Governing Bodies

The International Assigned Numbers Authority (IANA) is responsible for the overall control of the DNS.  In 1993 The Internet Network Information Centre ( InterNIC ) was established in the United States by AT & T, General Atomics and Network Solutions Inc. to manage the registration of the generic TLD's.  Network Solutions Inc. (NSI) was initially given the task of allocating international registrations as well as those for the US.  Now , the non-profit Internet Corporation for Assigned Names and Numbers (ICANN) is responsible for administering the internet naming system for Latin based characters.  There is now considerable debate over which organisations have the right to register domain names in non Latin based languages.

Each country or territory has an authority for allocating domain names under the national TLD.  These domain names are allocated on a first to file basis.  In China, the China Internet Network Information Centre (CNNIC) provides domain name registration services, database input and information services for network subscribers.  CNNIC is currently working to be the registrar for Chinese character domain names.  Second level domain names are managed by the China Education and Research Computer Network Information Centre.

There are a number of different authorities in PRC who have responsibility for different aspects of the internet.  Details of some of the authorities follow:

Ministry of Information Industry (MII)

The MII was established in April 1998 to help develop China's nascent information technology industry.  The MII was created from the former bodies MPT, MEI and sectors of the MRFT, Aviation Industries of China and the National Aerospace Industry Corporation.  Those former bodies duplicated a number of services.  The creation of the MII sprang from a decision at the Ninth National People's Conference in March 1998 to streamline Central Government bureaucracy.  Those former bodies are described below together with details of other organizations.

The MII is relatively new and will take sometime to adjust to its responsibilities.  The MII is responsible for developing plans, policies and regulations for the industry, managing the nationwide network of long distance and local communication trunk lines, wired and wireless broadcasting and television networks.  "It aims to promote economic growth through invigorating such sectors as information products, telecommunications and software" said Wu Jichuan, the new Minster of Information Industries.

In early September 1999 Mr Wu was quoted as saying that the MII will adopt a "zero tolerance" approach to foreign investment in the local internet industry.  Whether this was an accurate quote, and if accurate how it would be implemented, is unclear.  Subsequent to this report MII officials sought to clarify that the comments were only directed at certain aspects of the industry and that there the government was reviewing the regulations with a view to possible liberalisation.  Notwithstanding this controversy some well known US companies have entered joint ventures with local Chinese parties in the internet industry.  Some analysts have said that China is turning a blind aye to such activity.  China.com, a portal supported by the Xinhua News Agency, has some foreign equity participation by virtue of its public listing in the US.  Foreign participation and access to the intenet is a sensitive issue since it could mean that local users will have unlimited access to unfiltered information provided by parties potentially beyond the control of the government.

In mid November 1999 the world internet community received positive news when the US and China announced that they reached broad agreement on the terms of China's entry to the World Trade Organisation.  Preliminary reports indicate that China will allow foreign investment in the telecommunications industry and also in the internet industry.  Whether this will result in total liberalisation or a partial opening with numerous restrictions is not yet clear.  The US Congress have approved the agreement and as at 1 September 2001 were lobbying two members of the WTO who had not yet indicated agreement.  Nontheless these latest developments have spurred foreign interests in the industry.

STATE COUNCIL LEADING GROUP ON INFORMATION (LEADING GROUP)

The Leading Group is a multidisciplinary task force comprised of representatives from 18 senior government organizations.  This body co-ordinates and supervises issues in connection with international linkups, such as drafting new legislation and the admission of new interconnective units.  It is also responsible for :

1. formulating policies and measures for the establishment, allocation and administration of China's internet domain names.
2. selecting, authorizing and abolishing administrators of top level and second level domain names.
3. supervising and inspecting the registration services of domain names at each level.

This body was established to take control of the telecommunications industry from the former Ministry of Post and Telecommunications.

MINISTRY OF POST AND TELECOMMUNICATIONS (MPT) - defunct, now absorbed by MII

• this body used to have exclusive control over telecommunications;
• was responsible for the international telecommunication gateway to China; and
• operated an interconnective network called ChinaNet.

MINISTRY OF ELECTRONICS INDUSTRY (MEI) - defunct, now absorbed by MII

• operated an interconnective network called Golden Bridge Network or ChinaGBNet

CHINESE ACADEMY OF SCIENCE (CAS)/STATE EDUCATION COMMISSION (SEC)

The CAS established the China Internet Network Information Centre (CNNIC) to assist the working committee of the Leading Group in the management and operation of the domain name system.  CNNIC's website can be accessed at:

http://www.cnnic.net.cn

The CAS and the SEC operate interconnective networks called CASNET and CERNET respectively. Users connected through CASNET or CERNET cannot conduct business activities.

