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Aspects of Cybersquatting in the Baltic States

The author reviews various aspects of the process known as cybersquatting classical and European practice and theory, steps being taken in the Baltic States in opposition to cybersquatting, the situation which exists in this regard, and a possible solution that just might work.


Dr Darius Sauliunas, lecturer, Faculty of Law, Mykolas Romeris University, Lithuania

INTRODUCTION

If someone asks us what a domain name is, we can all be fairly certain that we know the answer.  We think of something ending with .com, and this creates no confusion.  The issue, however, is far more elaborate and complex than might seem at first glance.  A domain name is a genuinely new product and feature of the modern society, one that is firmly based on information technologies, and the fact is that it is not easy to define.  The predominant approach of IT specialists suggests that its nothing more than a literal address which directs the user to a single Web site, helping to distinguish it from the wealth of other materials on the Internet.  The truth is, however, that when domain names are used in business activities, a more thorough definition is needed, and that is where the law had to step in with a solution.  Today it is generally accepted that a domain name is an object of intellectual property, and in this sense, it is compared to trademarks, which have a long history of their own.  A domain name creates values in and of itself for its owner, and that means that it requires effective legal protections.

CYBERSQUATTING: THEORY AND PRACTICE

Once it was shown that domain names could not be replaced in online and offline business activities, there were individuals and companies which sought to make use of domain names to which they were not entitled.  People often registered a domain name which actually was related to another entity which had legitimate expectations and rights vis-à-vis that name.  This practice came to be known as cybersquatting.  Once a domain name which theoretically belongs to another entity is registered, the cybersquatter seeks to sell it to the interested party, usually at a price far above the normal registration fee.  The person or entity with seemingly legitimate rights to the name is forced to pay a high price for a domain name that could otherwise have been registered almost for free.  This can be seen as a process of fraud.  The point is that registration costs are minimal in comparison to the market value of a popular and easily discernible name.  The phenomenon is not yet well known or much debated in Estonia, Latvia and Lithuania, and it has not been the subject of much Internet coverage.  That does not mean, however, that the problem does not exist in the Baltic online market.  As long as people remain unaware of their rights and of potential remedies, they have less of a chance to use effective legal protection against malicious cybersquatting.

CLASSICAL MANEOUVRES AGAINST CYBERSQUATTING

Domain names are often registered as trademarks.  Such names enjoy the same protections against abuse as ordinary trademarks do.  The fact is, however, that registration of domain names tends to be a first come, first served process, and the owner of a trademark still does not necessarily have the right to a domain name which has not yet been registered.
Because of the vast possibilities which exist in hijacking domain names that end in <.com> and the threat which this process poses to legitimate business activities, cybersquatting is illegal in the United States, as well as in other developed countries with widespread IT use.  The US Anticybersquatting Consumer Protection Act was enacted in 1999.   The law allowed owners of trademarks to secure the right to the respective domain name.  The point was to offer legal remedies to trademark and service mark owners against people who obtained domain names in bad faith domain names which were identical to a trademark or service mark, or similar to such a trademark or service mark to the degree that confusion could arise.
This did not stop cybersquatting, but it did offer the legitimate holders of rights to a domain name with effective legal remedies against such malevolent activities.  Instead of paying ransom for a domain name, people could not go to court to seek the right to the relevant domain name.
At the global level, disputes involving allegedly bad-faith registration of names in top-level domains such as <.biz>, <.com>, <.info>, <.net> or <.org> are usually resolved through the Uniform Domain Name Resolution Policy (UDRP).   This is a policy developed by the Internet Corporation for Assigned Names and Numbers (ICANN),  and it took effect on December 1, 1999.  The UDRP has been very successful in terms of battling cybersquatters around 80% of cases have been decided in favour of the petitioner.

