A Dispute Resolution Policy for .nz Domain Names

Wednesday 23rd April 2008

1 June 2006 marks the beginning of a new era for .nz domain names, with the launch of InternetNZ’s .nz Dispute Resolution Service Policy.

Previously anyone who objected to another’s registration of a .nz domain name had to either negotiate with the registrant, or issue court proceedings to stop that person from using it.
Negotiations can be difficult if the registrant does not want to talk, refuses to transfer the domain name, or will do so only in exchange for an exorbitant sum. In some cases, disputes over domain names are resolved through negotiation. However, in many cases they are not.

Court proceedings are expensive, time-consuming and in many cases only result in an injunction preventing the use of the domain name in ways that will infringe the complainant’s rights. They do not usually result in the domain name being transferred to the complainant.

The policy, which is available on the Domain Name Commissioner’s website (www.dnc.org.nz), gives parties who believe their rights are infringed by a .nz domain name registration a third option, resolving their dispute “in-house”.

If overseas experience is anything to go by, this will provide parties with a fast and cost-effective means of recovering domain names that have been registered in breach of their rights.
The dispute policy is based on a similar policy operated by Nominet, the organisation responsible for .uk domain names. The procedure also resembles the Uniform Domain Name Dispute Resolution Policy (UDRP) administered by the World Intellectual Property Organisation and other parties; which Baldwins has used to recover domain names such as www.steinlager.com, www.airnewzealand.com and www.russellcoutts.com for clients.

The essence of the policy is that a party objecting to the registration of a domain name (the Complainant) by another (the Respondent) must establish that:

  1. the domain name is identical or similar to a name or mark in which the complainant has rights; and
  2. the domain name, in the hands of the respondent, is an unfair registration.

Procedure

The complainant initiates an action under the policy by filing a complaint with Internet NZ. This:

  • is a written document;
  • is limited to 2,000 words;
  • sets out the complainant’s argument, including establishing that it has rights in the domain name and that the registration is unfair; and
  • can be accompanied by any suitable supporting evidence (though this cannot be used to extend the word limit for the submissions contained in the complaint).

The complaint must also state whether the complainant wants the domain name transferred, suspended, cancelled or amended, though in practice most complainants will probably request a transfer.

The respondent then has 15 working days in which to file a response, setting out the respondent’s argument as to why it should be entitled to retain the domain name. Like the complaint, this is a written document limited to 2,000 words, and can be accompanied by suitable supporting evidence.

Unlike the UDRP, the complainant then has 5 working days in which to file a reply to the response. This is limited to 2,000 words and may only address any new points raised in the response.

There is no charge for filing a complaint, response or reply.

If a response is filed, the dispute is then referred to informal mediation, paid for by Internet NZ. If the parties settle at mediation, the dispute is resolved.

If a response is not filed, or if one or both parties refuse to mediate, or if mediation takes place but the dispute does not settle, the complainant can pay a fee of $1,800.00 (+GST) to have the matter referred to an expert panelist for determination. The expert determines the complaint on the basis of the documents.

Internet NZ has appointed eight highly-experienced experts in this area to its panel. They are Andrew Brown QC, Hon Sir Ian Barker QC, Hon Robert Fisher QC, Hon Barry Paterson QC, Clive Elliott, Warwick Smith, Terence Stapleton and Dr Clive Trotman.

Once issued, the panelist’s decision is implemented by Internet NZ, unless either party appeals. An appeal costs $6,600.00 (+GST), with the determination being reviewed by a panel of three experts. Each party may file a single appeal document, limited to 1000 words.

At any time before the appeal panel issues its decision, the parties can settle a dispute on any terms they see fit.

Grounds required to establish a case under the policy

To succeed, the complainant must show that the domain name is identical or similar to a name or mark in which the complainant has rights, and that the domain name, in the hands of the respondent, is an unfair registration.

The rights of the complainant can be any rights enforceable under New Zealand law. This includes registered trade marks, and also includes other rights, such as unregistered trade mark rights enforceable under the Fair Trading Act or under the tort of passing off. These might include trading names, company names, well-known tag lines, and names of celebrities or other well-known individuals.