PUBLIC SECURITY BUREAU (PSB)

This body is responsible for registering internet users, amongst other things.  It has been reported that the PSB in Anhui Province dealt with a number of internet related offence in July/August 2000.  These relate to embezzlement, cheating and pornography.  The PSB established a special Internet police unit to maintain order on computer networks.  The PSB are also responsible for monitoring the users of encryption technology.  The authorities are then likely to approve which foreign produced encryption technology it will allow.  This technology protects electronic communication from eaves dropping.  Many foreign businesses see this as an attempt to interfere with business.

XINHUA NEWS AGENCY (XINHUA)

• approves foreign news agencies disseminating information in China and is responsible for monitoring the content of such information.
• users of information provided by foreign news agencies must register with Xinhua.
• contracts between suppliers of foreign news and Chinese users need approval from Xinhua.

MINISTRY OF RADIO, FILM AND TELEVISION INDUSTRIES (MRFT) - partly absorbed by MII

• controls the use, installation, production, import and advertising of satellite receivers that can be used to access the internet.

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Provisional Legislation

China - Provisional Regulations of the PRC for the Management of International Networking with Computer Information Networks ( "Provisional Internet Regulations") came into force on February 1, 1996.  These regulations were amended on May 20, 1997.  Article 1 of the Provisional Internet Regulations state that the aim of the legislation is to ensure and promote the healthy development of China's internet and to strengthen the development of China's domain name system.  Under the regulations the Leading Group is given responsibility for co-ordinating and resolving issues concerning the internet.  Articles 7 to 11 set out the Structure of the Domain Name System in China.  Articles 12 to 19 deal with applications for domain name registration.  Article 13 of the regulations prohibits the use of the Internet to harm the state, reveal state secrets, or to produce, read, copy or transmit obscene information or materials.

Measures for Administration of Inward and Outward Channels for International Networking of Computer Information Networks became effective on April 9, 1996 as did Measures for the Administration of International Networking of China Net.

In addition, on June 3, 1997:

1. Administration of the Registration of Domain Names for the Chinese Internet Tentative Procedures; and
2. the related Implementing Rules

were promulgated by the National People's Congress and became effective on that date.

The regulations also required internet users to register with the PSB.  New regulations implemented on May 30, 1997 required all local organizations with access to the internet to obtain a licence in order to operate.

The regulations also seem to cover intranets; that is, in-house data communication systems. This however is a grey area.  Practically it is very difficult for authorities to monitor the information on intranets.

On December 30, 1997 the "Administration of International Linkups of Computer Information Networks Security Protection Procedures" was promulgated.

On 18 September 1998, the MII published The State Council Notice on Relevent Issues concerning Implementing a Business Permit System for operating International Connections to Computer Information Networks, ( the " Notice") which became effective on 1 Nov.1998.  This implements a permit system for accessing international computer networks and a licence to carry out international connection business.

It has been reported that from 1 Januray 2000, China's " state secret " law has been extended to information on the internet. This provides that information provided on the internet may be checked by the state Bureau of Secrecy.  There is a prohibition on transmitting "state secrets" over the internet.  Web sites that do not safeguard against breaches may be closed.

On 7 September 2000 the State Administration for Industry and Commerce (SAIC) issued the "Provisional Regulations on the Registration of Web Site Names" and implementing rules.  These regulations were effective on 1 Sept. 2000.  These were intended to standardize the registration of Web site names and protect the legitimate rights of site owners.

The regulations give the Beijing Municipal Administration for Industry and Commerce the responsibility for the registration of Web site names throughout China.  The Beijing Municipal Administration for Industry and Commerce planned to officially launch its own online work platform in September 2000 with the intention of allowing applicants to file application forms using the Internet.

China published sweeping new regulations on Internet companies on 2 October 2000. These regulations limit foreign investment, require strict surveillance against "subversive" content and

threaten to close down any unlicensed firms.  Companies are to be held responsible for blocking illegal content on their websites.  Internet content and service providers are also required to keep records of all the content on their sites and details of users for 60 days.

Comments on the practical aspects of applying to register your domain names follow.

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Application

Article 6 of the Provisional Internet Regulations state that an applicant must be a registered entity in China that has independent civil liability.  One service provider has indicated that a Hong Kong entity may apply but this is yet to be confirmed.  A foreign applicant wishing to apply for a domain name under the "cn" domain in theory must have a branch or representative office registered in China.  At least one PRC domain name service provider advertises that it can help to work around this requirement.  Further, a foreign applicant must have an internet account with one of the Chinese internet service providers.  Under the provisional measures a number of restrictions apply.  For example, unless otherwise approved a domain name cannot contain:

1. words such as China or national
2. the names of administrative divisions at or above county level
3. the names of a foreign country, a foreign place or an international organization
4. the generic name of a commodity or industry
5. a trade mark or enterprise name registered in China

Article 25 of the Provisional Internet Regulations allows the owner of a registered name or mark to object to a third party applying for a domain name including that registered name or mark.  Once a complaint is made and ownership approved the management agency will keep the domain name in the system for 30 days.  If no resolution can be reached after that period the domain name will be terminated.  The management agency is not liable for any losses arising from the dispute.

