Consumer Agency orders cancellation of '.is' domain name

Iceland

Kex Hostel Ltd, a popular hostel in Reykjavík, Iceland, filed a complaint with the Consumer Agency regarding the use and registration of the domain name 'kexhotel.is' by the owners of the B47 Hostel.

Kex Hostel is the holder of the company name Kex Hostel Ltd and of registrations for the trademarks KEX, KEX HOSTEL and KEXLAND, as well as the domain name 'kexhostel.is'.

The Consumer Agency is a governmental agency which is entrusted with the market surveillance of business operators and the enforcement of the Act on Supervision of Unfair Commercial Practices and Transparency of the Market (57/2005). The Consumer Agency rules in complaints brought against the registered owners of domain names that are identical or similar to prior trademarks, company names and/or domain names.

The most effective method for recovering a '.is' domain name is to file a complaint with ISNIC, which uses the same main principles as those outlined in the Uniform Domain Name Dispute Resolution Policy adopted by ICANN. However, the conditions required for using this method are strict and, therefore, it is seldom available.

In the present case, Kex Hostel requested that the Consumer Agency prohibit the use of the domain name 'kexhotel.is' and oblige the owners of the domain name to cancel the registration. The Consumer Agency considered whether use and registration of 'kexhotel.is' constituted a violation of Article 15(a) of the act. Article 15(a) prohibits:

  • the use in business operations of the name of a firm, business designation or the like without authorisation; or

  • the operation of a business under a name that conveys misleading information as to the operator’s property right or responsibility.

It is also forbidden to use a sign in such a manner as may lead to confusion with a designation that another firm uses with full rights.

Articles 5 and 14 of the act were also cited. Article 5 includes a general rule that prohibits unfair commercial practices, while, according to Article 14, it is forbidden to use incorrect, incomplete or misleading information in advertisements.

Álftavatn and Þorsteinn, the owners of 'kexhotel.is', rejected the claims, arguing that:

  • the registration of the domain name predated Kex Hostel’s trademark rights;
  • there was no danger that consumers would confuse a hostel and a hotel; and
  • the domain name 'kexhotel.is' redirected to 'hostelb47.is'.

Consequently, there was no danger of confusion under the act.

The Consumer Agency, however, accepted Kex Hostel's claims, noting that Article 15 includes a general prohibition against the use of signs (eg, a company name and a trademark) owned by another. The rights to these signs can be based on separate legislation, such as laws on trademarks, trade registers or firms.

The Consumer Agency further argued that rights to a trademark can be established by registration and use in the market. The main rule is that the owner of a mark is granted exclusive rights to that mark and, therefore, others are prohibited from using it or any other similar terms. Article 15(a) is intended to protect signs against the use of confusingly similar signs by competitors. When evaluating the risk of confusion, one must consider whether the parties involved are in competition and whether they operate in the same business field.

Kex Hostel had registered the company name Kex Hostel Ltd on December 1 2010 and the domain name 'kexhostel.is' on September 29 2010. Kex Hostel had used the domain name, its logo and the name Kex Hostel continuously - at least since mid-2011 - to identify its business. Kex Hostel registered the marks KEX (Registration No 478/2013), KEX HOSTEL (Registration No 479/2013) and KEXLAND (Registration No 480/2013) with the Patent Office on May 31 2013, following applications filed on March 21 of the same year.

The owners of the domain name had registered 'kexhotel.is' on March 5 2013, and the domain name directed users to 'hostelb47', which hosts the website of B47 Hostel.

The Consumer Agency argued that, according to an English-Icelandic dictionary, the word 'hostel' means 'gististaður' (accommodation), especially for young travellers, or 'farfuglaheimili' (youth hostel). It also found that Kex Hostel runs a hostel in Reykjavík, as mentioned on the hostel’s website. The company has the ÍSAT business classification 55.10.1 "hotels and hostels with catering services". It was evident that Álftavatn also runs a hostel, under the name Hostel B47, in Reykjavík; on the hostel’s website, it is mentioned that it offers hostel services. The company has the ÍSAT classifications 68.20.1 "rental of residential property" and 55.10.1 "hotels and hostels with catering services". The information on the parties' websites is available in English and the marketing seems to be directed at tourists. Therefore, the Consumer Agency concluded that the parties were unequivocally competitors in the same market and ran their operations in the same area.

Consequently, the Consumer Agency had to assess whether the registration and use of 'kexhotel.is' on behalf of Álftavatn could cause confusion within the meaning of the law. The Consumer Agency held as follows:

"The signs of the parties involved in the dispute are compound names which both include the Icelandic word 'Kex', which means 'cracker', on the one hand, and the English word 'hotel' or 'hostel' on the other... The word 'Kex' grants the compound names considerable distinctiveness and the names are not descriptive for the services. Therefore, a similarity between the names was considered to exist as only the letter 'S' separates them. It was submitted in this case that Þorsteinn had (in March 2013) registered the domain 'kexhotel.is' and authorised its use by Álftavatn in order to automatically direct consumers to the domain 'hostelb47.is', which hosts the website of B47 Hostel. There are no connections between Álftavatn or Þorsteinn and the name Kex Hotel. Neither Þorsteinn nor Álftavatn uses the name Kex Hotel to identify the operations of B47 Hostel in any way... and the name is almost identical to the name of a competitor."

According to the Consumer Agency, it must have been evident to the owners of 'kexhotel.is' that the abovementioned use of the domain name could violate their competitor's exclusive rights in the company name Kex Hostel Ltd and the domain name 'kexhostel.is'. The Consumer Agency concluded that this caused confusion. Therefore, by registering and using the domain name 'kexhotel.is', the holders of the registration had violated Article 5 and Article 15(a) of the act. They were thus ordered to cease using the domain name and to cancel their registration.

Valborg Kjartansdóttir, Sigurjónsson & Thor, Reykjavík

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