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www.cybersquattersbeware.com

CYBERSQUATTERS beware.

On 11 February 2014, the Supreme Court of the Philippines promulgated its decision on the petitions seeking the unconstitutionality of the Cybercrime Prevention Act of 2012. 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.” In a manner of speaking, it is like kidnap for ransom; only instead of a person, it is the domain name that is “abducted,” with the view of possibly extracting ransom money from a company or celebrity.

Section 4(a)(6) of the Cybercrime Law defines ‘cybersquatting’ as:

The acquisition of domain name over the [I]nternet 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.

Domain names are the web addresses that Internet users type in the address bar 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 Ateneo Law School’s official web address may be led to any of the websites other than its official one. In marketing terms, cybersquatting directs a potential target audience away from the real brand as it is presented, similar to the Ateneo Law School website example. What is worse is that 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. This enables competitors to get hold of their rivals’ web addresses, causing the failure of the real brand owner to reach its target clientele.

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

The Decision
Barely a month after its enactment, the Supreme Court issued a temporary restraining order (TRO) against the implementation of the Cybercrime Law. Upon the expiration of the original 120-day TRO, the same was extended “until further notice” in a decision of February 2013. It was only after a year that the Supreme Court finally issued its verdict.

The decision, penned by Mr. Justice Roberto Abad, upheld the constitutionality of the provisions on crimes such as illegal access, data interference, identity theft, cybersex, child pornography, and cybersquatting. It, however, held other provisions 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. Article III, Section 1 guarantees that no person shall be denied equal protection of the laws.” The leading case of People v. Cayat (68 Phil. 12 [1939]) explains that this provision mandates only reasonable and not absolute classifications.

The petitioners in this recently decided case of Disini v. Secretary of Justice (G.R. No. 203335, 11 February 2014) 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 elucidated, “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.” 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 should 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. P

Atty. Ferdinand Negre is a teacher of intellectual property courses including copyright law and intellectual property enforcement at the Ateneo Law School. He is a partner at Bengzon Negre Untalan Intellectual Property Attorneys and the Vice-President of the Intellectual Property Professors and Researchers Organization of the Philippines, Inc.

Jeff Ferrer is part of the Ateneo Law School Class of 2013 and a member of the Teehankee Center for the Rule of Law. He currently works at Bengzon Negre Untalan Intellectual Property Attorneys.

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