Stephen Koenig vs. Arbitrator, National Internet Exchange of India (Nixi) & Anr. AND Jagdish Purohit vs. Stephen Koenig

Stephen Koenig vs. Arbitrator, National Internet Exchange of India (Nixi) & Anr.

AND

Jagdish Purohit vs. Stephen Koenig

2012(49)PTC304(Del), 186(2012)DLT43

FACTS:

The case is about dispute regarding the domain name ‘internet.in‘. The present petitions under Section 34 of the Arbitration & Conciliation Act, 1996 (‘Act’) were directed against an Award passed by the sole Arbitrator appointed by the National Internet Exchange of India (‘NIXI’).

Jagdish Purohit (JP) filed a complaint before the .IN Registry of NIXI under Para 4 of the .IN Domain Name Dispute Resolution Policy (‘INDRP‘) to the effect that the domain name ‘internet.in’ registered by Stephen Koenig (SK), was identical and confusingly similar to the registered trade mark ‘internet’ of JP in respect of ‘Tobacco, raw or manufactured, smokers articles, matches included in Class 34’. However, before JP could get any domain name registered using its trade mark, SK a U.S.A resident got the domain name ‘internet.in’ registered with the.IN Registry. JP claimed that SK had no rights or legitimate interests in respect of the said domain name and that SK’s domain name had been registered or was being used in bad faith.

The Arbitrator concluded that the domain name ‘internet.in’ should be struck off and confiscated and kept by the .IN Registry. He rejected the prayer of JP that the domain name should be transferred to him.

PROVISION(S) IN ISSUE:

Para 4 of INDRP –

“Any person who considers that a registered domain name conflicts with his legitimate rights or interests may file a complaint to the.IN Registry on the following premises:

(i) the Registrant’s domain name is identical or confusingly similar to a name, trademark or service mark in which the Complainant has rights;

(ii) the Registrant has no rights or legitimate interests in respect of the domain name; and

(iii) the Registrant’s domain name has been registered or is being used in bad faith.”

Para 4(a) of Uniform Domain Names Dispute Resolution Policy (UDRP)  –

“4. Mandatory Administrative proceedings.

This Paragraph sets forth the type of disputes for which you are required to submit to a mandatory administrative proceeding. These proceedings will be conducted before one of the administrative-dispute resolution service providers listed here

a. Applicable Disputes. You are required to submit to a mandatory administrative proceeding in the event that a third party (a “complainant”) asserts to the applicable Provider, in compliance with the Rules of Procedure, that

      i.        your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

     ii.        you have no rights or legitimate interests in respect of the domain name; and

   iii.        your domain name has been registered and is being used in bad faith.

In the administrative proceeding, the complainant must prove that each of these three elements are present.”

GROUNDS OF CHALLENGE –

SK challenged the impugned Award primarily on the ground that it was contrary to the INDRP inasmuch as JP had failed to prove the ingredients of Para 4 thereof in order to succeed in his complaint and further that the Arbitrator exceeded his jurisdiction in ordering the confiscation of the domain name by the .IN Registry when no such remedy is provided in Para 10 of the INDRP. JP also filed a suit in the court of Additional District Judge, Delhi (‘ADJ’) challenging the Award to the extent that the Arbitrator had rejected the plea of JP for transfer of the domain name in his favour. Later on this particular suit was tagged with the present petition.

JP also raised a preliminary objection that the petition was barred by limitation as SK had failed to file the petition within the maximum permissible time as stipulated under Section 34(3) of the Arbitration Act (Act) read with the proviso thereto. To this SK replied that it is only through the letter dated 5th December 2006, received on 13th December 2006, NIXI informed him of the passing of the Award and enclosed a copy of the Award. Thereafter the petition was filed on 9th March 2007, within the stipulated three month period as prescribed under Section 34(3) of the Act.

CONTENTIONS:

