Court rules no special domain rights for famous brands

Facts
Decision
Comment

Beijing's Number One Intermediate People's Court has decided China's first Chinese language domain name case. In a suit brought by Beijing Zhengpu Science Development Company against China's registrar for '.cn' domains, China Internet Network Information Centre (CNNIC), and the B2B internet company, Alibaba, the court held that CNNIC lacked the authority to reserve domain names for well-known brands. However, the court refused to cancel Alibaba's domain name, even though it had been registered as a result of CNNIC's unauthorized reservation.

Facts

Alibaba registered the English language domain name 'Alibaba.com' and other domain names containing 'Alibaba' in late 1998 and early 1999. It launched the 'Alibaba.com' website at the end of 1998, built up a highly regarded B2B e-commerce model, and invested in technical support and human resources to establish a commercially valuable name.

Zhengpu filed applications for the Chinese characters and pinyin (the official Roman system of Chinese) for the trademark ALIBABA in May 1999. Zhengpu then applied to register the Chinese language domain name 'Alibaba', but CNNIC rejected the application, saying it had reserved the domain name for Hong Kong-based Alibaba Corp. CNNIC subsequently approved Alibaba's registration of the domain name.

Zhengpu filed suit demanding cancellation of the registration, claiming that CNNIC had reserved the domain name on its own initiative, without any request from Alibaba. Zhengpu also cited the 'first to apply, first to register' rule and the prohibition on domain name reservations in the State Council's 1997 Interim Measures for the Administration of the Registration of China's Internet Domain Names.

CNNIC explained that when the pilot system for Chinese language domain name registration was launched in January 2000, it reserved the Chinese versions of certain well-known English domain names to prevent bad-faith registration by cybersquatters.

Decision

The Beijing court held that, under civil law principles, only the owner of a trademark or enterprise name has the right to decide whether to register its mark or name as a domain name. CNNIC did not have the authority to exercise that right on behalf of the owner. The court also noted that while CNNIC could reserve the names of government bodies, educational institutions and the like, it did not have the authority to reserve the names of private enterprises.

Nevertheless, the court acknowledged that the Alibaba website had become well known among internet users in China. Thus, registration of the Chinese language 'Alibaba' domain name by another party would lead to confusion, and would constitute a form of unfair competition. On this basis, the court refused to transfer the name to Zhengpu.

Finally, the court held that Zhengpu could not claim trademark infringement because its application for the ALIBABA trademark had only reached the gazetting stage and had not yet been registered.

Comment

This case clarifies CNNIC's role as a domain name registrar, particularly the fact that CNNIC lacks authority to reserve domain names at will or to judge criteria, such as 'well known'. As Zhengpu was not yet the registered owner of the ALIBABA trademark, however, the court did not have to address the more difficult issue of conflict between the owner of a domain name and the owner of a subsequently registered trademark.

Annabel Allen (senior consultant) and Jon Eichelberger (partner), Perkins Coie, Beijing