Impact of reputation when unregistered trademarks face domain squatting

In an internet era, when some international brand owners declare they will explore the Chinese market, they may then find professional squatters rushing to register everything from trademarks to domains containing the brands in China, with the aim of selling them to the real brand owners later at a sky-high price. While based on prior trademarks registered outside China a pirated general top level domain (GTLD) like a .com or .net domain is easier to recover, a pirated Chinese trademark or .cn national TLD is difficult to challenge under current Chinese laws. The New Trademark Law, effective from 1 May 2014, may bring some hope for combating bad-faith trademark applications. Before we see the effect, a recent .cn domain name dispute arbitration heard at the Hong Kong International Arbitration Centre (HKIAC) cast some light on anti-unfair competition rights to protect brands when prior trademark rights are not registered in China.

A non-typical case

After negotiations to buy back the pirated domains came to a deadlock, one of the world’s largest brand owners explored the chance of recovering the domains through domain name dispute arbitration. Among the pirated domains, two contained a mark to which the brand owner owns trademark registrations in several jurisdictions – but not in China. The brand owner has globally promoted its service using that mark as a brand name and abbreviation of its unique service name online, but not specifically to the Chinese market.

We assisted the brand owner in filing a domain name dispute arbitration complaint with the HKIAC. According to article 8 of the Measures of the China Internet Network Information Centre for Resolving Domain Name Disputes (CINIC Complaint Measures), the brand owner/complainant submitted abundant evidence to support claims that:

1. the disputed domain names are identical with, or confusingly similar to, the names or marks to which the complainant has prior civil rights or interests by having used the names or marks in business promotion globally including to China, and registered the related trademarks and domains in many jurisdictions;
2. the cyber-squatter/respondent has no legitimate rights or interests over the pirated domains or the major part of the domains; and
3. the respondent registered and offered to sell the pirated domains for high prices in bad faith.