IKEA Case, Laws and Policies Concerning Domain-Name Disputes in China

Facts and Judgments

I. Accusation and defense

According to Inter IKER Inc., it obtained trademarks "IKEA" and IKEA, and the figurative trade mark along with the registered trademark in Chinese "宜家", respectively, for the Chinese commodity category and international commodity category as well as services, with the approval of the Trademark Office of the State Administration for Industry and Commerce in 1983. Outside of China, the Company has registered the trademarks "IKEA" and IKEA and the figurative trademark for many commodities and services in 90 nations and regions including the United States, Great Britain, Canada, France and Hong Kong. However, when the Company was about to register its domain name on China's Internet using its own trademark "IKEA", it found that the defendant had already registered a domain name "itea.com.cn". It can be easily seen by comparing the Company's registered trademark "IKEA" with the third-level domain name "ikea" registered earlier by the defendant that their pronunciations, appearances, letter orders and naming way used by customers are all exactly similar. Therefore, the domain name registered earlier by the defendant is a flagrant fraudulent copy of the original trademark used by the Company for many years. The Company's trademark "IKEA" is a well known trademark and its counterpart, the Chinese trademark "宜家", has also gained a level of popularity in China, Hong Kong, Taiwan and other Chinese-speaking nations and regions. Since 1998, household-ware stores with the trademark "IKEA" as their sign have been opened in Shanghai and Beijing and the trademark has been being gradually accepted by Chinese consumers. In 1998, the Company's expenses for advertising and promotion in China were 6 million RMB and the figure increased to 17 million RMB in 1999. The defendant, who has registered thousands of domain names, left the domain name "IKEA" unused for a long period after registering it, thus breaking the Paris Convention for the Protection of Industrial Property as well as conflicting with the principle of honesty and honor set forth in Article 4 of the General Civil Law of the People's Republic of China. The Company considered what the defendant had done as an unfair competitive conduct and asked the court for a ruling that would order the defendant to (a) cease using the domain name "ikea.com.cn" and nullify it; and (b) cover the expenses of proceedings for the case.

Guowang Inc.,the defendant, defended itself by saying that the domain name registered by it was reviewed and approved in conformity with legal provisions by the China Internet Network Information Center (CNNIC) with the authorization from the Chinese government and thus should be protected by the law. The purpose by registering "ikea" was to launch voice mail services on the Internet. For this purpose, Guowang Inc. had put great amount of efforts and investment for its preparation and brand cultivation going back to November 1997. In the domain name, the "ikea" is a combination of "I" and "Kea". "I" as the usual practice in the Internet indutry, stands for the Internet, while "Kea" refers to an English word for a kind of parrot, a bird with brilliant feathers, fond of meat diet and capable of imitating human speeches. Parroting is a phrase known by every household in China, and Guowang Inc. registered its domain name just out of the consideration for the linkage between parrots and human voices. Since Guowang Inc. knew nothing about the trademark "Ikea" owned by the plaintiff, how come such a thing of copying or imitating? Furthermore, a domain name and a trademark are two totally different entities and so the protection for a trademark could not be extended to a domain name. Although Guowang Inc. had yet to begin its operating under the domain name "ikea" since registering it, it had been preparing to launch the voice mail service on the Internet, a service that has nothing to do with the household-ware Business run by the plaintiff. At the time when the defendant applied and registered the domain name "ikea" in 1997, the plaintiff did not open any of its stores in China, and say nothing of high reputation in the Chinese market. The trademark "IKEA" had not obtained the certification by the Trademark Office of the State Administration for Industry and Commerce in accordance with the Provisional Rules on the Certification and Management of Well-know Trademarks and thus should not be viewed as a well known trademark. Guowang Inc. registered its domain name based on its own originality in total conformity with the law. The plaintiff's accusation on ground of unfair competitive conduct found no basis both in facts and in the law. Therefore, it was the Company's request for the court to reject all claims made by the plaintiff.

II. Basic facts of the case

The court has found that the plaintiff, Inter Ikea Inc., is the owner of the registered trademark "IKEA". The trademark came from the original design by Swiss farmer Ingvar Kampargd in 1947, an acronym from has name and the name of has hometown Elmtaryd Agunaryd. The trademarks "IKEA" and IKEA and the figurative trademark have been registered by the plaintiff for many commodities and services in more than 90 nations and regions including the United States, Great Britain, France, Germany, Sweden, Hong Kong and Taiwan for several decades, with their legal status and use never interrupted. In 1998, the international trademark consulting firm "INTERBRAND" appraised and listed 60 trademarks (brands) in the world with $1 billion market value or more, with the trademark "IKEA" being one of them. In 1999, plaintiff put $373 million in advertising and promation for the trademark "IKEA". In 1983, the plaintiff registered the trademark "IKEA" in subcategories 15 and 58 for the Chinese commodity category, and afterwards registered the trademarks "IKEA" and IKEA, the figurative trademark and trademark "宜家" in commodity/service subcategories 2, 8, 11, 16, 18, 20, 21, 24, 25, 27, 28, 35, 26, 39, 41 and 42 for the international commodity category. In 1998, the plaintiff opened large-scale household-ware monopolistic stores in Shanghai and Beijing. On November 19, 1997, the defendant, Guowang Inc., applied and registered its domain name "ikea.com.cn" at the CNNIC. During the court trial, the plaintiff presented evidence showing that, in addition to its registration with the domain name "ikea", the defendant had also registered domain names after world-wide known brands and trademarks including amex, bacardi, boss, cartier, dupont, carlsberg, coia, dunhill, hertz, 1a21Come, 1v, marriott, omega, phillps, polo, rolex, whisper, etc., and left them unused on the Internet. During the court cross-examination, the defendant presented copies for 4 printed pages in color showing the settings for the "ikea" voice forum homepage but failed to present other evidence showing any actual content matching the homepage settings. The defendant did not present other rebuttal evidence against the evidence presented by the plaintiff.

