Domain name registrars could be held liable under trademark law: Delhi High Court

The Honorable High Court of Delhi (“Delhi HC” or “To research”) by judgment of April 18, 2022 in summary proceedings in Snapdeal Private Limited against Go Daddy Com LLC & Ors. considered that although domain name registrars (“DNR“) are “intermediaries” within the meaning of section 2(1)(w) of the Information Technology Act 2000 (“computer act“), Safe Harbor protection under Section 79 of the Computer Act is not available to DNRs where alternative domain names provided by DNRs for an additional fee infringe trademarks registered under the sections 28 and 29 of the Trade Marks Act 1999 (“Trademark Law”).

CONTENTIONS OF THE PARTIES

Snapdeal filed a lawsuit along with a request for an interim injunction against various DNRs, the Department of Telecommunications and the National Internet Exchange of India (NIXI) alleging that certain third parties, unrelated to Snapdeal, were registering domain names with the term “snapdeal”. ” thereby infringing its brand. Snapdeal did not implicate any of the registrants and instead sought relief from the DNRs on the grounds that the DNRs facilitated the infringement of its trademark by third parties, i.e. the registrants, and also infringed the trademark themselves. of Snapdeal under sections 28 and 29 of the Trade Marks Act, 1999.

Snapdeal argued that DNRs provided alternative domain names, infringing its trademarks, to registrants whose choice of domain names was not available and charged a special price for those alternative domain names. Snapdeal also argued that the DNR charged higher prices for alternative names involving popular brands such as “snapdeal”. Additionally, Respondent #1 had blocked trademarks associated with “Go Dad” from appearing as alternate domain names, which shows that they have control over alternate domain name options.

The DNR countered by arguing that they were intermediaries within the meaning of the Information Technology Act and as such were protected under Section 79 of the Information Technology Act. . They argued that the process of offering alternative options to potential registrants is entirely automated in nature and that they have no control over it.

Snapdeal sought an interim injunction against the DNRs ordering them to suspend the registrations set out in Snapdeal’s application and also to restrain the DNRs from offering domain names in the future that infringe Snapdeal’s trademark. While the DNR did not object to the first part of Snapdeal’s prayer, it did object to the second part, namely a dynamic injunction preventing it from registering in the future any trademark that infringes the Snapdeal brand.

DECISION

• The Court ruled that domain names are considered electronic records and that because DNRs provide services relating to domain names, which originate from a common domain name registry, DNRs are “intermediaries” in the meaning of section 2(1)(w) of the IT Act.
• The Court observed, however, that the DNRs in this case offered alternative domain names for a price, in case the domain name sought by the holder was not available, and even charged a higher price for domain that were requested, including the allegedly infringing Snapdeal trademarks. The DNRs were therefore clearly acting for profit and, in doing so, were using the allegedly infringing marks “in the course of business”. As such, the DNRs were liable for infringement pursuant to Section 29(4) of the Trade Marks Act.
• The Court further rejected the DNRs’ assertion that they have absolutely no control over the alternative domain names that are suggested to third-party registrants, as this is an automated, algorithm-based process. The Court observed that it was an undisputed fact that no domain name, even reasonably close to “Go Daddy”, i.e. Respondent No. 1’s mark, was available to third parties. depositors. The Court further held that the algorithm on the basis of which the alternative domain names are made available is designed by each DNR itself, and that it is the DNR’s responsibility to ensure that the alternative domain names do not infringe any registered trademark.
• In the above circumstances, the Court held that if an intermediary provides services that go beyond the normal course of an intermediary’s duties and operates for profit as a commercial enterprise, he cannot claim safe harbor protection under section 79 of the Information Technology Act for liabilities arising from such functions.
• Although it found that DNRs could be held liable for a violation of trademark law, the court declined to grant an injunction preventing DNRs from registering any domain name that might infringe Snapdeal’s brand in the future. The Court held that a quia timet action cannot be based on hypothetical and imaginary infringements and that it cannot be concluded in advance that all potential alternative domain names that include Snapdeal as a word/fil of discussion would be infringing in nature. The Court ultimately ruled that Snapdeal must undertake to take legal action against each registered domain name it finds to be infringing and seek redress on a case-by-case basis.

ANALYSIS AND CONCLUSION

This judgment is significant because while it concludes that DNRs are intermediaries, it at the same time argues that DNRs will lose Safe Harbor protection if the algorithm designed by DNRs suggests alternative domain names that infringe trademarks. deposited. The Court indeed observed that since the algorithm by which the alternative names are suggested was created by the DNR itself, they must ensure that it is modified in such a way that the infringing domain names are not not provided. It’s unclear how practically this would be possible for DNRs given the endless possibilities for domain name infringement that can be suggested by the algorithm. Implementing the Court’s mandate while maintaining the service of providing alternative domain names can prove to be a difficult task for DNRs.

Additionally, at the same time, the Court also declined to grant an interim injunction preventing the DNR from registering domain names incorporating Snapdeal’s trademarks in the future, relying on its earlier rulings in Tata Sky Limited v National Internet Exchange of India (NIXI), Star India Private Limited v y1.mylivecricket.biz and Star India Private Limited v yodesiserial.su. The Court observed in this respect that before blocking a website/domain name, it is up to the court or the competent authority to decide first whether this domain name actually infringes a trade mark and, by therefore, a blanket injunction cannot be granted.

It is pertinent to note however that the Delhi HC in the decision of Dabur India Limited v Ashok Kumar & Ors. (CS(COMM) 135/2022) when dealing with a similar issue of trademark infringement by third parties through the registration of domain names and websites, the Court granted a blanket interim relief in which DNRs were prevented in the future from authorizing a third party, except Dabur India Limited, to register domain names using the “Dabur” trademark/name.

The position taken in the Dabur India decision contrasts with that of the Court in Snapdeal. It will be interesting to see what direction the courts will take in the future in similar cases.