This article is written by Ashutosh Singh. This article analyses the case of Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd. where the Appellant had appealed before the Supreme Court to seek the reversal of the decision given by the Karnataka High Court regarding domain name infringement.
In this era where mostly all businesses run through the internet, domain names have become much more than a simple identity of internet resources. All the large companies and the services provided by them can be easily known by visiting their websites. The country where a trademark is registered is protected by the laws of that country and hence a trademark can have multiple registrations in more than one country throughout the world. The internet allows access without any geographical limitation and hence a domain name is accessible irrespective of the geographical location of the consumers.
A cyber world has been created with technological advancement parallel to the physical world and at the heart of this cyber world is the internet. The internet has touched or made an impact on every aspect of our life. In the situation that you do not know the exact website, you could simply type the name of the manufacturer/business/trader in the address bar and search expecting that it will take you to the official website of the manufacturer/business/trader.
The present case is about a ‘domain’ name dispute and passing off. The case was decided on 6th May 2004, by the Supreme Court of India. The appellant is Satyam Infoway Ltd. and the respondent is Sifynet Solutions Pvt. Ltd. The 2 judge bench, in this case, comprised Ruma Pal, J. and Venkatarama Reddi, J.
Facts of the case
- In this case, the appellant, Satyam Infoway Ltd., alleged that the respondent, Sifynet Solutions Pvt. Ltd., deliberately registered and ran a domain name that was confusing and similar to the one owned by them.
- The appellant had registered various domain names in 1995 such as:
- In 1999, they registered the domain names with the Internet Corporation for Assigned Names and Numbers (ICANN) and World Intellectual Property Organization (WIPO).
- It submitted that the word ‘Sify’ its corporate name was coined by using the elements of its corporate name ‘Satyam Infoway’ and it had reaped considerable goodwill in the market.
- The respondent started their business of internet marketing in 2001 under the domain names:
- The respondent carried out internet marketing by using the word ‘Siffy’ as part of its domain names like siffynet.com and siffynet.net, and said that these were registered with ICANN in 2001.
- Sifynet Solutions has also been accused by Satyam Infoway of an alleged attempt of passing off its services like those belonging to Satyam Infoway by using a deceptively similar word as part of its domain name.
- Satyam Infoway claimed that this similar domain name would cause confusion in the minds of the consumers, who would mistake that the services of Sifynet Solutions belonged to Satyam Infoway.
Background of the case
City Civil Court, Bangalore
- In the City Civil Court, Bangalore, Satyam Infoway filed a suit and had applied for a temporary injunction against Sifynet Solutions.
- The temporary injunction was decided in favour of Satyam Infoway by the Court.
- The Court said that Satyam Infoway was the prior user of the word ‘Sify’, and had gathered immense reputation with respect to the sale of the internet and computer services sold under the same.
- Further findings of the Court revealed that Sifynet Solutions’ domain name was confusingly similar to that of Satyam Infoway, and therefore created confusion in the public’s mind with regard to their source of services.
Karnataka High Court
- The Karnataka High Court heard the appeal which was made by Sifynet Solutions.
- The High Court relied on the balance of convenience to support its decision.
- The Karnataka High Court also said that Sifynet Solutions already invested quite a lot in acquiring a huge customer base of about 50,000 members for its business, which if the Court found it in Satyam Infoway’s favour would cause massive hardship and irreversible injury to the respondent.
- The Court noted that the two parties that were involved in business were different, therefore customers being misled by similar domain names is not possible.
- Moreover, as Satyam Infoway had that name to use in trade, the Karnataka High Court thought that it may not cause them significant hardship to deny the temporary injunction.
- Whether a domain name can be a word that is qualified to differentiate and identify the trade/service which is made available to the users of the internet?
- Whether the same legal rules apply to internet domain names as the legal norms or laws applied to intellectual property like trademarks?
- Whether the principle of passing off under the trademark law applies to domain names?
- Whether the balance of convenience lies with the appellant as applied in this case?
Arguments by the appellant
- Satyam Infoway submitted that the word ‘Sifi’ was an amalgamation of components of its corporate name ‘Satyam Infoway’ and had gotten extensive goodwill in the market.
- Satyam Infoway claimed that Sifynet Solutions was trying to pass off its services like those belonging to Satyam Infoway by operating a deceptively similar word as part of its domain name. It also claimed that this would cause confusion in the minds of its consumers, who would mistake the services of the respondent, Sifynet Solutions as belonging to Satyam Infoway thereby causing a lot of damage to its reputation and also it’s business.
- The appellant claimed that it was a leading information technology services company apart from being one of the largest internet services providers in the country.
- The appellant also claimed that it had more than 5 lakh subscribers, about 480 Cybercafes, and 54 places of their presence spread over India alone.
