China – New Internet Domain Name Dispute Resolution Policy Imposes Two-Year Statute of Limitations

By Ryan M. Kaatz

The administrator of .cn domain names, China Internet Network Information Center (“CNNIC”), recently promulgated a revised dispute resolution policy governing .cn Internet domain names effective March 17, 2006. The rules include a unique provision that limits dispute resolution actions over potentially infringing domain names to two years from the date of registration. Otherwise, the new rules bring the resolution of disputes over .cn domain names more closely in line with generic top-level domains .com, .net and .org, which are governed by the Uniform Domain Name Dispute Resolution Policy (“UDRP”).

The new CNNIC rules add a two-year statute of limitations in Article 2 of the policy unique to .cn domain names. The relevant part of Article 2 states, “the Dispute Resolution Service Providers do not accept the Complaint regarding domain names with registration term of over (including) TWO years.” This means that the alternative dispute resolution policy does not apply to domain names that have been registered for more than two years. Intellectual property owners troubled by a .cn domain name registered for more than two years will be relegated to the Chinese court system. This is even more reason, as a result, for trademark owners to be watchful and diligent in policing .cn domain names that could infringe their rights, as use of the alternative dispute resolution procedure is limited by the new two-year term.

One article on Mondaq asserts that the new CNNIC rules otherwise strengthen the rights of intellectual property holders and weaken the opportunity for third parties to infringe those rights. However, a close reading of the English translation of the new rules reveals that the changes on balance only marginally disfavor intellectual property owners, actually bringing Chinese dispute standards in line with the UDRP.

The new rules narrow one of the circumstances that evidence bad faith registration and use of a domain name. The new rule states, “[t]he purpose for registering or acquiring the domain name is to sell, rent or otherwise transfer the domain name registration to the complainant who is the owner of the name or mark or to a competitor of that complainant, and to obtain unjustified benefits” evidences registration and use in bad faith. The new italicized language restricts the type of transactions deemed “bad faith” under the policy, because only those involving the trademark holder or a competitor of the trademark holder qualify. Before the addition of the italicized language, any attempt to sell, rent or otherwise transfer to any party could constitute registration and use in bad faith under Chinese dispute resolution practice. Still, the new language is strikingly similar to UDRP ¶ 4(b)(i), which states that evidence of bad faith registration and use includes “circumstances indicating that [the registrant of the disputed domain name] registered or … acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of [the registrant’s] documented out-of-pocket costs directly related to the domain name.” [Emphasis added]. The new, limiting language in the Chinese domain name dispute resolution policy renders establishing bad faith registration and use more difficult, but no more difficult than establishing the same under the UDRP.

The new .cn policy specifies what amount to affirmative defenses for .cn domain name registrants accused of registering or using domain names in bad faith. The policy provides circumstances that evidence the registrant’s rights to and legitimate interests in the disputed domain name:

1. Your use of the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services;
2. You have been commonly known by the domain name, even if you have acquired no trademark or service mark rights;
3. You are making a legitimate noncommercial or fair use of the domain name, without intent of or commercial gain to misleadingly divert consumers.

These are actually quite similar to the provisions of the UDRP:

1. before any notice to you of the dispute, your 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; or
2. you (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or
3. you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.

Another article on Mondaq contends that the changes in the policy for .cn domain names create difficulty for intellectual property owners to demonstrate that the registrant lacks rights to or legitimate interests in the disputed domain names. It asserts that a domain name registrant with an active website through which the registrant offers goods and services would establish the registrant’s rights to or legitimate interests in the disputed domain name. Actually, though, the UDRP has parallel provisions and in this respect the CNNIC’s new affirmative defenses do not disadvantage trademark owners more than the UDRP.

The most significant change in the CNNIC rules is the two-year statute of limitations, which could force an infringed intellectual property owner away from the alternative dispute resolution process and into a Chinese court. Trademark owners must be watchful and vigilant in their efforts to police domain names in China as a result.