Internet Service Providers' Association

Advisory 1: Trade marks and domain names

Release date: 24 February 2000
Author: Michael Silber

Introduction

In the offline world, your trade mark represents your identity in the marketplace, making you and your products recognisable for the persons and entities with whom you do business, particularly your customers. In the online world of the Internet, domain names fulfil the same role as a trade mark, as your presence on the Internet starts with your domain name.

A domain name is an important corporate identifier and beyond being the name under which the you send and receive e-mail, like any other trade mark or trade name it can be a symbol of your goodwill and recognition in the market place. Importantly, when attempting to locate an entity on the Internet, the domain name is often the first component of any search.

It would be out of pace for a lawyer to attempt a comprehensive treatise on domain naming and this opinion is therefor focussed on -

• a brief introduction to the law of trade marks;
• an examination of the convergence between trade mark and domain name registration;
• an examination of the evolving form of trade mark disputes involving domain names and certain pertinent cases;
• a consideration of recent attempts to resolve the disputes arising from domain naming.

It must be borne in mind that the Internet does not have the physical and jurisdictional boundaries of our modern nation states. The Internet is borderless in nature and it is this very essence of the Internet and consequential increase in globalisation that has simultaneously been inspired by the Internet and global communications and has turn has inspired the growth of the Internet and global communications. Most law is, however jurisdictionally bound to a specific state. Trade mark law is a hybrid of national law and international practice, agreements and conventions, most importantly perhaps being the General Agreement on Tariffs and Trade (AGATT@). This is due largely to the globalisation of which the Internet is both cause and symptom and where entities trade and products are sold and services offered multinationally and no longer just nationally. In this changing environment it is necessary to consider South African trade mark law as being the nearest example of trade mark law and practice, which is similar to the majority of international trade mark law, but not necessarily identical.

A copy of the South African Trade Marks Act 194 of 1993 (the ATrade Marks Act@) is attached for reference.

An Introduction to Trade Mark Law

A trade mark is a "mark" used in relation to goods or services for the purpose of distinguishing those goods or services from the same or similar goods or services of others. Provided the mark fulfils this function, there is virtually no limit to the form which it can take. The Trade Marks Act defines a mark as "any sign capable of being represented graphically", thus capable of visual representation, and this includes a device, name, signature, word, letter, numeral, shape, configuration, pattern, ornamentation, colour or container for goods, or any combination of these.

• A mark can be a symbol which may or may not have a particular significance, or it can be a person's name or image, or a corporate logo, or it can be an invented word, or an ordinary word of the language, or a distinctive container for particular goods.
• A mark may be something applied to the surface of goods or incorporated in their shape or structure. It may be a musical jingle or a slogan, or a combination of colours in a particular format. The three stripes down the sides of "adidas" shoes, the little red tab projecting from the hip pocket of Levi's jeans and the arrow device on the Parker pen clip are all well known and valid trade marks.
• Trade marks are registered for certain goods or categories of goods or services.

Registration of a trade mark has many advantages ­

The mere fact of registration, without the necessity for any proof of use of the trade mark, is sufficient to enable the owner of the trade mark to stop the use, or the registration, of another trade mark in respect of the same or similar goods or services, if that other trade mark so nearly resembles the registered trade mark as to be likely to deceive or cause confusion.

A trade mark registration will also enable the owner to object to other unauthorised use of the trade mark or a similar mark if the registered mark is well known in South Africa and the use would be likely to take unfair advantage of, or be detrimental to, the distinctive character or reputation of the registered mark, notwithstanding the absence of deception or confusion. This so-called "anti-dilution" provision in the law enables the owner to object to comparative advertising or use which adversely affects the advertising image of the mark. Without registration, the entity claiming rights in a trade mark is put to very considerable trouble and expense in establishing its reputation and rights, which would include disclosure of confidential information concerning the goods or services bearing the trade mark. The proceedings would have to be based on passing-off under the common law. In the case of a new product or service, reputation may be minimal and the mark is therefore difficult to protect.

