Dreyfus

Dot brands are on a roll (2017 – continuation of blog article n° 76 – New extensions: all set for “.brand”?)

Domain names: status of the <.brand> in 2017

In June 2011, the ICANN launched the new gTLDs program in order to boost innovation and competition. This is how we uncovered new gTLD applications in October 2013.

Surprisingly, many <.brand> applications were submitted (cf. https://dreyfus.fr/en/marques/new-extensions-all-set-for-brand/). Companies using registered brands were consequently able to apply for their own top level domain name extensions, at the same root level as the <.com>.

The top level domain name registration process is far more complex than domain name registration insofar as it is compulsory to become a registry operator to achieve the former. It is a time-consuming and expensive process and no one can, at the present time, submit an application anymore. A new round is scheduled for 2020. In order to become a certified registry operator, the ICANN would need to conduct an operational and technical assessment on an application basis. The applicant would submit its infrastructures (servers and networks) for examination in order to inspect its viability and security. In addition, the applicant would have to pay application fees of 185,000 US dollars, followed by an annual payment of 25 000 US dollars per “extension” to the ICANN. Once the assessment process is complete, the applicant would obtain the pre-delegation and sign a registry agreement (Registry Agreement) with the ICANN in order to guarantee compliance with its operating guidelines. Should the applicant not possess the technical skills, he may contact a service provider who would have to pass the operational and technical tests.

In January 2017, there were 551 <.brand> “extensions” in total. However 2016 proved to be the <.brand> year: 46% of delegated top level domain names were <.brand> “extensions”.

New gTLDs (generic Top Level Domains), and in this instance the <.brand>, are becoming increasingly widespread for a number of reasons.

First of all, the <.brand> extension implies not only better visibility on the Internet but also increased security insofar as this type of domain may only be registered by brand owners.

These top level domains enable the likelihood of confusion to be averted  when the brand appears in the domain or sub-domain name. Indeed, in order to acquire a top level domain delegation, evidence of earlier rights over the brand must be provided to the ICANN. It therefore represents an effective means to reduce cybercriminality such as phishing. In that respect, one could easily speculate that websurfers will be more suspicious of domain names that have other “extensions” once they will have gotten used to the matching <.brand>. This security is an essential spur to some brands, particularly to banks as they are frequent victims of phishing. For this reason, as depicted by studies done by Alexa Internet, an American company specializing in data analysis, two of the most popular “extensions” are respectively owned by Banco Bradesco, a brasilian bank, and BNP Paribas.Barclays also recently registered the <.barclays> “extension”.

Secondly, the launch of the new gTLDs program has triggered the creation of entities such as The dot brand Observatory, whose activity is to assist brands in creating their own <.brand> extension.

Brand strategies on the Internet, in fact, have become an unavoidable issue for professionals but success is never guaranteed. By the end of 2015, The dot brand Observatory was created to assist companies in their top level and second-level domain name strategy. This research program entails a full analysis of brands registered as top level or second level domains which takes into account their environment, brand naming strategy and marketing approach. The observatory immediately noticed a rapid increase in <.brand> top level domains.

Finally, the growth of top level domains allows for better brand outreach on the Internet and facilitates access because the <.brand> extension is better referenced, in most cases leading to enhanced brand visibility. In addition, companies can provide exclusive access to their clients, employees and prospective clients, or make a single website accessible to the three user groups.

It is worth noting that nowadays many brands use the extension <.brand> for their own different purposes. According to the Dot Brand Observatory’s statistics, most brands use the <.brand> extension for their main website. However some prefer to dedicate the <.brand> extension exclusively to consumers, or only internally. Some companies use a <.brand> extension to fulfill both purposes such as <.bnpparibas>, the only company so far that has destined its’ <.brand> to its’ clients and its’ intranet users.

A new <.label> extension category has been developed around the <.brand> use. An example : the <.eco>.