A registration is unfair if:

  • it took unfair advantage of or was unfairly detrimental to the complainant’s rights when it was registered or otherwise acquired; or
  • it has been or is likely to be used in such a manner.

This is an important difference from the UDRP, where the complainant must show that the domain name was registered AND is being used in a manner that is objectionable.

It also means that the policy covers domain names that are not currently in use, and domain names which are not in the hands of the original registrant.
The policy sets out examples of what might constitute an unfair registration. These include domain names registered:

  • in order to profit by selling them to the complainant or its competitors;
  • in order to block the complainant from using that domain name;
  • to unfairly disrupt the complainant’s business;
  • to cause confusion with the complainant’s business;
  • as a part of a pattern of registering well-known names or marks in which the respondent does not have rights;
  • using incorrect contact details; or 
  • out of a relationship between the complainant and respondent, where it is clear that the complainant was intended to own the domain name.

The evidence of unfairness must be under three years old. This provides an incentive to Complainants to take action once they have identified an unfair registration.

Grounds required to defend a case under the policy

The policy also gives examples of how a respondent may demonstrate that its domain name registration is not unfair. These include that:

  • the respondent has used or prepared to use the domain name in relation to a genuine offering of goods and services; 
  • the respondent is known by or legitimately connected with a mark similar or identical to the domain name; 
  • the respondent has made legitimate non-commercial or fair use of the domain name (which might include operating a fan site or criticism site);
  • the domain name is generic or descriptive and has been used in its generic or descriptive sense; 
  • the respondent is entitled under a written agreement between the parties to hold the domain name registration; or 
  • that no pattern of registering well-known names or marks exists as the domain name is significantly different to the Respondent’s other domain names.

These grounds are indicative, not exclusive, and either party can rely on other grounds.

Comments

It is important to recognise the limitations of the policy.

First, it is targeted solely at situations where the complainant has established rights and the respondent is attempting to take advantage of those rights. For example, it is not appropriate for situations where two different parties both have genuine rights to the same name or mark. A recent example is the use of APPLE by both the computer company and the record label. Until recently, when the nature of the market changed, these marks co-existed relatively comfortably, as the services provided by the two companies were reasonably distinct.
This problem arises frequently in the domain name context, where, unlike trade marks which can be registered in a variety of classes, only one party can register www.apple.co.nz.
The policy is not an appropriate forum for resolving disputes arising out of the use of generic terms such as ONLINE PHARMACY or WATER DIRECT.

One interesting issue will be how experts decide cases where resellers or distributors have registered domain names in their own name, for instance if Nissan New Zealand registers www.nissan.co.nz in its own name. This often occurs, and often leads to disputes, particularly where the reseller or distributor ceases to be the authorised reseller or distributor. UDRP decisions on this particular point are divided and it is not clear how the experts under the Policy will deal with this issue when it arises. Because the New Zealand policy is based on the Nominet policy, which has already produced a large body of decisions, experts will look to and be influenced by Nominet decisions that raise the same issues. It will accordingly be important for New Zealand parties to consider any relevant Nominet decisions on their particular points when preparing their complaints and responses.

One final issue is that the policy prohibits a complainant initiating a proceeding in relation to a domain name and respondent in relation to which it has previously had a decision. This is to prevent complainants “having a go”, seeing which points they failed on, then filing an ‘improved’ complaint and trying again. The practical effect of this is that we recommend that parties obtain proper advice before filing a complaint, to ensure they do not undermine their own position by filing a poorly-constructed or poorly-supported complaint, then being barred from further action.

Conclusion

In recent years Baldwins has seen a number of disputes involving .nz domain names go unresolved where parties have been unable to negotiate a solution but have been unwilling to incur the expense and inconvenience of court proceedings.

If the success of the UDRP and Nominet’s .uk dispute resolution policy are anything to go by, parties in New Zealand will welcome the introduction of the .nz Domain Name Service Policy, which will enable them to have their disputes considered faster and for a much lower cost than that of court proceedings.

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