Courts vs Arbitration for Domain Name Disputes

court-arbitration-domain-names

People or entities who want to object to the registration or use of another domain name can choose whether to pursue a remedy by arbitration through the Australian Dispute Resolution Policy (auDRP) or to sue in court. What factors will influence this choice?

In this article, we imagine that you registered a trademark for the letters ‘jklm’, and also hold the license for the domain name ‘jklm.com.au’. We assume that a second trader comes along and registers the domain name ‘jklmn.com.au’.

The auDRP

There’s another article on this website which provides an overview of the auDRP. In brief you would need to show that:

  • the second domain name (jklmn.com.au) is confusingly similar to your domain name (jklm.com.au) or your registered trademark (jklm);
  • the second trader has no rights or legitimate interests in respect of the domain name jklmn.com.au; and
  • the second trader registered the domain name or subsequently used it in bad faith.

If you choose to file a complaint under the auDRP, then the second trader is required to submit to the mandatory administrative proceeding, as they have consented to do so as part of the registration of their domain name.

By bringing a successful complaint under the auDRP, you can have the offending domain name cancelled, or have the domain name transferred to you (assuming that you satisfy the eligibility criteria for that name).

The alternatives to an arbitration under the auDRP

The main alternative to the auDRP is to sue in court alleging that the other trader has breached a statute or committed a wrong against you. The most common avenues in this context involve alleging that the other trader has:

  • infringed a registered trademark in breach of the Trade Marks Act 1995;
  • committed ‘passing off’ (i.e. the second trader has ‘passed themselves off’ as being connected with you); or
  • engaged in conduct that is misleading and deceptive, or likely to mislead or deceive, and has therefore breached the Trade Practices Act 1974 or equivalent state legislation.

There is some overlap between the auDRP and the above options, which are technically called ‘causes of action’.

1. Infringement of a registered trademark

For an action under the Trade Marks Act 1995, the first trader must prove that the domain name jklmn.com.au:

  • is ‘substantially identical’ or ‘deceptively similar’ to its registered trademark;
  • has been ‘used as a trademark’; and
  • has been used in relation to the same or similar goods or services.

In relation to the second point above, Australian courts have held that the use of a domain name can amount to use as a trademark in certain circumstances.

2. Passing off

In a claim for passing off, the first trader must prove the making of a misrepresentation by the second trader which -

  • is made to prospective customers of goods or services supplied by the first trader;
  • is ‘calculated to injure’ the business or goodwill of the first trader (in the sense that this is a reasonably foreseeable consequence); and
  • causes actual damage to a business or goodwill of the trader by whom the action is brought or will probably do so.

3. Misleading and deceptive conduct

In a claim for misleading and deceptive conduct, the first trader must prove that the first trader engaged in conduct that was misleading and deceptive, or likely to mislead or deceive.

Not all options are available to all traders

While there are some similarities between the various options above, there are some crucial differences which mean that not all of the options are open to all traders. For example:

  • actions under the auDRP or in ‘passing off’ require proof of some knowledge on the part of the second trader (either actual ‘bad faith’ or ‘reasonable foreseeability’). In contrast, the second trader could breach the Trade Marks Act 1995 or the Trade Practices Act 1974 without having heard of the first trader;
  • actions under the Trade Marks Act 1995 require the first trader to have a registered trademark, whereas the other actions do not; and
  • actions under the Trade Marks Act 1995 require the trademark to be applied to similar goods or services, whereas the auDRP doesn’t require any use whatsoever.

If you have a choice, which one should you choose?

Ultimately, how you proceed will depend upon the particular circumstances of your case, but there are a some considerations that apply to all cases.

  • Prospects. As discussed above, the elements that you would need to prove under each different cause of action are different, and you might have better chances under one option than the other. You’ll need to obtain legal advice to understand these issues.
  • Cost. Disputes referred for resolution under the auDRP are invariably much less expensive than those decided by a court. Having said this, if the second trader were to lose the case under the auDRP, it still has a right to take court action to prevent the decision being implemented. Therefore, even if you were to win, you might still end up in court.
  • Time. Disputes under the auDRP are resolved much more quickly than court proceedings (usually being concluded in a matter of weeks).
  • Comprehensiveness. A dispute under the auDRP is solely concerned with whether or not the second party has the right to use the disputed domain. If you need to stop them advertising in magazines, or selling products in retail stores, then you’ll need to commence court proceedings to do that.
  • Compensation. You can’t recover compensation for any losses through the auDRP. If the other trader has damaged your brand or cost you in lost sales, then you will not be able to receive compensation for such losses.
Domain Names, DisputesDavid Kwei