Courts vs Arbitration for Domain Name Disputes

1. Domain name owners have a choice of options

As detailed in this post, domain name registrants who want to object to the registration of another domain name can choose whether to pursue a remedy through the Australian Dispute Resolution Policy (ADRP) or to sue in court.

What factors will influence this choice?

2. The alternatives to an arbitration under the auDRP

The main alternative to the auDRP is to sue in court alleging that the other trader has breached a statute or committed a wrong against a trader. The most common avenues in this context involve alleging that the other trader has:

• infringed a registered trademark in breach of the Trade Marks Act 1995;
• committed “passing off” (i.e. the second trader has “passed themselves off” as being connected with you); or
• engaged in conduct that is misleading and deceptive, or likely to mislead or deceive, and has therefore breached the Trade Practices Act 1974 or equivalent state legislation.

a. An example

There is some overlap between the auDRP and the above options, which are technically called “causes of action”.

For example, imagine that a trader (the plaintiff) has registered a trademark for the letters “jklm”, and also holds the license for the domain name “jklm.com.au”. Imagine that a second trader comes along and registers the domain name “jklmn.com.au”. The arguments that would need to be made by the first trader are roughly as follows.

b. The auDRP

Under the auDRP, the first trader must prove that:

• the second domain name (jklmn.com.au) is confusingly similar to the first domain name (jklm.com.au) or the registered trademark (jklm);
• the second trader has no rights or legitimate interests in respect of the domain name jklmn.com.au; and
• the second trader registered the domain name or subsequently used it in bad faith.

c. Infringement of Registered Trademark

For an action under the Trade Marks Act 1995, the first trader must prove that:

• the domain name jklmn.com.au is “substantially identical” or “deceptively similar” to its registered trademark; and
• the domain name has been used in relation to the same or similar goods or services.

d. Passing off

In a claim for passing off, the first trader must prove the making of a misrepresentation by the second trader which -

• is made to prospective customers of goods or services supplied by the first trader
• is “calculated to injure” the business or goodwill of the first trader (in the sense that this is a reasonably foreseeable consequence) and
• causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a qua timet action) will probably do so.

d. Misleading and Deceptive Conduct

In a claim for misleading and deceptive conduct, the first trader must prove that the first trader engaged in conduct that was misleading and deceptive, or likely to mislead or deceive.

3. Not all options are not available to all traders

While there are some similarities between the various options above, there are some crucial differences which mean that not all of the options are open to all traders. For example:

• actions under the auDRP or in “passing off” require proof of some knowledge on the part of the second trader (either actual “bad faith” or “reasonable foreseeability”). In contrast, the second trader could breach the Trade Marks Act 1995 or the Trade Practices Act 1974 without having heard of the first trader;
• actions under the Trade Marks Act 1995 require the first trader to have a registered trademark, whereas the other actions do not; and
• actions under the Trade Marks Act 1995 require the trademark to be applied to similar goods or services, whereas the .auDRP doesn’t require any use whatsoever.

4. If I have a choice, which one should I choose?

Ultimately, how you proceed will depend upon the particular circumstances of your case, but there are a couple of considerations that apply to all cases.

In general, disputes referred for resolution under the auDRP are much less expensive than those decided by a court. They are also resolved much more quickly than court proceedings (usually being concluded in a matter of weeks).

On the other hand, a respondent who loses the case under the auDRP still has a right to sue in court, and therefore the complainant does not have complete control over whether the proceedings will end up in court or not.

Finally, as discussed above, the elements that you would need to prove under each different cause of action are different, and you might have better chances under one option than the other.