I. Justice has a long arm

“The net of Heaven has large meshes, but it lets nothing through.” The saying is often used to warn off potential offenders. The reason for beginning with such an sensational statement is that the author wants to inform those who believe there is a legal vacuum in the Internet field that the so-called “legal vacuum” is an unfounded rumor represented by the media. Such a legitimate void does not actually exist. Presently, there is not an act or social condition that is not regulated by law. Take the issues and problems with domain names for example, despite their new looks, and because there is not “a domain name law” (such a law will never be formulated); any dispute resulting from them can be resolved against the existing legislation. As a legal professional, the author wishes that the media would stop representing a “legal vacuum” which easily misleads the public. Also the public would never be misled by such representation.

II. Cyberquatting vs. Cyberinvesting

In the Chinese language, “cybersquatting” literally corresponds with “抢注” (which means “Panic Registering”), and is a neutral. The Chinese term reflects a phenomenon when a registrant tries to be earlier than a specific or non-specific counterpart to finish registration. However, in English “cybersquatting” has acquired a “legal meaning”. It means that an act to register as an Internet domain name is a symbol in which another person enjoys prior rights. Obviously the reason why many people in China are discussing whether law is concerned in cybersquatting is that they either do not know where the Chinese expression comes from, or do not want to match the Chinese term with the English, but understand it under the Chinese language environment.

Therefore, certainly “cyberinvesting”, as some people have called it, is not completely the equivalent to “cybersquatting”; the former can include the latter, and the conceptual extension of the former is far more extensive than that of the latter. Strictly speaking, “cyberinvesting” should mean only legal domain name registration and trafficking, and does not include “cybersquatting”. This indicates that an investor in domain names needs not remain in the dark as long as their act does not infringe upon the rights of others, nor does it violate any prohibitive provisions of law. Of course, like other investments, cyberinvesting is a commercial activity. Cyberinvestors must accept administration by the State and pay the taxes; otherwise, they will be subject to punishment.

An additional reminder for cyberinvestors: both WIPO and ICANN have seriously considered domain name warehousing, and clearly listed it as a problem to be administered and resolved. So, the possibility cannot be excluded that WIPO and/or ICANN may on an international level, formulate rules to prohibit or limit registration of an excessive number of domain names. This means that one who does not “squat” the domain name of others, but registers and keeps a more-than-necessary number of domain names may incur an institutional risk, though not a big one by far. According to the current domain name dispute resolution proceedings on cybersquatting, it will be more possible for many domain name registering acts to be found as cyberquatting with bad faith.

III. Big Wisdom vs. Petty Cleverness

Similar to other investments, cyberinvesting can require a substantial cash outlay. Additionally it relies on knowledge to correctly understand the domain name regulations and system, direction of future development, exploration and seizure in the practice of website construction, and operation, the psychology of Internet users, and familiarization of relevant laws and regulations. Also, the ability to run a business is mandatory.

Over the past few years, some “specialized cyberinvestors” have made fairly sizable incomes. Some have made their “first pot of gold” through “cybersquatting”. However, in more cases than not, those who make a living by counting on their “petty cleverness” will find their living space narrowing.

In terms of the structure of domain names, the identifying part can be divided into three categories. Category One covers the identifiers of existing rights, including commercial identifiers, personal noncommercial identifiers, and geographical marks. Category Two works with existing generic terms which have developed specific meanings. Category Three handles numeric or alphabetic combinations which are coined and do not have any specific meaning. According to the current law and domain name dispute resolution policies, to register an identifier of existing rights or a marker similar to the same without the approval of the original rights holder may be found as “cybersquatting”, and the domain name so registered may be arbitrated to be transferred to the rights holder. The use of generic terms is not limited by law, but the users of such identifiers probably cannot obtain the rights which qualify for legal protection. Therefore, despite their certain commercial advantages because they can be occupied early and owned, some of these domain names are not valuable for long-term investment because of the lack of legal protection. Coined numeric and/or alphabetic combinations are strictly protected by law because of their inborn distinctiveness. But, as domain names, they have a relatively lower chance to be known and memorized by Internet users. They may not find their way deep into people’s heart unless through wide-scale advertising. However, once acquiring popularity, the domain names develop an inestimable value. For example, such well-known domain names as SINA, SOHU, GOOGLE and BAIDU are domain names of Category Three; domain names of Category One become famous as they are related closely to their original commercial markers.

