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Online infringement and counterfeiting - new practical and legal weapons at your disposal

Ask most brand owners about the risks their businesses face, and somewhere near the top of the agenda will be the issue of counterfeiting and online infringement.  Whether it is the sale of counterfeit goods via online marketplaces, or the registration and use of infringing domain names, brand owners are continually battling against online infringement.  However, with the launch of the new generic top level domains (“gTLDs”) and some recent case law from the US on the liability of online marketplaces, brand owners may wish to take advantage of new ways to protect their rights.

New gTLDs

Introduction

The launch, or ‘delegation’, of the first tranche of gTLDs took place at the end of October 2013.  Although some brand owners have already seized the opportunity offered by the new gTLDs with both hands, there will be those who have not fully appreciated the opportunities and risks for businesses.

Given the size of the shakeup and the impact it is likely to have on e-commerce, now is the time to think again about online strategy in order to ensure a strong foothold against online infringement and counterfeiting and, where possible, to exploit new branding prospects opened up by the new gTLD regime. 

What is all the fuss about?

The Internet Corporation for Assigned Names and Numbers (“ICANN”)’s plans for a new system of generic top level domains (to add to the established .com, .net, .org) have generated concerns regarding how rights holders might be able to protect against a flood of new infringers and infringements.  The new system opens up the door to third parties to register a seemingly infinite number of new domains which may in themselves infringe, or which may be used for unlawful purposes such as the hosting of infringing content or sale of counterfeit goods. 

However, the process could, in fact, be seen as a way for brands to exploit their existing trade mark rights and gain an even greater competitive advantage online. Although the cost of applying for a new gTLD is not cheap (and the first wave of applications has already closed), it might be an investment worth making in future; both in the hard cash returns from customer domain name renewals, as well as increasing brand awareness and loyalty.  It is also worth monitoring the release of new gTLDs, bearing in mind the opportunity to snap up domains ending in completely new ‘dot-strings’.

What to do and why?

So what else should rights owners be doing about gTLDs? You can register your trade marks at the Trade Mark Clearing house (“the TMC”), and once these have been verified, the idea is that you have effectively protected against third parties using your trade mark in domain registrations. This costs USD 150 per year per mark (with some savings to be made for long-term registrations).  However, the TMC will only notify you of other applications which are exact matches, so it is important to do your own in-house investigation and monitor applications being made.


What to apply for, if anything

With the advent of more than 1,000 new gTLDs, businesses should at least consider whether they wish, in future, to apply to own any new gTLD strings.  So far, the uptake has been varied, with some big businesses applying for a whole host of new gTLDs (Google, L’Oreal and Amazon, for example) whereas other major brands have kept a low gTLD profile, going only for their own brand name (Apple Inc. have applied for .apple, for example).  Another consideration is whether to try and register new domains ending in new open gTLD strings, as and when these become available.  Whether to cast the net wide is, of course, a commercial consideration and each business has a number of options:

1. Brand gTLDs

The obvious choice for many brands has been to just apply for their trade mark(s) or flagship brand(s) as a gTLD.  A branded gTLD string is a valuable asset to add to an IP portfolio and is likely to provide the public with an easy and obvious verification that websites with that gTLD are legitimate. 

2. Sector gTLDs

Another approach is to concentrate on a sector that is particularly applicable to your business, which will help internet users easily associate you with your business strengths and focus.  For example, gTLDs like .clothing, .wine and .hotel have all proved popular, with conflicting applications for each. Applicants seeking ownership of such gTLDs will now be subject to String Contention procedures (in general, by way of inter-party settlement, an independent evaluation or even an auction), but once launched, there is likely to be opportunity for other businesses to buy domains ending in these strings.

3. Emotive gTLDs

One way to inspire good feeling from consumers might be to adopt gTLDs which encourage an association with security, quality, or efficiency.  For example, applications have been made for .secure, .protection, .luxury and .now.

4. Geographical gTLDs

These have already proved popular, with applications for .paris, .tokyo, .swiss and .africa being made, amongst a host of others.  The idea is to capture the attention of, and appeal to, groups defined by location or language, so that an entirely new geographical market can be targeted by a brand.

Counterfeiting, the internet and the new gTLDs

Third parties’ new gTLDs

It has long been known that counterfeit goods are available, if not rife, on the internet. While pre-emptively applying for gTLDs, such as those described above, will hopefully go some way to protect brand owners against the damage that might be caused by infringers seeking to exploit the new gTLD roll out for their own purposes, the importance of vigilance and swift action will remain paramount once the new gTLDs go live.  Brand owners should be aware of these gTLDs and keenly monitor the progress of any such applications in an effort to restrain the registration of infringing domains and/or counterfeit or otherwise infringing online sales.  The list of applications and their status can be viewed on the ICANN website.

Hosting sites

There are also the usual concerns to think about relating to counterfeit sales over the web, and in particular via online auction and marketplace websites such as eBay and Alibaba.  These sites provide forums for counterfeiters, but legal action brought by brand owners against such sites on both sides of the Atlantic has usually failed to eradicate the sale of counterfeit goods on the sites concerned.  For example in L’Oreal v eBay, a case referred to the CJEU by the High Court, and also in Tiffany v eBay in the US , eBay was not held to be primarily liable for the sale of infringing goods on its website. 

However, other cases have been decided in favour of the brand owner. Until recently, the most notable example was Louis Vuitton’s success against eBay in the French courts. However, in October 2013, the US courts found TradeKey, the largest B2B website after Alibaba, liable for contributory trade mark infringement and granted an injunction against the sale of counterfeit products on the site.  That decision, in particular, indicates that where the business operating the hosting or auction website has an active involvement in the compilation of and content of listings (for example by offering optimisation tools to infringers), and where the website does not have in place systems whereby rights holders can swiftly and easily register a complaint, they are at risk of being found liable for trade mark infringement. 

As ever, the best way to deal with infringing listings on such sites is to regularly monitor the sites and act promptly to notify the site of any infringing items or advertisements, providing as much detail and information as possible regarding the complaint and the rights relied upon.   However, the TradeKey decision described above might also give hope to rights-holders as to the prospects of claims made directly against the host website.

Conclusion  

The introduction of the new gTLDs is bound to be a time of change, and will, as ICANN admits on its website ‘affect most organisations’.  Therefore, now is not the time to hide away from such web-based evolution.  Rather, businesses should pay attention to the processes involved, and where possible take advantage of the changes.  If businesses act promptly, pre-emptively and commercially, they may minimise the risks and threats posed by online infringers and in fact take advantage of a system which in reality has the potential to benefit major brands.

Further, in the fight against counterfeiting and online marketplaces, brand owners can take heart from the TradeKey decision. While it is, to a certain degree, fact specific, it shows that the Courts (certainly in the US) are willing to hold marketplaces liable for trade mark infringement where they are not doing enough to protect the rights of brand owners.

For further information, please contact Jeremy Harris or Emily Nuttall.