Whilst a registered domain name may be amended or cancelled it cannot be transferred or sold.  It is unclear how these procedures will be implemented since they have only recently been put into place.

Potential users of the internet must apply for a licence with the PSB, fill out an Internet Access Responsibility form and approach one of the thousand + Internet Service Providers (ISP) such as ChinaNet, Golden Bridge Network, CERNET or CASNET for access.  A decision on whether to grant a licence should be made within ten days of receipt of the information.  Managers of the PRC ISPs have ambitious plans to improve research, provide commercial services and disseminate information about the country.

The Chinese government is also very sensitive to dissident web-sites and have closed down several prominent pro-democracy sites.  The organisors of such sites risk arrest and imprisonment.

In January 2000 the authorities made web site owners liable if state secrets were posted on or transmitted through their web sites.

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Disputes

In August 1999 the author assisted a corporation to cancel a domain name by making approaches to the domain name management agency, the CNNIC.

The first judgment in a Chinese Court case (Kelon Group v Wu) relating to domain names was reported by the Beijing daily in June 1999.  The defendant (Wu) registered a domain name (kelon.com.cn) which is identical to the plaintiff's trade mark.  The defendant approached the plaintiff for the purpose of exacting payment from the plaintiff by intentional acts of bad faith.  The Court ordered that the defendant be restrained from using the 'kelon.com.cn' domain name.  It is reported that the judges emphasize the 'bad faith' of the defendant.  Nonetheless bearing in mind the Rules, the Court could have based their Order on the fact that the defendant appropriated Kelon's registered trade mark.  Of course you will note that no real defence was raised.

On June 20, 2000 the Beijing Intermediate People's Court ordered Beijing CINET Information to stop using and cancel the domain name ikea.com.cn immediately.  This followed a complaint lodged by the Dutch company Inter Ikea Systems B.V.(" IKEA") against Beijing Guowang Information Company ("BGIC").  IKEA had registrations in China for its IKEA mark dating back to 1983 and had over 150 IKEA branded stores in over 28 countries around the world.  The court decided that the IKEA mark was a well-known mark which should enjoy protection under the Temporary Regulations for China Internet Domain Name Registrations, Paris Convention and under the Anti-Unfair Competition Law.

It has been reported in the INTA Bulletin ( Jan 1, 2001 Vol. 56, No1 ) that Proctor & Bamble Co, and E.I. DuPont de Nemours & Co succeeded in convincing the Beijing No. 1 Intermediate People's Court to order that the registrants (Tianda Electronics Group and Guowang Information Co) to return the domain "tide.com.cn" and "dupont.com.cn".

The Court recognised that the marks are well known trademarks and that registration violated the Trade Marks Law and the Anti - Unfair Competition Law.

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Action

To minimise the likelihood that a third party will register their domain name, companies should register their name and common variations of their name.  In the case of companies having a well-known product or service mark, consideration should be given to registering the mark used in relation to the product as a domain name.  Other names which may be relevant are slogans, book or song titles, professional designations and variations on those names.  Failure to do this in a timely manner has given many unscrupulous parties the opportunity to register many well-known marks.

In some cases the apparent pre-emptive registration may be quite legitimate since the registrant may have rights to the name or trade mark in relation to a totally different field of goods or services.  Unlike the trade mark registration system, the internet does not have any division according to the class, and in the case of China sub-class, of goods or services.

Trying to recover the use of your name in any one of more than 200+ countries that register national domain names is time consuming and costly.  Further, the result is not always positive.  There are some companies who will assist to register names in all the main markets and also monitor the internet for the registration of names which are identical or similar to yours.

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Domain Name Policy/Infringements - International Context

Although there is a profusion of different bodies potentially governing different aspects of the internet the different bodies have so far been reasonable in exercising their authority.  This can perhaps be attributed to the complex distribution of authority, the reluctance to hinder the development of the internet industry and China's bid for WTO membership.

Xinhua monitors incoming information by taking samples.  It is unclear as to how Xinhua interprets phrases like "unsuitable" or "undesirable information".  The interpretation and enforcement of such phrases can be potentially used to exert government control or censorship on information flowing through the internet.

