@eLaw.com.hk 葉謝鄧律師行

Commercial Use of Domain Names and First-come-first served Policy

Because of the use of the DNS to translate the English spelling into digits, domain names have become the identifiers to persons and businesses.

The use of the Internet as a commercial platform (through the concept of E-Commerce) has increased the demand of corporations on domain name. Companies invariably prefer to adopt their company names, product or servie trademark to be their domain names. Some people foresee that could happen and proceed to 'pirate' the domain names spelt in the names of the corporations or trade marks. This is known as 'cybersquatting'.

Domain name registration companies like Network Solutions (US) and Nominet (UK) do not take into account the nexus between the registrant and the domain names, namely whether the registrant has a lawful right over the domain name. The allocation of domain names is done on a "first-come-first-served" basis.

ICANN and gTLD

ICANN (the Internet Corporation for Assigned Names and Numbers) is a non-profit making international corporation based in California. In November 1998, it took over the role from the US Government on administering the generic top-level domains (gTLD) of .com, .net and .org and other 4 gTLDs.

There are no restrictions on who may register .com, .net and .org. The other four are restricted. Only organisations meeting certain criteria may register names bearing those gTLDs. They are .int (international organisations); .edu (colleges and universities); .gov(agencies of the US government); and .mil, (military of the USA).

Apart from those few gTLDs, there are at present 243 ccTLDs. Each of them bears a country code represented by 2 letters, such as .cn (China), .hk (Hong Kong), .uk (United Kingdom), .au (Australia), and so on.

Basic Legal Framework in Hong Kong

Electronic means, including the Internet, is one of the media for conducting commercial and trading activities. In general, legislation regulating the various aspects of commercial and trading activities (such as the use/collection/storage of personal data, trade description, consumer goods safety and copyright) is also applicable to commercial and trading activities conducted through electronic means. If criminal activities are involved, they can be dealt with by the Crimes Ordinance or other relevant legislation.

Moreover, with a view to facilitating the development and adoption of e-business, the Electronic Transactions Ordinance (Cap. 553) was enacted in 2000 to provide a clear legal framework for the conduct of electronic transactions. For instance, the Ordinance accords electronic record and digital signature the same legal status as that of their paper-based counterparts. We also introduced the Electronic Transactions (Amendment) Bill 2003 into the legislature last year with a view to updating and improving the Ordinance, and thereby facilitating the adoption of electronic transactions. The Amendment Ordinance, if enacted, will come into operation on June 30 this year.

Mode of E-Commerce

Regarding the mode of e-commerce utilisation, this can be based on the research and survey findings of e-commerce adoption in 2002 and 2003 published by the United Nations Conference on Trade and Development, European Commission, National Statistics of the United Kingdom, University of California and Census and Statistics Department of the Government of the Hong Kong Special Administrative Region.

In general, online shopping is most popular in the United States and European countries, in particular the United Kingdom and Germany. Enterprises in the European Union member states tend to be active in adopting e-procurement and participating in e-marketplace transactions, as well as exchanging business and product information through the Internet with their business partners, suppliers and customers. Among the firms in the United Kingdom and United States, popular e-commerce utilisation includes the use of e-mail and electronic data interchange (EDI), establishment of website and intranet/extranet, as well as electronic fund transfer and payment.

As regards the Mainland, some enterprises in the manufacturing, distribution and financial sectors have set up websites and extranets and adopted EDI. Exchange of operational data through the Internet with their customers and suppliers is also quite common. In Hong Kong, receipt of goods, services and information through electronic means has been the most commonly cited e-commerce utilisation among enterprises. Some firms have also offered product and service information through their websites, and sold their products and services through various electronic means.

Hong Kong's International Ranking

Since 2000, the Census and Statistics Department has been conducting annual surveys on information technology (IT) usage in the business sector. The survey findings have recorded a steady increase in the adoption of IT and e-commerce in the business sector over the past three years. The penetration rates of personal computer and the Internet have increased respectively from 51.5 per cent and 37.3 per cent in 2000 to 54.8 per cent and 47.5 per cent in 2003. In addition, more and more business establishments have started to order/purchase, receive, sell or deliver goods, services or information through various electronic means.

With a view to encouraging more small and medium-sized enterprises (SMEs) to adopt IT, Information Technology Services Department has been cooperating with the relevant trade associations and IT industry organisations to promote IT adoption by SMEs in specific sectors. We have already started two sector-specific programmes to promote IT adoption by travel agents and private medical practitioners. We expect that e-commerce adoption in Hong Kong will continue to grow steadily over the next few years.

Hong Kong ranks ninth overall (10th and 14th respectively in 2003 and 2002) in the Economist Intelligence Unit's 2004 e-readiness rankings, which covers over 60 economies. The rankings are based on criteria in six categories and Hong Kong comes 11th in the category of consumer and business e-commerce adoption.

Those ahead of Hong Kong in the 2004 e-readiness rankings are mainly the United States and European countries leading in IT adoption, including Denmark, the United Kingdom, Sweden, Norway and Finland, etc. The Mainland ranks 52nd.

Yellpage.com

Yellpage.com is a small size start-up in England. It was launched in February 2001.

It claims to have signed up more than 20,000 users and supplies ringtones and logos to websites for the BBC, Emap and Carlton. Yell is the directories division of British Telecom (BT). Yell alleged the use of the domain name Yellpage.com was a infringing the trademark owned by BT. Yellpage.com was demanded by Yell to stop using the domain name. Facing the allegation and in order to avoid huge expediture on a legal fight with the telecom giant, Yellphone.com has decided in April, 2001 to shift to use Splashmobile.com as the domain name of its business in 2 months' time.

Prince.com

UK IT consultant registered prince.com. US sports manufacturer both traded without conflict for years in different markets in different trades under the trade mark 'prince'. US company sought to rely on registry's dispute policy to 'take back' the domain name. UK company accordingly has to bring court proceedings to defend its ownership. Demand letter sent by US company to UK company UK company argued the letter constituted an unlawful threat under the Trade Marks Act 1994.

Held:

ownership of prince.com domain name by UK company affirmed yet court makes no general ruling on rights of domain name

Pitman.co.uk

Registrant traded in a trade name. Registered trade name as domain name with bona fide intention and supporting legal rights ie owner of the associated goodwill pitman.co.uk (Pitman Trading Ltd v Nominet UK [1997]) both had the lawful right to use the Pitman trade mark but only one could own and use the domain name court upheld first-come-first-served' policy of the registry as the allocation procedure.

UK Case: Marks and Spencers and Others v. One in a Million Limited

Another UK precedent case. It is a more detailed judgment than Harrods.com.

Held:

It was held by the Court that registrant had been dealing in domain name registration for some period of time could constitute a threat of both passing off and trade mark infringement.

The Defendant was ordered to re-assign domain names to the Plaintiffs respectively.

UK Case: Harrods.com

Harrods is a famous and the biggest dept store in UK. The domain name harrods.com was registered by the Defendant.

Court considered Defendant's activities in registering as a domain name "… clearly constituted infringement of Harrods' trade marks and passing-off".

No reasoned judgment was given by court. It is rather unclear whether mere act of registering of domain name could amount to trade mark infringement or passing off.