BALTIC MEASURES

Another approach toward cybersquatting was approved by the European Unions own domain name registry (<.eu>).  The EU declared a sunrise period for the registration of domain names in this top-level domain.   People who sought to register a domain name had to prove the existence of a valid and registered trademark, and this has minimised the likelihood of bad-faith registration.
The Latvian registrar of national domain names implemented a similar preventive approach in a document called General Rules for the Acquisition of the Right to Use a Domain Name.   A domain name in Latvia cannot be the registered trademark of another entity, the name of an entity, or the standard abbreviation of the entity.  Second, the registry reserves the right to postpone the registration of any domain name which does not satisfy the aforementioned requirements, as well as to demand additional evidence as to the right of the applicant to the domain name.  This provision represents a general formalisation of intent in terms of security the right of trademark holders to the relevant domain name, thus preventing cybersquatting.
The Latvian registry also has a policy to resolve disputes.   It is largely patterned after the ICANN UDRP.  The policy says that the complete and abbreviated names of organisations and companies which are registered by the Latvian Company Register, as well as trademarks registered by the Patent Office of Latvia, can only be registered as domain names by their legal owners.  Clearly, this is a more specific provision than the aforementioned one.  Even further, the registry has the right to refuse registration or request additional evidence in questionable instances.  This active approach is highly welcome, and it may prevent cybersquatting if properly implemented.  It is noteworthy that Latvian rules clearly state that any disputes regarding existing domain names are to be resolved in arbitration by the owner of the domain name and the contesting party.  The registry itself does not become involved in such processes.
In Estonia, official regulations concerning the registration of domain names under <.ee>  say that registration of such domain names is available to companies which are registered in the Republic of Estonia.  If an individual wishes to register a domain name, then he or she must register with the Commercial Register as a business subject.  This limits opportunities for foreign cybersquatters, although it does not necessarily eliminate local ones.  This is a protectionist system, and it does limit the likelihood that illegitimate activities will occur.

LITHUANIAS SITUATION

Cybersquatting has not yet attracted much attention among Lithuanias residents or members of Parliament.  There are no legal acts to protect the owners of domain names or the right to domain names.  No law mentions the national <.lt> domain name.  The problem is how one can protect ones rights and interests if ones intended domain name is hijacked.  This is very important, because negotiations or mediation often do not yield satisfactory results.  Cybersquatters are seldom prepared to yield on the matter.
Sadly, there seems to be no instantly acceptable solution to this problem, but one way of dealing with it would be to follow world practice and that of neighbouring countries forcing the national registry for domain names to introduce rules that would oblige disputes about domain names to be handled by international commercial arbitration.  In that case, someone who registered a domain name would be contractually obliged to agree to arbitration in all cases of dispute.  This would mean a suitable forum for cybersquatting cases a forum in which such cases could be resolved successfully.  Arbitration courts can call in qualified experts who can deal with IT-related issues.  This is seen clearly in the recently established way in which disputes about <.eu> domain names are resolved by the Czech Arbitration Court.   This procedure has many clear advantages, among which a main benefit is an online procedure which saves time for applicants and experts alike.  Efficient management of time makes it possible to reduce the time span before a final ruling is issued.  Experts, moreover, are much better qualified in the specific area of IT law than are judges on ordinary national courts.  There are also lower litigation costs, and that is not unimportant.

CONCLUSION

Cybersquatting is increasingly a global problem, and an international solution was proposed by the ICANN with its UDRP strategy.  International experience in the fight against cybersquatting has also been adopted in Latvia, where cases are sent to arbitration courts.  In Lithuania, by contrast, the registrar of <.lt> domain names has not created any uniform system to deal with litigation.  There have, accordingly, been very few cybersquatting cases in Lithuania, as in its neighbouring countries, but the number of such disputes is certainly on the rise.  The sooner steps are taken to find a solution to domain name litigation, the less time will be needed to improve the ability of holders of domain names to protect their rights.

Authors contacts: d.sauliunas(at)euroteise.lt


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eBaltics
14.12.2019


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