Question of the day

The COVID-19 pandemic continues to force businesses to adjust to new realities. For some entrepreneurs, in addition to complying with harsh, globally coordinated measures, this adaptation can mean moving their business online. And it’s understandable – it’s easy to use, maintenance costs become smaller and give more visibility. However, this can increase the risk of electronic scams, including cybersquatting. We have therefore set out to give an overview of this fraudulent intellectual property practice and make recommendations in this regard.

The concept of cybersquatting

Cybersquatting is the practice of unauthorised registration and use of domain names on the internet that are identical or sufficiently similar to trademarks registered for goods and/or services, business names or even well-known personal names. Users typically pursue the aim of making a profit by selling, renting or otherwise disposing of the purchased domain, at a price above the real value, to the owner-companies/persons or their competitors.

Cybersquatters can be individuals or even legal persons who profit from the domain name of commercial undertakings with sound names but who do not yet have a domain open under the name of the goods or services covered by the trade mark.

Legal background

At national level, we do not have legislation that expressly regulates and protects intellectual property rights against cybersquatting (as in US law, e.g. where the Anticybersquatting Consumer Protection Act exists). However, this local state of affairs does not necessarily mean that trade mark proprietors cannot protect themselves from the registration and/or misuse of domain names.

For example, we have Act No 38-XVI/2008 on trade mark protection which says that trade mark rights are acquired and protected by registration. That is to say, registration of a trade mark confers on its proprietor exclusive rights therein. What we are talking about is the fact that the trade mark proprietor is entitled to prohibit third parties from using use on the internet, including as a domain name, in their commercial activities without their consent.

In addition, Competition Law No 183/2012 prohibits any actions or facts which are liable to create, by any means, confusion with the undertaking, products or economic activity of a competitor, carried out through the unlawful use, in whole or in part, of a trade mark or business name, liable to create confusion with those lawfully used by another undertaking.

Similarly, Law No 105/2003 on consumer protection provides that a commercial practice is to be regarded as misleading if, in the factual context and taking account of all its features and circumstances, that practice causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise and if that practice involves any commercial activity relating to the product, including comparative advertising, creating confusion with another trade mark.

Furthermore, the Code of Administrative Offences of the Republic of Moldova No 218/2008 provides that the use without the proprietor’s consent of the protected trade mark or of a sign which, because of its identity with, or similarity to, the registered trade mark and the identity or similarity of the goods or services covered by the sign and the trade mark, gives rise to a likelihood of confusion on the part of the consumer, is punishable as an administrative offence.

Furthermore, if the infringement of the right to these industrial property objects constitutes a criminal offence and causes extensive damage, the actions may be subject to criminal penalties, according to the Criminal Code of the Republic of Moldova no. 985/2002.

International conjuncture

The Republic of Moldova created its own identity in the internet address space when registering with the Internet Assignmed Numbers Authority (IANA) the high-level address domain ‘.md’ – the code of the Republic of Moldova, assigned by the Internet Corporation for Assigned Names and Numbers (ICANN), in accordance with the international standard ISO-3166, to identify the country in the comprehensive network.

ICANN is the organisation responsible for coordinating the maintenance and procedures of name and number spaces on the internet. It adopted the recommendations of the World Intellectual Property Organisation (WIPO) and implemented the Uniform Domain Name Dispute Resolution Policy (UDRP) to resolve disputes arising from the registration of generic top-level domains.

“MoldData” – which was reorganised by merger (absorption) with the Public Institution “Service for Information Technology and Cybersecurity” – was appointed Administrator of the Register of higher-level domain names “.md” (ccTLD.md), also acting as National Registrator. And, as a National Registry, the institution is bound by the IANA/ICANN regulations.

The filing of an application for registration of a domain name (or the filing of an application for renewal, or the renewal of a registration) implicitly assumes the commitment of the registrant of the domain name that it will neither infringe nor prejudice the rights of any third party. It is the responsibility of the beneficiary applicant (“registrant”) to determine whether the registration affects the rights of another person (natural or legal). To date, there are more than 25 000 domain names in the “.md” area.

Therefore, when a domain name is required to be registered, it is implicitly designed to be for bona fide purposes. The Registrar shall not be obliged or have any lever to verify the registrant’s right to register and use a domain name. The latter bears personal responsibility for any trademark infringement and conflict situations that may degenerate into the outcome of cybersquatting.

What can we do?

The National Registrar does not have the authority to arbitrate any dispute concerning the registration and use of domain names “.md”. Through the ‘Whois’ service, it can only provide certain domain data and its holder. So, if we have not granted any licence or other right to use the trade mark, we can try to ask for the domain name to be cancelled or transferred – either amicably or through an alternative procedure, or through legal proceedings.

It is good to know that we are entitled to lodge a complaint with the Competition Council for alleged unfair competition actions (so an investigation report will be launched). In order to be entitled to file such a complaint about alleged anti-competitive actions, we need to demonstrate that the conduct complained of affects our company’s interests. Similarly, we must respect the deadline of 6 months from the date when we knew or should have known about the conduct of the alleged unfair competition actions (the expiry of this deadline is a basis for refusing to examine the complaint).

For acts of unfair competition to be punishable, they must be liable to create confusion. The Competition Council may impose a fine of up to 0.5 % of the total turnover of the undertaking concerned in the year preceding the penalty for committing acts of unfair competition in respect of intellectual property objects such as the registered trade mark. And the financial damage caused as a result of the actions found to constitute unfair competition shall be compensated, in accordance with the provisions of the Civil Code of the Republic of Moldova No 1107/2002, by the undertaking that caused it.

Alternatively, we can submit a domain name dispute resolution request to the WIPO Arbitration and Mediation Centre, through the UDRP, or to any other provider among those approved by ICANN (for the full list, see List of Approved Dispute Resolution Service Providers). All high-level domains apply the UDRP for dispute resolution and ccTLD.md is not an exception.

We will have the chance to obtain a favourable decision in such an administrative procedure – either annulment or transfer – if we demonstrate that the following circumstances have been cumulatively met:

• the domain name at issue is identical or similar and leads to confusion with our registered trade mark;
• the registrant (defendant) has no rights or legitimate interests in the disputed domain name;
• registration of the domain name was made and is used in bad faith (practice shows that it is sufficient to prove that either the registration or the use of the domain name was made in bad faith);

If an action in the court is initiated before or during the initiation of a UDRP procedure, the administrative panel is free to decide whether to suspend or terminate the administrative procedure, or to proceed with a decision. One on top of the other, if we initiate legal proceedings, then we are obliged to notify the provider (in this case, the WIPO Arbitration and Mediation Centre) and the administrative panel.

If a lawsuit relating to the right to use a domain is already pending before a court, arbitration or other authorised institution, the domain name shall be blocked until the final decision settling the dispute has been issued.

Conclusion

Cybersquatting is a fraudulent intellectual property practice that grows globally year on year. And the spread of COVID-19 is only increasing (it remains to be seen at a later stage, through a comparative study, to what extent). What is certain is that the phenomenon of bad faith registration and/or use of domain names is difficult to eradicate, as companies are increasingly present on the internet.

It should be noted that trade mark proprietors are entitled to prohibit third parties from using in their commercial activity, without their consent, the name of the goods or services covered by the trade mark as a domain name on the internet. And while legal action can be taken when their rights are violated through cybersquatting, our recommendation is not to neglect, in the first place, the advance registration of domain names and the use of trademark surveillance services.

We encourage companies to remain attentive to any fraudulent behaviour on the internet with regard to their intellectual assets and, if necessary, to consult lawyers in order to prevent further damage.

Source: bizlaw.md