Registration gives notice to all interested parties of the rights claimed by the trade mark owner throughout the country. Rights in an unregistered trade mark may be much more localised. Particulars of all trade mark registrations are maintained in the records of the Trade Marks Office in Pretoria, through which searches are conducted by trade mark practitioners on behalf of interested parties and also by the Registry itself in examining new trade mark applications. If the examiner considers a new trade mark to be too similar to an existing registered mark, he will refuse the application.

The owner of a registered trade mark can grant a license to use that trade mark to a licensee, as a "registered user" and the parties can thereby benefit from certain advantages arising through such license.

Registration is usually an indemnity against attack on the use of the trade mark. It is, in fact, not possible for one registered proprietor to bring an action for infringement arising from the use of another registered trade mark.

Registrations endure indefinitely, subject only to the payment of renewal fees every ten years.

International arrangements to which South Africa is a party confer additional benefits on owners of registered trade marks or pending applications for registration, in certain circumstances

Not all trade marks qualify for registration and it is a fundamental requirement for registration that a trade mark must be "capable of distinguishing". A mark which is reasonably required by other traders for use in connection with the particular goods or services is not registrable and the Trade Marks Act expressly excludes from registration, designations as to the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of the goods or services, or the mode or time of production of the goods or rendering of the services, and "shapes and colours which are necessary to obtain a specific technical result".

The procedure for the registration of a trade mark commences with the filing of a trade mark application. The specification of goods or services included in the application is of primary significance, since rights against infringers are confined to use of the same or a confusingly similar trade mark on the same or similar goods or services covered in the specification. The goods and services in respect of which a trade mark can be registered are divided into 42 classes (www.naming.com/icclasses.html). In order that a trade mark be comprehensively protected it may be necessary to register it in a number of classes, each of which requires a separate application.

After filing, the application for registration of a trade mark is examined by the Trade Marks Registry both as to the inherent registrability of the trade mark itself and as to possible conflict with existing registrations. Furthermore, if the trade mark is deceptive for all or certain of the goods covered by the application, this would also form the basis of an objection to registration.

After examination, an official action is issued in which the registry indicates whether, and subject to what conditions, it would be prepared to register the mark. Upon the registry being satisfied that a trade mark can proceed to registration, it will issue acceptance of the application and the applicant must arrange for the acceptance of the application to be advertised in the Patent Journal.

 

After such advertisement, the application is open to opposition by interested parties for a period of three months. If a party believes it has grounds for opposing, an extension of that period is usually arranged and, prior to the filing of formal notice of opposition, an attempt is generally made to find a basis for coexistence of the respective trade marks of the parties, or for the application or the objection to be withdrawn.

At the expiry of the three month period, or any extension thereof, the Certificate of Registration is issued. Unfortunately, there can be a considerable delay in the official examination of trade mark applications. Upon registration, however, rights in the trade mark date from the date of filing of the application.

Registration of the following will be refused -

• a mark which does not conform with the definition of a trade mark;
• a mark which is not capable of distinguishing, or which is a descriptive term, or which has become customary or commonplace in respect of the relevant goods or services;
• any mark where the applicant has no bona fide claim to proprietorship;
• any mark where there is no bona fide intention to use the mark;
• a mark which consists of a shape, configuration or colour dictated by the nature of the product;
• a mark which is essentially a reproduction or imitation of a well known trade mark for the same or similar goods;
• a mark where the application for registration is mala fide or in bad faith; a coat of arms, seal or flag of the Republic, or of other countries;
• any word, letter or device indicating state patronage;
• a mark which contains matter declared in published regulations as being prohibited;
• a container for goods or the shape, configuration, colour or patterns of goods where such registration will be likely to limit the development of any industry;
• matter which is inherently deceptive or would be likely to deceive or cause confusion or would be otherwise against the law or morality or would give offence;
• a mark which, as a result of the manner in which it has been used, would be likely to cause deception or confusion;
• any mark which is similar to a trade mark already applied for, registered, or in use; and,
• any mark which would take unfair advantage of a registered and well known trade mark or which would be likely to cause deception or confusion with a registered or unregistered well known trade mark.

