As a result of the increasingly intense digitalization that permeates all aspects of everyday life, there is no longer a sector in the economy in which a business can afford not to be present in the online space, as consumers are increasingly trying to find the products and services they need via the Internet. On the Internet, one of the most important identifiers of a business is the domain name.
A well-chosen domain name can make the website easy to find and worth clicking on for consumers, so there is no doubt that the domain name may also have an economic and property interest, and the domain name may be suitable for distinguishing a product or service from the products or services of others. The latter ability of domain names raises the question of what kind of connection there is between domain names and trademarks, since Act XI of 1997 on the Protection of Trademarks and Geographical Indications Act (hereinafter: Vt.) § 1, a sign may be protected by a trademark if it is capable of distinguishing a product or service from the products or services of others. At this point, the functions of trademarks and domain names are somewhat intertwined.
The domain name that a company wishes to use does not necessarily receive effective legal protection by registering it, because if the chosen domain name can be confused with some other prior right (e.g. a trademark, company name or trade name), the holders of the prior rights may file a claim against the use of the domain name. The easiest way to eliminate this uncertainty is to optimize the provision of the exclusive right to use the domain name by also obtaining trademark protection for the domain name itself. Namely, if the registration is successful, the rightholder has an exclusive right to use the sign in relation to the goods and services covered by the trademark protection, this exclusive right is also entered into the public official register kept by the Hungarian Intellectual Property Office (HPO), i.e. its existence becomes clear, easily verifiable and at the same time provable for third parties.
If, based on the above, the enterprise also wishes to obtain trademark protection for the domain name – in addition to its registration – when choosing the domain name, it is not enough to pay attention to the fact that the given domain name is still “free” (i.e. not registered in someone else’s name, this condition can be easily checked in the search engine of the www.domain.hu website in the case of domain names with the .hu extension), but the requirements imposed on trademarks must also be met.
Among these, it should be highlighted that in the case of trademarks, the use of descriptive signs or parts of signs may result in the rejection of protection. In a February 2021 case (Bell – bell.ai), the European Union Intellectual Property Office (EUIPO) did not classify the figurative sign bell.ai as distinctive, given that the “.ai” ending only indicated a country code in the domain name, and that it was not sufficient in itself, even as part of a domain name, to clearly distinguish it from the figurative sign Bell1. The EUIPO came to the same conclusion in relation to the “.de” domain ending2. In the case of domain names, therefore, particular attention must be paid to ensuring that the sign preceding the country code is not confusing with other earlier trademarks, as the addition of the country code does not in itself create sufficient distinctiveness.
The Advisory Board operating under the Internet Service Providers Council (ISZT), responsible for the registration of .hu domains, has also stated in several case-specific statements that if the requested domain differs from a domain associated with a registered trademark by only a few letters or a suffix that is not considered dominant, it cannot be registered in order to protect the rights of the trademark owner, if the applicant intends to use it for an activity similar to the trademark owner’s economic activity3. It should be noted, however, that if the applicant intends to use the domain for a purpose other than the activity carried out by the trademark owner, the domain may be delegated even in the case of a very small difference, regardless of how confusing the word in the requested domain name is with the word in the earlier trademark.
Another point of intersection between trademarks and domain names is when a company obtains trademark protection for a sign, but fails to register the associated domain name. This situation has a high potential for giving rise to the phenomenon of so-called “cybersquatting”. This refers to cases where a private individual or company registers a domain name containing a trademark registered for a third party for their own account without any actual purpose of use, simply to prevent the trademark owner from using it, or in more serious cases, to demand money from the trademark owner for the transfer of the domain5. In such cases, however, there is no reason to panic for the previous owner of the trademarked sign, as the delegation of the domain name does not in itself create a stronger right than the previously registered trademark, therefore, by referring to the trademark, the previous trademark owner can obtain the domain name registered in bad faith, if it can be proven, among other things, that the domain owner is not actually using the domain name or is using it in bad faith (e.g. if he is using it to infringe the trademark and direct consumers to a site offering his own products or services, or the sole purpose of the registration is to claim financial advantage from the previous trademark owner). In the case of Hungarian domain names, i.e. .hu, the procedure before the alternative dispute resolution forum operating under the ISZT provides the opportunity to enforce such claims, which can make a decision on the legality of domain use in an out-of-court procedure. However, since the decision made in such a procedure can be challenged by the domain user – in the event of an unfavorable outcome for him/her6, it may be considered to initiate a trademark infringement lawsuit, for which the Budapest Metropolitan Court has exclusive, national jurisdiction in the first instance7. In the event of a successful outcome of the trademark infringement lawsuit (in contrast to alternative dispute resolution), not only can the further use of the illegally registered domain name be prevented, but the court may also order the person acting in bad faith to pay compensation8.