(English) Legislative Bill aims to inhibit practice of cybersquatting

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Admirable for breaking any physical barrier, the advent of the Internet still surprises for the lack of regulation and for decentralization in the operation of its control by the Government. With its consolidation as a business platform, the Internet is no longer only an accessory of the company’s activities, becoming a major instrument for the dissemination of brands and marketing of its products, the Internet domains (websites) became an essential and structural element of the company’s day by day activities, turning into an element with extremely relevant commercial value.

Occur that the registration of Internet domain names can still be performed using brands and corporate names of existing and established companies, in this sense, the sales negotiation of Internet domain names has become a kind  of profitable activity, although based on bad faith, creating a new form of purchase intangible assets, a practice known as cybersquatting.

The cybersquatting is the registration of domains related to big companies, personalities, brands and/or product with the objective of getting financial advantages with the future sale of such domains to the person or the legal owner of their company, brand and/or products. Thus, through the practice of cybersquatting, third parties acting in bad faith can gain unlawful enrichment through the selling of domains for the parties really interested in acquiring their property to the effective dissemination of its commercial activity and or image. In the words of Patricia Peck[1] such individuals act as true virtual squatters.

On the late 2000s, the phenomenon of the Internet bubble allowed the speculators to obtain sumptuous gains from the sale of Internet domains. Anyone could have registered websites related to known brands or expressions with the extension “.com” or “.com.br” for example, for extremely low amounts, almost irrelevant by the amount of their subsequent sale. Domains containing popular, generic terms and terms with strong commercial appeal were sold for millions in the end of the 90s and early 2000s, for example, the domain “vodka.com ” which was acquired by Russian billionaire Roustam Tariko, responsible of the biggest vodka manufacturer in Russia for 3 million American dollars, the domain “diamonds.com” was sold for 7.5 million American dollars for Ice.com, a  jewelry retailer . Today, the speculation in on buying and selling domains still occurs and sets “profession” of people known as “domainers” or “cybersquatters”.

Currently, the agency in charge of the domain name registration in Brazil is the Registro.BR and the criterion to be adopted for register the name of a domain in Brazil follows the “first come, first served rule”. In other words, it is the one who first request and proceed with the registration protocol to get the right to use particular domain, fulfilling the requirements of the procedure and comply with its requirements, will be its rightful owner.

This register, it should be noted, lacks of material analysis regarding the possible conflict between the domain filed by the applicant and registered trademarks before the National Institute of Industrial Property (INPI) or corporate name of companies registered before Boards of Trade. The Registro.BR performs only an internal analysis on domains already registered before the agency so there is no duplication of registers.

Different procedure, in the other hand, occurs with the registration brands before the INPI , which is necessary  a preliminary analysis on the classes in which it intends to be registered a  certain brand (other than one with high reputation), should be attached to the protocol application for registration  the contract or the company’s bylaws in order to relate the class in which it intends to register the brand, to the purpose of the company, avoiding speculation regarding the registration of trademarks.

In this point, a connection between intellectual property and the registration of Internet domains is noticed. Trademark is defined as the distinctive signal attached to products or services in order to identify and distinguish them. It is simply a signal capable of used to identify products and services, a brand shall distinguish similar of different products or services[2]. The article 15 of the TRIPs[3] Agreement defines brand as “Any sign capable of distinguish goods or services of a company relating to another”. The Agreement includes a non exhaustive list of such signs, including letters, numbers, figurative elements and color combinations.

             It seems, therefore, the registration of Internet domains and trademark law intersects in the matter of identifying a product or service and the registration of a trademark before INPI under the current national legislation does not generates automatic rights that prohibit third parties to apply such brand in an Internet domain. It is noticed that the two spheres operate separately and in parallel, without communication, when in practice, before consumers opinion, the website of a company is seen as an extension of their brand and vice versa.

The resulting conflicts between registered trademarks before the INPI and the use of Internet domain names still requires a  specific legal provision that regulates  the subject, as given opinion of the Justice Minister Villas Boas Cueva in Special Appeal No. 594,404[4]. Realizing the existence of a conflicting Internet domain with a brand name or company name, must the interested party  notify extra judicially the domain holder and if not successful, must appeal to the judiciary to request the transfer of the same or prevent of its use. The Registro.BR, itself, already instituted a conciliation chambers to try to solve this type of conflict.

According to the Minister, the adoption of the principle of first come, first served does not mean that there is a absolutely and definitively position by the judiciary and that the legitimacy of the obtained domain name registration may be challenged by the owner of a distinctive signal similar or identical to previously registered, either business name or brand . According to Cueva, the cancellation or transfer of the domain and potential liability will depend on clear demonstration of bad faith.

In this sense, the Congressman Claudio Cajado (DEM/BA) presented on 03 March 2011 the Legislative Bill N° 835/2011[5] which aims to curb the practice of cybersquatting. The project has already been approved by unanimous vote on many committees, including the Committee of Science and Technology, Communication and Data processing (CCTCI ) and the Economic Development, Industry and Commerce  Commission (CDEIC). Currently, the Project is pending on the Congress, is awaiting the Commission’s of Constitution and Justice and Citizenship (CCJC) analysis.

In case the legislative bill is approved and published on the Official Gazette, it will not be allowed to use identical or similar names to those who already have a registered trademark before INPI, title of establishment, trade name, legal name, family name or surname, pseudonym or famously known nickname, singular or collective artistic name, title of protected intellectual work or other domain name other than the applicant’s ownership whose record which there is no consent of the owner, his heirs or successors. The names of internal or external public legal entities also may not be used in Internet domains except in cases where the applicant is a legitimate representative of such legal entities.

Finally, the bill also seeks to determines that the only legitimizing request of the registration of Internet domain names in the categories with extension “.br”:  physical and legal entities, legally represented or established in Brazil, registered before the Individual Taxpayers´ Register (CPF/MF ) or National Taxpayers´ Register (CNPJ/MF ) in good standing and that the domains registered not in disagreement with the provided in the bill, prior to its publication shall not be registered.

According to Congressman Cajado, the project aims to curb existing opportunistic behavior due to the lack of regulation that has always guided the industry sector, allowing the anticipation of domain speculators due the legitimate trademark holders to the domain registration process in order to profit from its subsequent sale.

The legislative bill, in case of its approval, shall have a big impact regarding the protection of intellectual property rights of persons and companies, as well, shall constitute as a big step towards a more efficient regulation of the Internet in Brazil.

Gabriel Soares Queiroz – Lawyer member of the Business Consulting Team

[1] PINHEIRO, Patrícia Peck. Direito Digital. 4th Edition. São Paulo.

[2] DE LAS CUEVAS, Guillermo Cabanellas e BERTONE, Luis Eduardo. Derecho de Marcas, Editorial Heliasta S.R.L, 1989, tomo I, p. 14.

[3] Decree numéro 1,355, of 30 December 1994

[4] Special Appeal (Recurso Especial) No. 594,404 – DF (2003⁄0168857-8).

[5] Available at:  http://www.camara.gov.br/proposicoesWeb/fichadetramitacao?idProposicao=496040

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