A registered trade mark can be attacked on the grounds that it is an entry wrongly made if registration was obtained contrary to the provisions of the Trade Marks Act. In other words, an application for rectification can be based on any of the grounds on which opposition to registration of the trade mark could have been based -

• a trade mark which fails to serve its primary function of distinguishing the goods or services of the proprietor from similar goods of others may become invalid. Thus a trade mark which is used deceptively, or which passes into the public domain as the only practicable name for a product or service can be cancelled;
• a trade mark can also be expunged from the Register on application by any interested party if for a period of more than five years prior to the application for expungement, there has been no bona fide use of the registered trade mark. The proprietor bears the onus of establishing bona fide use;
• where it can be shown that the proprietor of the trade mark had no bona fide intention of using the trade mark and there has in fact been no use of the trade mark, the trade mark can be cancelled.

A registered trade mark is infringed by unauthorised use of the same or a confusingly similar trade mark, if such use is in relation to the goods/services for which the trade mark is registered, or similar goods/services.

A registered trade mark which is well-known in South Africa can also be infringed by the unauthorised use of a mark which is likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of confusion or deception.

A foreign-owned trade mark which is well-known in South Africa is protected even in the absence of registration or goodwill in this country. In the McDonald's case the court held that "well-known" meant that the trade mark must be known to a substantial number of persons who are interested in the goods or services provided under the trade mark - it need not be known in every nook and cranny across the country.

A registered trade mark is not infringed by -

• the bona fide use by a person of his own name;
• the bona fide description of the kind of quality, quantity or characteristics of goods or services;
• the bona fide use of the registered trade mark where it is used to indicate the intended purpose of goods or services. The exemption is intended to accommodate manufacturers of spare parts and components and it is not an infringement of the registered trade mark if the manufacturer of generic parts or components uses the registered mark in a bona fide manner, such as in lists of systems requirements;
• the sale of goods to which the trade mark has been applied by or with the consent of the trade mark proprietor, such as parallel imports of genuine products which by-pass the official distributor will not constitute infringement of the trade mark;
• the fair and reasonable use by someone of its own registered trade mark will not constitute an infringement of another registered trade mark.

A trade mark is, however, infringed by -

• the unauthorized use of an identical mark or of a mark so nearly resembling it as to be likely to deceive or cause confusion, in the course of trade and in relation to goods or services in respect of which the trade mark is registered;
• the unauthorized use of a mark which is identical or similar to the trade mark registered, in the course of trade in relation to goods or services which are so similar to the goods or services in respect of which the trade mark is registered, that in such use there exists the likelihood of deception or confusion;
• the unauthorized use of a mark which is identical or similar to a trade mark registered, if such trade mark is well known in the Republic and the use of the said mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of confusion or deception (Adilution@).

Trade Marks and Domain Naming

Generally speaking domain names are assigned on a first come first serve basis by various regional and international registries who have been allocated the responsibility of domain name registration. These registries, in accordance with RFC 1591, typically do not exercise veto power over a requested name so long as that name is not identical to one already assigned. The result is that an Internet user may register as its domain name, a well known and established trademark or proprietary name, to the exclusion of all other persons, including the proprietor of the trade mark.

In South Africa, the fact that a domain name is an alphanumeric address, does not mean that it cannot be treated as a "mark" as defined in the Trade Marks Act, given that it serves some of the same purposes as a trade mark and there is no bar to registering domain names as trade marks, provided they fulfill the remaining criteria for registration.

