On September 30, 2002, three new sets of rules concerning domain names became effective in China. The Ministry of Information Industry promulgated the PRC Rules for the Regulation of Internet Domain Names (the Domain Name Rules). The other two were issued by the China Internet Network Information Center (CNNIC): CNNIC Rules for Domain Name Dispute Resolutions (the Dispute Resolution Rules) and CNNIC Procedural Rules for Domain Name Dispute Resolutions (the Procedural Rules). The Dispute Resolution Rules replace the original CNNIC Rules for Domain Name Dispute Resolutions (Trial Implementation), issued in November 2000.
General Rule – First to Apply Has Priority
Article 16 of the Domain Name Rules provides that the first applicant for a domain name has the priority right over the other applicants and users. Article 17 further provides that a registration authority may provide a certain period of time during which the first applicant may extend its domain name registration to certain related words. Other than the aforementioned exception, no reservation of a domain name is permitted.
Exception – Infringement Upon IP Owner's Rights
The Dispute Resolution Rules set forth the following exception for the "first to apply" rule:
(a) if the domain name is confusingly similar to an existing name or logo over which another person has intellectual property right;
(b) if the owner of the domain name does not have the intellectual property right over the domain name or the principal portion of the domain name; and
(c) if the owner of the domain name registered or uses the domain name in bad faith. Bad faith is further defined as one of the following:
(i) the purpose of the ownership is to sell, license or otherwise assign the domain name to gain improper benefits;
(ii) repetitively registers other persons' name or logo as its own domain name to prevent such other persons from using its own name or logo on the Internet; or
(iii) registers or owns a domain name for the purpose of damaging another person's reputation, or to disrupt such other person's normal operation, or to confuse the identity with that of the other person, and to mislead the general public.
In addition, in the Several Issues Concerning the Application of Law to the Trial of Civil Dispute Cases Involving Computer Network Domain Names Interpretations issued by the Supreme People's Court (SPC) on July 17, 2001, the SPC also set forth additional circumstances under which a court may cancel a registered domain name:
(i) the domain name is identical or substantially similar to a "famous trademark" protected by the PRC Trademark Law, and if such a domain name registration or ownership is for a commercial purpose (it is unclear why "commercial purpose" is a factor here); or
(ii) the owner of the domain name fails to use the domain name after its registration, and has no intention to use it. Rather, the domain name owner's true intention is to prevent the IP owner of the name or logo from using such name or logo. Unlike CNNIC's Dispute Resolution Rules (see (c)(ii) supra), the SPC does not require a "repetitive pattern" to cancel the domain name registration under this circumstance.
Names Not Registerable
The Domain Name Rules also set forth a list of overly broad and undefined activities that are prohibited when using a domain name. The list includes: opposing the fundamental principles of the Constitution; endangering national security, exposing state secrets, engaging in sabotage against the government or threatening national unity; damaging national honor or the national interest; inflame hatred; creating or broadcasting false statements; defaming other persons; and broadcasting pornography, violence, gambling, horror, etc. These provisions show that the government is serious about strengthening its control on the media and promoting an official ideology.
Dispute Resolutions
Currently a domain name dispute can be resolved through one or two of following methods.
One possibility is arbitration through a CNNIC-certified domain name arbitration tribunal. Currently the China International Economic and Trade Arbitration Commission (CIETAC) and the Hong Kong International Arbitration Centre (HKIAC) are the first two arbitration organizations certified by CNNIC to handle disputes related to ".cn" and Chinese domain name disputes.
Another avenue open is arbitration through another arbitration organization. Although the Dispute Resolution Rules state that domain name disputes are handled by CNNIC's certified arbitration organization, the same rules also provide that the parties are free, by their own agreement, to submit a dispute to any other arbitration organization.
A third option is a lawsuit filed with a Chinese court that has the proper jurisdiction. Either party to the domain name dispute may at any time during the CNNIC-certified arbitration tribunal's proceeding, or within 10 days after it issues an arbitration ruling, file an arbitration application with any Chinese arbitration organization (if both parties so agree) or a lawsuit with the court having the jurisdiction over the district in which CNNIC is located (Haidian District People's Court of Beijing Municipality as the trial court, or the First Intermediate People's Court of Beijing Municipality as the trial court if the case is foreign-related).
As CIETAC or HKIAC arbitration is neither mandatory nor final, thus its effectiveness is questionable. CNNIC's decision to subject HKIAC's ruling to a Beijing local court's review also seems to be politically problematic. It is foreseeable that many parties will continue to directly submit their disputes to Beijing courts for final resolution.
A Loophole: Infringement Through Search Engine Registration
Bad faith registrations involving registration of website links with search engines, particularly Chinese language search engines, is rife. Some entities have registered their websites with search engines with words identical or substantially similar to a famous trademark or business name. If such registration is completed, when one uses such name or words to search, the search engine will offer results that are totally unrelated to the famous trademark or business name. So far there does not seem to be special legislation that would cover this violation. Someone seeking redress may try to use existing anti-unfair competition laws. The SPC also states that using a domain name similar to that of someone else in order to attract viewers to visit the wrongdoer's own website belongs to "bad faith" registration or use. See Article 5 (2) of the Several Issues Concerning the Application of Law to the Trial of Civil Dispute Cases Involving Computer Network Domain Names Interpretations. However, neither of them specifically and clearly invalidates such infringement acts through search engine registration. It would be more ideal to cover an offense in an Internet related law.