Protecting Internet Domains in China

Website: www.haiwen-law.com

In February 2006, the China Internet Network Information Center (CNNIC) issued a revised policy to govern disputes concerning all .cn domain names. Effective from March 17 2006, Article 2 of the revision includes the following two-year statute of limitations: “The Dispute Resolution Service Providers do not accept the complaint regarding domain names with registration term of over (including) two years”.

The new dispute resolution process does not apply to domains that have been registered for more than two years. Thus, when a dispute arises two years after registration, trademark holders must go to a Chinese court to solve the dispute.

By the time the new policy went into effect, brand owners had filed more than 100 complaints with the Domain Name Dispute Resolution Center (DNDRC) in Beijing. All complaints cited registrants with domain registrations of more than two years. We represented some of these domain owners. We also used private negotiations to help clients regain control of their domains.

Further below is an excerpt from one of these negotiations, which we conducted with a cybersquatter who registered a company's domain in China. He is known as “ÒÊ (corn bug) since the Chinese tone for corn is similar to its tone for domain names. Our exchange illustrates how the revised policy changes cybersquatters' bargaining position. (Brand and domain names were omitted to protect the client's privacy.)

Haiwen & Partners: Hi, we noticed recently that you registered a domain name and redirected it to a website that says, “For Sale: A Domain Name for a US Fortune 500 Company”. Why did you do this?

Corn Bug: I want to sell the domain to anyone willing to buy.

H&P: It is clear that you are targeting the US company who owns the trademark to this unique word.

Corn Bug: So what? As long as I do not offer to sell the domain to the trademark owner, I am not engaging in bad faith use.

H&P: But given the circumstances, you cannot call what you are doing good faith use, either.

Corn Bug: If you are here to buy my domain, give me a price and stop wasting my time.

H&P: How about Rmb400? We know that you paid no more than Rmb40 to register the domain.

Corn Bug: No deal. I have hundreds of thousands of domain names. You need to consider the amount I paid for other domain namesnot just this one!

H&P: How about Rmb4,000? This is our final offer!

Corn Bug: My domain name is worth at least US$20,000.

H&P: Are you out of your mind?! We can regain the domain through the DNDRC for just Rmb3,000the cost to file the claim. Needless to say that this procedure would leave you with nothing!

Corn Bug: You can do the calculations, but you can't take me to the DNDRC because my domain name has been registered for more than two years. I only redirected the domain name to the website when the two-year period expired. The new policy protects me, remember?

H&P: Let me make this clear to you; we can file a complaint against you with the DNDRC and the courts. Your domain registration constitutes bad faith, and this is enough cause to substantiate our claim.

Corn Bug: But you would need to prove that I used the domain name during the two-year period. Can you prove that?

H&P: Your failure to actively use the domain can be classified as bad faith.

Corn Bug: Not exactly. I've read the decisions posted on the DNDRC website and they do not say that.

H&P: Fine. We'll take you to court and you'll gain nothing from the process.

Corn Bug: Don't forget that court cases can drag forever. You would have to pay an enormous sum to file the suit and pay your expensive lawyers You would need notarization since you are a foreign company And I could always appeal if I lost the case. Do you realize how much the whole deal would cost you?

H&P: You don't have to remind us of the costs, time and efforts. We know how much it would take to serve you justice!

Corn Bug: Fine. Don't waste my time. Are you going to make a higher offer to buy my domain or what?

This neared the end of our conversation with Corn Bug. In the end, our client paid Rmb80,000 to acquire the domain name.

The two-year time limit specified in the new rules is not consistent with international practice. The difference is apparent in the following recommendation from the World Intellectual Property Organization:

“A time bar to the bringing of claims in respect of domain names (for example, a bar on claims where the domain name registration has been unchallenged for a designated period of years) should not be introduced. It was considered that such a measure would not take into account that a time bar would in any event be undesirable in cases of bad faith. It is usual for time bars in legal proceedings not to be applicable to cases of bad faith. It is not recommended that claims under the administrative procedure be subject to a time limitation”.

In February 2006, we contacted the CNNIC to discuss the new policy. We suggested that they revise the policy so that legitimate domain owners can safeguard their interests. We have not received a reply from the CNNIC.