Disputes - Another case which had an internet aspect relates to the use of the trade mark "TH-OCR" in relation to software. By way of background in 1993 a Chinese company named Wentong Co. applied to register the trade mark TH-OCR.  The component OCR is commonly understood to mean "optical character recognition" which was in fact descriptive of a character of the software.  Another Chinese organisation, Tsinghua University Technology Development Company ("TUT") (the predecessor of Ziguang Co.) opposed the TH-OCR trade mark on the basis that the TH portion was similar to portions of its own "TIANHAI and Device" mark and because the component "OCR" was descriptive.  It is interesting to note that TUT and Wentong are both units of the Tsinghua University.  The opposition was dismissed and the TH-OCR mark proceeded to registration in relation to computers, peripheral equipment and fixed software.

In early 1994 there was an agreement between Wentong and Tsinghua's successor Ziguang Co. to jointly market Tsinghua OCR products.  The characters Tsinghua OCR and TH-OCR appeared on the display screen of the products sold. It then appears that there was a falling out between the parties.

Subsequently Ziguang marketed its own software together with another local co. Beijing Information Engineering Institute under the name ZIGUANG OCR.  The ZIGUANG OCR trade mark was used on packaging and in advertisements.  The wording "TH-OCR Installation System" appeared on one window.  The name "TH-OCR" appeared on the top and bottom of another window.  The trade mark TH-OCR was not on any of the packaging or any related literature.  This case was ultimately settled with Ziguang agreeing to pay Wentong for using the TH-OCR mark.  Even if the case was not settled, the court would probably have found that there was an infringement of the registered TH-OCR mark relying on established trade mark law principles relating to use of trade marks.

Existing laws relating to trade marks and copyright may deal with some infringement scenarios.  There are however an increasing number of new intellectual property infringement issues involving the internet which have recently arisen in the west and are only just being considered.

Although this is not meant to be an exhaustive list some of the issues which need to be considered are:

("HTML") code which allows search engines to classify the contents of the web site. These codes are not visible on the user's web page.  Hence if a trade mark is used as a metatag a search engine looking for web sites containing the trade mark will also locate a web site using the metatag.  In the US, Playboy Enterprises were able to obtain a temporary restraining order to prevent a defendant using the name "Playboy" as a metatag.  The court found that there was a likelihood of success in trade mark and unfair competition actions.

A UK court in the "Road Tech Computer Services v. Mandata Ltd" case (2000) determined that the use of a mark as a metatag constituted trade mark infringement and passing off.  For more details see below under UK.

No doubt, as China's internet usage develops some or all of these issues will arise.

It is therefore instructive to consider the policies and approaches taken in other countries around the world.  This is beneficial because some of the principles could be raised in China and also since the internet is generally accessible to everyone.  Hence, when faced with a problem, the plaintiff may wish to consider the most appropriate forum to take action in.

Hong Kong - the HKNIC has developed a policy relating to the use and registration of domain names.  An applicant is required to warrant that :

1. it has the right to use the domain name;
2. it is not seeking to use the domain name for any unlawful purpose, including passing off, infringement, or for otherwise confusing or misleading anyone; and
3. its use of the proposed domain name does not interfere with or infringe the intellectual property right of any third party in any jurisdiction.

The HKNIC may take action to remove a domain name if presented with evidence that the domain name registered violates the rights of a third party in a registered trade mark or service mark.  The HKNIC will also consider the claim of the applicant to the mark.  The HKNIC may put domain names on "Hold" in certain circumstances pending determination of any dispute.

Further, if an applicant does not use a domain name within any period of 90 days he may be requested to relinquish use of the name.

The latest policy statement of HKNIC is to be found on the internet at:
ftp://ftp.hknic.net.hk/pub/netinfo/hknic-domain-policy

In Hong Kong legal proceedings were filed relating to the registration of the letters "MTRC" as a domain name.  The letters MTRC are probably best known as the abbreviation for the Mass Transit Railway Corporation which is the company which provides the underground service in Hong Kong.  This case was settled just before the trial. We therefore have to wait for the first judicial pronouncement in Hong Kong on how traditional laws relating to passing off and trade mark infringement will apply to the internet.

We understand that a well-known publicly listed company recently paid HK$250,000 to wrest a domain name from the control of a prior registrant.

Probably the most serious problem for trade mark owners in Hong Kong and throughout the world is domain name extortion.

Germany - In Germany the Deutsches Network Information Centre ("DE-NIC") is responsible for the German TLD "de".  Associated members of DE-NIC allocate domain names. The DE-NIC does not have a domain name dispute policy.  In the absence of any such procedure the only effective forum for relief is the court.  The plaintiffs traditionally had to rely on provisions of the German Trade Marks Act and the German Act Against Unfair Competition.

