@eLaw.com.hk by yip tse & tang, solicitors + notaries 葉謝鄧律師行

E-Commerce Trend

Many trades and industries have in the past benefited from the use of electronic transactions or trading without the Internet. This similarly happens in Hong Kong. The EDI (electronic data interchange which has been moderated and promoted by Tradelink in Hong Kong's situation), electronic banking through public telephone and private ATM network and credit card transactions are the most obvious and prominent examples. The associated networks are costly and by nature a private network and hence their communications protocols are proprietary.

The welcoming trend of the use of the Internet as an alternative which carries little cost and wide openness has caused a lot of security concerns, name on authentication of the parties, on preserving message or data integrity made during communications. The most widely accepted technology presently is the Public Key Infrastructure (PKI) . The use of PKI as a security safeguard is at the same time reinforced by the availability of an trusted third party (TPP), namely certification authorities. Hong Kong has given effect to the Electronic Transactions Ordinance, which is expected to govern transactions adopting the electronic channels as a means of communications.

Domain Names FAQ

Q: What is the legal significance of the "first-come-first served" registration policy of the domain name registrar such as Network Solutions Inc and Hong Kong Domain Name Registration Limited?
A: In the English authority where pitman.co.uk was the subject of dispute, the "first-come-first-served" registration policy is challenged by Pitman Training Limited. The registrar of .co.uk Nominet NK was sued. The Court ruled that Nominet NK was entitled to allocate domain names based on the "first-come-first-served" policy.

Q: What legal risk relates to the use of domain names?
A: There is a legal risk on using a domain name associated with a famous brand, trade mark or business. Disney and Rolex are examples. A person who adopts a domain name the same as or with likeness to famous brands will highly likely attract litigation on passing-off and trade mark infringement.

Q: Are there any cases being litigated on use of famous brand as domain names?
A: There are a lot of cases on that in America but not too many in England. There is so far none in Hong Kong. In England, Harrods.com, marksandspcxencer.com have been a subject of dispute. In both cases, Harrods and Marks & Spencer managed to "get back" their domain names. The relevant aspects of laws adopted by the Court are trade mark and passing off. As these are common law cases, the decided legal principles are of great use to Hong Kong when advising rights on domain name legally.7

Q: Am I liable of trade mark infringement or passing off if I have adopted the use of domain name associated with a famous mark which I am not aware of its existence?
A: You would still be liable. You are therefore advised to make searches in respect of the trade mark registry before you decide to adopt the domain name. Some marks could have attracted litigation to your surprise. For example, a information company in Washington DC registered the domain name dc.com. Warner Brothers owns the registered trade mark DC COMICS and sued the information company with the objective of "getting back" the domain name..

Besides, Genesis Access Point obtained the domain name thegap.com. The garment shop The Gap Inc. who also owns the registered trade mark of GAP, sued Genesis for trade mark infringement,.

Q: How is my position if I am only a domain name collector of famous brands and I do not use the domain names to a build a homepage.
A: That is legally risky. In the English case of One in a Million, a long history and volumnous act of domain name collection is sufficient to constitute a threat of infringement. In that case, the defendant was ordered by the Court to assign a number of domain names to the Plaintiffs. The domain names included bt.org, marksandspencer.com, labrokes.com.

Q: Should I commence legal action in the Court or complain to the accredited arbitration service provider in a dispute relating to a .hk domain name?
A: It depends what remedies you intent to seek. Judge by the experience in .com disputes, complainants inclined to use ICANN's Uniform Dispute Resolution Policy much more often than using the Court as a venue. The arbitration venue is believed to be of less cost and more speedy. But the Arbitration Panel has no power to order any damages against the registrant.

Assignment of .hk Domain Names

Starting from 1st June 2001, .hk domain names became transferable. Such transfer is subject to the registration rules or agreements, including the subject of the transferee to the Registration Agreement and the Dispute Resolution Policy. As HKDNR has restricted the use of .com.hk to commercial organisations, .net.hk to holder of a Public Non-exclusive Telecommunication Service licensee (IVANS/ISP licence holder), .org.hk to non-profit making organisation, a transfer must be effected to a transferee having the same legal status.

The usual format of the transfer of a domain name is by way of an assignment. An assignment is preceded by an agreement unless the parties can have all the documents and the purchase consideration exchanged simultaneously. As the execution of an assignment does not complete the whole process of the transfer, the purchase consideration should preferrably be held by the vendor's solicitors as stakeholders in escrow pending the updating or the domain name service (DNS) server hosted by the HKDNR. The vendor would be entitled to the release of the purchase consideration to him once the DNS server has been updated with the purchaser's name.

Practical Advice on Registering and Using a Domain Name

The registration of a domain name does not give the registered owner proprietary rights in the name. The name must be capable of passing through the tests that it does not infringe a prior trade name. Nor the name may commit passing off against reputable trade names and products. A third party possessing rights based on trade marks and common law's passing off can enforce its right against the registered owner of the name.

A domain name user must be cautious when registering domain names. He must refrain from registering a domain name similar or same as a famous trade mark or trade name can be liable for passing off and trade mark infringement.