III. Ruling by the court of first instance

The court of first instance ruled that the law advocates and protects fair competition and that operators in the market competition should observe the principles of honesty and honor and follow generally accepted business ethics. The plaintiff, the Inter IKEA Inc., is the owner of the registered trademark "IKEA", which has long been registered and used without interruption in many other nations. With years of tremendous investment in advertising and promotion, along with high-quality commodities and services, the trademark of the Company has gained high popularity and good reputation among consumers worldwide. In China, the trademark "IKEA" become known to concerned industries and consumer groups as a result of its vigorous publicizing and promoting its unique operation made and its satisfactory services. The trademark "IKEA" should therefore be identified as a well-known trademark. The domain name registered by the defendant, Guowang Inc., is similar to the registered trademark owned by the plaintiff in letters and pronunciation. With the ever increasingly migrating of businesses to the Internet, domain names have become more closely associated with business signs. Since cyberspace is part of man's social activities, business activities in that area and resulted conflicts in rights should be regulated by applicable laws and regulations. By using the well- known trademark "IKEA" owned by the plaintiff for its own domain name, the defendant can easily mislead consumers in general into believing that the registrant of the domain name is either the owner of the well-known trademark "IKEA", or is a partner of the latter. Consumers may further be misled into believing that they may find information related to commodities with the "IKEA" trademark in the website named "ikea" and thus give the defendant's site a higher click rate. By using such an approach, the defendant has in fact taken advantage of the good business reputation attached to the well-known trademark. In addition, due to the uniqueness of domain-name use on the Internet, the registrant of the well-known trademark is prevented from using has right to operate on the Internet with the well-known trademark. It should hence be determined that the above said conduct of the defendant has constituted an infringement upon the right owned by the registrant to the exclusive use of the well-known trademark. Although the defendant has made settings for the voice forum homepage within the said domain name, it has never actually used the site for the purpose specified in the homepage settings. It has been found that the defendant has also registered numerous domain names similar to other well-known trademarks and all of them have not be used in an active way. The speculative and non-goodwill motivation is extremely obvious in the conduct of the defendant, as a service provider in network information, to register numerous domain names without actively using them. It was thus ruled that the defendant's conduct breaks the basic principle of fair competition, honesty and honor and constitutes unfair competition.

The plaintiff, the Inter IKEA Inc., requested that the court identify and protect the substantive civil right for its registered trademark and that the defendant stop its infringing conduct. This request is unconcerned to the institution providing the domain-name registration service. The concerned civil rights and duties should be regulated by China's civil laws. The defendant argued that its application and registration were approved by the domain-name registration administrative authority and that this case thus falls within the jurisdiction of the administrative law. The defendant's argument that the plaintiff should submit its claim to the domain-name registration administrative authority is rejected by the court for being not sufficiently based on the law. The defendant's submission that the domain name "ikea" was invented solely by its own and that great amount of efforts own and that great amount of efforts and resources had been invested in preparing, brand cultivating and launching of voice mail service is also rejected by the court for lacking of evidence. Another submission made by the defendant that its conduct of registering the domain name "ikea" did not infringe upon the right owned by the plaintiff to the exclusive use of its registered trademark and thus did not constitute a conduct of unfair competition also found no support from the court.

In conclusion, the conduct of the defendant to register the well-known trademark "IKEA" owned by the plaintiff as its own domain name not only violated applicable regulations set forth in the Provisional Rules on the Management of Internet Domain-Name Registration in China, but was contrary to the spirit reflected in the Paris Convention for the Protection of Industrial Property and the basic principle of the Law against Unfair Competition of the People's Republic of China. It hence infringed the lawful rights and interests of the plaintiff as the owner of the well-known trademark and should be held for corresponding civil liabilities. Therefore the defendant shall not use the domain name "ikea.com.cn" and its registration of should be revoked. According to Clause 1, Article 2 of the Law against Unfair Competition of the People's Republic of China., the court ruled that the domain name, "ikea.com.cn", registered by Guowang Inc. shall cease using the domain name immediately and cancel the domain name within ten days after this ruling takes effects.