The Cybersquatters are Coming!

A recent decision by Nominet, the UK internet registry, to order CyberBritain Holdings Limited (a small British company) to transfer ownership of the domain name ‘itunes.co.uk’ to Apple (a multi-national computer company) has been criticised on the grounds that Nominet disregarded CyberBritain’s legal rights, in order to be ‘corporate friendly’.

Nominet found that CyberBritain had made an ‘abusive registration’ i.e. they had used the domain name in a way which took unfair advantage of Apple’s legal rights or reputation. Alternatively, it was claimed, they had been ‘cybersquatting’.

The decision may seem surprising, and consequently the criticism justified, for two main reasons.

First, CyberBritain had registered the domain name a month before Apple registered a UK Trade Mark in ‘iTunes’ and three years before Apple’s iTunes music internet download service was launched in the UK.

Secondly, the High Court found, in a similar case, that a company using the domain name ‘phone4u.co.uk’ was not infringing the legal rights of the well known High Street store ‘Phones4U’, despite the fact that both businesses sell mobile phones and that there is only one letter difference between the two names.

On a further examination of the facts in the iTunes case, it seems that the decision of Nominet is not as perverse as it first appears. Although there was no suggestion (by Apple) that, at the time of registering the domain name, CyberBritain had abused Apple’s legal rights, it was subsequent use of the domain name which was detrimental.

The domain name was, it was alleged, used to redirect users to Napster, a rival to Apple in the download music industry; in return for this, CyberBritain would receive payment for visitors so redirected.

CyberBritain also offered to sell the domain name to Napster for the sum of £50,000.00. No justification was given for the figure but, suffice to say, it was considerably greater than CyberBritain’s administrative costs in obtaining the domain name in the first place.

This was the single most damming point against CyberBritain - a classic example of ‘cybersquatting’.

These facts may usefully be contrasted with the decision in the Phone4u.co.uk case, where there was found to be no confusion between the domain name and the High Street retailer. No evidence was adduced to show that visitors felt they were visiting the larger (and better known) retailer; there was, it was stated, no attempt by the smaller retailer to take unfair advantage of the larger retailer.

A fear that small businesses, holding domain names of commercial interest to more established companies (even if they owned the domain name before it became associated with the better known company), would have to hand over those domain names simply because the more established companies complain, would not seem to be entirely justified by the iTunes case. What the decision reinforces, however, is the point that if you are trying to take advantage of the goodwill of another, you are in danger of accusation that you are infringing its legal rights.