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Domain Dispute and Blast Furnace ("Domain" Furnace). Culture of Domain Disputes in Ukraine and Europe

Vitalii Savchuk, senior associate with Legal Alliance Company

Khrystyna Demchenko, junior associate with Legal Alliance Company

“Cybersquatter” sounds proud. At least it sounds progressive and mysteriously enough so that some individuals are fine with being associated with this word (at any rate they are not trolls, even though patent trolls).

Typical cybersquatting means deliberate and unfair registration of a domain name in breach of the trademark (TM) rights of another person. The European experience shows that cybersquatters do not limit themselves to TM and cybersquatting is considered to be one of the forms of unfair competition; illegal use of other people's names, aliases of people (including, but not necessarily famous); the names of state agencies and institutions (even the names of coalitions of political parties); trade names / commercial names; designation of origin of goods; geographical indications; names of works protected by copyright (e.g., literature); names of cultural, sporting or other events etc. However, for the purposes of this article, we will concentrate on TM.

The purpose of the domain name registration may be intention to sell and advertise products and services, taking advantage of the reputation of the TM owner or desire to sell this domain name to such owner, making him an offer he can refuse of (by filing a lawsuit in court in order to obtain the following rights on a domain name).

Unfortunately, the culture of domain disputes in Ukraine to date is at the stage when the majority of actors do not yet know that the name can only be the «domain» (with the accent on the second syllable) and “domain” (blast furnace) - with the accent on the first syllable - could be only the furnace (wordplay with omophones in Ukrainian, Trans.)

In Ukraine, before filing a suit on domain dispute the party should be prepared to face a number of difficulties. By paraphrasing frivolous popular online communities, typical cybersquatter is hard to be found, easy to get lost and impossible to be forgotten.

Firstly, if cybersquatter is a natural person, it is impossible for TM owner to find information about him/her in the open access that will be sufficient for filing a suit. Such data should previously be requested from the registrar of domain names through court action.

Secondly, there is no guarantee that the cybersquatter has provided registrar with truthful and complete information, or that he/she is located in the territory of Ukraine.

Thirdly, if the TM owner has received through court action sufficient and truthful data about cybersquatter, there is no guarantees that such cybersquatter still be proper defendant at the moment of filing of the lawsuit by the owner of TM since the registrar after receiving an inquiry for data disclosure from the court, notifies the cybersquatter so that he/she will have enough time to transfer the domain name to another person.

Each of these conditions could cost the TM owner time, at least. However, even overcoming these difficulties by filing a suit against cybersquatter and banning (through the courts) to transfer (delegate) the disputed domain name to third parties till the dispute settlement, TM owner will not have chance to relax. Judicial practice on domain disputes in Ukraine is unstructured and ambiguous enough so that there is no point to expect a quick resolution of the dispute. Many questions arise concerning number of aspects (e.g. how the claims should be stated or how the decisions should be enforced, etc.)

Many plaintiffs in cases on domain disputes – from small to large (e.g. Google) – passed through all levels of Ukrainian judicial system. However, it had been all over the papers. As opposed to Ukraine, in Europe alongside with judicial method, very common is extrajudicial procedure of dispute resolution on domain issues, in particular, by means of alternative dispute resolution. For instance, the disputes are resolved in accordance with the UDRP procedure - Uniform Dispute Resolution Policy on domain names approved by ICANN (the organization that internationally regulates the functioning of the Internet network including the domain issues). The disputes according to the indicated procedure could be resolved by 5 accredited organizations (Approved Dispute Resolution Service Providers, hereafter – the arbitration courts), including: Asian Domain Name Dispute Resolution Centre, National Arbitration Forum, WIPO Arbitration and Mediation Centre, Czech Arbitration Court, Arab Centre for Dispute Resolution.

Consideration of disputes under UDRP procedure is often much easier, more predictable and less expensive way to protect rights in comparison to applying to national courts. In addition, it should be noted that there are such nice bonuses as possible consideration in the comfort of one's home in online mode (Czech Republic) and no need to wait for the compulsory enforcement of the judgment.

