Cybersquatting and Domain Name Disputes in Australia

What Is Cybersquatting?

The practice of domain name squatting or cybersquatting has been common since the onset of the dotcom boom and has not ceased with the passing of time.

It creates headaches both for established enterprises and new businesses. As there are no stringent checks placed on those seeking to acquire a domain, cybersquatting continues to thrive.

Is Cybersquatting Legal In Australia?

Cybersquatting is illegal in Australia.

However, the path to preventing domain name cybersquatting in the court system has been costly and long placing a significant onus of proof on the aggrieved party and the need to rely on “traditional” legal remedies such as:

  • Allegation of a breach of the Australian Consumer Law (or equivalent) usually misleading and deceptive conduct (s18 ACL);
  • Allegation of Trade Mark infringement; or
  • Allegation of the tort of Passing Off.

Fortunately, there is another avenue. au Domain Administration Ltd (auDA) is the policy authority and industry self-regulation body for the .au domain space.

In 2010 the auDA published 2010-05 – .au Dispute Resolution Policy (auDRP) setting out the list of approved auDA providers as an alternative to litigation for the resolution of domain name disputes between the registrant of a .au domain name and the party with competing rights in the domain name.

The approved auDA Providers are:

Cybersquatting and auDRP Policy in Practice

A recent decision by the WIPO Arbitration and Mediation Center Administrative Panel in Tyre Depot Holdings Pty Ltd v. Tyre Kingdom Pty Ltd, WIPO Case No. DAU2014-0016 (2014) demonstrated auDRP policy in practice.

The case involved the complainant (Tyre Depot Holdings Pty Ltd) bringing an action against the respondent (Tyre Kingdom Pty Ltd) over the domain tyredepot.com.au which the respondent held.

The complainant had operated a large and successful tyre wholesale business since May 2009 under the name of Tyre Depot. The business name was registered in June that same year, and two trademarks were obtained in 2011 and 2012 respectively.

On May 22 2014, with the auDRP proceedings underway, the complainant received repeated offers from the respondent to transfer the domain in exchange for a sum of $5,000.

Under auDRP policy, 3 elements must be made out to make a claim successful:

  1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;
  2. The respondent has no rights or legitimate interests in respect of the domain name; and
  3. The domain name has been registered and is being used in bad faith.

In this instance, the auDRP did find the domain to be identical or confusingly similar. It then determined that due to the “significant reputation” enjoyed by the complainant in the name Tyre Depot and the fact the website was essentially a “shell” with no substance to it, the respondent had no rights or legitimate interests in respect of the domain name.

Weight was given to the registration of a “non-distinctive expression on the grounds of acquired distinctiveness” as a trademark.

In other words, both ‘tyre’ and ‘depot’ are general terms, but the combination trademark was able to be registered the complainant regardless. This demonstrates that considerable weight will be given to registered trade marks.

Finally, it found that the domain had been registered by the respondent in bad faith with reference to the offer to transfer the domain in exchange for payment and the domain “preventing the complainant from reflecting its TYRE DEPOT mark.”

The decision was to transfer registration of the domain name to the complainant.

Cybersquatting: Lessons From Ariix LLC v Mahilall

Ariix Corporation was a company registered in 14 countries with revenue of $32 million in 2012. Mr Mahilall was a resident of Sydney, employed primarily in the IT industry.

Beginning on July 4 2013, Mr Mahilall attempted to make a deal with Ariix: rights to the domain name ariixcorporate.com in exchange for a significant amount of money.

Mahilall offered the rights for an initial sum of US$110,000 stating that if the money was not received he would perform SEO (Search Engine Optimisation) and do “extremely creative things”.

On refusal of his demands, Mahilall followed through. He:

  • Conducted extensive Search Engine Optimisation (placing ariixcorporate.com above all other relevant searches on Google);
  • Linked the site to illicit pornography content;
  • Made representations on behalf of the Corporation;
  • Emailed fabricated client testimonies; and
  • Paid amateur actors for the filming of two ‘real life’ documentaries on “Ariix corporate fraud”.

Due especially to this last measure, Ariix tendered evidence that the brand suffered a significant ‘public relations crisis’.

Upon each refusal, Mahilall’s proposed fee would increase. Eventually, Mahilall demanded a fee as high as US$400,000.

The Outcome of Ariix LLC v Mahilall

Ariix was granted injunctive relief through the courts against Mr Mahilall but not before significant stress and damage had occurred.

In concert with ICANN (Internet Corporation for Assigned Names and Numbers), the .com domain name was transferred to Ariix.

Mr Mahilall was deemed to have carried on an undertaking misleading or deceptively similar and engaged in injurious falsehood and intimidation.

In granting the injunction on a permanent basis, the judge made particular reference to the fact that there was a “real threat that the respondent will repeat this conduct unless injunctions restrain him.”

The case is a reminder that domain name cybersquatting is becoming more aggressive in strategies and that injunctive relief should be sought the moment a threat is made.

It also highlights the need to be proactive in having an extensive domain portfolio and adequate trade mark protection.

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