By way of example, the Federal District Court of Dusseldorf recently supported Epson Germany GmbH's claim to the domain name "epson. de".  The court stated that Epson's rights in the EPSON trade mark was sufficient to base a claim for the removal of a third party's prior registration of the domain name.  The court noted that the defendant had offered to release the domain name for a fee.

An issue arose in June 1997 when the local head of the ISP Compuserve was arrested and charged with the criminal offence of breaching Germany's Censorship laws.  It was alleged that Compuserve provided access to news groups which displayed pornographic material, amongst other things.  Fortunately for Compuserve parliament was already considering issues relating to the internet.

On 15 June 1997 the German parliament enacted the "Federal Act Establishing the General Conditions for Information and Communication Services".  This law became effective on 1 August 1997 and was aimed at regulating communications media.  It set out rules relating to the liability of internet service providers, rules for data privacy and established a system for digital signatures.  ISP's are now only potentially liable for materials which are accessible over their networks if they have knowledge of the contents and if it is reasonable to restrict access.

United Kingdom - In the UK a company named Nominet UK is responsible for allocating domain names and also assisting to resolve disputes involving the use of a domain name.  On learning of a dispute a Senior Executive member of Nominet UK will try to determine whether it can be resolved.  Nominet UK have the power to suspend a domain name in certain circumstances.  The most frequent complaint relates to claims that a particular name will cause confusion amongst users.

If the initial investigation does not lead to an agreed resolution Nominet UK will consider whether to suspend use of the name.  If either party is unhappy with the decision of Nominet UK (to suspend or not to suspend) he may refer the decision to an independent expert for consideration.  Nominet UK maintain a list of independent experts who will be consulted on a rotational basis.  The expert will render a decision within one month of receipt of all the papers.

If either party is still dissatisfied they may request review by the Nominet Alternative Dispute Resolution Service, which is administered by the Centre for Dispute Resolution.

If one of the parties does not wish to enter this process they may pursue their claim by litigation through the courts or by arbitration.

Nominet UK has a home page at:
http://www.nik.uk

The UK domain name registry policy is accessible on the internet at:
http://www.nic.uk/nominet/terms.html

In January 1997 there were about 40,000 domain names registered with Nominet UK.  Up until about November 1997 there have only been disputes relating to about 50 names and the majority of these have been settled quickly.

In 1997 the UK High Court ordered that a registrant transfer the domain name "harrods.com" to the famous London department store of the same name.  The High Court held that the registration of the name was an infringement of Harrod's registered trade marks as well as passing off.  It should be noted that the defendant did not contest the action.  Whilst it may appear that the famous HARRODS mark should be protected some commentations questioned what the basis of the decision would have been if the defendant did not intend to use the domain name on any goods or services.

This question was answered by the Court of Appeal on 27 July 1998 in a case relating to the piracy of well-known trade marks by a company called "One in A Million".

The facts of the One in A Million case are that the Defendant registered a number of well-known brand names as internet domain names.  The six plaintiff's (Marks & Spencer, Sainsbury, Ladbroke, Virgin, BT and Cellnet) commenced proceedings for passing off and trade mark infringement.  The defendants argued that since they did not trade under the names, did not have an active web site or intend to sell the names for an illegitimate purpose that there was no basis for action.  In fact the defendant's did try to sell the names for considerable sums to the true owners.

The single judge at first instance, Sumption QC found that there was trade mark infringement and passing off.  On the issue of passing off Sumption QC decided that the mere registration of domain names without a threat to cause deception was not passing off, but found on the facts that there was evidence that the defendants threatened to pass off.

The Defendants appealed.  The Court of Appeal confirmed the result and it is said that the principles upon which the decision was based went further than the first instance decision insofar as:

• it said that the creation of an instrument of deception is actionable.
• it said that the registration of a distinctive name makes a representation to persons who consult the register that the registrant is connected or associated with the name registered and thus the owner of the goodwill in the name.  This has implications for the spurious application and registration of names on the trade marks register.
• it appears that the court recognised dilution as a separate head of damage even if there is no confusion.  UK Courts have gone both ways on this point in the past and may continue to do so until the House of Lords is required to make a determination.

The decision in the "One in A Million" case is consistent with the approach taken previously by US courts to prevent pirates from benefitting from registering trade marks of well-known businesses, or cyber-squatting.  This was relatively easier in the United States where laws against Dilution were already in place.

Copyright in traditional works are also protected in cyberspace in the United Kingdom.  Hence where a party makes unauthorised use of the copyright text, graphics and sounds of another party an action will be available for copyright infringement.  Some commentators have stated that since the law in the United Kingdom is rather limited at this point, attention will be paid to how internet issues have been considered in the United States.