- It also said that their company was the first Indian internet company to be listed in 1999 with NASDAQ where it traded under the trade name ‘Sify’. This fact was given wide coverage in the leading national newspapers of the country.
- The appellant put on record the stringent conditions it had to go through and that it deposited a large fee for having a trade name included in the NASDAQ international market and it has also submitted that since 1999 its shares are actively traded on a daily basis on the NASDAQ.
- It is also claimed by the appellant that it has widely used the word ‘Sify’ as a trading name/domain name for its software business and services and it has made brochures and advertised marketing and offered services under the name ‘Sify’ on the internet.
- To authenticate its claims the appellant has submitted its sales figure and expenses on advertisement for the market promotion of its business under the trademark ‘Sify’.
- It is also claimed it has applied for registration of more than 40 trademarks with the prefix ‘Sify’ under the Trade and Merchandise Marks Act. 1958 (since replaced by the Trade Marks Act, 1999).
- The appellant submitted documents to show that it had won many awards and prizes in recognition of its achievements under the trade name ‘Sify’.
Arguments by the respondent
- Sifynet Solutions claimed that it had started using the word ‘Siffy’ as part of their domain name under which it operated for internet marketing namely Sifynet.com and Sifynet.net appealing to the Court that it had registered them with ICANN in 2001.
- Sifynet Solutions challenged that the registration of a domain name did not confer any intellectual property right in the name under law. It added that a domain name is just an address on the computer, which permits the user to reach the owner of the business, and authorises no comparable property rights in the same.
- The respondent submitted that the word ‘Siffynet’ characterises its corporate name and its domain names.
- The respondent claimed that the word ‘Siffy’ was the brainchild of its founder Director, Mr Bawa Salim.
- The respondent further added that ‘Siffynet’ was arrived at by combining the first letter in the names of their five promoters, namely Saleem, Ibrahim, Fazal, Fareed and Yusuf. The word ‘net’ implies the software/internet based business of the respondent.
- The respondent also said in their defence that it was not aware of the appellant’s trade name and trading style ‘Sify’.
- Section 2(zb) of the Trade Marks Act, 1999
- Section 2(m) of the Trade Marks Act, 1999
- Section 2(j) of the Trade Marks Act, 1999
- Section 2(z) of the Trade Marks Act, 1999
- Rule 4 of ICANN
Judgement of the case
The Apex Court held that the Trademark Act, 1999 will be applicable to the domain names in this case relying on several other cases judged in India before this case. The decision was given in support of Satyam Infoway on this issue.
By looking at the evidence of sales and prior use and similarity in the domain names and other factors, the Supreme Court held that domain name has the same characteristics as that of trademark and hence the rules of passing off as laid down in the Trademark Act, 1999 will apply in this case.
On the basis of facts and merits, the Supreme Court finally ruled in favour of the Appellant. The appeal was accordingly allowed and the earlier decision given by the High Court was set aside. Also, the Apex Court acknowledged the decision given by the City Civil Court.
Observations of the court
- The Supreme Court observed that domain names are subject to the same rules which are applied to trademarks under the Trade Marks Act, 1999, although there is no law in India that has specific provisions for domain names.
- The Apex Court said that different Courts have regularly applied the law relating to passing off under the Trade Marks Act, 1999 to domain name disputes. It added that disputes can be between domain name owners and trademark owners or between domain name holders themselves. The SC relied on the following cases to arrive at its decision:
- Rediff Communication Ltd. v. Cyberbooth and Anr. (1999)
- Yahoo Inc. v. Akash Arora, (1999)
- Dr. Reddy’s Laboratories Ltd. v. Manu Kosuri, (2001)
- Tata Sons Ltd. v. Manu Kosuri, (2001)
- Acqua Minerals Ltd. v. Pramod Borse & Anr.(2001)
- Info Edge (India) Pvt. Ltd. & Anr. v. Shailesh Gupta & Anr. (2002)
- If a person uses the same domain or phonetically similar name that is used by another person, it may lead to loss or diversion of consumers due to confusion in their mind about the services provided and can be construed by them as misrepresentation. The Supreme Court also made a very pertinent observation that the use of similar domain names has similar essentials of passing off like protection of Goodwill, the reputation of the business in the market, and not misguiding the public by creating confusion in their minds, and lastly the loss thereby. Thus, on the issue of applicability of passing off, the SC concluded that domain names are to be protected under the same law of passing off as described under the Trade Marks Act, 1999. The Court relied on the following judgements for the same:
- After an elaborate description of sections 2(zb), 2(m), and 2(z), the Court observed that the role of a domain name was to provide the computers with an address on the internet but the internet with time has evolved from being a communication means to carrying out multiple commercial activities. Due to this a domain name has now become an identity of a business. Thus, henceforth a domain name may be considered as service under Section 2(z) of the Trade Marks Act, 1999.
