[co-author: Xiuyuan Yan]

The Beijing Haidian District People’s Court has recently heard a case in which a domain name registrant requested the court to declare its domain name registration contracts invalid. In this somewhat unusual case, the court granted this request concluding that the object of the agreement was cyber-squatting, thereby cancelling dozens of squatted domain names.

The facts of the case were as follows: the registrant (plaintiff), a Chinese individual, signed domain name registration contracts with a Chinese registrar (defendant), and claimed that he was persuaded by this registrar to cyber-squat a number of domain names containing some famous brand names. The plaintiff claimed he was lured by the registrar with the promise of high economic gains which could be achieved through selling these domain names. It turned out that this “registrar” in question was in fact not an accredited registrar and could not handle the registration of the domain names by itself; so it outsourced the registrations to two other registrars. As such, the plaintiff argued that these three registrars colluded to deceive him. He therefore sought a declaration from the court that the registration contract was invalid and also asked for reimbursement of the registration fees.

In its judgment, the court declared the registration contract invalid on the basis of the following:

1. the registrar did not actually have a domain name registration license;
2. the registrar induced his client to cyber-squatting; and
3. the registrant was persuaded to register over 30 such domain names for cyber-squatting.

The court confirmed that the first registrar should shoulder the primary liability. Having said that, the plaintiff did not get full compensation, as the court held that he did register the domain names in bad faith. As regards the two outsourced registrars, the court found them jointly liable with the first defendant as they were knowingly instrumental in implementing this cyber-squatting scheme.

The court ordered the registrars to reimburse part of the registration fees to the plaintiff, and also ordered the collective cancellation of the cyber-squatted domain names. At the time of writing, it is not known to the public whether the defendants have appealed.

This is not the first case where the Beijing Haidian Court found against domain name registrars for participating in cyber-squatting activities. Would these cases support a brand owner in tackling cyber-squatting by arguing in court that the registrars involved are liable or at least jointly liable? This seems like a potential strategy. One advantage would be that unlike domain name proceedings under UDRP, courts can grant compensation to a winning plaintiff, and in a cyber-squatting case the plaintiff may find that the registrars are in a better position to pay compensation. However, these cases are fact-sensitive. Chinese courts are also very stringent on the formality requirements of evidence. One critical piece of evidence to be able to use this strategy would be materials which can show a clear pattern of bad faith and cyber-squatting by the registrar involved.