Unlike in Germany, internet service providers in the UK remain liable for copyright infringement.  This is because under UK copyright law the storing of information constitutes reproduction. This is particularly important for plaintiffs because the party initially commissioning the work may have few assets.

Metatags - In the first case of its kind in the UK courts, a company has been ordered to pay damages of ¢G15,000 (and costs) for using a rival's trade mark on the Internet by the use of metatags.  Mandata included the registered trade mark of its competitor Road Tech in its metatags.  After this was discovered in September 1999 and Road Tech began proceedings for trade mark infringement and passing off.  The names were removed from the website.

Road Tech sought judgment on admissions in respect of the trade mark infringement and summary judgment on the passing off claim.  Master Bowman held that Road Tech was also entitled to summary judgment in respect of passing off, no positive defence or serious challenge having been put forward by Mandata, amongst other things.

United States - The United States dominates the internet because the system started there and it has the most number of users.  It is therefor relevent to consider both the administrative and judicial approaches taken in the US.

Administrative. In about 1995 NSI established a policy for trying to deal with conflicts between domain names and trade marks.  Essentially, the NSI will consider allegations of trade mark infringement, provided there is proof of a valid trade mark registration.  One obvious problem is that in many countries rights to trade marks can also be acquired through use alone not simply through registration.  The NSI policy does not take account of common law rights developed through use.  Further, a trade mark registration may not cover the specific goods or services on which the domain name is used.  No applicant for registration will be challenged until a third party complains.  The NSI policy can be located on the internet at:
ftp://rs.internic.net/policy/internic/domain-4.txt

A new policy became effective on 25 February 1998.  The new policy clarifies the previous policy. Many parties have complained that the NSI policy for domain name dispute resolution and the domain name registration process is unsatisfactory.  One complaint is that neither NSI nor any other NIC should make decisions in the event of dispute over domain names.  This is because the bodies are not experts in determining who has rights over such valuable business assets.  Issues relating to whether one trade mark or copyright work infringes another can often be difficult for lawyers practising in the area let alone for administrative bodies who were set up simply to allocate names.  Indeed, the initial assumption of the NSI and a number of other registries was that domain names have no legal significance but were only addresses to specific sites on the internet.  The NSI policy is quite rare because most countries around the world do not have a dispute policy.  This non-interventionist approach is consistent with a statement by SANA in 1994 that the registration authority has no role in adjudicating disputes other that to provide contact information to the parties.

As at mid November 1999 the NSI indicated that it would no longer institute its own domain name dispute policy nor would it put domain names on hold.  The reason for this is that the NSI will institute ICANN's Uniform Domain Name Dispute Resolution Policy ( "UDRP") from 1 January 2000.  Hence after 1 January 2000 it will be necessary to rely on the UDRP or revert to civil litigation.

On January 30, 1998, the United States Government proposed that:

• a new private not-for-profit company manage the allocation of internet names and addresses.  This new body is called the Internet Corporation for Assigned Names and Numbers ( ICANN)
• NSI would lose its monopoly as the maintainer of the Internet and assignor of domain names
• five new domain name registries will be established.  Each of these new registries will be responsible for one new TLD.

Judicial disputes relating to internet names on other legal grounds must be settled in court or by negotiation.  There have been a number of internet related cases filed in the United States.  Some of these have been be settled out of Court because of the uncertainty of the result at trial and in some cases because one or both parties did not wish to embroiled in time consuming and costly proceedings.  The Courts have found that :

1. there was trade mark infringement based on a likelihood of confusion between a domain name and a third party trade mark.  This has resulted in court orders preventing the use of domain names.
2. a traders rights have been diluted through the use of a domain name with a resulting prohibition order.  Under the Federal Trademark Dilution Act ("Dilution Act") the owner of a famous mark may prevent the dilution of the distinctive quality of the mark.  There is no necessity to show that there is any likelihood of confusion mistake or deception; or even that there is any competition between the parties.  To that extent the rights available are much broader than those traditionally available in common law countries like the United Kingdom and Hong Kong.  The owners of the Toys "R" Us mark successfully took an action under the Dilution Act against a trader using the name "Adults R Us" in relation to sexually explicit products.
3. in some cases they have no jurisdiction to hear a case.  The issue of jurisdiction is very important in the United States since there are specific state long-arm statutes.  These statutes generally require that a non-resident has a sufficient minimum contact with the forum state for there to be personal jurisdiction and that due process is respected.  The Due Process Clause of the Constitution sets the parameters of the courts power to exert personal jurisdiction over a non-resident.  The purpose is to allow potential defendants to order their activities with some minimum assurance as to where their conduct may render them liable to suit.

