Tort law used against modern-day cybersquatter

Israel

The fight against cybersquatting in Israel was taken to a new level recently when the District Court of Tel Aviv ruled against a company that had registered domain names identical to those of its competitor.

Magnetics Ltd, which had operated under the same name for 14 years, filed an application to register the domain names 'magnetics.co.il' and 'magnetic.co.il'. However, its competitor Discopy Ltd had already registered both domain names. Although Discopy did not operate a web site using either of these domain names, it did use them to traffic users to its own web site.

Magnetics argued that Discopy had registered the names as a form of unfair competition - to prevent Magnetics from setting up its own web site. Discopy argued that the words 'magnetic' and 'magnetics' are generic and therefore could be registered by anyone.

The court relied on Article 3 of the Commercial Torts Act to decide in favour of Magnetics. Article 3 provides that no merchant may unlawfully prevent customers, suppliers or employees from gaining access to property or services provided by another merchant. The application of Article 3 requires the following:

  • that two merchants are involved;

  • that the defendant's action prevents customers, suppliers or employees from gaining access to the plaintiff's property or service; and

  • that the defendant's action is unlawful.

The court recognized that web sites have become a common way for businesses to communicate with their customers and suppliers. Thus, purchasing domain names to prevent a competitor owning and operating a web site is considered unlawful conduct under Article 3.

The court noted that had a competitor whose name was similar to the domain names been the registered owner of the domain names, Article 3 would not have applied as the requirement of unlawful action would not have been fulfilled.

The court ordered Discopy to transfer the two domain names to Magnetics and to pay the plaintiff's legal expenses of about $4,800.

Rafi Ton, Sanford T Colb & Co, Tel Aviv

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