- The Court questioned the respondent on its domain name that if the founders of the company were the five people namely Salim, Ibrahim, Fazal, Fareed and Yousuf, then why the domain name of the respondent was already registered as ‘Siffynet’ in the name of Mr C.V. Kumar.
- The Court observed that in the original written statement, the respondent had submitted that although its domain name was initially registered in the name of Mr C.V. Kumar but at present, the said person did not have any connection with the respondent because he was no longer a partner(sio).
- The last issue was about the balance of convenience. The Court observed that either ‘Sify’ or ‘Siffy’ had to go. The Court observed that the appellant was the prior user and had presented enough evidence to show that the public recognises the trade name ‘Sify’ with the appellant.
- The Court said that the respondent, however, had not produced sufficient proof to avert the allegations in support of its case. It was proved beyond doubt that the Appellant was a prior adopter of the domain name and prior user. Thus, the Balance of Convenience was held to be in favour of the appellant, Satyam Infoway in the case.
The Apex Court said that a domain name in the modern-day has advanced from a simple business address to a business identifier. Hence, a domain name is not just a gateway for internet navigation, but it is also a tool which differentiates and classifies goods or services of the business while providing the specific internet location in parallel. This feature allows them to be associated with trademarks, and concurrently to be included within the purview of the Trade Marks Act, 1999.
No proper justification was given by the Respondent, as to its adoption of ‘Siffy’ and how it arrived at that name, but on the other hand, the Appellant was a prior adopter and prior user and was well known and had a reputation that was good which was amply backed by documented proof.
The lacuna existing in the domain name system (DNS) required an international regulation which was put in effect through WIPO and ICANN. India is one among 171 countries of the world that are members of WIPO which came into being for promoting the protection, dissemination and use of intellectual property throughout the world.
The collaboration between ICANN and WIPO has resulted in the setting up of a system of registration for domain names with accredited Registrars and has also resulted in the evolution of the Uniform Domain Name Disputes Resolution Policy (UDNDR Policy) by ICANN on 24th October 1999. The UDNDR Policy has provisions for the kind of rights which a domain name owner can expect to have upon registration with ICANN accredited Registrars. An individual can complain etc. before administration-dispute-resolution service providers under Rule 4 of ICANN.
For some time now, the internet has become a basic part of human life and a lot of transactions take place online such as trading and shopping etc. Due to these activities, e-commerce has become popular and a very strong and prominent means to regulate and control the market and sometimes it prevails even over the offline market.
A voluminous increase in e-commerce activities means that there is a need to protect the business on the internet. For a business that takes place offline, there are trademark laws which protect them, but when we deal with business on the internet it is hard to distinguish between them if they are similar in nature and have similar domain names.
Because of no concrete law to cover and protect the online markets and its products, there have been several cases that have arisen regarding the safety and protection of these goods and businesses. The present case and Yahoo!, Inc. v. Akash Arora (1999) are good examples. The Apex Court in this case acknowledged the existing voids in law when it came to domain names. In a somewhat radical move, to address a void in the law, the Court observed that trademarks and domain names operate differently yet they need protection as these days businesses online are identified by their domain names and it is not just an address anymore.
The Apex Court took the right decision to uphold the City Civil Court’s decision and set aside the decision of the High Court. But we need a new set of regulations that cover the domain names in its ambit because the trademarks legislation in the country is not equipped to deal with the innumerable disputes that arise in the domain name. Furthermore, the Information Technology Act, 2000, has also failed to fill in the lacunae in the Trademarks Act pertaining to dealing with domain name disputes.
The protection of trademarks is territorial in nature but domain names surpass geographical boundaries and domain names need worldwide distinctiveness and national laws are inadequate to successfully protect domain names. Just the way a trademark distinguishes one product from another, a domain name identifies a business on the internet. In fact, every internet site can be controlled and traced back by its unique domain name that differentiates it from the other domain names.
Mostly the business organised on one domain name is different from another’s but the problem arises when two different persons/companies use an almost similar domain name and maybe in a similar line of business which results in the loss to the company which was a prior user and well reputed and identified by that domain name. The Supreme Court, in this decision, refers to international organisations such as the WIPO and private bodies such as the ICANN. These bodies are involved in devising technology law that addresses domain names.
In all the cases involving domain name disputes, the Court held that there is a need to protect the domain names and the business of the owner of that domain name holder. Since domain names and trademarks serve different purposes it is critical to have a different set of laws that cover the domain name regulations and their disputes.