Trademark Clearing House: A proactive mechanism to fight cybersquatting

1. Introduction

Technological development in the economy supplemented by the tremendous growth in world trade has created a virtual world wherein the domain names are considered as the identity of corporations. For companies like Facebook or Google, domain names act as an identity for these companies. Many a times, the domain names of such companies relate to their registered trademarks which make such domain names incredibly useful.

In the present day and age, these corporations and their domain names suffer a huge threat known as Cyber Squatting. Cyber Squatting leads to unfair use of registered trademark/trade names by the trademark infringers who create domain names for economic gains and extorting money from corporations. It is a serious economic problem causing disruptions in the competitive market. To take an example, wallstreet.com which was registered for only $70 in 1994 by a cyber squatter who sold it for $ 1 million in 1999. This article discusses the Trademark Clearing House mechanism (TMCH) which is used to prevent cyber squatting for domain names (gTLDs) and discuses the potential introduction of such a mechanism to protect domestic domain names (ccTLDs) in India.

2. Cyber Squatting

"Cybersquatting is the Internet version of an unlawful land grab. Cybersquatters register well-known brand names as Internet domain names in order to force the rightful owners of the marks to come forward and pay for the right to engage in electronic commerce under their own name”. (Interstellar Star ship Servs. Ltd. v. Epix. 304 F.3d 936, 946 (9th Cir. 2002)) It is an act of reserving a domain name on the internet especially a name that would be associated with a company’s trademark and then seeking to profit by selling or licensing the name to the company that has an interest in being identified with it. When domain name is registered for a purpose of reselling it for profit it is known as cybersquatting.

The courts in India, have also taken the same view as the courts in USA with regard to cybersquatting. The Delhi High Court in Jagdish Purohit v. Stephen Koenig (2012(49) PTC 304 (Del)) that the root problem stems from the system of assigning domain names on a first-come-first-served basis. This permits well known and established trade names, brand names, company names, names of famous personalities, politicians to be 'captured' by a 'registrant' with little connection with such name and get it registered as a domain name. The High Court of Bombay in Rediff Communication v. Cyberbooth & Anr (AIR 2000 Bom 27) held that the Internet domain names are of importance and can be a valuable corporate asset. A domain name is more than an Internet address and is entitled to the equal protection as trade mark.

However, registration of a domain name per se in not violation of rights, but the registration of domain name featuring the trademark of the registered trademark holder with an intention to have unfair economic gain by selling those domain names is a violation of the rights of a registered trademarks holder. There is a Uniform Domain Name Dispute Resolution Policy (UDRP) administered by WIPO which sets out the legal framework for the resolution of disputes between a domain name registrant and a third party (i.e., a party other than the registrar) over the abusive registration and use of an Internet domain name in GTLDs and those country code top level domains (CCTLDs) that have adopted the UDRP Policy on a voluntary basis.

3. Dispute Resolution under UDRP and INRegistry

Any person or company in the world who wants to file a complaint concerning an unfair registration of Generic Top Level Domain (gTLD) can follow the UDRP administrative procedure. UDRP aids the dispute resolution pertaining to domain names (gTLD). It is pertinent to mention here that gTLD includes com, info, net, and org domains whereas ccTLD includes .in domain. In case of any dispute involving domain name registered as ccTLD, the same UDRP procedure can be used provided that the concerned country has adopted the UDRP policy on voluntary basis. India has a .IN Domain Name Dispute Resolution Policy (INDRP) based on UDRP, established by INRegistry to help the trademark owners fight against Cyber Squatters who have registered domain names under .in ccTLD in bad faith. INDRP serves an important and crucial role to resolve domain name disputes in and out of court proceedings. INRegistry is the authority operating under National Internet Exchange of India (NIXI) since January 1st, 2005 responsible for maintaining unrestricted domains like .in, .co.in, net.in, org.in etc. and restricted domains like gov.in, edu.in, ac.in etc as ccTLD. However, despite the INDRP procedure and administrative policies, domain names are still unfairly registered by the cybersquatters for economic gains.

