Domain dispute puts question mark over UK ecommerce
Game.co.uk goes to appeal
A dispute over ownership of "game.co.uk" could have significant and far-reaching effects on e-commerce in Britain.
The domain, which comes under the control of private company Nominet, was awarded to Game plc in January following a complaint that the owner, Garth Sumpter, was misusing it. Mr Sumpter, a consultant for the games industry, has owned the domain since October 1995 and immediately appealed the decision.
That appeal will soon be heard by three Nominet-chosen experts in a case that raises important questions over UK domain name rights and the basis on which companies can trade online.
The battle for Game.co.uk is unusual and highly significant for two reasons. Firstly, it concerns a generic and common word in the English dictionary - "game". And secondly, Mr Sumpter was using the domain to run a video-game-selling business.
Nominet, as controller of the .uk registry, has created over 3.8 million .uk domains and yet only heard 2,104 domain disputes since its Dispute Resolution Service was launched in September 2001 - an extremely small number in comparison to other top-level domains such as .com or .org. Of these, only six have ever gone to appeal. Nominet is justifiably pleased with this record, even boasting of the service in a recent letter to Internet overseeing organisation ICANN.
These are five main reasons for the service's success:
- Nominet insists on a mediation session with the parties in dispute before it will allow it to go further.
- It asks for a significant investment - £750 - from the Complainant if the mediation fails or couldn't happen and the Complainant wants to take it further.
- Its domain ownership rules are grounded in fairness and have been twice reviewed following feedback from the Internet community as the Net has continued to evolve.
- Its decisions have been for the most part consistent and well-argued.
- Experts are handed cases in a pre-decided order
The result of this approach has been to stack the odds against both abusive registrants and acquisitive companies. The system also tends to favour existing owners of domains by making it the job of complainants to prove their case.
In many other domains around the world - where cases are decided by ICANN's UDRP rules - the situation is flipped and complainants traditionally have the upper-hand, with the existing owner forced to argue why they should retain the domain. Big questions have also been raised over the opaque arbitrator selection process. The result has been a huge number of cases, with resulting financial benefits for the four companies allowed to arbitrate in such disputes.
Kicked in the fundamentals
However, both Nominet's DRS system and the ICANN UDRP approach have tended to recognise that no one has greater rights over generic names, names with a common meaning, than anyone else, so the owner is entitled to keep the domain. Equally, few cases have seen company pitched against company since they tend to see the sense in steering clear of each others' trademarks.
That the Game.co.uk decision saw both of these rules-of-thumb dismissed, and under the Nominet system, is highly unusual. Even though Nominet stresses all cases are decided on their individual merits, if the decision is upheld in appeal, it will also have a lasting precedent thanks to the very few appeal decisions in Nominet's DRS system.
Mr Sumpter, the original and at the moment still current owner of Game.co.uk, confessed to us that he didn't think for a second that the original decision would go against him. Now he sees it as a case of big company against small company. Game plc had a £171m turnover in 2002 and has nearly 350 shops across the UK. Mr Sumpter on the other hand has his consultancy and Game.co.uk, which he says makes £60,000 to £70,000 pre-tax profit a year. If a big company can shut down an existing online business - and competitor - through financial might, and over a generic name such as "game", it could have dire knock-on effects for the hundreds of thousands of small online businesses running from .uk domains.
Game plc sees things differently. Its finance director David Thomas told us that the company feels Mr Sumpter had infringed on its rights by starting to sell video games on his site, which was and has been mistaken for Game plc. Mr Sumpter is benefiting from Game plc's good name, it claims. "We have rights under Nominet's procedure and we have exercised those rights. Mr Sumpter has a right of appeal which will be on the points of law," Thomas explained. "We're confident Nominet will uphold its original decision." Mr Sumpter is, of course, confident that the decision will go his way.
And so the spotlight comes down on the original decision made by Scottish solicitor Andrew Lothian, a specialist in domain name law, on 18 January.
Lothian produced a lengthy 17-page explanation of his reasoning in the case in which due consideration was given to nearly all points raised by both parties. However it does contain some unusual assumptions and several apparently contradictory statements.
Simply put, the Nominet approach to domain resolution comprises two elements that need to be proved by the complainant. One, that they have legitimate rights over the name. And two, the existing owner must be misusing that domain. If both are satisified, the complainant is awarded the domain. If either side is unhappy with a decision, they can go to appeal for £3,000 and/or take the dispute to a court of law for judgement.
Mr Sumpter and his lawyers take issue with a large number of statements within the original decision to the extent that they are unhappy at the 1,000 words appeal limit, arguing it doesn't provide sufficient to make all their arguments.
Straight off, Mr Sumpter said he is more than prepared to sign a declaration of truth for his appeal. In the original decision, the expert, Mr Lothian, made it clear he was according less weight to Mr Sumpter's filing because he had failed to include such a declaration despite it being clearly written down in the DRS procedure. Mr Sumpter swears this was no more than an oversight.