The only South African domain with a broadly published policy on trade marks is the second level commercial domain (.co.za), administered by UniForum, a company registered in terms of Section 21 of the Companies Act. The registration documentation of the ".co.za" domain name provide, inter alia, for -

1. registration of domain names on a "first come, first served" basis;
2. an exclusion of liability and a disclaimer of any legal obligation to screen requested domain names to determine if the use of a domain name by any applicant may infringe upon the rights of any third party;
3. a warrantee that -
   

   3.1 the applicant's statements in the application are true;
   3.2 the applicant has the right to use the domain name as requested in the application;
   3.3 the applicant has a bona fide intention to use the domain name on a regular basis on the Internet;
   3.4 the use or registration of the domain name by the applicant does not interfere with nor infringe the right of any third party in any jurisdiction with respect to any trade mark, service mark, trade name, company name, close corporation name, copyright nor any other intellectual property right;
   3.5 the applicant is not seeking to use the domain name for any unlawful purpose, including, without limitation, delictual interference with contract or prospective business advantage, unfair competition, injuring the reputation of another, nor for the purpose of confusing or misleading a person, whether natural or incorporated; and

4. comprehensive indemnities and exclusions of liability.
   
   There is no reported judgement concerning trade marks and domain name disputes in South Africa, though it should be noted that UniForum are inundated with complaints concerning infringement of trade mark by way of a domain name, even though they disclaim any responsibility therefor and agree to abide by the decision of any competent court.

Forms of Domain Related Trade Mark Disputes

A. Trademarks as second-level domains

Domain names have value. Organisations wishing a location on the Internet need to locate themselves at some address. Most organisations, especially commercial entities want to locate themselves on the Internet at an address where their customers can find them, and at addresses that can be remembered easily. Therefore, for an organisation, the ideal case would be to have an Internet address at a second-level domain that matches its business name or the name of its products. Thus, Internet users who wish to find the company may be able to guess at the company's location without knowing for sure where the company is located. For instance, if you want to find the web page for Apple Computer, you could guess that it might be located at www.apple.com. Because domain names are unique, only one organisation can get any name in a particular top level domain. You might guess, for instance, that Apple Records might be located at www.apple.com (and you would be wrong because Apple Computer registered the address first). Although a variant of a particular name may be available, registering such a variant makes an organisation less easy to find on the Internet. For instance, Apple Records could register apple-records.com or some such variant, but such a name would be less intuitive for people to guess.

Because some particular domain names are likely to have more value, people have registered names that they thought other companies may want and be willing to pay to get. There have been numerous claims, predominantly in the USA concerning these Acybersquatter@ or domain name Ahi-jackers@. These cases include Panavision International L.P. v. Toeppen and Intermatic, Inc. v. Toeppen as well as the English case of British Telecommunications plc and another v One In a Million and others, Marks & Spencer, et al v One In a Million.

The One In a Million cases put an end to the practice of cybersquatting in England. In this case the defendants had registered a number of famous names such as "marksandspencer.com" and "ladbrokes.com" and had then tried to sell these to the real owners. The High Court held that where there was a deliberate practice of registering domain names with the intention to deceive, there is a threat of "passing off and trade mark infringement and the true owners are entitled to final injunctions restraining the use or sale of the domain names. The defendants were ordered to assign the domain names to the "true" owners.

It is likely that the South African Courts will follow the British Courts. Where a person has registered a domain name and attempts to hold another company to ransom, or where use of a domain name gives rise to confusion or deception, legal action may be possible in terms of the Trade Marks Act and/or in terms of the common law provisions pertaining to passing off. The provisions relating to infringement, misuse of well-known trade marks and dilution of marks can be adapted and applied on a case-by-case basis, depending on the nature of each individual case.

