Whether Domain Names have Intellectual Property (IP) rights such as trademark?

This is an interesting question which was considered by the Hon'ble Supreme Court of India in the case of Satyam Infoway Ltd vs Siffynet Solutions Pvt. Ltd on 6 May, 2004. This post will be briefly discussing the facts and ratio decidendi laid down in the case and then go on to discuss the relevance of this decision in the present time and how it is useful to you.

Facts of the case are:

1. Satyam Infoway Ltd. (appellant) was incorporated in 1995 and had registered several domain names like www.sifynet, www.sifymall.com, www.sifyrealestate.com etc. in June 1999 with the internationally recognised Registrars: ICANN and WIPO.
2. Appellant claims that the term 'Sify' is a coined word invented by using elements of its corporate name, Satyam Infoway.
3. Appellant claims a wide reputation and goodwill in the name 'Sify'.
4. Meanwhile, Siffynet Solutions Pvt. Ltd. (respondent) started carrying on business of internet marketing under the domain names, www.siffynet.net and www.sijfynet.com from 5th June 2001.
5. The respondent claims to have obtained registration of its two domain names with ICANN on 5th June, 2001 and 16th March, 2002 respectively.
6. When Appellant came to know of the business of Respondent he served a cease and desist notice on the Respondent and to transfer the domain names to the Appellant which the Respondent denied.

Case history prior to reaching Supreme Court:

1. City Civil Court- Appellant filed a suit in the City Civil Court against Respondent for passing off its business and services by using the appellant's business name and domain name. An application for temporary injunction was also filed, and the same was allowed on the grounds that 1) appellant had prior use of the trade name Sify and it had earned good reputation in connection with the internet and computer services. 2) the domain names of the respondent were similar to Appellant had confusion could be caused in the mind of general public by such deceptive similarity, 3) court held that the balance of convenience was in the favour of the appellant.
2. High Court- The respondent preferred an appeal before the High Court. An interim stay of the City Civil Judge's judgment was granted. The appeal was ultimately allowed by the High Court. It was noted- 1) mere prior use without considering where the balance of convenience (BOC) lay cannot give favourable decision to the appellant. 2) there was no similarity in the businesses done by the appellant and respondent, hence there was no question of customers being misled or misguided or getting confused. 3) Assessment of BOC Large investment was done by resopndent in the business and great hardship, inconvenience and irreparable injury would be caused in case of injunction was granted whereas Appellant had a separated trade name, and no injury would be caused if injunction not granted.

Questions of law before the court

1. Both the courts had dealt with the matter with the underlining understanding that trademarks are applicable to domain names. According to the respondent, a domain name is merely an address on the internet. It was submitted that registration of domain name with ICANN doesn't confer any IPR, it is similar to registration of a company name which is unique identifier of a company but of itself doesn't confer any IPR.
2. (A) Whether a domain name can be said to be a word or name which is capable of distinguishing the subject of trade or service made available to potential users of the internet? Court noted that the answer is yes. Originally, the role of domain name was to provide an address for computers on the internet, however, with increase in commercial activity, domain name is also used as a business identifier.
3. Thus domain name may pertain to provision of services within the meaning of Section 2(z). A domain name is easy to remember and use, and is chosen as an instrument of commercial enterprise not only because it facilitates the ability of consumers to navigate the Internet to find websites they are looking for, but also at the same time, services to identify and distinguish the business itself, or its goods or services, and to specify its corresponding online internet location.
4. (B) Would the principles of trade mark law and in particular those relating to passing off apply? As we know the right against passing off is to preserve the goodwill and reputation of the tradete mark owner and to preserve the interest of the public. Similar domain names can divert consumer base from one site to another, and causing loss to the intended site owner. And in cases like the present one, where both the sites are offering different goods and services, the consumer may believe that the owner has misrepresented.
5. Court notes that there have been many such cases between trademark owners and domain name owners and between domain names owner itself.

What do we learn about passing off from this case?

1. The defendant must have sold its goods or offered its service in a manner which has deceived or would be likely to deceive the public into thinking that the defendant's goods or services are the plaintiff's. The action is normally available to the owner of a distinctive trademark and the person who, if the word or name is an invented one. invents and uses it. If two trade rivals claim to have individually invented the same mark, then the trader who is able to establish prior user will succeed. The question is, as has been aptly put, who gets these first? It is not essential for the plaintiff to prove long user to establish reputation in a passing off action. It would depend upon the volume of sales and extent of advertisement.
2. The second element that must be established by a plaintiff in a passing off action is misrepresentation by the defendant to the public. It is irrelevant whether the misrepresentation is intentional or unintential (relevant only to decide the quantum of punishment). One only needs to establish the likelihood of confusion in the minds of the public, (the word "public" being understood to mean actual or potential customers or users) that the goods or services offered by the defendant are the goods or the services of the plaintiff.
3. The third element of a passing off action is loss or the likelihood of it.

Distinction between domain name and trade name highlighted by the Court

1. A trademark is a jurisdictional right, protected by laws of a country, needs multiple registration to claim protection in other countries. Whereas, the internet is not barred by geographical limitations, domain name can be accessed from anywhere. So, national laws might be ineffective in protecting the domain names.
2. Hence, to overcome this shortcoming, DNS (Domain Name System), an international regulation, effected through WIPO and ICANN was necessitated, to which India alongwith 170 other countries is a member. Further, Uniform Domain Name Disputes Resolution Policy (UDNDR Policy) by ICANN on 24th October 1999 was introduced. As far as registration is concerned, it is provided on a first come first serve basis. So, rights in similar fashion is accorded to domain name but not under the Trademarks Act, 1999.

So, what happened in this case before the Supreme Court?

1. Court noted that in order to establish passing off, appellant must show that it has goodwill by showing that people associate the word "Sify" with its services.
2. Appellant was able to establish its goodwill based on: a. number of subscribers in the country, cyber cafes. b. registered on NASDAQ where it uses "sify" for trading purposes and for use of this tradename large fee has been paid. c. has introduced brochures and advertisements in the name of Sify. d. has over 40+ trademarks registered with the prefix of "sify" e.brought on record newspaper clippings where its referred to as "sify" f. presented documents of award presented for achievement under the name "sify".
3. Further, it was pointed out the similarity between "sify" and "siffy", the phonetic similarity it has, mere addition of "net" doesn't remove similarity. Also noted that the appellant is the prior user of the word "sify".
4. The appeal was accordingly allowed. The decision of the High Court set aside and that of the City Civil Court affirmed.