Kong who intentionally register others’ names, company names, businesses or trademarks as domains for illegitimate purposes. These include:-

  • Reselling for benefits: someone registered 4 Hong Kong trademarks of Warner Group at just US$280, and then reselled to Warner Group for some US$350k, a remarkable profit. Another case was that someone registered business.com as a domain and gained US$7.5M by reselling.
  • To create confusion: someone registered a domain with a spelling similar to disneyland.com to create confusion. Most websites in this kind of domain are adult websites.
  • Fraudulent activities: register domains that are prone to misunderstanding for fraudulent purposes. An obvious example is making use of domain to disguise as a bank. People might thought it was a website of a legitimate bank but it turns out to be a malicious site that hunts for credit card passwords.

The question is: how do we tackle with these situations? There are different ways depending on the severity.

When the domain of your company is registered by somebody else – threat level: lenient. In situations like this, we may suggest a sum of money for domain transfer to prevent from losing time and money during legal precedures and judiciary.

When the domain of your company is registered by another company – threat level: medium. When holding the ownership, the law court takes into account the ownership of related trademarks. Now that you know how important trademarks can be when trying to protect your corporation.

When the domain is registered by mischivious web hosting companies – threat level: high. There are 2 ways to register a domain: by yourself or through web hosting companies. In general circumstances, you should fill in the company address, phone, and email for domain registration. The representative from your company is responsible for the registration and acts as the contact person during the progress.

When there is a need to switch to another web hosting company, HKDNR or registrar will contact the original web hosting company and the specified contact person of the domain through email. This is to smoothen the transition of website and email server between the 2 web hosting companies. If you have unfortunately requested an untrustworthy web hosting company in the beginning, it would be possible that they have made themselves the contact person of the domain instead of you. You will miss notifications in the progress, all you can do is to wait for the original web hosting company to transfer the website and email. While important emails might be overlooked in this period of time, some web hosting companies may even charge you end-service fee. To ensure the progress to be smooth, we should research web hosting companies for their credibilities before making a choice.

On the other hand, we should have by now recognized the threats in domain registration. We should confirm everything related to trademark and domain registration so as to protect our websites and the rights.

About domain dispute

If your company domain has unfortunately been registered by cypersquatters who demanded an astronomical reselling price, there are procedures to solve this kind of disputes, unlike several years ago when you’re complelely helpless. It should be noted that, even there are institutes specializing in these disputes, the procedures could be complicated, so you better be prepared!

Claims on .hk / .cn / .com domains

The Hong Kong International Arbitration Center (HKIAC) is an institute that deals with the claims concerning .hk / .cn / .com domains. They specialize in domain dispute resolution policies, domain dispute resolution policy procedure regulations and HKIAC supplemental rules.

In order to start the arbitration procedure on .hk / .cn / .com domains, the following must be submitted by the claimant as evidence:-

  1. the concerned domain and the Hong Kong trademark or service mark owned by the claimant are the same or confusingly similar; and
  2. the owner of the concerned domain has no right or legitimate interests derived from the domain; and
  3. the concerned domain was maliciously registered and used.

“Maliciously registered and used” means…

  1. the fundamental objective of the registrant and got the domain was to receive a high amount of transfer fee (one that surpasses the necessary fee required for registering a domain) from selling / renting / transferring by any means to the claimant (who is the trademark or the service mark owner) or claimant’s competitor; or
  2. the objective of registering the domain was to prevent the trademark or the service mark owner from using the trademark or service mark in the domain, and such act has become a traceable trait; or
  3. the fundamental objective of the registrant to get the domain is to impede the business of the competitor(s); or
  4. by registering the concerned domain, the registrant deliberately mislead people overe the claimant’s trademark or service mark, making them think the concerned domain is the cliamant’s website (or other places on the Internet, the product provider / service provider / sponsor / related companies / symbols on the website), thus earning commercial benefits by attracting netizens to browse those websites or other places on the Internet.

Steps of claiming

  1. the claimant files a claim to HKIAC
  2. HKIAC inform the contact person of the concerned domain together with a carcon copy sent to the registrant of the domain
  3. the registrant of the concerned domain reply to the claims
  4. HKIAC makes the decision of holding an one-person or three-person tribunal over the dispute
  5. the tribunal announce the decision
  6. delete ot transfer the concerned domain according to the decision of the tribunal

For details please refer to the flow chart of domain arbitration

Capture

Required time and fee for domain claims

From HKIAC receiving the claim to the tribunal informing stakeholders of the decision and HKDNR, the whole process should be within 60 days.

According to HKIAC – domain dispute supplemental rules, a tribunal with 1 arbitrator costs HK$8,000 , where HK$4,000 will be given to the arbitrator. A tribunal with 3 arbitrators costs HK$16,000 , where HK$12,000 will be given to the arbitrators. If the claimant goes against any rule in the claiming process, an additional fee of HK$2,000 will be charged. The claimant is normally responsible for the fees, unless the defendant (i.e. the registrant of the concerned domain) chooses to open the tribunal with 3 arbitrators, while the claimant chooses 1. In this case the total fee will be equally bore by both parties. It should be noted that if a tribunal is opened as a special case, additional fees will be charged, and the amount will be decided after an agreement is reached between HKIAC, the claimant, the defendant, and the tribunal.

The above mentioned fee doesn’t include the required fee for lawyers or representatives of the stakeholders. Each stakeholder takes care of his or her own fees.

Basically filing a claim to HKIAC has the following advantages over judiciary institutes:-

  1. Takes shorter time. A claim normally takes 60 days from filing to decision making, which is a lot faster than judiciary institutes.
  2. Inexpensive. It costs a minimum of HK$100k for a case to be settled in law courts.
  3. Professional. Arbitrators have rich experience in dealing with domain disputes, and could understand the incident better than common judges.

Back in 2006 there were 2 web hosting companies decided to settle disputes in the court, with major local media reporting this case. The decision can be view here: http://www.adndrc.org/adndrc/image/hk0500068_decision.pdf

Domain trading