Mr Sumpter did not wish to discuss precise legal arguments he will be deploying before the Appeal begins, but a review of Mr Lothian's decision raises plenty of questions.
He accepts two fundamental arguments put forward by Game plc: that a domain name's suffix is not significant to the point of irrelevance; and that Game plc's rights with regard to the name "game" online can be sufficiently gauged by referring to a Google search on that name.
Both arguments are palpably not true and demonstrate a fundamental misunderstanding of how the Internet works. A domain name's suffix - as in .com, .co.uk, .org etc - is of enormous significance. For one, if the dispute was over "game.com" rather than "game.co.uk" the case wouldn't even be being heard by Nominet, it would come under the jurisdiction of ICANN.
The majority of suffixes available come with a widely varying degree of control. Many countries do not allow anyone living outside the country to register a domain with them. Any company without a presence in a certain country would stand little chance of winning a case with that country's suffix. Equally, .net domains were originally only for those companies that played a part in the Internet's infrastructure. Dot-org domains are by-and-large not-for-profit organisations. Domains ending with .pro, .aero and many others all have strict criteria before a domain is handed over.
Even if you look at the UK registry, there are strict controls in place on some domains, some of which has been the source of recent arguments. Use of .me.uk and .net.uk are both restricted. A domain's suffix is in fact just as important as the domain stem itself when it comes to deciding ownership.
As for second argument that Game plc's rights can be adjudged by typing "game" into Google and seeing where it comes - it is akin to deciding a border dispute on the basis of how fat the landowners are.
Game plc provided Nominet's Lothian with a print-out of a Google search for "game" in which it came top out of over 123 million entries. But this was a Google search for purely UK domains. A wider Google search yields a very different set of results in which domains that include the word "game" and which also sells video games feature higher than Game plc.
The argument also ignores the fact that Google results change significantly each month as the company adjusts its formulae. This fact has spurned an entire mini-industry in itself - adjusting websites to maximise Google ranking.
Mr Lothian dismissed Mr Sumpter's point that Game plc is not suing "game.com" because that website has "distinctive branding identified by the Hasbro logo". Which raises the question: how distinctive does a website have to be before it can be adjudged distinctive enough? This impossible scenario is already well recognised in law and is turned the other way to ask whether the company under scrutiny is sufficiently similar to the Complainant for there to be confusion. Online, this confusion is decided through the use of font, colour and page design.
Mr Sumpter's Game.co.uk may not have stood out a mile but at the same time it could not have been mistaken for Game plc website at Game.net. For one thing, one was blue and the other purple.
Tipping the balance
At the end of his deliberations, Mr Lothian accepts that the idea of Game plc's rights "is a very difficult question and in the context of a mark like GAME, being a word in common usage, the Expert takes the view that a demonstration of very wide or extensive use is necessary." Nevertheless, he finds that the Game plc has "narrowly met this requirement".
We believe that by wrongly accepting the two arguments put forward above, the balance was tipped decisively in the wrong favour.
Once he had ascertained Game plc's "rights" to the name "game" online, the question turned to whether Mr Sumpter was guilty of "abusive registration".
This argument revolved around three main points:
- That Mr Sumpter had changed what the website contained and did (from acting as a front for his consultancy business to selling video games) in order to benefit from Game plc's name.
- That Mr Sumpter sought to elicit as much money as possible from Game plc for the domain.
- That there was past and ongoing confusion between Game.co.uk and the Game plc shops and business.
This part of the dispute was harder to discern as Mr Sumpter and Game plc had widely different accounts of what had happened.
What is not under dispute is that Mr Sumpter did change his business to selling video games online, and he spent two years building that business on his Game.co.uk site. Also, both parties met several times and discussed the sale by Mr Sumpter of his domain to Game plc.
These discussions varied in time, place, length and amount offered for the domain. As is usual in such domain dispute cases, Game plc sought to paint Mr Sumpter as someone out to profit from a respectable business by holding the company to ransom over a domain name. Mr Sumpter claims just as forcefully that he was considering a sale since he had been asked to sell and that he asked what he felt was a fair price.
The expert, Mr Lothian, appeared swayed by the assertion - later admitted to us by Mr Sumpter - that a representative of Mr Sumpter had asked for £1m for the domain. This is clearly an enormous sum but Mr Sumpter argues that this was a figure put on it by a salesman who had good reason to overplay the domain's true value. He also claims there were several parties interested in buying the domain at the time.
Game plc had already given the domain a £100,000 value. Mr Sumpter felt that with his business making £60,000 in pre-tax profit a year, this figure was not high enough. Game plc was not just buying his domain, it was buying his entire business based at Game.co.uk. It is a persuasive argument - after all Amazon.com is worth a little more than just its domain name.