Interestingly, the contentions of the petitioner (SK) were-

1. Burden of Proof: The burden was on JP who held registration of a highly descriptive or generic word like ‘internet’ to prove that the word was at all capable of being a trade mark or had acquired a secondary meaning. Merely because the sentence at the end of Para 4 (a) Uniform Domain Names Dispute Resolution Policy, (UDRP)[2] was absent in Para 4 INDRP did not mean that the burden of proof was not on the complainant. Also, vide Sections 101, 102 and 103 of the Evidence Act, 1872 the complainant must establish how the domain name was confusingly identical to the registered trademark;
2. Registration: JP’s registration was for the logo mark ‘internet’ which did not give him any rights in the word per se. There could be no confusion with the logo ‘internet’ registered for tobacco.
3. Validity of Registration: JP had not adduced a single document of usage of the said trademark, the quantum and amount of sales under the trademark, the nature and extent of advertising, consumer surveys and media recognition;
4. Bona fide Intentions: SK intended to “legitimately use the domain name as the identifier for internet related goods and services on a website”. SK had not put up the domain name ‘internet.in’ for sale. In fact, it had over the years developed internet businesses like fax.de and toner.com for legitimate purposes and therefore, was a legitimate and a bona fide trading entity. The domain name ‘internet.in’ was used in good faith in relation to internet related goods and services which “amounted to merely a generic or descriptive use”. Bulk registration of domain names for ultimate sale to prospective buyers was per se not an illegal or illegitimate activity (relying on WIPO Arbitral Tribunal Awards);
5. Due Diligence: INDRP did not make it mandatory for the Petitioner, SK to conduct a trademark search in all classes before registering a domain name;
6. Ignorance: JP had provided no evidence to the effect that the SK knew of the rights of JP in the mark ‘internet’ or ought to have known the same. JP had not registered any domain names containing the word ‘internet’ in the popular gTLDs e.g.,.com,.net,.org etc. so as to raise any inference or assumption, that SK ought to have had any indication of the rights of JP in the domain name ‘internet.in’;
7. Dilution: As per Whois results of the relevant domain names, the domain names like internet.biz, internet.net etc. were all registered by different entities;
8. Reverse domain name hijacking: The complaint had been filed with the sole aim to harass SK and usurp rights beyond the registration of JP. As per the information received from other registrants against whom JP had initiated INDRP proceedings, JP had sought to monopolize several generic words such as business, web, jobs, hotels, etc. without even an iota of evidence of that it intended to use the said words as trademarks.

Respondent 2 (JP) –

1. Prior User: JP is using its trade mark ‘internet’ for over three years and prior to the registration of the domain name in favour of SK;
2. Confusingly Similar: Even though the domain name was being used for internet related services, there was bound to be confusion since it was identical to the registered mark of JP;
3. Registration: JP had by securing registration of the trademark in his favour demonstrated his right in the mark, irrespective of its use or the fact that it was a generic word. Citing Manish Vij vs. Indra Chugh[1], JP contended that where no exclusivity can be granted to marks that are generic, the Court should permit the registered owner of the trademark to use it in relation to tobacco, the goods for which it was registered and in relation to which it would be distinctive rather than permit a domain name holder of the generic word to use it in a generic sense in relation to internet related activity;
4. Mala fide intentions: SK got several domain names registered in the.IN Registry in which he had no right or trade mark. SK had mala fide intentions to sell the domain name to either JP or to another organization for a profit. SK parked the domain name and was making money by luring customers to the website and tricking them into clicking on ads.

HELD

On Preliminary Objection as to Limitation –

Under Para 13 of the INDRP Rules of Procedure, the .IN Registry shall, “within five working days after receiving the decision from the Arbitrator“, “communicate the full text of the decision to each Party and shall also communicate to each Party, the date for implementation of the decision.” The High Court of Delhi referring to the Supreme Court decision in Union of India v.Tecco Trichy Engineers & Contractors[3] quoted from that judgment-

“The delivery of arbitral award to the party, to be effective, has to be “received” by the party….As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings.” 

The Court observed that in the present case it was not clear whether the .IN Registry at any time prior to 05.12.2006 communicated to the parties the full text of the Award in terms of Para 13 of the INDRP Rules of Procedure. Accordingly, the Court rejected the preliminary objection of JP that the petition of SK was barred by limitation.

On Internet, Internet protocol (IP) and Domain Names –

The Court noted:

Internet is “a computer network consisting of or connecting a number of smaller networks, such as two or more local area networks connected by a shared communications protocol.”[4]

Internet Protocol (‘IP’) is “a standard that specifies the format and addressing scheme of packets of data sent over the internet or other network.“[5]

As per the dictionary meaning ‘internet’ is a now a common word. To access a ‘site’ on the internet, the user usually has to key in an IP address. This is a combination of four groups of numbers separated by decimals, which is not easy to remember. Domain names on the other hand are ‘mapped’ on to an IP address to facilitate easy access to web sites. Domain names usually relate to the organization or entity whose website is being accessed and can therefore be easily remembered.

Taking the example of the website of Delhi High Court, the Court further explained that a domain name can be divided into different levels. The domain name ‘delhihighcourt.nic.in’, has in the first level “delhihighcourt” which refers to the entity whose website it is, the second level is ‘nic’ which refers to the entity which hosts the server on which the website is located and ‘.in’ is the top level domain name (‘TLD’) which is indicative of the geographical location of the website i.e. India. ‘.in’ is in fact a country code Top-Level Domain (‘ccTLD’) as contrasted with a generic Top-Level Domain (‘gTLD’) like ‘.com’ or ‘.org’. [Para 12]

The Court also highlighted the problem with current domain name registration system noting that disputes regarding domain names generally stems from the system of assigning domain names on a first-come-first-served basis. The problem is compounded with web browsers and search engines making it easy for a surfer to locate a website by simply typing the name of the company or product. Among the serious problems of the domain name system (‘DNS’) is “cyber squatting” resulting from deliberate and fraudulent registration of domain names using well-known trademarks with the intention of selling them to the owners of those trademarks at a huge price. Cyber squatters could also sell these domain names to any other person for a price, thus ‘diluting’ a well known trademark or trade name. [Para 13]

On Para 4 of the INDRP and the corresponding Para 4 (a) of the UDRP –

Analyzing the nuances between the two provisions, the Court observed at para 29 of this case that while each of the sub-paras (i) to (iii) of Para 4 (a) of UNDRP are required to be ‘proved’ by the complainant cumulatively, that is not the case with Para 4 INDRP as one can file a complaint under any of on the ‘premises’ outlined in sub-paras (i) to (iii) of Para 4. The Court however decided to interpret the INDRP as it exists and not supply the omissions (underlined) read into the INDRP words that are absent.