The <.eco> extension was launched on February 1^st, 2017, with the purpose of enabling domain name registrants who wish to use this extension to showcase their activity’s ecological awareness to consumers. The <.eco> is open to everyone willing to commit themselves to the ecological cause, whether it is an association or a company, so long as they demonstrate that it is in accordance with their actions. The project is supported by leading international organisations in ecology such as World Wildlife Fund, Greenpeace and the UNEP (United Nations Environment Programme) which have laid down strict requirements for eligibility to a <.eco> registration.

This project is shaping the future of domain names by developing <.label> extensions which are meant to guarantee genuine quality of the registrant to the public.

However, the downside of this system lies in the fact that it is possible for domain names to be reserved without yet having been activated, and while waiting for the registrant to undergo the post-registration check.

To be continued…

The Cour de Cassation upheld the appeal court’s decision (CA Paris, Pole 5, ch. 1, March 31, 2015), thereby confirming that the word mark “vente-privee.com” has acquired a distinctive character through use (Com. Dec. 6, 2016, n°15-19048).

On September 5, 2012, the company “Showroomprive.com” sued “Vente-privee.com” for cancellation of a trademark and fraudulent filing. The Tribunal de Grande Instance of Paris, granted “Showroomprive.com”’s application given that the word mark “vente-privee.com” did not have a distinctive character, and therefore declared the mark invalid (TGI Paris 3rd c. , 1st section, Nov. 28, 2013). However, the defendant company appealed and the Cour d’Appel reversed the judgment of first instance, considering that “vente-privee.com” had acquired a distinctive character through use of the trademark.

Showroomprive.com challenged this decision before the Cour de Cassation on the basis of Article L.711-2 of the French Intellectual Property Code (IPC), which makes it possible to pronounce the invalidity of a trademark if it does not have a distinctive character. The company maintains that, while the Article provides for the possibility to acquire distinctiveness by use of the trademark, this possibility is to be interpreted in the light of Article 3§3 of the EU Directive 2008/95/EC on trademarks and the decision of the European Union Court of Justice (ECJ, June 19, 2014, Oberbank AG, Banco Santander SA, Santander Consumer Bank AG c/ Deutscher Sparkassen-und Giroverband eV, C-217/ 13 and C-218/ 13). Indeed on the one hand, Article 3§3 of the Directive also provides for this possibility, but also allows liberty for Member States to choose the time for assessing the acquisition of the distinctive character through use: that is, before or after registration. On the other hand, the jugdment of the ECJ specifies that, if one does not use the option to assess the acquisition of the distinctive character through use subsequent to the registration, said distinctive character should be assessed if it was acquired before the application date for registration of that trademark. “Showroomprive.com” thus considers that since Article L711-2 of the IPC does not expressly provide for this option , the trademark “vente-privee.com” must be declared invalid since it had acquired a distinctive character by use only after registration.

However, the Court considers that by providing for the possibility of acquiring the distinctive character such as to constitute a trademark through use, Article L.711-2 of the IPC made good use of the option left to the Member States by the Directive. Moreover, the Cour de Cassation emphasizes the identified elements showing the acquisition, before the invalidity claim, of the distinctive character of “venteprivee.com” through its use, in particular of the media publications and a poll listing it as one of the favourite French brands.

Thus the Cour de Cassation dismissed the appeal, thus confirming the possibility of acquiring a distinctive character such as to constitute a trademark through use even after the registration date.

The fashion and design industry is gradually turning to new technologies. Designers use more and more innovative techniques in their products. What are the legal means that should be implemented to protect and defend immaterial capital, widely present in this sector?

The development of interactive clothing

In recent years, many ready-made clothing brands have used advanced technologies in their products or fashion shows such as 3D printing, augmented reality or even virtual reality. Thus, there is a strong development in smart clothing, also known as e-textiles.

For instance, the collaboration between Google and Levi Strauss on project Jacquard, a jacket made of a touch sensitive fabric used for interaction with one’s smartphone, without having to remove it. Reebok, the famous shoe and sportswear manufacturer, also designed an innovative shoe model, This pair of running shoes includes a 3D printed sole that focuses on performance and energy return.