Representatives of the administrator of .UA domain, the Hostmaster Company have already raised questions concerning using such alternative method of dispute resolution. However, to date this initiative remained at the level of statements.

In 2015 UDRP principles were amended and now cybersquatters are not allowed to use such unfair practice as cyberflight (cyber or virtual flight). The latter meant deliberate transfer of the domain name to another person during the pendency of the case that made it difficult for the trademark owner to get the name. Today the registrars are obliged to block the domain names of domains that are included in the special list specified by ICANN. There are already several cases when the registrars were hold accountable for non-compliance with this rule. In this circumstances there is no matter what will be the choice of the owner – either to solve the dispute by means of alternative dispute resolution or through the courts.

However, there are some disadvantages that should be noted:

  • even in the case of the judgment in favour of the TM owner, there is no point to count upon reimbursement of judicial expenses;
  • only one question is raised before arbitration court - the transfer of the domain name, so that in order to get the compensation of damages, caused by the infringement of intellectual property rights, the owner of TM would have to wait again for resolution of the dispute, but this time - for the court decision;
  • the arbitration courts decision on the transfer of the domain name do not have final legal force (a party is entitled to apply to the court).

In Ukraine, just as in Europe, early bird gets the worm. If a person has lawfully registered the domain name first, so according to the general rule, it belongs to him/her. In European practice, this principle applies, in particular, to disputes between two owners of the TM or in case of the registration of a domain name for non-commercial use.

In particular, fair use in the first case is possible if trademarks (not recognized as well known) are registered for the different classes of goods and services and are used by their owners for various products, including the owner of the domain name, without other questionable motives. For example, the owner of the domain name is the owner of TM, which was registered for protection of shoes, and uses the site for advertisement, introduction to consumers and sales of mentioned products, while the other owner has registered TM for medicines. At the same time, there is no ground for declaring the latter TM as well known. In this case, there is a strong probability that the domain name will remain by the one who received the right for the domain name first.

The prime example of noncommercial use in dispute practice according to the principles of UDRP is the decision of Czech Arbitration Court in the case of a domain name MY-GTI.COM, which was actually created as fan-club site. On the one hand, the court held that the TM of German automaker was used in the domain name, and the site contained pictures of the car manufacturer and links to auto customizing sites concerning the model of this particular car. However, no signs of commercial use (including advertising), as well as warnings about the nature of the website in the description of each web page (site was focused on owner`s experience in improvement of his own car, bought from this German car manufacturer) did the trick. The domain remained in the ownership of its holder.

However, UDRP principles do not cover all the top-level domains. Thus, such pre-trial dispute resolution procedures do not apply to majority of national top level domain names, particularly to the domain names .ua, .de, .fi, but Ukrainian, German and Finnish TM owners may apply to the abovementioned arbitration courts concerning such domains as, for instance, .com, .net, .srl, .org, .info, .health, .biz, that belong to a common domain names of top level.

In this context, in contrast to Ukraine and Germany, in Finland the legislation introduced in 2003 an alternative way to judicial proceedings in the form of an appeal to the Finnish Communications Regulatory Department (FICORA). Besides, since 2016 to domain disputes apply the new code of information society (Information Society Code) and Regulation of domain names, on the basis of which the regulation of administration and delegation of national and regional domain names of top level are conducted (the domains in zones .fi and .ax, respectively).

In the same way as according to UDRP procedure, the dispute by FICORA is resolved quickly, the transfer of the domain name to the owner of TM is made by technical means, so that the compulsory enforcement of the decisions is not needed. Virtual flight is impossible because in the course of FICORA proceedings, the transfer of the disputed domain name is blocked. Still, FICORA`s decision is not final and does not deprive the parties of the right to appply to the court.

In Ukraine quick and convenient domain disputes resolution still remains hard achievable prospect. Apparently, first of all we should at least teach cybersquatters to put correctly the stress in the word "domain".
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