Switzerland: Domain Name Grabbing And Other Domain Name Disputes Under Swiss Intellectual Property Laws

Last Updated: 27 September 2001
Article by Louis Rohner

Everybody has already heard stories about private persons registering famous trademarks as Internet domain names and then trying to sell them to the owner of the trademark. The most famous example is mcdonalds.com, registered by a journalist to serve as basis for his Internet article. It was released to Mc Donald's in exchange of a donation to a school. Very interesting is also the case of the domain name "altavista.com". In a Zurich newspaper (Neue Zürcher Zeitung) of August 7, 1998 it was published that a certain Jack Marshall has settled a two year old litigation with Digital Equipment and that Digital Equipment (now owned by Compaq) has paid as much as USD 3 millions for the domain name "altavista.com". Marshall had registered the domain name in 1994 in order to sell software. Thereafter Digital Equipment developed the famous search site "altavista" however always with the domain name "www.altavista.digital.com". Many users searched for altavista under the domain name "www.altavista.com" and then got the homepage of Marshall. Obviously that was not in the interest of Digital Equipment. Marshall now, after the settlement with Digital Equipment, has a new domain name "photoloft.com".

Now the question is whether the existing laws on intellectual property are sufficient to solve the arising problems of domain name disputes.

If you start reading an Internet address, you will see from left to right first the so called Top Level Domain Name (TLDs), of which there are four different for the time being:

National Top Level Domain Names (nTLDs) following the ISO Standard 3166, consist of a two letter country code (e.g. "ch" for Switzerland, "de" for Germany. The country code indicates in which country the server is located. The nTLDs are assigned by a national institution authorized by IANA (Internet Assigned Numbers Authority). In Switzerland, the authorized registrar is a high-school institute called SWITCH.

Special Top Level Domain Names (sTLDs), such as "gov", "mil" and "edu", are all reserved for American institutions (government, military, educational institutions). The reason why there are sTLDs for American institutions is that Internet was created for and by the American military department under the name of ARPANET.

Generic Top Level Domain Names (gTLDs), are "com" for commercial use, "org" for non-profit organizations and "net" for networks.

International Top Level Domain Name (iTLDs), "int" for international organizations.

Following the TLDs, you will find the Second Level Domain Name (SLDs) which you usually will recognize as the name or trademark for the company to the homepage of which you got. Those are the ones which create the bigger problems in domain name disputes, as they are freely chosen by the domain name holder.

The rapidly increasing number of domain name disputes throughout the world results from the Internet characteristics that each domain name is absolutely unique, but that slight differences, like the use of another letter in the SLDs, or of another TLDs (e.g. .ch instead of .com), are sufficient to allow the domain name to be registered. For example if Mc Donald's domain name is "mcdonalds.com" a competitor, or any other person could register "mcdonald.com" or "mcdonalds.ch".

It is an important aspect that domain names are registered under the principle: first come, first served and that the registrations offices do not and are not in a position to check out the legitimacy of the use of a certain domain name before registration.

Therefore, the question is, whether the trademark law or the unfair competition law also applies to Internet and especially domain names.

Swiss trademark law:

A trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Trademarks may consist, in particular, of words, letters, numerals, graphic representations, three-dimensional shapes or combination of such elements with each other or with colours (Section 1 of the Federal Law on the Protection of Trademarks and Indications of Source; LPM).

It is here that the first important difference between trademarks and domain names appears: As domain names can only consist in letters and numerals, graphics and colours will not allow to make a difference between two very similar domain names. Therefore, only the trademarks consisting in words and numbers, under exclusion of graphics and colours, might have the protection of the trademark law also for the domain name.

Once the user has registered his trademark, he has the exclusive rights to use it to identify the goods or services for which it is claimed and to dispose thereof. The owner of a trademark may prohibit others from using a sign that is excluded from protection under section 3, in particular from:

- affixing the sign to goods or their packaging

- offering the goods, putting them on the market or stocking them for such purposes under the sign,

- offering or supplying services under the sign,

- importing or exporting goods under the sign,

- using the sign on business papers, in advertising or otherwise in the course of trade (section 13 LPM).

A limit to this right only exists regarding the fact "that the owner of a trademark may not prohibit another person from continuing to use, to the same extent as hitherto, a sign that such person had already used prior to the filing of the application" (section 14 LPM).

For an owner of a trademark to have his sign protected under the trademark law against another's domain name, the trademark must have been registered prior to the domain name, in order not to fall under the exception of prior use mentioned under section 14 LPM.

Another important condition for the granting of the trademark protection is that the domain name containing the trademark must be used for the same goods or services for which the trademark is claimed. Therefore, the trademark law is of no use for the trademark owner against a person having the same or a similar trademark used as domain name and he may not prohibit the use of the domain name as long as it is not used for the same goods or services.

However, the trademark law makes an exception for "trademark of wide repute, for which the owner may prohibit others from using it for any type of goods or services if such use would jeopardize the distinctiveness of the trademark or would exploit or damage its reputation" (section 15 LPM).

Another condition is that the trademark must be used for commercial purposes. There is no prohibition possible against a private person who uses a certain trademark as domain name without offering or selling goods or services, or against a commercial use if the offered goods or services are not distinguished by this particular trademark.

The domain name must be registered as trademark and used for commercial purposes in order to have the protection of the trademark law.

In the above mentioned example, if a private person uses the domain name "mcdonalds.com" without commercial purposes, in Swiss law, Mc Donald's could not use the trademark law to prohibit the use of this domain name.