4. Trademark Clearing House- A proactive mechanism

To counter Cyber Squatting, the Internet Corporation for Assigned Names and Numbers (ICANN) has introduced a mechanism known as Trademark Clearing House (TMCH) for protecting the rights of the registered trademark holders. ICANN is the international regulator of TMCH and TMCH is an enhanced rights protection mechanism that have been built into the new Generic Top Level Domain (gTLD) Program. The TMCH registers and authenticates the rights holders of Trademarks and supports their claims while adjudicating the infringements pertaining to Cyber Squatting. The introduction of TMCH serves as a protector of trademarks used as domain name in the global community. It acts as a proactive mechanism for controlling a situation like Cyber Squatting. TMCH collects information on registered trademarks, marks protected by statute, marks validated by courts in various languages or any other marks that constitute intellectual property rights and tallies them against the domain names proposed to be registered to check if there are any violations which may flag a potential case of Cyber Squatting. Therefore, instead of filing a case against an infringer and arguing the same, TMCH helps in deciding the dispute at a nascent stage, saving time and money.

With regards to the process of TMCH, the Trademark holders or their agents submit their registered trademarks to the TMCH and then undergo a verification process whereby the TMCH verifies the original owner of the mark. The New gTLDs are given priority registration for a minimum period of 30 days over the general availability period known as Sunrise Services. During this Sunrise period, these verified trademark holders under TMCH are given priority rights to register their domains. The Claims Service period follows the Sunrise period and typically runs for the first 90 days of every gTLD’s general availability. The Claims Services period provides notice to potential domain name registrants that the domain they are seeking to register matches a label in the Trademark Clearinghouse. Its purpose is to reduce the infringing activity of registering a domain name that matched TMCH verified trademark through a two-prolonged process. Firstly, a notice is sent to the potential registrants when they attempt to register a domain that matches a TMCH recorded trademark. Secondly, notice is sent to trademark holders if the matched subject mark of the trademark holder has been registered. The claims services period identifies the potentially infringing domain registrations by comparing it with recorded TMCH trademarks during the registration process. An exact match of the potential registration with the TMCH recorded trademarks with minor alterations like inserting of punctuation, spaces or other invalid characters or any omission could be easily traced or detected.

5. Benefits of TMCH mechanism in India

Since TMCH exists on a global level, a similar mechanism can be introduced in India for ccTLDs. India being one of the most appealing markets to the foreign investors is troubled with the problem of Cyber Squatting. There were 70 domain name disputes which were filed in 2015 under the INDRP for cybersquatting activities. These cybersquatters, by spending merely a token amount of hundred rupees, register the domain names and demand huge amount from trademark owners to recover their ccTLD. The trademark owner filing any complaint under INDRP has to pay the statutory fees along with litigation expenses which runs into lakhs of rupees coupled with the uncertainty of refusal by INDRP. In order to avoid such cumbersome process and expenses, the trademark owners prefer to pay the amount to these cybersquatters which is lesser than the expenses they would otherwise incur. This allows cybersquatters to take unfair advantage of the existing procedures and the trademark owners suffers from ludicrous cost for protecting their lawful rights. Thus, a corporation can register with the TMCH avail the trademark protection facility by paying a nominal amount.

6. Conclusion

There is dire need for a mechanism like TMCH in India for domain name registrations under the ccTLD and raising awareness about the TMCH mechanism. In the author's opinion, if the INRegistry establishes a similar mechanism to TMCH for ccTLDs, it will discourage or even bring an end to cyber squatting. Considering the rapid advancement and development of virtual world, the NIXI and INRegistry should introduce a similar mechanism like TMCH and raise awareness about its existence and its benefits while viewing it as the need of the hour. Further, the process of registering in TMCH should be made compulsory for the trademark owners. It would decrease the chances of litigation arising out out of cyber squatting and bring legal certainty and protection to the business in India. It would certainly help Indian markets lure global corporations to set up their businesses in India.

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