Like registering a trade mark, the user should investigate the current usage of the name before doing the registration. This can be done by for example conducting trade mark search at Trade Mark Registry

How to Demonstrate the Registrant's Rights to and Legitimate Interests in the Domain Name?

When a registrant receives a Complaint as defined in the relevant rule of the Rules of Procedure, he should refer to Paragraph 5 of the Rules of Procedure in determining how the Registrant's Response should be prepared.

Any of the following circumstances, in particular but without limitation, if found by an Arbitration Panel to be proven based on its evaluation of all evidence presented to it, shall demonstrate the Registrant's rights or legitimate interests to the domain name for purposes of the DRP:

(i) before any notice to the registrant of the dispute, the Registrant's use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services in Hong Kong ; or

(ii) the registrant (as an individual, business, or other organisation) has been commonly known by the domain name, even if the Registrant has acquired no trade mark or service mark rights in Hong Kong; or

(iii) the registrant is making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trade mark or service mark at issue.

What Does a Complainant have to Prove?

The Complainant has to adduce evidence of Registration and Use in Bad Faith.

For the purposes of rules in the DRP, the following circumstances, in particular but without limitation, if found by an Arbitration Panel to be present, shall be evidence of the registration and use of a domain name in bad faith:

(i) circumstances indicating that the Registrant has registered or the Registrant has acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the Complainant who is the owner of the trademark or service mark or to a competitor of that Complainant, for valuable consideration in excess of the Registrant's documented out-of-pocket costs directly related to the domain name; or

(ii) the Registrant has registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the Registrant has engaged in a pattern of such conduct; or

(iii) the Registrant has registered the domain name primarily for the purpose of disrupting the business of a competitor; or

(iv) by using the domain name, the Registrant has intentionally attempted to attract, for commercial gain, Internet users to the Registrant's web site or other on-line location, by creating a likelihood of confusion with the Complainant's mark as to the source, sponsorship, affiliation, or endorsement of the Registrant's web site or location or of a product or service on the Registrant's web site or location.

What are the Applicable Disputes?

Regarding .hk registration, the registrant is required to submit to a mandatory arbitration proceeding in the event that a third party (a "Complainant") asserts to the applicable Provider that:-

(i) the domain name is identical or confusingly similar to a trademark or service mark in Hong Kong in which the Complainant has rights; and

(ii) the registrant has no rights or legitimate interests in respect of the domain name; and

(iii) the registrant's domain name has been registered and is being used in bad faith.

To succeed in the arbitration proceeding, the Complainant must prove that all of these three elements are present.

What are the Applicable Registrations?

Regarding .hk domain names, the DRP applies to all new registrations done after 1st June 2001 and re-registration done with the adoption of the new Registration Agreement effective on 1st June, 2001. Therefore, domain names registered before 1st June 2001 and do not adopt the Registration Agreement are not governed by the DRP.

In case the DRP applies, to each registrant, the arbitration proceeding set out in the DRP is mandatory. These proceedings will be conducted before one of the Dispute Resolution Service Providers approved by HKDNR (the Provider). Presently, the Hong Kong International Arbitration Centre is the only Provider accredited to provide such arbitration services.

Domain Name Dispute Resolution Policy of HKDNR (.hk domain names)

The Hong Kong Domain Name Registration Company Limited ("HKDNR") has adopted the Domain Name Dispute Resolution Policy (the "Dispute Resolution Policy") as being incorporated by reference into the Domain Name Registration Agreement between HKDNR and a registrant ("the Registration Agreement").

The Dispute Resolution Policy (DRP) sets forth the terms and conditions in connection with a dispute between the registrant and any party other than the HKDNR in regard to the registration and use of a .hk (most commonly .com.hk, .net.hk and .org.hk suffix). That means every registrant, when registering his domain name is automatically subject himself to the governance of the DRP. Therefore, knowing and understanding the Dispute Resolution Policy is very important when facing a complaint from others or the Registrant intents to make a complaint against the registrant.

World Wrestling Federation v Bosman

The case involved the registration of the domain name worldwrestlingfederation.com.This is a decision decided by WIPO pursuant to the UDRP policy.

The Respondent, Bosman was the first person who registered the domain name worldwrestlingfederation.com. The registration was made by Bosman in Australia through an Australia registrar who has adopted ICANN UDRP rules.

After 3 days after he has registered the domain name, Bosman offered to sell it to World Wrestling Federation (WWF) for US$1000.

Complaint lodged by WWF with the UDRP arbirator, WIPO. WWF is the owner of the relevant trade mark in the US.

Held by the court:

That the domain name was identical or similar to WWF's trade mark. Bosman did not have any legitimate rights to the domain name. Bosman registered the domain name in bad faith. That was evidenced by his offer to sell shortly (3 days) after the registration. In regard to the element bad faith, it was held that even though Bosman did not set up a website. It was found: that the offer to sell constituted 'use' under the UDRP. In the circumstances, the Court decided to have the domain name transferred to WWF.