Legal status of the innovation

These 2.0 clothes raise issues such as their protection and defence and the contractual framework of such designs. First of all, the legal status of these innovations should be identified. A technical approach is required because the connected device does not have a technical definition. Smart clothing might be, for example, brought together with medical devices defined in and intended for the following purposes: “1° For diagnosis, prevention, monitoring, treatment or alleviation of a disease; […]3° For study, replacement or modification of the anatomy or a physiological process”. Thus, sports clothing that regulates body temperature or decreases tension are covered by this definition.

Contractual framework for innovation

The author of the innovative work should then be identified. Thus, in case a textile is created by 3D printing, the person who created it may be designated as its author, as well as the person who created the 3D file. outlines the differences between works of collaboration, composite works and collective works. Thus, the different actors involved in the creation of e-textiles must agree on the scope of their respective rights.

Furthermore, prior to the disclosure of the innovation or the execution of the project, the parties involved must sign agreements governing the confidentiality of information exchanged. Parties may further consider using partnership agreements to enhance coorperation and define the obligations of each party. Such was the case, for instance, for the collaboration between Google and Levi Strauss.

Finally, fashion designers who use innovative technology must properly define the scope of their rights over the product designs so as not to overlook their protection.

A friend is a person for whom we feel a sense of affection, of that we are sure. As commonly defined by dictionaries, there is a second definition. With respect to information technology, a friend is a member of a social network who is granted access by another member to his or her personal information. Likewise, the “friend” allows that member to access their personal information. The distinction is interesting in the sense that the term “friend” is demystified and tends to lose its notion of intimacy. However, in theory, access to personal information should incorporate this concept of intimacy because of how sensitive the information is. The definition given by the Cour de Cassation on January 5, 2017 (Cass., 2^ème civ., 05.01.2017, no.16-12394, Publié au bulletin) supports this theory. Indeed, within the framework of a social network, a friend is a person who shares the same interests without necessarily sharing a feeling of affection or even intimacy.

> The definition of Facebook “friends”

On January 5, 2017, the Cour de Cassation confirmed the appeal decision (Paris, December 17, 2015, no. 15/23692), by determining that a friend on social networks does not abide by the traditional meaning of the term but refers to the existence of common interests.

In the present case, a Paris lawyer challenged the legitimacy of one of the Bar Council’s decisions, claiming that the members of the disciplinary tribunal responsible for the judgment were friends with the prosecution (The “Bâtonnier”) and the claimant.

As proof of this friendship, it is argued that some members of this council are part of the “Bâtonnier”’s and the claimant’s network of Facebook friends. Consequently, a lawyer who received disciplinary sanctions invoked a conflict of interest. He considered that even before his case was examined, he was being “pre-investigated and pre-judged”.

On December 17, 2015, the Cour d’appel de Paris considered that the term “friends” was not to be understood in the traditional sense. Then on January 5, 2017, the Paris Cour de Cassation supported this view, rejecting the conflict of interest theory. To justify its decision, the Court states that “the social network is merely a specific means of communication between persons who share the same interests, and in this case the same profession. Also, the mere fact that the persons subject to the claim are friends of the “Bâtonnier”, the prosecution, does not constitute a justification for undertaking verifications.”

This unprecedented analysis reminds us that social networks are so new that we are at the early stages of their legal qualification. If the law has not yet done so, it is left up to the judges.

> Issues with this definition

Some issues still cannot be addressed under current legislation. For now, judges are the first reviewers of these disputes and are the first to rule on the matter.

The solution brought forth by the courts is interesting given the current context. The case dated January 5, 2017 is thought-provoking in relation to the “friendship ties” on Facebook held with people identified as being close to terrorism or any other criminal activity. The simple fact of being a “friend” on a social network with a person identified as such will not constitute tangible proof enough to act against “friends”, or other members of the social network.

