Anti-Cybersquatting in China: A Judicial Overview

For trademark owners, it is important to know that China does not have a comprehensive law (by the National People’s Congress) or regulation (by the State Council) regarding cybersquatting. Rather, the China Internet Network Information Center (“CNNIC”) and the Ministry of Information Industry (“MII”) both issued rules and measures on the topic of domain name. Among these rules and measures, the most prominent is the Regulations of Internet Domain Name Administration in China (“Domain Name Regulations”) by the MII. In accordance with the Domain Name Regulations, the CNNIC compiled the Detailed Rules of Registration for Domain Names, the Domain Name Dispute Resolution Policy, and the Procedure Rules for CNNIC Domain Name Dispute Resolution Policy.

For a detailed account of the above-mentioned rules and measures, please refer to Professor Mo Zhang’s article on SSRN. The content of this post is attributable to his excellent research and scholarship.

Besides detailing the regulatory framework of domain name registration and dispute resolution thereof, Professor highlighted the judicial standards as set by the Supreme People’s Court of China.

Litigants, seeking to protect their trademark rights in China against cybersquatters, should pay special attention to the Supreme People’s Court’s Explanations to Several Questions on Application of Law in Civil Actions Concerning Internet Domain Names (“Explanations”). The Explanations serves as judicial guidance to all levels of people’s courts in China adjudicating domain-name related disputes.

Jurisdiction

Only intermediate level courts have jurisdiction to domain name disputes, and suits should be brought in courts where the defendant is domiciled. Where the defendant’s domicile cannot be ascertained, the court where the infringing equipment (computer terminal) is located shall have the proper jurisdiction.

Causes of Action

According to Professor Zhang’s article, two most common causes of action for trademark rights are under the Chinese law are trademark infringement and unfair competition.

Legal Test for Infringement or Unfair Competition

Based on the Explanations, if the legal test requirements are met, the plaintiff can plead in the alternative for Trademark Infringement and Unfair Competition.

The determining factors in the legal test are:
1. the plaintiff must have valid and legitimate rights to the interests for which the legal action is being initiated. (in other words, if you are want to protect your trademark rights, make sure your trademark is registered under your name in China, unless your mark is deemed legally famous elsewhere.)

2. the defendant’s domain name must “be found to be either a copy, imitation, translation, or transliteration of the plaintiff’s well-known trademark”, or it must be same or similar to the plaintiff’s “registered trademark” so as to cause confusion to the consuming public. (this is the confusion prong of the test)

3. the defendant does not have a legitimate right or interest to the registered domain name, nor does it have “reasonable grounds for its registration or use of the domain name. (this factor balances the right of the plaintiff against that of the defendant)

4. the court must determine whether there was bad faith on the part of the defendant in its registration of the domain name. (black mailing the plaintiff using the domain name, offering to sell the domain name, registering the domain name using other’s famous marks for commercial purposes are all evidence for bad faith.)

5. in case involving famous trademarks, the likelihood of confusion prong of the test is eliminated because famous trademarks deserve special protection. (this further demonstrates China’s fulfillment to its TRIPS commitment over IP protection)

6. in terms of remedies, people’s courts can only grant damages of cancellation of the infringing domain name, which means transfer of the infringing domain name is not a remedy. (obviously, a trademark owner needs to register the domain name ASAP.)

Granted, a combination of agency level rules and judicial opinions do make the scene of anti-cybersquatting law in China complicated. However, the growing popularity of e-commerce in China makes it imperative for foreign trademark owners to register domain names with their trademarks. The cost of registration is a nano-fraction of what it would cost in a lawsuit against an unscrupulous Chinese cybersquatter. In the same vein, consideration should be given for registration in other commercially significant jurisdictions to which the trademark owners are likely to expand. In order to achieve that, a coordinated and calculated approach to IP protection becomes necessary. It is called IP Strategy. Mr. Godfrey Firth has an excellent article out on this very topic of developing an IP strategy for China, and I think some of his ideas are good for anywhere.

Read Professor Zhang's full article at SSRN.

Trademark Owners Beware: Anti-Cybersquatting in China

Let’s push aside the academic debate about the nature of domain rights, namely, whether the right to register a domain name is an independent form of intellectual property right or just an extension of exclusive rights inherent in the ownership of a trademark. Rather, let’s focus on the practical question of what a trademark owner or domain name holder can do to protect his legitimate rights accordingly in China.

First off, what is cybersquatting? It arises in the unique context of a conflict between a domain name holder and trademark owner. If a domain name, containing a recognized trademark, is registered in bad faith for the purpose of infringing on the rights of a mark owner, the holder of the domain name is considered to be a cybersquatter. Four types of squatters exist out there, and a detailed discussion of them is the topic of a law review article. Here, let’s make it almost black and white for ease of discussion—a squatter that purposefully registered the name associated with a trademark with the intention to cause confusion or blackmailing the mark owner; and a suspected squatter whose registration of the a domain name, which having the same name as a recognized brand, was in good faith and does not in essence infringe IP right of the mark’ owner (i.e. the domain name was registered way before the trademark was registered or in use).

In the international arena, pursuant to the Uniform Dispute Resolution Policy (“UDR” Policy) put forth by the Internet Corporation for Assigned Names and Numbers (“ICANN”), a trademark owner can file a complaint against suspected cybersquatters who registered top level domain names in violation of the owner’s trademark rights. Top level domain names (“TLD”) can be exemplified as: .com, .org, .net, etc. Since TLD registrants are bound by the UDR Policy, a plaintiff can file an arbitration complaint thereunder. A favorite venue for such arbitration is National Arbitration Forum. The World Intellectual Property Organization (“WIPO”) also offers arbitration proceedings through which a trademark owner could seek the cancellation or transfer of infringing domain names. Therefore, a trademark owner has two venues to seek redress for a TLD infringer—UDR arbitration or WIPO arbitration, of course in addition litigation in proper jurisdictions.

As to litigation, a trademark owner can sue under the Anti-Cybersquatting Consumer Protection Act or the Federal Anti-Dilution Act, assuming that proper jurisdiction over defendants can be had.

What if a trademark owner finds out that a sub-TLD domain name has already been registered in China, and the domain name used the mark owner’s trademark? Obviously, UDR arbitration is not available since the domain name is not a TLD. Neither is the WIPO arbitration for the same reason. And if the trademark owner happens to be in a country without a judicial treaty with China to enforce judgments against a Chinese defendant, the plaintiff’s right of action in its own jurisdiction is practically meaningless (both the China Law Blog and Korea Law Blog addresed this general topic). With that, a trademark owner’s option is limited to seeking redress in China. And seeking rightful redress and protection in China is fraught with pitfalls due to the fragmented nature of the Chinese law on anti-cybersquatting as China currently does not have a comprehensive law/regulation on point.