Certain states may also require additional pre-conditions to be met before a court has jurisdiction.  For example, the Texas long arm statute requires that a tort be committed inside Texas.  The New York long-arm statute requires that the defendant could reasonably foresee that his action would cause injury within the state and that the defendant derived substantial revenue from interstate or international commence.  It does not matter where the tort was committed.  In 1997 the Federal District Court for New York held that it did not have personal jurisdiction over a resident of Missouri who simply made information available over a passive web site.  It was said that the mere creation of a web site which is accessible worldwide was not purposefully directed at the forum state.

On the other hand the Courts in Connecticut and Louisiana have found that they have had personal jurisdiction in cases where a non-resident defendant maintained a passive website on the internet.

One of the most recent decisions was handed down in the Hornel Brewing Co. v. Sioux Tribal court case on January 14, 1998.  This case considered the unauthorized use of the name "Crazy Horse" on whisky.  This whisky was promoted on an internet site accessible on the internet in the state of South Dakota.  The original Chief Crazy Horse was a Sioux Indian.  The Eighth Circuit Court held that there was no jurisdiction to hear the case.

Some commentators have argued that there should be a specific standard relating to internet issues but so far neither the congress or the majority of the courts have seen fit to dispense with the current due process model.

Having regard to the potential for Plaintiffs to join InterNIC as a defendant in an infringement action an applicant for a domain name must undertake to indemnify it against any cost and damages awarded as a consequence of such use.  A law was introduced in the US exempted Internet Service Providers from direct copyright infringement or vicarious liability actions based solely on transmitting or providing access to materials on-line.

The United States Congress and the Senior Advisor to the President for Policy Development have been considering issues relating to the development and regulation of the internet.  On 30 January 1998 the US Department of Commerce issued a discussion draft entitled "A Proposal to Improve Technical Management of Internet Names and Addresses".  This proposal is aimed at privatising the control of domain names through the creation of a new not-for profit corporation.  Details can be seen on:

http://www.ntia.doc.gov/ntiahome/domainname/domainname130.htm

The International Trademark Association (INTA) have been very active in lobbying those two bodies.  The thrust of the INTA submission is that the current NSI dispute policy should be improved and that the concept of "deadwood" non-used should be redefined to eliminate SLDs which are not used.  Essentially, the INTA believes that any disputes should be left to the courts and trade mark tribunals.

The issues which have arisen show that the current laws in the United States and other countries around the world are inadequate to deal with all the problems.  One reason is that the technology has advanced much more rapidly than the laws in each other country.  Even if countries do pass legislation or courts make pronouncements regarding how an issue should be dealt with, it does not mean that the legislature and judiciary in each country will adopt the some approach. Within the states of the US there are different approaches to when jurisdiction is proper.  On the international level these jurisdictional questions are magnified.  Even without the internet there have been and are vexed questions on jurisdiction and who is the rightful owner of a firm.  Since the internet is a medium which does not heed political or geographic boundaries it would be beneficial for there to be an international agreement which unifies the approaches.

The World Intellectual Property Organisation (WIPO) made a recommendation to ICANN in April 1999 that there be:

• a minimum " best practices" code for domain name registrars and the collection of details of all applicants for domain names.
• mandatory dispute settlement procedures to deal with cases of bad faith and and the abusive registration of domain names.

International Ad Hoc Committee (IAHC)

This was a task force set up by the Federal Networking Council (FNC), Internet Society (IS), Internet Architecture Board (IAB), Internet Assigned Numbers Authority (IANA), International Telecommunication Union (ITU), World Intellectual Property Organization (WIPO), the International Trademark Association (INTA) and others to enhance the administration and use of international Top Level Domain names (iTLD), eg. com, .org, .net.  These iTLD's are more appropriately called "generic" Top Level Domain names (gTLD).  In undertaking this task the IAHC sought to balance administrative fairness, operational aspects and the protection of intellectual property rights.  The IAHC has a very useful website at:

http://www.iahc.org

The IAHC decided that seven new TLD's should be created.  This is intended to increase the level of competitive supply and access to these name spaces.  The IAHC has also recommended that the new gTLD's be operated in a shared fashion by a number of domain operators.  This is anticipated to improve the service to consumers.  The steward for the new gTLD's will be a Council of Registrar's (CORE) who are comprised of the different gTLD registrar's.  There is controversy as to whether the new plan would aid or worsen the problems.  The IAHC was dissolved on May 1, 1997.

At the moment the plans for new gTLD's have been deferred.

There is now an ad hoc coalition named IFWP (the International Forum for the White Paper) whose purpose is to form a new IANA.  One of the concerns which has been raised is that the new non-governmental agency will be controlled by the interests it is intended to regulate.  At the moment there is no consensus on who should select the Board members nor on who should be the Board members.