However, with respect to information technology, the definition of the term “friend” given by case law trivializes the exchange of personal information to a meaningless degree, and without any consequences since the exchange takes place without any actual friendship bond. This implies that granting a third party access to one’s personal information is an ordinary act devoid of any legal impact. In a relationship with a professional, one must consider the provision of personal information as an agreement: it is an actual covenant. On the other hand, the judgment dated January 5, 2017 lays down the principle that a relationship between two non-professionals consisting in the exchange of personal information is not an agreement. It is, however, a legal act. The two members of the social network’s wills are needed so that one sends a friend request to the other and the other accepts. These two acts are evidence of their agreement.

In the judgment dated January 5, 2017 the Cour de cassation showed common sense by confirming that a friend on a social network was not to be regarded as a friend in the traditional sense. However, we recommend caution around this qualification as it will probably require some clarification in the future.

> Qualification of Twitter followers

Twitter and Facebook are social networks, which have similar reputations and are used worldwide. Facebook has 1.71 billion active users each month while Twitter has 313 million active accounts and 277,000 tweets published every minute. These two economic players are generally self-indulgent and have produced, among others, WhatsApp (Facebook, 2014) and Periscope (Twitter, 2015), two rising Internet stars. However, they also have common issues, for instance, being both banned in China.

Admittedly, the decision to define Facebook “friends” is innovative, but in the United States the qualification of Twitter followers has already been determined by the courts from a very different perspective.

In 2011 (PhoneDog v. Kravitz, No. 11-03474, N.D. Cal. Nov. 8, 2011), a Twitter account, its content and its followers were classified as trade secrets in the dispute between PhoneDog and Noah Kravitz.

In this case, the dispute took place in the United States, involving the mobile phone company PhoneDog and its employee Mr Noah Kravitz, in charge of promoting the trademark on the social network.

Originally Mr. Kravitz had a Twitter account whose username was @noahkravitz and this account became very popular, generating a very large number of followers. It was then that the company PhoneDog offered to hire him in order to promote the trademark on his account.

At the end of his employment contract with PhoneDog, Mr. Kravitz was offered a contract with the direct competitor of his previous employer. He accepted the offer, but PhoneDog had different views on the matter, and initiated proceedings against its former employee.

The claim involved recovery of the Twitter account where passwords were targeted, as well as $ 340,000 in damages. PhoneDog claimed that the Twitter account and followers belonged to it and were trade secrets.

The case was not successful because Mr. Kravitz raised an objection to jurisdiction. Indeed, using websites like tweetvalue.com and whatsmytwitteraccountworth.com, his Twitter account was assessed to be worth less than $ 8,000. He alleged that the Federal Court lacked jurisdiction to hear this matter.

PhoneDog and Mr Kravitz finally reached an agreement wherein the information remained confidential. As for Mr Kravitz, he continues to use his Twitter account @noahkravitz without risk of interference.

> The impossible qualification of trade secrets in Europe

According to the European Commission, “information protected through a trade secret can be strategic for decades (for example a recipe or chemical compound) or ephemeral (the results of a marketing study, the name, price and launch date of a new product, or the price offered in a bidding procedure).”

It must meet three criteria: it is not public or “easily accessible”; it has a “commercial value” because it is confidential and is subject to “reasonable provisions designed to keep it secret”.

In Europe, such a qualification would probably not have been accepted insofar as trade secrets must meet three criteria. The first criterion is that it is not public or “easily accessible”, indeed, although the passwords were not accessible, the followers were and they cannot be appropriated. In addition, this account belonged to Noah Kravitz and not to PhoneDog. The second criterion is that there is a “commercial value”, according to Noah Kravitz’s claims to raise the objection to jurisdiction, the value of the account amounted to $ 8,000. Finally, trade secrets must be subject to “reasonable provisions destined to keep it secret”, in this case by not renewing the contract of their employee and without having agreed on a non-competition clause; the Company PhoneDog was inevitably running the risk that their employee works for a competitor.

