Reverse onus in .co.za disputes: Strike 5 for Digital Orange
17/09/2010

The provisions of Regulation 4(3) of the Alternative Dispute Resolution (“ADR”) Regulations again come to the fore in the recent decision ordering the transfer of the domain name hotelmissoni.co.za from Digital Orange (also known as “Joris Kroner”) to Missoni S.p.A (“Missoni”).

On 27 August 2010, the Adjudicator found the domain name to be an abusive registration in the hands of Digital Orange.

Missoni is a leading company in the fashion industry. Its goods are marketed and promoted in almost every country in the world, including South Africa. There are also a number of hotels operated or in development stages known as “Hotel Missoni”. It is the owner of many national, international and community registered trade marks, and the complaint was mainly based on its HOTEL MISSONI and MISSONI trade marks. In South Africa, the first filing date for the MISSONI trade mark dates back to 11 March 1981, and to 5 May 2009 for the HOTEL MISSONI trade mark.

Missoni has also made its company information available to the public via the internet since 2000, and as such has registered more than 60 domain names corresponding to its trade marks, including missoni.com and hotelmissoni.com, all of which predate the disputed domain name.

On 9 June 2009, announcements were published in international media that Missoni intended to open a HOTEL MISSONI in Cape Town. A few weeks later, Digital Orange registered the domain name hotelmissoni.co.za. Whether or not this subsequent registration was a coincident was left undecided by the Adjudicator. As with the other disputes involving Digital Orange, more of which will be said below, the domain name pointed to a single static web page which stated “This will soon be the new home of the domain name: www.hotelmissoni.co.za”.

The Adjudicator found that Missoni had established its rights in respect of its MISSONI and HOTEL MISSONI trade marks. Therefore, the only question left to be answered was whether the registration in the hands of Digital Orange was an abusive registration.

An abusive registration means a domain name which either:-

• was registered or otherwise acquired in a manner which, at the time when the registration or acquisition took place, took unfair advantage of or was unfairly detrimental to the Complainant’s rights; or

• has been used in a manner that takes unfair advantage of, or is unfairly detrimental to the Complainant’s rights.

Ordinarily, the onus is on the Complainant to prove, on a balance of probabilities, that the abovementioned elements are present. However, in the present dispute, the Adjudicator found that the provisions of Regulation 4(3) of the ADR Regulations were operative, thus shifting the onus onto the Registrant to rebut the presumption of an abusive registration.

Regulation 4(3) provides that “There shall be a rebuttable presumption of abusive registration if the Complainant proves that the registration has been found to have made an abusive registration in three or more disputes in the 12 months before the dispute was filed”.

In its complaint, Missoni raised the provisions in Regulation 4(3) by pointing out that in the 12 months preceding the dispute, Digital Orange had been found to have made an abusive registration in four disputes. It transpired that different adjudicators had previously ordered the transfer of hackett.co.za, absapremiership.co.za, ketelone.co.za and peroni.co.za from Digital Orange to the Complainants in separate complaints.

In the present dispute, Digital Orange failed to rebut the presumption and the Adjudicator found that the registration was an abusive registration.

Although much reliance was placed on the provisions of Regulation 4(3), the Adjudicator found that even in the absence of Regulation 4(3), the domain name was still an abusive registration on the strength of two other factors, namely those referred to in Regulation 4(1)(a) and 4(1)(c). These are respectively:

• circumstances indicating that the registrant has registered or otherwise acquired the domain name primarily to sell, rent or otherwise transfer the domain name to a complainant or to a competitor of the complainant, or any third party, for valuable consideration in excess of the registrant’s reasonable out-of-pocket expenses directly associated with acquiring or using the domain name; and

• evidence, in combination with other circumstances indicating that the domain name in dispute is an abusive registration, that the registrant is engaged in a pattern of making abusive registrations.

Before the complaint was lodged, Digital Orange had offered to sell the domain name for R100 000.00 and, subsequently, for a reduced amount of R80 000.00.

The Adjudicator found that the demand of R80 000 (or R100 000) betrayed the intention of the Registrant because the costs attendant upon registering the domain name had no relation to these ransom-like sums at all. The Adjudicator therefore drew the inference that the domain name was an abusive registration in terms of Regulation 4(1)(a), as it was registered primarily to transfer it for an amount in excess of the reasonable expenses incurred in acquiring the domain name. It was also found that due to Digital Orange’s engagement in a pattern of making abusive registrations, it had to be concluded that the provisions of Regulation 4(1)(c) had been satisfied.

It appears that Regulation 4(3) has once again proven to be a useful tool in dealing with repeat offenders in domain disputes. It aids in curbing so called “cyber-squatters” who register domain names purely for commercial gain. Its effect has resulted in strike 5 for Digital Orange.
Dale Healy
Partner
Trade Mark Litigation
Dale-h@adamsadams.co.za
Nondumiso Msimang
Candidate Attorney
Trade Mark Litigation
nondumiso@adamsadams.co.za