First limb of Para 4 (i): Confusingly Similar

The Court cited Supreme Court’s decision in Satyam Infoway Limited v. Siffynet Solutions (P) Ltd.[7] to point out that “a domain name may have all the characteristics of a trademark and could found an action for passing off“.

The domain name ‘internet.in’ and the trademark ‘internet’ are identical. The said domain name is likely to cause confusion in the minds of actual or potential customers with ‘imperfect recollection’ as regards the source of the goods and services when going on the net to search for a website using the said domain name. The mere fact that the goods for which JP holds registration is different from internet related services which the Petitioner proposes to offer using the domain name does not mitigate the possibility of such confusion, given the nature of e-commerce and the range of products that can be purchased on the net.

Second limb of Para 4 (i): Right in the trademark

The fact that Respondent No. 2 held a registration for the trademark ‘internet’ was sufficient to show that he had a right in the mark. This position flows from a reading of Section 28(1) TM Act, which gives the registered proprietor of a trademark “the exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered…” This read with Section 31 of the TM Act, which raises a presumption of validity of the registration, places the registered proprietor of a mark in a better position than a non-registered one for the purposes of Para 4 (i) INDRP. Whether the mark was generic was not apposite in the context of Para 4 (i) INDRP as for the purposes of Para 4 (i) it was more than sufficient for JP to be a registered proprietor of the trademark in question in order to show that he had a right in it. JP had sufficiently demonstrated his interest and right in the said trademark for the purposes of the second limb of Para 4 (i) INDRP. However, this would not ipso facto entitle JP to ask for transfer of the domain name in his favour under Para 10 INDRP (discussed later).

Third limb of Para 4 (i): Mala fide

What constitute “bad faith” in this context is provided in Para 6 of INDRP.  The Court noted that SK had registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name” and that the Registrant has engaged in a pattern of such conduct. SK had registered 1747 domain names in.de Registry for the purpose of selling such domain names. The .in domain names were parked with SEDO which made it likely that the domain names were meant to be sold. Also, the meta tags in the page of SEDO where the domain name internet.in was parked showed that the domain name was intended for ultimate sale. Even if SK was not going to offer ‘internet.in’ for sale to either JP or anyone else immediately, JP had managed to prevent a registered proprietor of a trademark in that word from using it as part of his domain name or getting a domain name registered in the said word mark. There is an obligation cast on the Registrant in terms of Rule 3 INDRP to ensure that “the registration of the domain name will not infringe upon or otherwise violate the rights of any third party.”

The Court therefore concluded that in terms of Para 4 (iii) read with Para 6 (ii) INDRP, the Petitioner’s registration of the domain name ‘internet.in’ was in bad faith

On Burden of Proof –

Once the complainant discharges the initial burden of showing that the Petitioner had no legitimate interest in the domain name, the burden of showing that he did have such interest shifted to the Petitioner. JP had discharged the initial burden of showing that SK had no legitimate interest in the domain name and that SK thereafter failed to prove the existence of any of the ingredients of Para 7 of INDRP viz., the SK’s ” use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services”, that SK is “commonly known by the domain name even if SK has no trademark” or that SK is “making a legitimate non-commercial or fair use of the domain name.”

On Relief –

The cancellation of the registration of the domain name ‘internet.in’ in favour of the Petitioner (SK) would not automatically entitle JP to its transfer in his favour unless it is shown that he was actually using the trademark ‘internet’ in his business. Additionally, the fact that the word ‘internet’ is generic and that the trademark ‘internet’ of JP is therefore a weak one, are relevant considerations that support the decision of the Arbitrator to decline the prayer of JP for transfer of the domain name ‘internet.in’ in his favour.

On Scope of the present proceedings under Section 34 of the Act –

To warrant interference with the Arbitral Award it would have to be based on one of the grounds mentioned in Section 34 of the Act. An award could be set aside[6]:

“if it is contrary to:

(a) fundamental policy of Indian law; or

(b) the interest of India; or

(c) justice or morality, or

(d) in addition, if it is patently illegal.

 Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that the award is against public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.”

The Court after examining the impugned Award of the Arbitrator noted that there was not any patent illegality in the award nor was it against or contrary to the public policy of India. Since JP had successfully made out a case for cancellation of registration of the domain name, the further order of the Arbitrator directing the confiscation and retention of the said domain name by .IN Registry was held to be without any legal basis vide Para 10 of the INDRP.

OUTCOME:

• Registration of the domain name ‘internet.in’ in favour of SK directed to be struck off
• JP not entitled to the transfer of the said domain name in his favour
• Direction that the impugned domain name should be confiscated and kept by the. IN Registry, set aside.