Recent Domain Name Cases: Beijing Cinet vs Cartier International

Background

Between December 1983 and December 1995, the Dutch company Cartier International B.V. (Cartier) registered the word trademark "Cartier" in several classes of goods or services with China's Trademark Office.

Between 1993 and 1998, Cartier published advertisements and publicity articles for "Cartier" merchandise in numerous newspapers and magazines, and in China it established a fine goods store and fine goods boutiques, and licensed some companies as distributors of its products.

In April 1999, the trademark "Cartier" was included by the Trademark Office of China's State Administration for Industry and Commerce (the TMO) in the National Directory of Key Protected Trademarks.

Cinet was established in March 1996. On November 4 1998 it registered the domain name "cartier.com.cn" with the China Internet Network Information Center (CNNIC). To date, it has made no actual use of the domain name. During the trial at first instance, Cinet was unable to explain in what way it was related to "Cartier".

The First Intermediate People's Court of Beijing Municipality held that Cartier had the exclusive right to use the registered trademark "Cartier" and had published advertisements carrying the trademark "Cartier" in numerous newspapers and magazines. The news media also carried numerous reports on the registered trademark "Cartier". Through mass advertising and a relatively high rating accorded by the public, the trademark "Cartier" enjoyed a relatively good reputation in China and was familiar to the relevant pubic. It was a well-known trademark.

Cartier was a Dutch legal person. China and the Netherlands were both signatories to the Paris Convention for the Protection of Intellectual Property (the Paris Convention). The Paris Convention required each signatory to afford to well-known trademarks protection surpassing that afforded to ordinary registered trademarks, viz., well-known trademarks should be accorded special protection of a higher order than the general protection accorded ordinary trademarks. Computer networks had become tools used by enterprises to project their images and provide commercial services. According special protection to well-known trademarks on the internet prevented damage to such well-known trademarks and their goodwill value.

A domain name was an internet subscriber's name and address and a domain name registrant's mark on the internet, and should be included within the scope of intellectual property. Enterprises would frequently do their utmost to use their trademarks or trade names as domain names, so as to enable visitors to distinguish the web site establishers' goods and services by means of the domain names. By using a well-known trademark as a domain name, an enterprise could also make use of the reputation of such trademark to conduct commercial publicity, attract customers and obtain relatively high access rates. Accordingly, registering a third party's well-known trademark as a domain name without the consent of the party with the exclusive right to use such trademark would inevitably prejudice the lawful rights and interests of the trademark owner.

Cinet had registered the "cartier.com.cn" domain name knowing full well that "Cartier" was Cartier's well-known trademark. If Cinet had used the said domain name on the internet it would certainly have misled the public into believing that the owner of the said domain name was in some way connected with the trademark "Cartier" and confused the public as to its origin. Cinet had failed to establish a connection between the word "Cartier" and its name, address, abbreviated name, marks, business or any other aspect and failed to prove that it had any prior right in "Cartier" or that it had a legitimate reason for registering the said domain name. Cinet's act constituted infringement of Cartier's exclusive right to use its well-known trademark. China's Anti-unfair Competition Law expressly stipulated that business operators shall comply with the principle of good faith and conform with generally accepted business ethics. By the bad faith registration of Cartier's trademark as a domain name, Cinet had taken possession of Cartier's goodwill without consideration. If the said domain name were used online, it would lead to confusion among the relevant public, thereby causing damage to Cartier. Cinet's act was contrary to the principle of good faith and constituted unfair competition and, as such, it should bear the attendant liability for infringement.

As Cartier had failed to produce evidence proving the financial losses it incurred due to Cinet's act of infringement or the reasonable expenses it incurred in connection with this case, the court rejected its claim for Rmb200,000 in financial damages and court costs. Given that Cinet had not actually used the said domain name, the court rejected the Plaintiff's request that the Defendant be ordered to make a public apology. The Paris Convention did stipulate that trade names shall be protected; however, as Cinet had not registered and used Cartier's enterprise name as a domain name, it had not infringed upon Cartier's right to its enterprise name. Pursuant to Item (4) of Article 38 of the PRC Trademark Law (中华人民共和国商标法) and the first paragraph of Article 2 of the PRC Anti-unfair Competition Law (中华人民共和国反不正当竞争法) , the First Intermediate People's Court of Beijing Municipality rendered the following judgment:

(1) Cinet shall cancel its registration of the "cartier.com.cn" domain name;

(2) Cartier's other claims are rejected.

The Current Case

Being dissatisfied with the judgment of the court of first instance, Cinet filed an appeal with this Court. Its grounds for appeal were that there were no grounds for the court of first instance recognizing Cartier's registered trademark "Cartier" as a well-known trademark; use of the domain name "cartier.com.cn" on a computer network would not lead to confusion among the public as to its origin; the absence of a connection between Cinet and the word "Cartier" is not grounds for determining that registration of the word "Cartier" as a domain name was bad faith infringement, so the finding that Cinet's registration of "cartier.com.cn" constituted unfair competition was erroneous; and Cinet's registration of the domain name "cartier.com.cn" did not violate China's Trademark Law, China's Anti-unfair Competition Law or the Paris Convention. Cinet requested that the judgment of the court of first instance be overturned and that Cartier's suit be rejected. Cartier complied with the judgment of the court of first instance.