The legal definition of users of social networks (friends, followers) is increasingly apprehended by the courts. It remains, however, that this definition as such is unclear despite the fact that the case-law and the European Parliament have taken up the matter. Article 1 of Directive 98/34/EC, as amended by Directive 98/48/EC, provides that “social networks shall be Information Society services” and Article 29 of Directive 95/46/EC provides that “social networking is enabled using tools which provide a list of contacts for each user, and with which users can interact”.

Thus, the only proposed definition of the social network, based on these directives, is “An online communication platform that allows an internet user to join or create one or more network of users sharing common interests. In practice, a social network is presented as a website which, after a free registration which involves providing summary details such as the surname, date of birth and e-mail address, gives access to an information exchange platform with other Internet users on various subjects“. (Nathalie Dreyfus, « Trademarks and  Internet: Protection, Valorization, Defense », Lamy Axe Droit, 2011, p325.)

Registrars’ liability

Registrars and registries play an important role in operating domain names. Even though they do not register domain names maliciously and with intent to cause prejudice to a trademark, they nevertheless are not required to review registration applications before reserving the names. This explains the common cybersquatting practices. Although they have a prima facie neutral status as technical service providers, they are in fact at the very heart of cybercrime cases.

Registrars made aware of consumer protection

“The courts held that a registrar has to carry out its mandate in accordance with its accreditation agreement with the ICANN and its liability is thus limited to the framework of the agreement” (Marques et Internet, Nathalie Dreyfus). Following this logic, in a cybersquatting case for instance, the registrar approves the domain name registration and derives financial benefits from the registration even though the trademark owner’s prior rights are being prejudiced.

Its status as technical service provider implies that there is no general statutory requirement to monitor content or search for circumstances revealing unlawful acts and doings (Article 6, I, § 7 of the Law no. 2004-575 dated June 21, 2004 for a Digital Republic). By contrast, “a presumption of knowledge of the disputed facts weighs on the technical service provider as soon as information containing factual and legal grounds has been notified to them” (Marques et Internet, Nathalie Dreyfus). Indeed, when the technical service provider is informed of infringement (by letter of formal notice in compliance with the strictformality required by Article 6, I, 5 of the Law for a Digital Republic), they are legally bound to act promptly in order to deactivate the contentious domain name, failing which they may be held liable because they are presumed to have been aware of the facts in dispute.

In spite of the absence of statutory requirements and even though no notification had been made, the Tribunal de Grande Instance de Paris, in a 2006 judgement, jointly sentenced the registrant and the registrar in a cybersquatting case. Without contemplating the latter’s liability with respect to its’ client, the court found the registrar guilty of aiding and abetting with respect to unlawful activities being carried out by the registrant. Not only was the registrar ordered to suspend the disputed domain names but it was also instructed to pay for irrecoverable expenses and damages granted to the company for which the registrant was responsible, in solidum (Tribunal de Grande Instance, Paris, April 10, 2006, Sté Rue du Commerce v. Sté Brainfire Group et Sté Moniker Online Service In.). In this case, the registrant was owner of the domain names “rueducommerc.com” and “rueducommrece.com” in order to redirect web surfers who made a typo when performing a search for similar worded websites (typosquatting). However, this example is just a mere exception to the registrars’ discretionarily acknowledged liability.

Generally, registrars cannot be held liable even though some legal practitioners advocate for minimum of liability.

At all events, things are evolving and some diligent registrars have joined forces as a top level domains conformity and verification consortium : The Verified Top Level Domains Consortium. This Consortium’s mandate focuses on protecting the online consumer. Indeed, in order to build web surfers’ trust by using websites that are likely to collect personal data, including sensitive data, this Consortium ensures that the domain names are being used for honest and non-fraudulent purposes.

This Consortium was created in May 2016 by eight registrars which managed the registration of 15 vTLDs (verified TLDs) of various sectors such as pharmacy <.PHARMACY> on behalf of the national pharmacists association, or finance <.BANK>. The registrars providing domain name verification services may join the Consortium provided that they obtain consent of the founding members.

