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12 September 2016

Trends of Consideration of Domain Disputes in Courts. Where shall people apply to?

In the early years of the Internet, domain names were just a convenient, simplified form of writing the address for the network addressing of a person or company. However, the situation has changed with the globalization of web resources: a huge amount of money has been involved into the network business; domain names have become commercially valuable, bringing profit to their owners. Individuals and legal entities use domain names as sale items or individualize the websites, which advertise goods and services.

Disputes concerning domain names are almost always associated with company names, trademarks, names and surnames of famous people, that is, with the means of individualization.

Currently, in Russia, the domain name is not legally attributed to the means of individualization. In accordance with Item 5 of Clause 2 of Article 1484 of the Civil Code of the Russian Federation the use of a domain name refers to the sphere of the exclusive right to a trademark. Due to this reason, in judicial disputes between the owner of the trademark on the one hand and the domain administrator on the other hand for the right to own a particular domain name, the priority is most often given exactly to the right holder of exclusive rights.

The main criterion for determining the jurisdiction of disputes about domain names was the nature of the dispute, as related with the economic activities of the defendant, and its subjective composition was only of a secondary importance.

The most common question of a person, whose right to a trademark was infringed by the actions of the domain owner: which court should he apply to?

Clause 13 of Resolution of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation of 01.07.1996 No. 6/8 “On certain issues related to the application of Part One of the Civil Code of the Russian Federation” reads that the person engaged in commercial activities, but not who has not been approved in the course of the official registration as an individual entrepreneur, shall not acquire the status of an entrepreneur in connection with this activity; the disputes involving such persons, including those related to carrying out their business activities, shall be within the jurisdiction of  the court of general jurisdiction.

It should be noted that the administrator of a domain name, unlike the right holder of a trademark, who is always either a legal entity or a registered individual entrepreneur, may simply be an individual. Consequently, domain disputes should be considered in courts of general jurisdiction; however, not everything is so simple.

The individual can participate in the arbitration proceedings as a party only in cases when, at the moment of applying to the arbitration court, he has an official registration as an individual entrepreneur, or if the participation of a person without the status of an individual entrepreneur in the arbitration proceedings is stipulated by the federal law (for example, Articles 33 and 225.1 of the Arbitration Procedural Code of the Russian Federation).

This position of the Supreme Court of the Russian Federation has had a significant impact on the practice of settling domain disputes. The key moment in determining the jurisdiction now is the subjective composition of the participants of the dispute, while its economic character has ceased to be taken into account. From the point of view of the Supreme Court of the Russian Federation, the priority jurisdiction of the courts of general jurisdiction over those domain disputes, where the defendant is an individual without the status of an individual entrepreneur has become a common practice.

However, the consideration of disputes in the court of general jurisdiction leads to a delay in the judicial proceedings, and the courts' lack of experience in settling the disputes in the field of intellectual property may lead to an unreasonable decision. Arbitration courts (especially the Arbitration Court of Moscow) have the necessary experience in settling the disputes, and therefore, the duration of judicial proceedings there may differ for the better in comparison with the courts of general jurisdiction.

If the statement of claim is filed to the arbitration court and will be agreed to hear, the case will be dismissed with greater probability. Even if the court of the first instance does not stop the proceedings on the case and considers the merits of the dispute, the Intellectual Property Court, as an appeal court, will cancel the aforesaid decision, because the case was heard with the infringement of the rules of jurisdiction.

The lawyers of company Zuykov and Partners have found an algorithm for returning the disputes to the arbitration court. The existence of economic activities, carried out by an individual – the administrator of the domain name, shall be indicated in the text of the statement of claim, which subsequently shall be filed to the court of general jurisdiction. The court, based on the text of the claim, shall come to a conclusion about the existence of the economic nature of the dispute, and therefore it shall return the statement of claim in connection with the lack of jurisdiction of the dispute to the arbitration court on the basis of Article 28 of the Arbitration Procedural Code.

On the basis of the aforesaid decision, the statement of claim shall be filed to the arbitration court, which is obliged to hear the case, as the disputes about the jurisdiction shall not be allowed.

The specialists of Zuykov and Partners track changes in the practice of settling domain disputes related to the illegal use of trademarks, including the domain disputes involving individuals and are always ready to provide a consulting and legal assistance.

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