Mexico: Expansion of domains in Mexico

The e-marketplace isthriving around the world and Mexico is no exception. According to a 2015 report issued by the Mexican Association of the Internet, the estimated total value of e-commerce in Mexico in 2014 was $12.2 billion; while according to the Network Information Centre Mexico (NIC), at the end of 2016 a total of 821,545 active domain names were registered under the ‘.mx’ domain.

Choosing and registering a domain name may seem simple at first glance, but doing so without the correct decision-making process in place may have profound negative legal and commercial consequences. Building a unique identity through domain name selection requires careful management, although this is often overlooked by brand owners.

Domain name management requires expert advice during the registration, renewal and monitoring process. However, in Mexico, the first challenge relates to raising awareness of the importance of domain names and how brand owners should consider them an asset for which a management strategy should be implemented.

Self-regulation

One of the essential elements of effective domain name management is self-regulation. No government agency in Mexico manages or registers domain names; instead, the NIC – through its different sections, including AKKY as registrar – administers the ‘.mx’ country-code top-level domain (ccTLD). In this sense, the NIC is a service provider and when acquiring a domain name, the registrant is receiving a service pursuant to a commercial agreement. Therefore, the central assumption behind domain name self-regulation is adherence to a common code of standards and rules.

Debate is ongoing over the role of the NIC as a private entity – particularly when a dispute arises, since it does not consider itself an enforcer of rights. This shows that self-regulation has its limits. Leaving aside the debate over the limits of self-regulation and the public-private partnership model, it is essential for domain name holders to understand the terms and conditions of the service agreement to which the domain name is subject.

As in many other jurisdictions, no specific act governs domain names in Mexico; thus, the various ccTLD registries play a significant role in internet governance. For example, they are responsible for setting user policy for their respective national internet zones and are usually the only actors that can technically block a party’s use of their respective national online space.

Under the ‘.mx’ Domain Name General Policies, the petitioner, registrant and contacts for a domain name must attest that they know and accept the basic policies, procedures, regulations and annexes relating to the domain name service, including with regard to registration, modification, suspension, cancellation and transfer. Thus, simply by registering a domain name, the holder agrees to comply with a complex set of rules, including those governing disputes and complaints.

The policies implemented by the NIC include the Dispute Resolution Policy on ‘.mx’ Domain Names (LDRP) and its corresponding regulation. According to these policies, the registrar is responsible for resolving problems that may arise in relation to domain names under its management. Two types of dispute are recognised:

• ownership disputes, where a party considers that it owns a domain name and has evidence of its ownership (as long as such evidence is unrelated to intellectual property); and
• IP disputes, which arise from a violation of IP rights (eg, trademarks, service marks, designations of origin or a reservation of rights).

Domain name registration agreements are contracts of adhesion by nature and the holder of a domain name should carefully read the terms and conditions to which its registration, use and maintenance will be subject – on the basis of self-regulation principles – in order to avoid breaches that could trigger a dispute and the ultimate cancellation or transfer of the domain name.

Due diligence

The domain name holder should thus perform due diligence, although this should not be limited to a review and understanding of the agreement. Due diligence involves a set of essential steps that should be taken before acquiring the domain name.

First, the acquirer should ensure that the domain name is owned by the party that is offering the asset. It is not unusual to find that domain names are held in the name of an employee or website developer; the buyer will want to ensure that any such title problems are identified and remedied before closing.

Unlike websites, domain names are not actually owned by the user or registrant; instead, they are licensed by the governing domain name registry for the period paid for. As such, title to the domain name belongs to the registry.

Second, a centralised strategy should be established, as an uncoordinated approach may lead to weak protection and increased costs. A clear and centralised strategy will help to ensure a proper management policy – minimising any legal or commercial risks – and may encompass easily actionable steps, such as:

• registering key domain names quickly;
• monitoring domain name registrations;
• renewing domain names in a timely manner;
• consolidating domain names into one company;
• registering domain names as trademarks (if possible); and
• registering common misspellings.