However, Game plc draws reference to a previous agreement that it accuses Mr Sumpter of backing out of, where he had agreed to sell the domain for a far lower figure. His sudden request for £1m is an abusive attempt to strong-arm Game plc, the company argued. And Mr Lothian tended to agree.
The blame game
However, we feel, and have always felt that this blame game where the large company is seen as working hard while the individual is abusing its position is too strongly entrenched in the minds of Internet organisations and experts thanks to the historical problem of cybersquatting.
Yes, there have been many people that have successfully and unsuccessfully blackmailed companies by registering their domain names, but that has very rarely happened in the past two or three years. And Mr Sumpter is also not one of them.
While it is quite clear that Mr Sumpter was angling for more money for his domain, you have to ask: why shouldn't he? He was selling his property and his business to someone who wanted it. Negotiating tactics and raising figures, falling out of deals before signing wouldn't even raise an eyebrow in the offline world - why should it online? Are we saying that somehow the Internet is exempt from normal business actions, that it is somehow pure? If we are, and Nominet agrees with that implicit assumption, there are very grave implications for e-commerce in the UK in the future.
The last and third point used to demonstrate Mr Sumpter's abusive registration was the confusion between his site and the company Game plc. This again is another area of domain disputes which needs a radical overhaul. There are little or no guidelines over what constitutes confusion or what level of confusion is required before it become prejudicial.
Game plc presented three examples of confusion:
- A number of complaints (five emails and 20 phonecalls) regarding Game.co.uk that had been sent to Game plc
- A letter from the head of the game industry's members body to Game plc about the use of its charts on Game.co.uk
- A Dow Jones Newswire story regarding Game plc but which gave the company's domain name as Game.co.uk.
Mr Lothian believed these examples enough to demonstrate adequate and serious confusion. We do not. In fact, in a paid-for domain dispute we would argue that such evidence should be dismissed unless it was accompanied by a declaration by the person involved explaining their confusion.
From Mr Lothian's statement, it would appear these declarations were not received: "Both the Director General of ELSPA, an industry body, and a financial journalist writing for Dow Jones, a respected publisher, might reasonably be expected to be skilled and knowledgeable about the industry concerned and the Expert believes that their joint confusion is symptomatic of the Respondent's failure to distinguish sufficiently the altered use of his website from the name or mark under which the Complainant has traded for a comparatively lengthy period."
We would suggest there are numerous possibilities that would paint an entirely different picture. But we do not even know if these people even visited Game.co.uk or were acting on information others had wrongly given them. Or whether it was no more than a typographical error. All are possible.
Equally to receive five emails mistaking Game.co.uk for Game plc is sufficient evidence for Mr Lothian that there is confusion. Our experience of the Internet and a wide public profile presents a very different picture. Following a recent story about Ronaldinho winning a domain dispute, we received no less than 20 emails from people clearly convinced that the link to the news story's author was no less than Ronaldinho's personal email address. Such completely irrational confusion is not unusual on the Internet. Never underestimate the public's stupidity.
As such, five emails seems a remarkably low figure. Also since Mr Sumpter is running his own business, no doubt emails intended for Game plc but wrongly sent to him have inconvenienced him. How do you decide which company is confusing which more? Or are we to assume that a bigger company has greater rights on the Internet? What if two companies have equal revenues - do we then base their correctness on profit? Where is the dividing line?
We would tentatively suggest that a percentage figure on the number of wrongly sent emails in comparison to total number of emails received would be a far more accurate measure of domain confusion. But the best method will always be to actually look at the websites at the domains themselves. If they are sufficiently different, then it is the correspondent that is to blame, not the domain owner.
Taking all this into account, we would argue that the original Nominet decision was flawed in several key areas. However, it is the dangerous precedents that the decision, if upheld, present that most concern us.
Mr Lothian was not without insight, striking at the heart of it at the very end of his decision: "The Expert is somewhat reluctant to transfer to the Complainant a domain name to which even the Complainant has ascribed values from £10,000 to £100,000 over recent years..."
But he nonetheless does exactly that having dismissed other options including cancellation and suspension. The key to Mr Lothian's decision is given in one finishing sentence: "The Expert has reached the view that the Respondent has brought the consequences of a transfer of the Domain Name upon himself by effecting the change of use in full knowledge of the Complainant's rights."
In other words, it was Mr Sumpter's cheek that informed the overall decision. However, dispute processes, procedures and rules exist for a very good reason - to provide a consistent and coherent response to a wide variety of scenarios, for good or ill. In this case, the decision is wrong, the implications dangerous and the process undermined.
Unless Nominet wishes to see it exemplary record wiped out by an invitation to big businesses to squash smaller competitors by reinterpreting long-established rules, it needs to overturn this decision, no matter what it believes about Mr Sumpter's behaviour. ®