So the trademark law helps, but only under the condition that the domain name holder uses the trademark for commercial purposes and for the same goods and services it was registered for. The trademark law offers a quite restrained protection and is not extensive enough to cover all the different aspects of domain name disputes.

Unfair Competition Law:

In some situations, the registration and use of a domain name which is identical or similar to another party's trademark or tradename, may infringe the Federal Act Against Unfair Competition (UCA) which offers a larger protection than the trademark law.

In principle, "any conduct or business which is deceptive or in another manner violates the principles of good faith dealing, and which affects the relationship between competitors or between sellers and purchasers, is unfair and illegal" (section 2 UCA). "Acting unfairly is, in particular, whoever takes measures, which by their nature may cause confusion with the products, works, performances or the business of another" (section 3 d UCA).

There is no necessity to prove the effective confusion, and the measures must not have been taken on purpose or in bad faith with the aim of causing a confusion. This section also applies to a good faith situation, when the infringer does not knowingly choose a domain name which may create a confusion with the product of another party.

The Unfair Competition Act can also serve for the protection of the domain name owner, as even if the domain name is not registered as trademark, the unfair competition act will protect the name against the registration of a similar domain name by another party which may cause a confusion.

It will also be the Unfair Competition Act that will apply to the so called domain name grabbing situations, e.g. when the domain name holder has systematically registered various famous trademarks or tradenames as domain names and has attempted to sell those registrations to the respective trademark/tradename holders.

As explained above, in trademark law, one cannot act against a private person for the use of a trademark, if it is not used for commercial purposes.

However, this condition has not to be fulfilled according to the Unfair Competition Act, and especially under section 2, as nowadays an enterprise is affected in its relationship with other competitors or between sellers and purchasers if it cannot use its well known trademark or tradename as domain name. Therefore, under the Unfair Competition Act, an enterprise could act not only against a commercial competitor but also against a private person who has grabbed its trademark in order to register it as domain name.

The above mentioned case "mcdonalds.com" would, in Swiss law, have been resolved by the Unfair Competition Act.

It would also apply to situations, where a competitor or any other person chooses a domain name which is the same or similar to a trademark or tradename of another party, "in order to disparage their owner, their products, works or performances, prices therefore or their business dealings by false, misleading or unnecessarily injurious statements" (section 3a UCA). Mc Donald's, for example could rely on this section of the Unfair Competition Act if the above mentioned journalist had used the domain name "mcdonalds.com" for a homepage containing negative comments and statements about the Mc Donald's company or its products.

International aspects:

Intellectual property rights are limited to the territory for which they are registered. This principle complicates a lot the domain name disputes, which could otherwise, at least the bigger part of them, be solved by national laws. But Internet, and therefore domain names have effects all over the world without territorial limitation. On the other hand, a domain name is always unique.

For example a little local company somewhere in Scotland advertises on its homepage for different sorts of single malt Whiskey's that can only be bought in their shop and will not be mailed. On the other hand, you have a wool manufactory in Australia that has the same name than the whiskey shop in Scotland. Under trademark law and unfair competition law, there would be no possibility to prohibit the use of their name as domain name as they do not act in bad faith and are both owners of the same trademark, but for different goods and services and in different countries. But as domain names are unique, it is not possible for one of these two companies to use its trademark if the other has already registered it as domain name following the principle first come first served, and they will have to find a amicable solution.

In Switzerland, this has happened in the case of Winterthur, which is the name of a town in Switzerland as well as an important insurance company, whose headquarters are located in this town. Both of them had strong, especially commercial interest in using the word "winthertur" as SLDs. They found the solution in having a common homepage "winthertur.ch" with pictures of both the town and the insurance building and the mention "Please choose", and the surfer chooses by clicking on one of the pictures, whether he wants to enter the town site or the insurance site (www.winterthur.ch).

But if two competing companies trade the same goods under the same tradename, or if to a known trademark it is just added or withdrawn a letter or changed the TLDs to create a new domain name (e.g. "mcdonald.com" or "mcdonalds.ch" for "mcdonalds.com"), then a consensual solution will hardly be found and other solutions will have to be found on an international level where finding the applicable law and court, and the enforcement causes difficulties.

Therefore an International ad Hoc Committee has established a Memorandum of Understanding for gTLDs adding other categories in order to specify the ".com" gTLDs. You can find this Memorandum of understanding at www.gTLD-MoU.org.

It also contains proposals for mediation in cases where two parties have intellectual property rights to a name, but one was faster than the other for registering it, for administrative domain name challenge panels for cases of domain name grabbing, where one party has internationally known rights and for arbitration, where one party has rights but these are not internationally known.

This memorandum of understanding has e.g. been signed by the WIPO (World Intellectual Property Organization) who has also set up a WIPO Internet domain name process for the development of recommendations regarding certain intellectual property issues associated with Internet domain names (www.wipo2.wipo.int/process/eng/rfc.html).

As a conclusion, one can state that the Swiss Federal Laws on intellectual property allow to resolve almost all domain name disputes on a national level, but that on an international level, the process must go on in order to clarify especially the territorial competence and dispute prevention and resolution.

___________________________________________________________

This article was prepared by Rohner & Partner, attorneys-at-law, a Zurich based law firm dedicated to serving the needs of domestic and international business clients.

The content of this article was designed to provide general information on the subject matter covered. No legal or other professional advise is being rendered. Any liability or loss incurred as a consequence, directly or indirectly from the use or application of the information contained herein, is specifically disclaimed.

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