It is certain that with the gradual maturation of web site construction and operators, the market value to “squat” under Category One and Two, domain names will decrease, and Category Three domain names, if lacking creativity, will probably not bring benefits to the registrants. Thus, the market vision for cybersquatting may probably wane.

IV. Domain Name vs. Trademark

In fact, a “domain name” by itself is a technical parameter – a marker which uses numbers and/or letters that common people understand when locating a specific Internet address. Its true function lies in that after an Internet user types in specific symbols, and the symbols are translated by the Domain Name Server (DNS) to locate a specific Internet address. However, to make the DNS translation easier, the domain names under the current domain name system are designed into sectionalized character strings which are separated with dots and added with prefixes and suffixes. As a result, the average person may understand and distinguish each and every domain name, but cannot memorize many of them. Therefore, there is no way to let Internet users search for a specific web site by relying on their memory and typing in the domain name. This creates more personalized web searching and locating services, including keyword indexing and directory services. Currently, these services have almost replaced the typing of direct domain-names as a way to access the Internet. Therefore, the existence of domain names is no longer important to most netizens nowadays.

It can be reasonably expected that with the continuous development of software and hardware technology, in addition to their property as a technical parameter, domain names will gradually transform into an administrative marker that Internet administrators may use to monitor each and every mode to access the Internet. To acquire the commercial value of a domain name, one must operate the main identifying part like a trademark, and deliberately advertise and generalize the central identifying part through commercial channels and means. This requires that the identifying part of the domain name has to, from the very beginning, acquire sufficient distinctiveness like a trademark, and it is better to be coined. To put it simply, only those domain names which can be transformed into trademarks or come directly from trademarks can acquire permanent commercial value. Since domain names that come from trademarks can be possessed only by the trademarks holders or other people they approve, one who has not a trademark but intends to develop a domain name with independent commercial value can do nothing else, but design and select their domain names in a careful, responsible and reasonable manner, as the would do for a trademark.

There is a misnomer around the Internet field. It is said that for a domain name, the simpler, the better; the more sensitive, the better. As a result, some think that they can certainly get rich if they register as domain names the Arabic numbers 0 through 9, or using such words as SEX or PORN. However, with a little intelligence, an investor will realize that these symbols and words will never truly become valuable trademarks. They would not be purchased by an insightful and business-minded investor.

V. Civil Settlement vs. Judicial Proceedings

There are presently two kinds of domain name dispute settlement procedures in both China and other countries. They are the domain name settlement procedure within the Internet system and the judicial settlement procedure. Also called “administrative settlement”, the former is actually a civil dispute settlement procedure; the arbitral result can be implemented only in the Internet domain name system, but is not legally enforceable. The latter is a “legal procedure” and the result can be put into force.

Compared with the judicial procedure, the civil dispute settlement procedure has the following advantages. It is fast. After the prefixed “formalities” are finished and once the case is submitted to the panel, the arbitral award will be given in 14 days. It is easy and convenient. Generally, the civil dispute settlement procedure does not need a “court hearing”, and the panel renders its decision by examining only the written materials and evidence from the parties. Also, it does not involve legal issues. By “not involve legal issues”, we mean: a. the panel need not consider the legal provisions, but render its judgment only in accordance with the domain name dispute resolution policies from the domain name registrar; b. what the panel need consider is only whether the disputed domain name meets the conditions provided for in the domain name dispute resolution policies, other than the existence of other legal disputes, if any, between the parties; and c. the panel may decide only on the ownership of the disputed domain name, to reject the complaint, to transfer the domain name to the complainer and/or to have the disputed domain name canceled, other than on other issues. Lastly, it is remediable. The arbitral award from the civil dispute settlement procedure is not “final” in terms of law. The dissenting party may resort to judicial proceedings or formal arbitration proceedings.

Among the above four advantages, “speed” is probably mostly welcomed by the holders of prior rights, as is a basis for the generalization and sustainment of the civil domain name settlement procedure. The practice in the last ten years or so indicates that the spreading of the civil domain name dispute settlement system has effectively contained cybersquatting with bad faith. As the system is being continually perfected, surely more disputes will be settled through the system. Of course, if the rights holder wants not only to retrieve their own domain name, but to keep the squatter legally liable, they has to resort to the judicial procedure.

About the author:
Tang Guangliang is the Vice Director of the Domain Name Dispute Resolution Center of China International Economic and Trade Arbitration Center (CIETAC).

                                                                   (Translated by Ren Qingtao)