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Arbitration

The World Intellectual Property Organisation Arbitration and Mediation Centre (WIPO-AMC) offered itself as an arbitrator of disputes relating to domain names and trade marks in an open communication on the internet on June 18, 1997.  The service is available through WIPO-AMC's web site at : http://arbiter.wipo.int and it will allow the parties to communicate electronically.

Disputes may also be heard by national arbitration centres.  The dispute between Princeton Review and Stanley Kaplan Review over the registration and use of the domain name "kaplan.com" was launched in the court then subsequently transferred to arbitration.  The ultimate result was that Princeton had to relinquish the "kaplan.com" name.

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Trade mark registration of domain name

China - The Trade Mark Office will accept domain names for trade mark registration.  Of course proprietors would not be able to claim rights to generic or descriptive elements.

The internet also tests traditional thinking on the registration of trade marks.  Trade marks in China must be capable of graphic representation; that is, they must be capable of being fixed on paper.  Three dimensional marks and sound and smell marks are excluded from registration unlike in Hong Kong.  Some trade marks on the internet are presented in three dimensional form which move when they appear on the web site.  The visual portion of the mark may also be accompanied by sounds when the mark appears.  The owner of the trade mark could apply for a static picture of a portion of the three dimensional mark but this would not fully represent the trade mark.

A draft new Trade Mark Law is being circulated in China at this time.  A new law is anticipated to be in effect sometime in 2001.  This new law may include a broader definition of what may be registered as a trade mark.

Hong Kong - Many domain names have been accepted for registration as trade marks.  Of course they have been endorsed with a disclaimer of the non distinctive elements like ".com".

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Other issues

In this paper, I have tried to set out some of the:

1. authorities, laws and regulations relating to the internet in China; and
2. some of the issues which must be dealt with relating to use of intellectual property on the internet.

As users, or potential users of the internet, there are a host of other issues which arise through the use of this new medium.  For example, how secure is the open and closed network environment?  The fact that most communication takes place on an open network means that messages can be intercepted, manipulated, reproduced, stored and distorted.  There is no way of knowing whether the purported sender actually sent it.  To increase security western companies are looking at cryptography methods for making documents secure and also for confirming digital signatures.  At the moment the level of cryptography technology made available to China is limited.  The issue of security has a strong impact on the development of electronic trading.  Assuming the recipient accepts the authenticity of the digital signature, another question arises as to the legal effect of exchanging documents carrying such signatures.  The laws vary in different countries, in states within countries (eg US) and in numerous other countries it is not absolutely clear.

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Action

We recommend that companies:

• register their company name, trade marks, slogans and event names and pinyin version of the chinese names as domain names as soon as possible.
• register their trade marks on the Trade Marks Register in all countries where their goods or services are available or offered
• exercise caution before advertising their goods or services on the internet. Countries such as China have stricter laws relating to advertising than in most western countries.  For example, something which would be regarded as being advertising hyperbole in the west [eg a pronouncement that "Acme is the best beer in the world"] would not be technically acceptable in China
• place a watch on the internet to detect any infringements or dilution of their rights at an early stage
• ensure that their own web pages do not infringe the rights of third parties
• prepare and circulate an e-mail code of conduct to all computer users in their company.  This should set out such things as what types of messages and personal data can be sent on the internet and who they may be sent to.  For example, users should not produce, retrieve reproduce or disseminate information that would hinder public security or that is obscene or pornographic.

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The Future

Government officials in China are aware of the importance of the internet, e commerce and telecommunications to the future of business in China.  Indeed in 1998 the Ministry of Foreign Trade and Economic Cooperation created the web site www.chinamarket.com.cn which was the first official export oriented e commerce web site. It has been estimated that the revenue for internet service providers in China could grow to more than US$4 billion by 2003.  The level of awareness of the importance of e commerce and domain names to particular companies and to the Chinese economy as a whole will only increase.  Given the population China has the potential to become one of the world's largest markets for e commerce and the use of domain names.

These comments are provided in general terms only and should not be relied on when considering specific actions.  The law and practice relating to intellectual property rights on the internet is developing rapidly so we recommend that you seek up to date professional advice before deciding on or altering any course of action.  Please contact Barry Yen on 22309012 (P) or barryyen@skys.law.com.hk if you have any questions or require further assistance in relation to specific problems.

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Copyright 1997-2000
SKYS - So Keung Yip & Sin
17/F., Standard Chartered Bank Building
4 Des Voeux Road Central, Hong Kong
Tel: 852-22309012
Fax: 852-28014148
email: barryyen@skys.com.law.hk
g:\transit\by\internet.prc

Sept 2000

Post Srcipt: engineers are working on a new network protocol called IPv6.

When this is effective it will drastically increase the number of addresses available and will be better able to support wireless communications and improve privacy and authentication measures.