This Consortium of registrars has the responsibility to ensure that the registrant complies with various conditions alreadylaid down by them before registering a domain name. In the case of <.PHARMACY>, the activity bearing this top level domain shall imperatively demonstrate a legitimate interest. This implies that the consumer will not be misled by the domain name extension. Furthermore, verifications will be carried out in the long term so that registrants may keep their domain names only if they comply with these requirements.

On account of the regulation performed by this entity and its’ will to work towards more regulation and security, it is possible to hope for changes in the registrars’ legal framework as the neutrality privilege  cannot be combined with a regulatory duty.

The WHOIS operated by registries showed flaws despite the willingness of registrars to ensure increased security

The increase in the number of domain names is a direct consequence of Internet democratisation. In that sense, the Internet offers more visibility for companies and even allows some individuals in bad faith to register domain names for resale at a high price to other individuals or entities who, in turn, have a legitimate interest.

When ICANN was created in 1998, the Clinton administration ordered the implementation of a highly accurate WHOIS database. The purpose was to index all registrants and to be able to contact them. Today, registries are responsible for operating the WHOIS database and its extensions.

Despite the publication, in December 2016, of a report (report of the WHOIS Accuracy Reporting System) pointing to this database performance, resolutions are yet to be passed to fill the gaps. This report has addressed the operational capacity of the WHOIS over 12 000 registered domain names with 664 different registrars. This sample comprised the old and new gTLDs only and excluded the ccTLDs (national domain names).

The study consists of two stages. Firstly, the formats of the e-mail address and phone number are verified. Then a test e-mail is sent to check if it is effectively delivered to the address specified in the WHOIS. In 97% of the cases, at least one of the details were valid with respect to its format and the test message is successfully delivered. North America has the most accurate information, whereas Africa conveys the most insufficient WHOIS information. The report, however, does include a weakness as no follow-ups are performed, and effective receipt of the message by the registrant is not mentioned. The test message only reports the existence of a valid address; as a consequence, receipt of the test message on a junk e-mail address, despite the validity of the address format, does not appear in the remaining 3% having specified inaccurate informations according to the report. Even if the specified WHOIS e-mail address is a junk e-mail address, as long as the address format is valid, the registrant’s address will be included in the 97% of domain name registrants who specified accurate details. In that context, in spite of erroneous information, this situation contributes to reinforcing WHOIS operativeness and accuracy.

Consequently, the real major challenge is to be able to effectively contact the registrant. However, even though the WHOIS does contain information, oftentimes the addresses lead nowhere because sauid information is inaccurate. Accordingly, the WHOIS is not as effective as seemingly stated by the report.

While domain names are growing in importance, information security and transparency are not always a priority for the main actors. Developments in the legal framework would thus be welcome.

To be continued…

Turkey has just adopted an Industrial Property Code, and it has come into force on January 10, 2017. Prior to that date, Turkish Industrial Property rights were regulated by ordinances dating back to 1995. These ordinances were progressively quashed by the Turkish Constitutionnal Court because the area had yet to be shaped by the legislative channel,  which had remained silent thus far. The last ordinance was quashed on January 6, 2017. In this context, the Code has finally filled a legal void and provided a solution to those rulings. However, its’ Article 1 provides for a smooth transitional period where the ordinances will continue to apply to filings until said Code enters into force.

Apart from changing the Turkish authority’s denomination (now referred to as the Turkish Patent and Trademark Office), the Code provides several new features.

New features brought to trademarks

Firstly, the Code expands scope by expressly providing the opportunity to protect colour and sound trademarks.

Several changes have also been implemented concerning grounds for refusal to register a trademark. Hence, abstract distinctiveness is now an absolute ground for refusal. By contrast, registration of a later trademark without opposition by the earlier owner now becomes a relative ground for refusal when it used to be absolute. Henceforth, it is possible to register the later trademark by letter of consent from the owner, which has first been certified by a Turkish public notary. The Code also includes a relative ground for refusal enshrined in caselaw, namely the inclusion of trade names’ trademarks.

