What really happened with the NewZealand.com case

Costs and trademark applications reveal murky world

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Following the saga over the NZ$1 million (£350,000) that it was recently revealed the New Zealand government had paid for NewZealand.com, further parliamentary questions have uncovered more revelations behind the expensive cock-up.

MP Rodney Hide, a specialist in finance in auditing, has been unearthing quite what happened and how come so much public money was unnecessarily wasted.

In answers given today to Parliamentary questions asked just over a week ago, it appears the government reached agreement with Virtual Countries to pay it NZ$1 million for NewZealand.com, just 19 days after its attempt to steal the domain at domain arbitrator WIPO had failed and the government was accused of reverse domain name hijacking.

An extraordinarily small time-frame for such agreement to be reached you would think, especially considering the sums involved. Unless of course you believe that the government already knew its legal case was doomed to failure.

That, after all, is exactly what the three WIPO judges believed. In their official report, they stated: "Having read the Response of the New Zealand Government to the WIPO Secretariat’s questionnaire referred to above, the Panel is unanimous in its view that when the Complaint was launched, those responsible for the Complaint, the New Zealand Government, were well aware that a claim to trademark and service mark rights in respect of NEW ZEALAND was baseless."

So, the government KNEW it was going to fail before it even took out the action. How much did this action cost? Well, thanks to immaculate bookkeeping (and Mr Hide's questions), we can tell you that it cost exactly NZ$57,770.21 (£18,500). Of this, the vast majority - NZ$47,100 (£16,500) - was taken up by legal advice. Legal advice that presumably said the government had no chance of winning. (We could have told them that for, say, £1,000.) So, another NZ$58,000 wasted unnecessarily.

It gets better though.

The New Zealand government did manage to get hold of NewZealand.biz following a very dubious decision by WIPO because of its impending trademarks on 2 October 2002.

Its bill in that case was just NZ$18,734.54 (£6,560) of which NZ$14,491 (£5,070) was in legal fees.

The New Zealand government had applied for five trademarks covering the words "New Zealand" for a range of goods in June 2001 (T/marks 640615 to 640619). It was sent warning of abadonment a year later and, obviously inspired, within a week it filed at WIPO against the owner of NewZealand.biz.

WIPO decided to award the domain on the basis of these trademarks (itself an arguable position). But the trademarks themselves were REFUSED by the New Zealand Patents Office just 27 days later on 29 October 2002. The government made no attempt to fight the decision and they were abandoned on 17 March 2003.

Even more interestingly, the New Zealand government failed to raise the fact that it had also applied for two "Biz" trademarks at exactly the same time as the other goods trademarks. These were finally accepted AFTER the WIPO decision on 4 November 2002 and were registered last month on 3 March 2003.

Why on earth didn't the government raise these trademarks? Surely a pending "biz" trademark makes its case all the stronger? Or could it be that this would make its aggressive approach too transparent and risk not only a decision against it but also the charge of reverse domain name hijacking that was subsequently found in the NewZealand.com case.

You also have to question Frederick M. Abbott's skills as a WIPO judge. Since WIPO is solely concerned in these cases about trademarks, is it not incredible that Mr Abbott completely failed to notice the "biz" trademarks? Or if he did, should he not have commented on the fact?

Mr Abbott himself is one of judges most frequently chosen by WIPO to sit on single-panellist cases. Although his pro-complainant track record is not as high as more controversial WIPO judges, it is certainly above average.

In the case of the NewZealand.com case, made just one month later, the situation was slightly different however. The final decision not to hand over the more valuable .com domain was made after the trademarks had been refused on 29 October 2002. The original complaint to WIPO was made on 12 August 2002 and the final piece of evidence submitted was on 5 October 2002.

So the panel could well have been aware that the trademark application had been refused (simply by checking online) but were not able to raise this fact since it had not been submitted in evidence. Indeed, it was impossible for it to have been.

This may explain the odd paragraph in the .com judgement: "The Complainant [NZ government] has no trademark registrations of the name and has not produced in evidence details of any such registrations in the name of anybody else whom she represents. In passing, the Panel observes that the trademark and service mark applications for NEW ZEALAND filed in New Zealand by the Complainant of themselves are no indication that the Complainant has any relevant rights in the name and the Panel ignores them. On their face they are open to the objection that they are deceptive unless the specifications are restricted to goods/services from New Zealand; yet, if the specifications are so limited, the inherent descriptiveness of the name will be highlighted."

This then is why the New Zealand government thought it would win the case since it would play by WIPO rules by having impending trademarks. This was no doubt the expensive legal advice it was given.

And it worked. For .biz anyway. Among WIPO's many many sins in deciding domain cases has been the acceptance of an applied-for trademark as pseudo-proof of a real trademark. It manifestly fails to account for the fact that a soon-to-be trademark owner could simply delay their action until they received the trademark and ignores the fact that many trademark applications fail.

But as soon as the trademark applications were turned down on 29 October 2002, the New Zealand government knew it would - or, rather, should - lose the case and so drew up plans to buy the NewZealand.com domain, without consultation, we may add, with Parliament of any of those taxpayers that would foot the bill.

So a huge waste of money because the Associate Minister of Foreign Affairs (in WIPO reports) and Minister for Trade Negotiations (in Parliamentary questions) the Honourable Jim Sutton wanted the .com domain.

And if our suspicions are right, we may go through the whole thing again for NewZealand.net and possibly even NewZealand.info. But more of that later. ®

Related link
Intellectual Property Office of New Zealand

Related story
NZ.gov coughs up NZ$1m for newzealand.com

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