B. Second-level domains that are similar to trademarks

Another example of a domain name based trade mark controversy is the Zero Micro incident. Zero Micro is an Austin, Texas based software business that registered the domain name micros0ft.com-- that is spelled: M-I-C-R-O-S-[zero]-F-T. At the web address www.micros0ft.com, the company put up a page making fun of the "real" Microsoft, the Redmond, Washington software giant, and its president, Bill Gates. Zero Micro's Internet address, micros0ft.com looks similar to (or exactly like) Microsoft's microsoft.com address, however there is no way to communicate with Zero Micro without knowing that the addresses are in fact different. After complaints were filed with the InterNIC, the domain name was placed on "hold" effectively taking it off of the Internet. There are numerous other instances of both second level and third level domains that are similar to trademarks. In some situations this is as a result of the same or similar trade marks or trade names over various trade mark categories or various countries (particularly in the generic top level domains). Some domain names that are similar to trade marks are created expressly with the purpose of diverting traffic to such site for various reasons, including religious (Jews for Jesus v. Brodsky), business (Playboy Enterprises, Inc. v. AsiaFocus International, Inc, Playboy Enterprises, Inc. v. Calvin, Playboy Enterprises, Inc. v. Frena, Playboy Enterprises, Inc. v. Chuckleberry and Playboy Enterprises, Inc. v. Universal Tel-A-Talk). In Princeton Review v Kaplan Educational Centre, both parties market educational materials and Kaplan did not take kindly to its competitor's use of the domain name "kaplan.com" in connection with a web site disparaging Kaplan's services and praising those of Princeton Review. The matter was settled by arbitration with Princeton Review being ordered to give up the domain name.

C. Trademarks as third/fourth-level domains/machine names

Large organisations will often have many machines connected to the Internet, all addressed under their second-level or third-level domain name. Perhaps they will even have sub-networks organised under their domain name. In such cases, machines and sub-networks often employ logical naming schemes for administrative convenience and communication ease. In some cases, this can also raise trademark concerns.

D. Trademarks as User IDs

In addition to appearing in the domain name, there are a number of other places where a trademark might appear in relation to Internet addressing. If a user has a trademarked name as a User ID, it will appear in an e-mail address, e.g., castle@company.co.za.

Problematic cases are likely to arise where more than one party has trademark rights attaching to a name, and therefore a legitimate claim to that name. An example that is frequently quoted is that several organisations use the term United, including United Airlines, United Bank and United Van Lines. If one of these trademark holders obtains the domain name united.com, do any of the others have the right to object? Applying existing trade mark principles, each owner of a "United" trade mark would have the right to use the domain name united.com, in the same way as they each use the word United on their respective goods or services. The difficulty with domain names is that, even if the name is used in relation to different goods, only one user is entitled to use the domain name in question. The result is that, with names over which more than one trade mark owner has rights those trade mark owners may find that they cannot prevent others from using their trade marks as domain names.

In the 1997 English case of AVNET, the judge stated that where a non-pirate user has a domain name "it is hard to see how a user can be confused by a domain name when he immediately sees that the site is not what he expected".

Attempts at Resolution

The lack of clarity regarding trade marks and the Internet domain name space is considered one of the obstacles to the further growth of electronic commerce. This shortfall is widely recognised and numerous attempts are being made by various organisations to remedy this confusion. Such attempts have included -

• the formation of the International Ad Hoc Committee (IAHC) tasked with preparing policy documentation relating to domain name registration. The IAHC proposals included the introduction of a number of new generic "top level" domain names (including .firm, .web, .arts, .rec. and .info) in addition to the previously existing generic top level domain names;
• the introduction of a comprehensive (and seemingly inexpensive and robust) dispute resolution policy that may be used by entities seeking resolution of trade mark issues before an adequately qualified adjudicator;
• the introduction of legislation in the USA to help trademark owners protect their intellectual property against "cybersquatters" who register Internet domain names resembling famous trademarks in order to extort money from or defame the trademark owner. Included in this bill are provisions that establish in rem jurisdiction in cybersquatting actions, i.e., it allows a mark owner to file an action against the domain name itself, rather than against the cybersquatter. The Trademark Cyberpiracy Prevention Act has come under a fair degree of criticism, not least for its definition of (or the lack thereof) ACyberpiracy@ . In addition, this Act ignores a new form of Cyberpiracy, which Eric Grimm calls "Reverse Domain Name Hijacking" or "Reverse Domain Name Piracy" This occurs when a trade mark owner uses litigation or the threat of litigation to extort the transfer of a domain name from a domain name registrant who is NOT infringing, such as an individual with the same name as a company, or the like.