As regards to oppositions, the time frame has been reduced from 3 to 2 months. In addition, it is now possible to request proof of actual use of the trademark from the opponents, provided that it was registered for more than 5 years (whereas previously one could just submit the filing receipt in order to submit an opposition)

As for renewals, it is now possible for the applicant to renew his own trademark for part of his products and services.

The Code also expands the scope of legal action for infringement actions. On one hand, the civil suit shall be open to the trademark owner who, initially, could only take action for annulment. Similarly, the latter may now take action to obtain an order against the use of a trademark as a commercial or company name. Moreover, regarding the counterplea, the earlier owner’s non-use may be raised and the other ongoing applications will no longer stay the proceedings. On the other hand, a criminal suit may now be brought against an offering of services on the grounds of infringement, whereas under the former legal framework it used to be limited to products. Besides, the destruction of the counterfeited goods can now also be ordered.

The new features on designs

The extent of the scope of protection has been expanded: the section entitled “industrial designs” has now been renamed “designs”. . Non-registered design are now protected for for 3 years from their first introduction to the public.

The timeframe for opposition has been reduced from 6 to 3 months. Finally, the Office now has the authority to examine design novelty.

New features brought to patents

The major innovation regarding patents is the withdrawal of the non-examined patent system in order to comply with EU legal provisions.

New features brought to trademark and patent agents

For the first time, Turkish standards mention their officials and set a legal framework for them. These agents must be registered with a registry. In the event of non-compliance with disciplinary rules (not yet adopted), they may be sentenced to sanctions ranging from a warning to temporary detention or inhibition.

In conclusion, the new Code has set the necessary rules for industrial property in Turkey. Difficulties may arise, however, with regard to practicals concerning the application of criteria for proof of actual use, and concerning the applicable procedure for declaring forfeiture during the transitional period. For now, it is necessary that we wait and monitor development in the field, possible solutions and especially implementation procedures.

The sale of counterfeit products currently represents 2.5% of global imports according to the OECD, amounting to more than USD 460 billion. Up to 5% of goods imported into the European Union are counterfeited goods. The sale of these counterfeit products concerns a range of industries, from luxury products and technological products to consumer goods.

The harm caused to the trademarks is significant and goes far beyond the financials, because it has been linked to  organized crime and presents a threat to the users’ security and health.

Today the situation has worsened by the very rapid growth of the Internet which allows counterfeiters to achieve global reach, but especially, anonymity; the trade in counterfeit products through the Internet seized by the French customs amounts to 20% of imports against 1% in 2005

In addition, counterfeiters know how to use the very best marketing practices in order to achieve their goals: optimisation of search engines, purchase of advertising to direct the consumer to their site, use of spams and cybersquatting of domain names are only a few of their practices.

A multi-level strategy must then be implemented in order to decrease the sale of counterfeit products at delivery points but also at promotion sites.

The impact of online counterfeiting for businesses

• Loss of 5 to 9% of the gross turnover
• Damage to business and the trademark image
• Fraudulent use of the trademark by a third party and identity theft (of the trademark, the logo and a similar domain name), which may lead to the recovery of personal data or client banking information by counterfeiters
• Risk of confusion through the reproduction of the trademark and similar domain names: Internet users may thus hardly distinguish between the company’s official home page and the counterfeit home page, making loss of visibility a serious issue.
• Decrease in effective marketing investments
• Other issues related to the consumer’s security and health caused by use of defective counterfeit products, especially in the pharmaceutical industry.

How to reverse the trend of businesses on online counterfeiting

There are many ways for victims of such practices to limit or to stop these counterfeiters.

Step 1. Identifying the problem

The endangered business must assess the entire issue quantitatively, on national and international levels as well as on all types of websites (ecommerce websites, auction websites, BtoC, BtoB…).

