Domain names and AdWords: fools rush in

A potential spat over domain names and AdWord spoiling tactics was resolved before it really began last week. New firm Localist (a subsidiary of NZ Post) filed proceedings against Yellow Pages Group (YPG), after YPG registered the domain names www.localists.co.nz and www.locallists.co.nz, and registered similar Google AdWords.

Internationally, disputes over domain names and AdWords are not new (see my post, Trade marks and AdWords). Some see the ease of registering domains and search terms, and the apparent lack of a sanction, as an open invitation to do so as a spoiling tactic against a potential competitor. But firms should be in no doubt that they are on thin legal ice when they get too close to a competitor’s trade mark or otherwise act in bad faith.

While there are potentially other legal remedies available, the starting point for most disputes involving domain names and search terms is the Fair Trading Act 1986. Among other things, this Act contains a general prohibition on business conduct that is “misleading or deceptive or is likely to mislead or deceive”, and misleading conduct in relation to trade marks. Note that there is no prohibition on “unfair conduct”. It has to be “misleading or deceptive” to a third party.

AdWords

While there has yet to be a New Zealand case on AdWords involving trade mark infringement and / or misleading & deceptive conduct, last year’s European case involving Google and Louis Vuitton did provide some guidance. There is little doubt, for example, that registering and directing a competitor’s trade mark alone to your own website would be unlawful. It gets more murky when a company simply registers an AdWord to block a competitor from registering it. That would be unlikely to amount to trade mark infringement.

Domain names

The primary remedy for .nz domain name dispute is the .nz Domain Name Commission‘s Dispute Resolution Service. Unlike the Fair Trading Act, this service can provide a remedy where a competitor has acted in an “unfair” manner. Disputes unable to be solved informally are referred to experts – including former senior commercial judge Sir Ian Barker and senior IP barristers – for determination. At $1,800+gst, it’s far cheaper than the Court process, though the input of a lawyer in preparing the relevant submissions can be beneficial.

For other TLD domains, it is a matter of using the relevant dispute resolution service, or Court proceedings.

In all cases though, the Fair Trading Act (and other general laws such as passing off) still apply, meaning that Court action can be taken in appropriate circumstances. If non-domain name issues are also involved, it may be more efficient to simply include the domain name complaint in any notices sent to the other party, or Court proceedings filed, than to attempt standalone determination, although it depends on the specific circumstances (e.g. if time is of the essence).

Register!

Localist was successful in forcing Yellow Pages to back down from what clearly seemed to be pretty sneaky behaviour, even if it did take a hefty statement of claim to do so. But the lesson remains: register! A .nz domain name costs all of about $21, or less than 5 minutes of a lawyer’s billable rate. It will probably cost less to register half a dozen domain name variations than it will to get your lawyer to read & reply to your email after a situation has arisen. Firms don’t need to register every possible variation just because an unscrupulous competitor may try to ankle-tap them; there are strong remedies for misleading or deceptive conduct. But at least grab the obvious domain names and (hopefully) prevent any cybersquatting in the first place.

More domain name headaches for trade mark owners?

Greg Adams comments here on the “recent .co virtual land grab”. Computerworld reports that “More than 39,000 organizations applied for .co domains during a ‘prelaunch’ phase for signing up big-name companies”. While this is great news for Columbia’s domain registry, it is just another potential headache for businesses trying to protect the identity of exising domain names and trade marks.

[ On a related issue, see my Computerworld article on AdWords and trade marks ]

A quick check on the .co whois server shows some popular .co.nz names now registered as .co’s by registrants that appear to be someone other than the New Zealand company, including nzherald.co, tvnz.co and blackcaps.co. Of course, the presence of a .co registration should not presume any illegitimacy or trade mark issue. Trade marks are territorial, and how the (global) domain name is used in a particular region (if at all) is what will be relevant.

Even more headache inducing (or wonderful, depending on ones view) is ICANN’s proposal to allow the creation of new generic top level domains (gTLDs) for “branding purposes” – i.e. vanity domains. As ICANN says:

Brand holders and organizations seeking to manage their own name as a top-level domain may have an interest in securing these rights in the early phases of the new gTLD program for future branding purposes. With the limited availability of .com domain names, some companies may opt to become early adopters of new TLDs to satisfy their marketing needs. There will also be opportunities to apply for community and geographic top-level domains, such as .blog, .brand, and .city.

For example, it is reported that IBM is likely to apply for the .IBM top-level domain. Someone could apply to register .kiwi (a popular trade mark) as a gTLD. Of course, for contested trade marks this could prove rather fraught. However, it will not be as simple as registering a normal (second/third level) domain name. To register a custom gTLD you will effectively need to become a accredited registrar and sign a contract with ICAAN.

The International Trademark Association recently expressed its concerns that the proposal could lead to cybersquatting mischief. ICANN, chaired by New Zealand barrister Peter Dengate Thrush, is expected to make a decision on its trade mark policy for the new gTLDs soon, although some remain concerned that “trademark concerns will be noted and then brushed aside”.

Tech Law news 6 April 2010

Don’t forget the domain names

Securing key domain names likely to be associated with a venture is business-101. Unfortunately for Tourism Australia, they launched their new “Nothing like Australia” campaign without registering www.nothinglikeaustralia.net, which has now been setup as a spoof site. They are now investigating legal action against the site for alleged misuse of a trade mark.

This raises the question of whether parody is a defense to trade mark infringement (for a local situation, see here). In New Zealand, there is no specific parody defence in the Trade Marks Act 2002, although a trade mark must generally be used “in the course of trade” for infringement to occur. A 2007 case, Solid Energy New Zealand Ltd v Mountier raised the question of whether use of a trade mark was use “in trade”. It found that the parody was not “in trade” for the purposes of the Fair Trading Act 1986, but did not reach a conclusion on the trade mark aspect. It also found that the trade mark owner had an arguable case for “exclusive use” of the trade mark, which (assuming a broad application what is “use”) would seem to prevent a parody defence. Whether or not the Bill of Rights Act 1990 (section 14) would override that is yet to be seen.

Cost of world-wide advertising campaign: AUD$150 million. Cost of not registering obvious domain names: $19.95. Parody site: priceless.

Gene patent ruled invalid

For the first time in the US, a judge has ruled that a human gene patent was invalid. This casts doubt on the validity in general of gene patenting in the US, the key market for biotechnology.

New Zealand’s in-progress Patents Bill (reported back from select committee last week) does not expressly exclude gene patents. It does exclude patents contrary to morality, which cover some biotechnology applications. However it does add a requirement for “usefulness”, which will prevent gene-related patents from being granted when no specific use has been discovered or disclosed (as has happened previously). But the value of a gene patent in a particular market is of questionable value, if it cannot be patented in key worldwide markets. The US case (which is sure to be appealed) is therefore of major importance to the biotechnology industry worldwide.

Online health records coming to New Zealand

2014 has been set as the target date for an online national health records system in New Zealand. Meanwhile, ISO (the International Standards Organisation) recently released new standards on electronic health records. From the press release:

Together, the two documents provide a powerful comprehensive solution to address e-health data integrity, including ethical and legal concerns, privacy protection, regulations concerning access and disclosing of records among other needs specific to the industry.

It will be interesting to see if the New Zealand programme achieves ISO compliance from the outset. The Privacy Act 1993 requires that reasonable safeguards be used to protect personal information, and in the case of service providers, that “everything reasonably within the power of the agency is done to prevent unauthorised use or unauthorised disclosure of the information”. It would be difficult to argue that failure to acheive “reasonable compliance” with an ISO standard (representing best, or at least good, practice) meets that standard.