How to Prevent Cybersquatting in China

With more than 772 million internet users in China in 2017, it is no surprise that cybersquatting is also occurring under (.cn and. com.cn) ccTLDs. China’s first-to-file approach to domain names facilitates an environment where cybersquatters constantly scout for "good" domain name squatting opportunities. This is understandable since, for most cybersquatters, their worst-case scenario would be merely losing rights to the domain name and wasting the registration fee. This is in stark contrast to the legislation in the United States, for example, where the Anti-Cybersquatting Consumer Protection Act provides plaintiffs with the opportunity to apply for statutory damages ranging from 1,000 to 100,000 USD per domain name.

So what can a trademark owner do if a third party has registered their trademark as a domain name under a cn. or com.cn ccTLD? The answer depends on how important ownership of the domain name is.

If ownership is secondary, and the domain is pointing towards infringing content, a cease and desist letter to the registrant, a take-down notification to the hosting provider, and a notification to the registrar should potentially suffice. If the infringing content has been taken offline by either the registrant or hosting provider, or if the domain has been suspended by the registrar the domain should be placed under observation until it expires. It can then be registered when available again for a defensive purpose or kept under observation for the reappearance of new infringing content.

However, if ownership is important, there are several steps the trademark owner can take to secure the domain name (potentially).

1. The first option is the least time-consuming but, unfortunately, often the least successful. The trademark owner should make it clear to the cybersquatter (the registrant) that its actions are infringements, which are actionable under Chinese law. The trademark owner can point out, or merely threaten, to take legal steps should the cybersquatter not reply. In return, the trademark owner may receive an impolite message including an offer to buy the domain, often similar to the cost of a .CN Dispute Resolution Policy (CNDRP). Such a reply is, however, not completely worthless, as it can be useful as evidence proving bad faith in a subsequent CNDRP filing.
2. The second option is to request the registrar to cancel the domain name registration due to the infringement and subsequently try to buy the domain when the redemption period is over. It can, however, be hard to prove the illegality of the domain to the registrar, especially if the domain is not pointing towards a website with illegal content and/or where the domain is not used for phishing.
3. The third alternative is to file a CNDRP. This option comes with an attached cost (dependent on the number of disputed domain names and panelists) and several requirements must be met:

• The domain must be registered in bad faith.
• The cybersquatter does not have any rights to the name.
• The domain has not been in control of the registrant for more than three years.
• The complainant has the trademark registered in China.

The good news is that the WIPO Arbitration and Mediation Center now offers domain name dispute resolution services for .cn and .中国 (China), making the undertaking of a CNDRP a bit easier than before. 

Where undertaking a CNDRP is too expensive, and where warning letters or notifications have not led to the desired outcome, the trademark owner is left with the option of purchasing the domain (hopefully at a lower price than the CNDRP cost). However, in most cases purchasing the domain from a cybersquatter is undesirable, as this would incentivize further cybersquatting. In light of the new amendment to the Anti-Unfair Competition Law (AUCL), the trademark owner should make it clear that the cybersquatter could be subject to hefty fines.