IP Views

www.Cybersquattersbeware.com

Mar 6, 2014
By: Jefferson P. Ferrer

Cybersquatters beware.

On February 18, 2014, the Supreme Court of the Philippines handed down its decision on the petitions seeking the declaration of the Cybercrime Prevention Act of 2012 as unconstitutional. In what is said to be one of its more controversial decisions to date, the Court upheld several key provisions of the law - among them, the crime of cybersquatting.

The Problem

Information technology law author David Bainbridge, explained cybersquatting saying that it “occurs where a person registers a company name, trademark or the name of a celebrity in the hope of selling on the name to the relevant company or celebrity”[1].

In a manner of speaking, it is like kidnap for ransom where instead of a person it is the domain name “abducted” with the view of possibly extracting ransom money from a company or celebrity.

Section 4 (a) (6) of the Cybercrime Law defines it as:

“The acquisition of domain name over the internet in bad faith to profit, mislead, destroy the reputation, and deprive others from registering the same, if such a domain name is:

(i) Similar, identical, or confusingly similar to an existing trademark registered with the appropriate government agency at the time of the domain name registration;

(ii) Identical or in any way similar with the name of a person other than the registrant, in case of a personal name; and

(iii) Acquired without right or with intellectual property interests in it.”[2]

Domain names are the web addresses that Internet users type in to be able to view websites.

The act described in paragraph (i) is the usual modus operandi of the crime’s perpetrators. Cybersquatters seeking to profit from brands, in most instances registered as trademarks, register web addresses similar to it with very little, or no variation at all. For example, a cybersquatter who wanted to ride on the esteemed reputation of the Ateneo Law School may register “www.ateneolaw.com”, “www.ateneo-law.edu”, “www.law.ateneo.com” and countless other variations. They, of course, know that the Ateneo Law School registered its own website under the address “www.law.ateneo.edu”.

A person who is not familiar with the Law School’s official web address may be led to any of the other websites other than its official one. In marketing terms, cybersquatting directs a potential target audience away from the real brand as it is presented just like the Ateneo Law School website. What’s worse is instead of selling the domain names to the real owners, some of these cybersquatters sell the knock off web addresses to the highest bidder among competing brands to make sure that not only does the real brand owner fail to reach its target clientele but also, that the competing brand gets a hold of them.

To counter the increasing concern over crimes involving exploitation of information and communications technologies, including cybersquatting, the Cybercrime Law was approved in September of 2012.

The Decision

Barely a month after its enactment, the Supreme Court issued a temporary restraining order against the implementation of the Cybercrime Law. The original 120 day TRO was extended “until further notice” in a decision reached in February 2013. A year later, the Supreme Court rendered the decision.

The decision penned by Mr. Justice Roberto Abad upheld the constitutionality of the provisions on the crimes such as illegal access, data interference, cybersquatting, identity theft, cybersex and child pornography. It, however, held other provisions as unconstitutional such as those on unsolicited commercial communications and the separate penalties for online libel.

On the matter of cybersquatting, the Supreme Court held that the petitioners failed to show how their argument that Section 4 (a) (6) of the Cybercrime Law violated the equal protection clause enshrined in the Constitution. The Constitution states that “no person shall be denied equal protection of the laws”[3]. The leading case of People v. Cayat[4] explains that this provision mandates only reasonable and not absolute classifications[5]. The petitioners in this case argued that the Cybercrime Law failed to make reasonable distinctions as would result in liability for those who register a brand or trademark as a domain name by virtue of use as real owner or as an alias. The Supreme Court ruled that the equal protection clause finds no relevance against the Cybercrime Law insofar as cybersquatting is concerned because the matter Section 4(a)(6) punishes is not the mere fact or registration of the domain name but the bad faith attending such registration. In particular, the Court said that “there is no real difference whether he uses [“Julio Gandolfo”] which happens to be his real name or it as a pseudo-name for it is the evil purpose for which he uses that the law condemns.”[6] Hence, any action involving an allegation of cybersquatting boils down to presentation of proof of bad faith in registration.

The Question

With the implementing rules and regulations for the Cybercrime Law in the works, we can expect a wave of actions involving cybersquatting to be filed in the near future. The question is: Are we ready for this? The prosecution of these cases will test the limits of legal experts’ knowledge of the Cybercrime Law, as well as the intricacies of intellectual property law and information technology law. Where will the suits be filed? What courts or agencies take jurisdiction over these matters? What remedies are available to the plaintiffs, and will these be effective? We are treading unfamiliar waters, and our legal system will be forced to adapt to the ever-changing landscape of technological innovation.

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[1] Bainbridge, David, Introduction to Information Technology Law, 6th Ed.,2008, p.202.

[2] Section 4(a)(6), Republic Act No. 10175, An Act Defining Cybercrime, Providing for the Prevention, Investigation, Suppression and the Imposition of Penalties Therefor and for Other Purposes [hereinafter known as the Cybercrime Law].

[3] Section 1, Article 3, The 1987 Constitution of the Republic of the Philippines.

[4] 68 Phil. 12 (1939).

[5] Id.

[6] Disini v. Secretary of Justice, G.R. No. 203335, February 11, 2014.

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