Through the trial, this Court held: China and the Netherlands are both signatories to the Paris Convention. As a legal person registered in the Netherlands, Cartier has the right to institute proceedings in a Chinese court in accordance with the Paris Convention if it considers that its legitimate rights and interests have been infringed in China. The Chinese court should try the case in accordance with Chinese laws and the Paris Convention.

The trademark registration certificates issued by the TMO and provided by Cartier evidence that Cartier has registered the trademark "Cartier" for numerous goods and services and that Cartier is the owner of the exclusive right to use the said registered trademark.

A domain name is the name and address of a user on a computer network. It is a mark used to differentiate the user from other users and functions as a distinguishing factor. In this case, the part of the Cinet-registered domain name "cartier.com.cn" that serves to differentiate it from other domain names and that functions as a distinguishing factor is the third level domain name "cartier". As the word "cartier" is identical to the trademark "Cartier" registered by Cartier with the TMO, it is sufficient to cause the relevant public to confuse the two.

Cinet registered the domain name "cartier.com.cn" later than Cartier registered the trademark "Cartier". Furthermore, Cinet failed to present any evidence that it enjoys any rights or interests in the word "Cartier" or that it had any legitimate reason to register the domain name "cartier.com.cn".

As a business providing computer network information consulting services and online services, Cinet ought to have been aware of the function and value of domain names on computer networks. Its use of Cartier's registered trademark "Cartier" as the distinguishing third level domain name in its registered domain name "cartier.com.cn" without putting it into actual use clearly demonstrates its commercial intent and should be deemed an act the objective of which was to block Cartier's registration of the said domain name. Cinet's registration of the domain name "cartier.com.cn" was done in bad faith.

Cinet's act clearly violates the provision of China's Anti-unfair Competition Law and the Paris Convention that stipulates that civil activities should be conducted in accordance with the principle of good faith and, as such, constitutes unfair competition against Cartier, and, accordingly, Cinet should bear the attendant civil liability. Therefore, Cinet's stated grounds for the appeal, viz., that its act did not constitute unfair competition against Cartier, are untenable.

In the trial of civil disputes involving computer network domain names, the determination of well-known trademarks is in essence the acknowledgment of objective facts, so a people's court may, at the request of a party and in accordance with the actual circumstances of the case, determine whether the registered trademark involved in the case is a well-known trademark. Therefore, Cinet's stated grounds for the appeal, viz., that the court of first instance violated statutory procedures in recognizing Cartier's registered trademark "Cartier" as a well-known trademark, are untenable.

The advertisements for and articles concerning the registered trademark "Cartier" published in newspapers and magazines and presented by Cartier were all published before Cinet registered the domain name "cartier.com.cn". These advertisements and articles establish that Cartier had carried out mass advertising of and publicity for its registered trademark "Cartier" and that it had a certain degree of notoriety among the relevant public. However, the National Directory of Key Protected Trademarks was issued by the TMO after Cinet's registration of the domain name "cartier.com.cn" and thus cannot be used to prove that the registered trademark "Cartier" was a well-known trademark at the time Cinet registered the domain name "cartier.com.cn". Although the evidence presented by Cartier establishes that the registered trademark "Cartier" had a certain familiarity among the relevant public, it does not prove that the said trademark was a well-known trademark. Accordingly Cinet's registration of the domain name "cartier.com.cn" did not infringe upon Cartier's exclusive right to use its registered trademark "Cartier". Therefore, Cinet's stated grounds for the appeal, viz. that Cartier's registered trademark "Cartier" was not a well-known trademark and that Cinet did not infringe upon Cartier's exclusive right to use its registered trademark, are tenable.

The Judgment

In summary, the judgment of the court of first instance failed to make a clear determination of, or incorrectly applied the law to, some of the facts and this should be corrected. Pursuant to Item (2) of the first paragraph of Article 153 of the PRC Civil Procedure Law (中华人民共和国民事诉讼法) this Court renders the following judgment:

(1) The second item of Civil Judgment (2000) Yi Zhong Chu Zi No. 107 rendered by the First Intermediate People's Court of Beijing Municipality is upheld.

(2) The first item of Civil Judgment (2000) Yi Zhong Chu Zi No. 107 rendered by the First Intermediate People's Court of Beijing Municipality is quashed.

(3) Beijing Cinet Information Co., Ltd. shall cease its infringement against Cartier International B.V. (of the Netherlands) and deregister its registered domain name "cartier.com.cn" within 10 days after the effective date hereof.

Of the first instance case acceptance fee of Rmb5,510, Rmb4,510 shall be borne by Cartier International B.V. (already paid) and Rmb1,000 shall be borne by Beijing Cinet Information Co., Ltd. (to be paid within seven days after the effective date hereof). Of the second instance case acceptance fee of Rmb5,510, Rmb4,510 shall be borne by Cartier International B.V. (to be paid within seven days after the effective date hereof) and Rmb1,000 shall be borne by Beijing Cinet Information Co., Ltd. (already paid).

This is an edited translation of a Beijing Municipality, High People's Court Civil Judgment issued November 2001.