The Hon’ble High Court of Delhi (“Delhi HC” or “Court”) by way of judgment dated 18 April 2022 in application for interim relief in Snapdeal Private Limited v Go Daddy Com LLC & Ors. has opined that though Domain Name Registrars (“DNRs”) are “intermediaries” within the meaning of section 2(1)(w) of the Information Technology Act, 2000 (“IT Act”), safe harbour protection under section 79 of IT Act is not available to DNRs where the alternate domain names provided by DNRs for an additional price infringe registered trade marks in terms of section 28 and 29 of the Trade Marks Act, 1999 (“Trade Marks Act”). 

CONTENTIONS OF THE PARTIES 

Snapdeal filed a Suit along with an application for interim injunction against various DNRs, the Department of Telecommunications and the National Internet Exchange of India (NIXI) alleging that certain third parties, having no connection with Snapdeal, were registering domain names with the term “snapdeal” thereby infringing its trademark. Snapdeal did not implead any of the registrants and instead sought relief against the DNRs on the ground that the DNRs were facilitating the infringement of its trademark by third parties i.e., the registrants and were also themselves infringing Snapdeal’s trademark in terms of section 28 and 29 of the Trade Marks Act, 1999.

Snapdeal contended that the DNRs were providing alternate domain names, infringing its trademarks, to registrants, whose choice of domain names were unavailable and were charging a special price for such alternate domain names. Snapdeal also contended that the DNR was charging higher prices for alternate names involving popular trademarks such as “snapdeal”. Further, Defendant No.1 had blocked the trademarks associated with “Go daddy” from appearing as alternate domain names which shows that they do have control over the alternate domain name options. 

The DNR countered by arguing that they were intermediaries within the meaning of the IT Act and were as such protected under section 79 of the IT Act. They argued that the process of providing alternate options to prospective registrants is entirely automated in nature and they have no control over it. 

Snapdeal sought an interim injunction against the DNRs directing them to suspend registrations set out in Snapdeal’s application and also restrain the DNRs from offering any domain names in future that infringes on Snapdeal’s trademark. While the DNR did not oppose the first part of Snapdeal’s prayer, it objected to the second part i.e., a dynamic injunction restraining it from registering any trademark in the future that infringes the trademark of Snapdeal. 

DECISION

  • The Court held that domain names qualify as electronic records, and as DNRs provide services with respect to domain names, which are sourced from a common Domain Name Registry, DNRs are “intermediaries” as per section 2(1)(w) of the IT Act. 
  • The Court however observed that the DNRs in the present case were offering alternative domain names for a price, in case the domain name sought by the registrant is unavailable, and were even charging a higher price for the domain names which were in demand, including the allegedly infringing marks of Snapdeal. The DNRs were therefore clearly acting for profit and in doing so, were using the allegedly infringing trademarks “in the course of trade”. As such the DNRs were liable for infringement as per section 29(4) of the Trade Marks Act.  
  • The Court further rejected the contention of DNRs that they have absolutely no control over alternative domain names that are suggested to third party registrants, as this is an automated process basis an algorithm. The Court observed that it was an uncontroverted fact that no domain name, even reasonably proximate to “Go Daddy” i.e., trademark of Defendant No. 1, was available to third party registrants. The Court further held that the algorithm, on the basis of which alternative domain names are made available is devised by each DNR itself, and it is the DNR’s responsibility to ensure that the alternative domain names do not infringe any registered trademark. 
  • In the above circumstances, the Court held that if an intermediary provides services which are beyond the regular course of functions of an intermediary and operates for profit as a business enterprise, it cannot claim safe harbour protection under section 79 of the IT Act for liabilities that arise from such functions. 
  • Despite concluding that the DNRs may be held liable for infringement of the Trade Marks Act, the Court declined to grant an injunction restraining the DNRs from registering any domain name that may infringe Snapdeal’s trademark in future. The Court held that quia timet action cannot be predicated on hypothetical and imaginary infringements and it cannot be held in advance that all prospective alternative domain names which include Snapdeal as a word/thread would be infringing in nature. The Court ultimately held that Snapdeal has to undertake to petition the Court against each domain name that is registered and that it finds to be infringing and obtain relief on a case-by-case basis. 

ANALYSIS AND CONCLUSION 

This judgment is significant as while it finds that DNRs are intermediaries, at the same time it holds that DNRs will lose safe harbour protection if the algorithm devised by the DNRs suggest alternate domain names which infringe registered trademarks. The Court in fact observed that since the algorithm by which the alternate names are suggested has been created by the DNR themselves, they need to ensure that it is altered in such a way that infringing domain names are not provided. It is unclear how this would be practically possible for DNRs considering the infinite possibilities for infringing domain names that may be suggested by the algorithm. Implementing the Court’s mandate while still retaining the service of providing alternate domain names may prove to be a tall order for DNRs. 

Further, at the same time the Court also declined to grant interim injunction restraining the DNR from registering domain names in future which incorporate Snapdeal’s trademarks, relying on its previous decisions in Tata Sky Limited v. National Internet Exchange of India (NIXI), Star India Private Limited v. y1.mylivecricket.biz and Star India Private Limited v. yodesiserial.su. The Court observed in this regard that before blocking a website/domain name it is for the court or competent authority to first adjudicate whether such domain name in fact infringes a trademark and therefore a blanket injunction cannot be granted.

It is pertinent to note however that the Delhi HC in the decision of Dabur India Limited v Ashok Kumar & Ors.(CS(COMM) 135/2022) where it dealt with a similar issue of infringement of trademark by third parties through registration of domain names and websites, the Court granted a blanket interim relief wherein DNRs were restrained in future from allowing a third party, apart from Dabur India Limited from registering domain names using the mark/name “Dabur”.

The stand taken in the Dabur India decision is in contrast with that of the Court in Snapdeal. It will be interesting to see which course the courts will take in future in similar matters