By creating awareness in all business departments for the monitoring of counterfeiting activities (legal, marketing…), the business optimises its available resources and its chances of prompt detection, which also implies limited damages and faster recovery.

Step 2.  Actively fighting the counterfeiting activities

Ruthlessness with counterfeiters helps deter them from counterfeiting our business products. They will naturally be more inclined to attack passive businesses, which seem to be easier targets.
Delivery points or promotion areas should not be neglected, particularly with respect to the safeguard of marketing investments made by the business.

Even though these counterfeiting activities must be actively counteracted, it is essential to prioritise these actions by identifying the main locations where the offences are being carried out so as to act precisely where they are located.

The business may also fight against the sale of counterfeit products online by informing its clients on the official selling points and the risks of buying from alternative sites.

Finally, the business may be assisted by intellectual property protection and enforcement solutions providers, or even have the assignment delegated to their provider.

In Russia, no specific procedure is provided for the settlement of country code top-level domain (ccTLDs) disputes. A special defense strategy must therefore be adopted to fight cybersquatting in Russia.

Cybersquatting on the rise in Russia

The number of Internet users in Russia is increasing  year after year. In 2015 alone, the number of Russian users who surfthe Net on mobile devices increased by 90%. Consequently, the number of domain name registrations is growing rapidly.

Indeed, the rules on country code top-level domain name registration have become more flexible over recent years, and today one can easily register a domain name in .ru ou .рф, since registration of gTLDs in non-latin based scripts was enabled in 2009. This has led to an increase in the number of Russian cybersquatters as well as a surge in fraudulent domain name filings.

The fight against cybersquatting in Russia: a step-by-step guide

In order to take action against a cybersquatter in Russia, one must first ensure themselves that the intellectual property rights in question are in force in Russia: the Russian territory is not automatically covered by a European Union trademark.

One must therefore serve a formal notice to the fraudulent party. In the absence of a reply, a lawsuit under Russian law can be filed. Note that a formal notice should be sent prior to any action in a commercial court. However, sending a formal notice is not a necessary prerequisite if the dispute is brought before a court of common law.

In Russia, the UDRP procedure is not applicable to domain name disputes for domaine names such as <.ru> ou <.рф>, contrary to domain names in new generic top-level domains (new gTLDs) such as <.moscow> .

Trademark owners can  initiate proceedings against infringers in two different courts: commercial courts, which have jurisdiction over cases against individual business owners or legal entities as well as any commercial disputes, and common law courts, which have jurisdiction over disputes between private individuals.

In Russia, a domain name is not treated as a subject of intellectual property in its own right as are trademarks or corporate names. There is no special law to prevent the violation of trademark laws via domain names. One should therefore rely on trademark laws or alternative liability regimes in order to enforce the corresponding intellectual property rights.

Holder of a degree in Operations and Industrial Management, Katarina is part of Anja’s team and specialises in Intellectual Property and Information Technology as a paralegal.

With her extensive knowledge of the English language, Katarina can assist you on your international issues.

With an outstanding level of know-how and expertise, Katarina can assist clients in the following areas:

• Audit, advice and consulting: exploitation strategy and valorisation of your rights on the Internet
• Strategy for company online presence
• Management of your domain names: registration, renewal and opposition actions
• Negotiation and contract drafting
• Audit and pre litigation consulting
• Arbitrary litigation
• Litigation in cases of counterfeit and unfair competition
• Trademark and design Law
• Social networks
• Phishing

It is our pleasure and pride to announce that Dreyfus is adopting the Respect Zone label alongside the Respect Zone association, in order to actively promote respectful behaviour on the internet.

Join us under this label in order to fight against cyber-violence, discrimination, antisemitism, sexism, homophobia, glorification of terrorism, stigma surrounding the handicapped and harassment.

It is perfectly simple: all you need to do is visit Respect Zone’s home page http://www.respectzone.org, make sure you respect the Terms of Use and download the Respect Zone logo in order to become an advocate for respect on the Wild Wild Web!