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UNITARY PATENT

In 2012 Member States and the European Parliament agreed on the "patent package" - a legislative initiative consisting of two...

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Nominet Appeal is Final, Confirms High Court

Parties who lose .uk domain name cases at Nominet cannot take their game to another court. So concluded the High Court recently in Michael Toth v Emirates [2012] EWHC 517 (Ch), settling a long-standing ambiguity in Nominet's policy and confirming the importance of finality for parties who submit to Nominet's swift and inexpensive jurisdiction for the resolution of disputes in the .uk ccTLD.

Nominet's Dispute Resolution Policy (the "DRS") differs in this important respect from the UDRP, which governs TLDs and a number of ccTLDs. The Court's clarification is therefore essential and welcome.

Come Fly With Me

The dispute here centred on the domain name (emirates.co.uk) registered by Michael Toth in 2002. The well-known airline, Emirates, filed an administrative proceeding before Nominet in 2008, citing its registered trademark rights in EMIRATES and arguing that the disputed domain name was, in the hands of Michael Toth, an abusive registration in contravention of Nominet's Policy.

At first instance the Nominet-appointed expert found for Mr Toth, but on appeal by Emirates a three-member panel overturned and awarded transfer of the domain name to Emirates.

In an unusual move, Michael Toth sought to thwart this outcome by commencing separate proceedings in the Patents County Court. He argued inter alia that the PCC had jurisdiction to re-hear the matter and to reach a different finding on abusive registration than Nominet's appellate panel. In response, Emirates applied to strike out the claim.

Faced with a novel legal issue, HHJ Birss in the PCC noted that Nominet's Policy did not state expressly that the decision of a Nominet-appointed expert or appeal panel was final or conclusive. Moreover, Paragraph 10d of the Policy provided that, "The operation of the DRS will not prevent either the Complainant or the Respondent from submitting the dispute to a court of competent jurisdiction."

Under Paragraph 17c, Nominet's Policy further provided that, "If the Expert makes a Decision that a Domain Name registration should be cancelled, suspended, transferred or otherwise amended, we will implement that Decision...after ten (10) days...unless we receive from either party:

ii. official documentation showing that the Party has issued and served (or in the case of service outside England and Wales, commenced the process of serving) legal proceedings against the other Party in respect of the Domain Name. In this case we will take no further action in respect of the Domain Name unless we receive:

A. evidence which satisfies us that the Parties have reached a settlement; or

B. evidence which satisifes us that such proceedings have been dismissed, withdrawn or are otherwise unsuccessful"

Mr Toth also drew the judge's attention to a 1999 report issued by WIPO on "Internet Domain Name Process", recommending that ccTLD dispute resolution systems should allow parties to seek a de novo review of an administrative decision, as the UDRP system expressly does. The judge considered this report to cast light on the meaning of Paragraph 17c above, since in his view Nominet was likely to have had it in mind when it drafted the DRS.

Overall, the judge concluded that the DRS, which was essentially a contract to which Mr Toth was party by virtue of his registration of the domain name, and to which Emirates became party when it brought the administrative action, did not preclude or limit the court's jurisdiction and indeed permitted a de novo review of Nominet decisions.

Taking all this into account, the judge concluded that Mr Toth's claim was arguable and declined to strike it out. Emirates appealed to the High Court.

On Second Thoughts

At the High Court, Mr Toth met with a very different reception indeed.

The High Court agreed that the issue was one of construction: could the DRS be construed as permitting a de novo review of an administrative decision under Nominet's dispute resolution procedure? However, from this point on the Court diverged from the views expressed in the PCC.

In the view of Mann J., contracts involving multiple adherents over the course of time, as does the DRS, must be interpreted cautiously, and the wording of the contract is paramount. Domain name registrants and complainants would not necessarily know about WIPO's 1999 report, and it could not therefore be regarded as part of the factual matrix determining the scope of parties' rights under the DRS.

The scheme of the DRS did not give rise to an independent legal cause of action for abusive domain name registration. Such a cause of action, indeed, existed only before Nominet under the DRS. The cause of action itself and the entire process of adjudication through to appeal, remedies and implementation of the decision was created and provided for by the DRS. As noted by Mann J., "the contract creates and completely regulates the dispute in such a way as to leave nothing for the court to bite on."

With regard to the references to court proceedings in paragraphs 10d and 17c of the DRS, the High Court agreed that these appeared to contemplate some form of court action. However, given that the cause of action for abusive registration was created and entirely regulated by the DRS, the Court considered that the litigation contemplated under paragraphs 10d and 17c of the DRS must relate to other matters potentially affecting the domain name, such as trademark infringement in respect of which jurisdiction was not reserved to Nominet under the DRS contract. This was, indeed, the position argued by Nominet itself.

In the judge's view, finding for Mr Toth would not only be at odds with this construction of the DRS, but would also undermine Nominet's self-contained, cheap and efficient dispute resolution mechanism.

The High Court ruled, therefore, that Nominet's decision had been final and could not be re-visited by the court.

Comment

Nominet's DRS has been in operation for over 10 years, and it is in a way surprising that this issue took so long to reach a court.

There is an inherent ambiguity in the DRS as to the jurisdiction of the courts, and those familiar with domain name matters will know that under the UDRP parties may seek a de novo hearing of a dispute already decided by a panel before a court of competent jurisdiction. Such actions are based on Para. 4 (k) of the UDRP, whose terms are incorporated into the contracts accepted by TLD and some ccTLD domain name registrants, which provides that:

"The mandatory administrative proceeding requirements set forth in Paragraph 4 shall not prevent either you or the complainant from submitting the dispute to a court of competent jurisdiction for independent resolution before such mandatory administrative proceeding is commenced or after such proceeding is concluded."

It is certainly arguable that even this provision could be subject to the same interpretation as applied by the High Court to the DRS. The difference, though, is that the UDRP always was intended, and has indeed operated, to allow parties essentially to appeal panel rulings to the courts. Indeed, there is no inherent administrative appeal mechanism at all within the UDRP, in contrast to the Nominet DRS, which provides for an expert appellate panel. Nominet's position is therefore rather different.

The outcome of this case does not prevent parties from effectively challenging Nominet expert decisions in court if such challenges can be based on causes of action on which the court can "bite", such as trademark infringement or passing off. This is most likely to apply where a complainant fails before Nominet and then applies to the court to order transfer of a domain name on the grounds that its use does or would infringe registered trademark rights or amount to passing off. Where the only issue, however, is whether Nominet was right in relation to abusive registration, though, parties will have to content themselves with a ruling under the DRS.

This does, of course, place a heavy burden on Nominet experts to get such findings right, and it is interesting in this regard to note Nominet's record on appeals. Of the appeals listed on Nominet's website, slightly over half appear to have resulted in the original decision being overturned. While this record is not entirely reassuring that first-instance decisions are generally right, the fairly balanced set of outcomes suggests at least that there is not a preponderance of bad decisions, and that where decisions are appealed, the appellate panels are doing their job of sifting the wheat from the chaff.