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Domain disputes

Dominika Kwiatkiewicz from the Intellectual Property practice group at Wardyński & Partners explains how to achieve an amicable resolution of Internet domain name disputes.

The practical importance and value (including market value) of Internet domain names today can hardly be overstated. A domain name identifies specific companies and individuals and their goods and services. It is a sign that marks the source of lots of information. A domain name may also serve as the address for an online store conducting sales all over the world. Dishonest Internet users realised early on the value of domain names and began to register the most appealing ones only in order to sell them at a profit—the process that came to be known as “cybersquatting.”
As of 2009, there were 1.63 million domain names registered with the .pl suffix, a 25% increase from the year before. According to a report by NASK, the research institute that administers domain names in Poland, a new domain name is registered in Poland every 30 seconds. Alongside the rapid growth in Internet domain names, the number of disputes between domain name subscribers and holders of intellectual property rights has inevitably exploded as well.
In a legal sense, registration of a domain name, i.e. entering into a subscription agreement with NASK, does not create any rights to the name on the part of the subscriber. Under the principle of the “closed number” of rights to intangibles, there is no intellectual property right to a domain name. As a result, a subscriber’s monopoly on use of a domain name is purely technical. While the subscriber does not strictly speaking have rights to the domain name, nonetheless the subscriber may be said to have certain rights that enable the subscriber to control the fate of the domain. For example, the subscriber is free to determine the content of the website published under the domain name, or to keep the name or sell it to another user. If a dispute arises between the holder of the domain name and the holder of intellectual property rights, it is resolved under the rule of protection for exclusive rights.
In practice, a domain name violates the rights of another party if it contains words that are identical or similar to a trademark held by the other party, or its business name or other distinguishing designation used by the other party. The basis for claims will thus be the Industrial Property Law of 30 June 2000 and the Act on Combating Unfair Competition of 16 April 1993. If the designation used in the domain name is renowned, the chance of obtaining a favourable judgment increases.
In practice, flexible approaches to resolution of domain name disputes, particularly proceedings before specialised arbitration courts, offer an effective alternative to traditional judicial proceedings.
The courts with jurisdiction to hear disputes concerning “.pl” disputes are the Polish common courts or arbitration courts. Arbitration offers an alternative to traditional judicial proceedings. Permanent arbitration courts operate under their own rules, supplemented by the Polish Civil Procedure Code.
Two arbitration institutions are appointed to resolve domain name disputes in Poland: the Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunications and the Court of Arbitration at the Polish Chamber of Commerce. In practice, the Internet Domains Arbitration Court handles the lion’s share of disputes in this area. From the start of its operations in 2003 through October 2010, 470 requests for arbitration were filed with the court and 126 cases had gone to an award. The most cases filed so far were in 2006, with 86.
The Rules of the Internet Domains Arbitration Court are the main legal act governing proceedings before the court. Matters not covered by the Rules are governed by the Polish arbitration law, set forth in Part Five of the Civil Procedure Code. The court has jurisdiction over disputes alleging violation of rights as a result of conclusion of an agreement on maintaining a domain with the .pl suffix if at least one of the parties has a registered address or residence in Poland.
Proceedings before the arbitration are conducted in line with the principle of equal treatment of the parties, and contacts with the arbitrator must be in the presence of the other party. In addition, the proceedings are confidential—including the fact that a proceeding has been filed as well as confidentiality of information. A specific feature of the Rules is that correspondence may be transmitted by e-mail or fax (apart from certain pleadings such as the statement of claim or an application for mediation). In practice this makes the procedure faster and less rigid. Other rules directly encouraging a speedy resolution include a provision that deadlines under the Rules may be extended only in exceptional cases, and requiring the arbitrator to impose measures to counter attempts by a party to prolong the proceeding. The proceeding itself should be closed within 30 days after the arbitrator agrees to resolve the dispute.
Before commencing a proceeding, the claimant must file a preliminary notice of the intent to file a statement of claim, and pay an administration fee. The parties are then requested to sign an arbitration clause consenting to resolution of the dispute by the Internet Domains Arbitration Court. If a party does not sign the clause, the proceeding is not commenced and NASK is notified accordingly.
As a rule, domain name disputes are decided by a single arbitrator, or by a panel of three arbitrators when expressly requested by both of the parties. A typical feature of the arbitration procedure is that the arbitrator is selected by the party from the list of arbitrators operating at the arbitration court. The arbitration court itself will take an active role in appointing the arbitrator only if the parties fail to agree on an arbitrator.
The arbitration proceeding is conducted under the adversarial principle, which means that each party is required to present evidence in support of its position. The arbitrator then decides the case within his or her own discretion, based on consideration of all the materials presented by the parties.
Unlike judicial proceedings, in arbitration hearings are not the rule, and the arbitrator will schedule a hearing on his or her own initiative, or on motion of a party, only if the arbitrator finds it necessary to hold a hearing in order to clarify the issues in the case thoroughly. Hearings are confidential.
It is clearly crucial for the claimant whose rights have been violated by registration or maintenance of a domain name that the arbitration award be legally effective. In resolving the dispute, the arbitrator issues an award that is treated like a judgment for purposes of the Civil Procedure Code. This means that the award has the same legal force as a judgment by a state court and may be enforced upon issuance of an enforcement clause by the state court that would have had jurisdiction over the dispute had it not gone to arbitration. Upon issuance of the enforcement clause the arbitration award becomes a writ of enforcement, binding on the parties as well as courts and other state bodies. The award also enjoys res judicata effect.
Significantly, when upholding a claim, the Internet Domains Arbitration Court is only authorised to find in the award that the subscriber has violated the rights of the claimant as a result of registration of the domain. The arbitrator may not assign the “right” to the domain from the respondent to the claimant. Nor is it authorised to rule on any other claims, particularly claims for damages. Such claims may be pursued before the state court.
It should be borne in mind that no appeal as such lies from an award issued by the Internet Domains Arbitration Court. Judicial review of the award may be sought by filing a petition with the state court to set aside the award. The award may be set aside only if one of the specific grounds provided in the Civil Procedure Code is proved.
One of the many advantages of arbitration is its relatively low cost. The Internet Domains Arbitration Court charges fees in accordance with its own fee schedule. The filing fee for a proceeding before a single arbitrator is PLN 3,000, or PLN 6,000 before a panel of three arbitrators. The administration fee is PLN 200. If mediation is sought, the preliminary fee is PLN 500 and the final fee is PLN 1,000. The parties may seek reimbursement of fees paid, and typically the losing party will be ordered to pay the winning party’s costs.
The operations and practice to this point of the Internet Domains Arbitration Court at the Polish Chamber of Information Technology and Telecommunications show that arbitration offers an appealing approach to resolving domain disputes. Arbitration is much faster than traditional judicial proceedings, more flexible and less costly. Another factor behind the growing popularity of arbitration among parties is the high level of competence of the arbitrators, who are recruited from among intellectual property specialists.
Dominika Kwiatkiewicz, Intellectual Property practice group, Wardyński & Partners