Domain names can be basis of passing off actions

In Satyam Infoway Ltd v Siffynet Solutions Pvt Ltd ([2004] 120 Comp cas (SC) 729, May 6 2004), the Indian Supreme Court has affirmed the Indian courts' inclination to afford the same degree of protection to domain names as to trademarks.

Satyam Infoway Ltd, an internet solutions provider, operates under the trade name Sify. In 1999 it registered various domain names incorporating the name Sify, such as 'sify.com', 'sifymall.com' and 'sifyrealestate.com'. Siffynet Solutions Pvt Ltd registered the domain names 'siffynet.net' and 'siffynet.com' in 2002. Satyam applied for a temporary injunction in the Delhi Civil Court on the basis of its prior use of the name Sify in domain names. The court granted the application on the grounds that the principles of passing off in connection with trademarks also applied to domain names. Siffynet appealed to the High Court.

The High Court stayed the injunction order. It held that (i) no order should have been granted without considering where the balance of convenience lay, and (ii) the fact that Siffynet started its business after Satyam should not prevent it from using the name Siffy. The court also held that there was no likelihood of confusion between Sify and Siffy since Satyam and Siffynet were engaged in different businesses. Satyam appealed to the Supreme Court.

The Supreme Court reversed. It considered the following two questions: (i) Is a domain name capable of distinguishing the services of one entity from those of another in the minds of internet users (in other words, can it be considered as a trademark)? (ii) Should the principles of trademark law, in particular those relating to passing off, apply?

The Supreme Court observed that domain names have developed from being a mode of communication to becoming business identifiers in relation to services provided by their holders. Accordingly, they can pertain to the provision of services within the meaning of Section 2(z) of the Trademarks Act 1999, which came into force in September 2003. The court affirmed that domain names provide a distinctive identity on the Internet, as opposed to trademarks in the physical world, where "a large number of trademarks containing the same name can coexist because they are associated with different products [or] belong to businesses in different jurisdictions".

In relation to the second question, the court outlined the principles of passing off in relation to trademarks. It first noted that the owner of a distinctive trademark is required to establish priority and reputation. The court held that long use is not essential to prove reputation. Instead, the issue turns on the volume of sales and extent of advertisement. Plaintiffs must also prove the presence of a likelihood of confusion and/or loss. It found that all these principles apply to domain names since they share similar characteristics to trademarks. It concluded that domain names can be the basis of an action for passing off.

The court also stated that domain names require specific protection under the law of passing off since they are not limited territorially and as a result may not be adequately protected by national laws, such as the Trademarks Act 1999.

The Supreme Court set aside the judgment of the High Court and affirmed the order of the trial court.

This decision gives domain names a formal place in trademark law in India. The order will go a long way towards improving the way e-commerce is conducted in India.

Ameet Datta, Anand & Anand, New Delhi