Illegal Domain Name Parking Rampant In SA

Domain parking allows persons to register a domain name in such a manner that the rightful owner of the domain cannot use it and is left ...

Because of an impasse in the law, so-called domain name parking is rampant in South Africa leaving many local companies powerless to acquire their rightful domains.

Domain parking allows persons to register a domain name in such a manner that the rightful owner of the domain cannot use it and is left without any legal recourse.

“A good example of parking in the co.za space is the current registration of telkombusiness.co.za by a competitor of Telkom. Since South Africa joins Angola as one of the few countries without domain name dispute resolution rules, Telkom’s only legal recourse is litigation in terms of trademark law. However, trademark law requires that a mark be used in the course of trade before infringement takes place. Thus, by not linking the domain name to any website the infringer escapes liability” says Reinhardt Buys of IT law firm Buys Inc.

“In effect any person can register any available trademark as a co.za domain name and ‘park’ it by not linking it to a website. Attempts to sell these domain names back to its owners at highly inflated prices and to simply prevent the use of a domain by a competitor are the main reasons behind the practice”.

Not only local businesses are affected by this abusive practice, but also foreign trademark holders whose names are parked as co.za domains.

“There are many and significant differences between trademarks and domain names and trademark laws were never a suitable reference for resolving domain name disputes” says Buys. “However, costly litigation in terms of trademark law remains the only option open for co.za disputes. On average, such litigation costs more than R100 000.00 and can take years to complete. Resolving similar disputes in Namibia and almost all other countries cost less than R10 000 and are resolved within days”.

Unlike most other countries, South Africa does not yet have domain dispute resolution rules and the facilities to resolve disputes through online, cheap and fast dispute resolution such as arbitration.

Although final dispute resolution rules were published by the Department of Communications on 22 November 2006, the necessary facilities will take years to be developed and accredited.

“Although the publication of these rules is a welcome and long awaited positive sign, the rules itself are generally disappointing. The Department opted for a ‘uniquely South African solution’ which amounts to nothing more than re-inventing the wheel in a rather costly and lengthy process. When the Department said ‘unique’ they said a mouthful” claims Buys.

As far back as 1999 international domain name dispute resolution rules were developed for top level domains ending with .com, .net, .org and others. These rules are administered by various agencies such as the World Intellectual Property Organisation which provide fast and online dispute resolution services which has been used by many local companies such as Nandos, Sanlam, Truworths and SAA to claim their domain names from unlawful registrants. Now many countries like Namibia, Australia, France and Ireland simply submit their country level domains to these rules and procedures.

“South Africa should have followed the international example and simply submitted local disputes to the international dispute resolution system. That would have been the logical, cost-effective and fast option. But the recent regulations create a unique system that require the accreditation of dispute resolution providers, the training of adjudicators and the payment of high fees” argues Buys.

“By opting for a separate and unique system .co.za domain disputes will be resolved in a different manner and according to different rules as the similar names in other countries, for example, sanlam.co, .za, Sanlam.com.au and sanlam.com. Furthermore, the rules failed to implement the vast majority of WIPO recommendations regarding ccTLD dispute resolution rules”.

The proposed domain dispute resolution rules are governed by the provisions of the Arbitration Act which requires that both parties agree in writing to submit their disputes to arbitration. However, the current agreement that governs co.za domain registrations makes no provision for such agreement.

“Uniforum, the co.za administrator, will have to amend their governing agreement and even if they do, it is uncertain if such an amendment will have retrospective effect. Since only new domain name registrations will be subject to the new dispute resolution rules, the current 282 636 registered co.za domains may well be excluded”.

Although the Uniforum agreement provides for a number of provisions that may assist in dispute resolution, Uniforum generally refuse to get involved and rarely relies on warranties such as those that force the registrant to use the domain name registered.

According to Buys the long awaited implementation of local dispute resolution rules may be even further delayed by litigation against Uniform regarding their governing agreement.

“Currently it is not even certain that the Uniforum agreement is valid and enforceable at all since it is a browse wrap agreement generally in violation of section 11(3) of the ECT Act. This all amounts to a messy legal environment. The losers will be local trademark owners who lost their domains and the only winners will be lawyers who will cash in on the coming litigation, legal impasse and general confusion”.