Third, parties should take steps to avoid acquiring a domain name that infringes third-party IP rights. The registration of domain names on a first come, first served basis has contributed to domain name infringement, while conflicts between domain names and trademarks present unusual features that test the capacity of the judicial system.

While traditional trademark infringement involves the use of a trademark in a manner that causes a likelihood of confusion with a different trademark owned by another party (usually in relation to identical or similar products or services), domain name infringement is not limited to the likelihood of confusion rule.

According to the ‘.mx’ Domain Name General Policies, IP disputes are resolved under the LDRP and its corresponding regulation. Both instruments stipulate that the following scenarios may be subject to the dispute resolution policy:

• The domain name is identical or confusingly similar to a trademark, registered service mark, registered slogan, appellation of origin or reservation of rights to which the petitioner has rights, if the holder has developed a pattern of such conduct.
• The registrant has no rights to or legitimate interests in the domain name.
• The domain name has been registered or used in bad faith.

The following circumstances are considered as evidence of registration or use of a domain name in bad-faith:

• The domain name has been registered or acquired primarily for the purpose of selling, renting or otherwise transferring the domain name registration to the owner of a related trademark, registered service mark, slogan, appellation of origin or reservation of rights (ie, the petitioner), or a competitor of the petitioner, for a value that exceeds the documented costs that are directly related to the domain name.
• The domain name has been registered in order to prevent its registration by the owner of a related trademark, registered service mark, slogan, appellation of origin or reservation of rights, if the holder has developed a pattern of such conduct.
• The domain name has been registered primarily for the purpose of disrupting the business of a competitor.
• The domain name has intentionally been used to attract internet users for commercial gain by creating a likelihood of confusion with the petitioner’s business in relation to the source, sponsorship, affiliation or endorsement of the website, the products or services offered on the website or any copyright notice appearing on the website.

By registering a third party’s trademark as a domain name (particularly a well-known trademark), the domain name holder runs the risk of facing legal action, as most laws treat registration of another party’s trademark as a domain name (ie, cybersquatting) as trademark infringement. A conviction may lead to the mandatory transfer or cancellation of the domain name.

In order to prevent domain name infringement, a search should be undertaken before registration to ensure that the domain name does not infringe any prior trademarks. Domain names that include certain words should also be avoided, including:

• geographical terms;
• names of famous people;
• generic drug names;
• names of international organisations; and
• trade names.

Best practice

In order to sidestep the aforementioned issues, a clear internal domain name policy that reflects best practice should be established. In an effort to enhance domain name management, companies should develop written policies that outline how domain names should be acquired, maintained and protected. As recommended by the International Trademark Association, such policies should stipulate:

• the purpose and scope of the policy;
• key brands and terms;
• key registries;
• the registration request process;
• roles and responsibilities; and
• other resources and samples.

Domain name management should include a clear strategy to minimise the impact of domain name infringement; however, it should also aim to maximise the business opportunities provided by domain name registration. Both goals can be achieved by developing and following best practices for conducting business online and throughout the process of choosing, using and maintaining domain names.

Eryck Castillo
Senior partner
[email protected]

Eryck Castillo is a senior partner of Uhthoff, Gómez Vega & Uhthoff SC and has over 25 years’ experience in managing the trademark and domain name portfolios of Mexican and international companies, both domestically and internationally. His practice includes both prosecution and enforcement matters. Mr Castillo was educated in Mexico and holds a degree from the Franklin Pierce Law Centre; he continues his education by attending seminars throughout the world.

Jimena Chi Barrales
Attorney
[email protected]

Jimena Chi Barrales is an attorney in the trademark department of Uhthoff, Gómez Vega & Uhthoff SC. She holds an LLM in international trade law, contracts and dispute resolution from the University of Turin (2012) and an LLB from the Panamericana University (2010). Her IP practice began in 2007, focusing on national and international IP rights prosecution, international trade, technology transfer and IP policies. Ms Barrales received a fellowship from the Japanese government to join the Osaka Institute of Technology Faculty of Intellectual Property as an IP researcher (2014).