transfer

Interlocutory Injunction to transfer domain name

Nicholas J has granted Thomas International an interlocutory injunction ordering Humantech to transfer the domain names, thomasinternational.com.au and thomas.co.za, to Thomas International. Thomas International had to give the usual undertakings and, as a foreign corporation, provide security for costs.

Thomas International is an English company which provides psychological testing and psychometric assessments, and competency and skills-based assessments, particularly using computerised services accessed over the internet through thomasinternational.net. It also makes its materials and services available through distributors. It appointed Humantech, a company associated with a Mr Schutte, as its master distributor/licensee for South Africa and Australia with power to exercise its rights through distributors. Humantech was permitted to use the “Thomas” trade marks, to incorporate a company in Australia under the name Thomas International (Australia) and to register the domain names. There were also obligations when the arrangements ceased or were terminated to cease use of the trade marks and change the corporate name of Thomas International (Australia) to a name which did not include Thomas.

In due course, the Schutte interests also incorporated another entity, ACT, which offered similar services to Thomas International’s assessment and training services. Thomas International alleges that, after some successful years’ trading, revenues from Thomas International (Australia) starting dropping off and the Schutte interests were diverting customers to ACT which, without permission, was using materials based on Thomas International’s materials.

Thomas International sued Humantech, Thomas International (Australia), ACT and Mr Schutte. There was a meeting between the parties and their lawyers shortly after. Thomas International said it would not discuss a new licensing arrangement until an undertaking dealing with the existing issues was provided. As a result, Humantech and the Schutte interests provided an undertaking to cease use of Thomas International’s trade marks, intellectual property and to transfer the domain names over. Thomas International also agreed to negotiate about a new licensing arrangement in good faith.

The next day Thomas International made its licence proposal to the Schutte interests. They considered it was financially unworkable and left the meeting. Later that day, they then put Humantech (and subsequently the other corporate entities) into administration and disabled the website. Shortly thereafter, Thomas International applied for interlocutory injunctions.

As noted, Nicholas J granted the interlocutory injunctions including an order that the domain names be transferred to Thomas International. The terms of the Undertaking meant it had a prima facie case to force the Schutte interests to stop using the Thomas name and trade mark and for the transfer of the domain names.

The Schutte interests’ main attempt to rebut that was their argument that the Undertaking was invalid or unenforceable. That was said to result because, it was alleged, that Thomas International extracted the Undertaking in return for its promise to negotiate a new licence arrangement in good faith. The Schutte interests contended that the terms of the licence they were offered were so unreasonable as to show that Thomas International did not negotiate, and had no intention of negotiating, in good faith. This issue was not developed in detail at this stage, but Nicholas J pointed out that, on the current state of the law in Australia, an obligation to negotiate in good faith did not require a party to subordinate its own interests to that of the other party.

On the balance of convenience, Nicholas J accepted Thomas International’s argument that:

the present state of affairs may cause TIL significant reputational damage as a result of customers who have purchased units entitling them to make use of facilities provided by TIL at the Thomas Hub being prevented from gaining access to it through the TIA website. I accept this submission. I also consider that any such damage may be irreparable and that damages will most likely not provide an adequate remedy. The financial statements of TIA for the financial year ending 30 June 2014 show that the company has net assets of just under $145,000.

On the other hand, the Schutte interests’ main argument was the disruption to their business, and that of their customers, if they could not continue to use the domain names, the main access point for provision of services both to Thomas International (Australia)’s customers and those ACT. As Nicholas J pointed out, however, the Schutte parties had already disabled access to the websites so they had already caused that problem themselves.

It would appear that Thomas International first learned something about ACT’s activities, the subject of the complaint, in May 2014 (i.e., a year earlier). However, Thomas International was able to lead evidence showing all the work it did, and the difficulties it encounted, in trying to ascertain what ACT was doing until proceedings were issued. In this context, the termination by Humantech of the main employee with responsibilities for running the Thomas part of its business may will have been highly significant.

Permission to proceed against the companies although administrators were appointed was granted as the interests of the administrators were adequately protected by the undertaking as to damages and provision for securities.

Thomas International Limited v Humantech Pty Ltd [2015] FCA 541

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Names and transfer policies for .au domain names

auDA is the body regulating the .au “name space” or ccTLD.

In that role, it has issued a number of policies including the auDRP (modelled on the UDRP) for the resolution of disputes between rights “holders” and the registrants of confusingly similar domain names.

auDA’s Board has now announced its acceptance of a number of the recommendations of:

2010 Names Policy Panel

Among the recommendations that have been accepted are:

Domain Name Eligibility and Allocation Policy Rules for Open 2LDs:

  • That the requirement for registrants to be Australian (or registered to trade in Australia) should remain in place.
  • That the “special interest club” eligibility criterion for org.au and asn.au domain names should be more clearly defined.
  • That auDA should publish the results of its periodic audits.
  • That auDA’s position on third party rights with respect to domain name leasing or sub-licensing arrangements should be clarified and published.
  • That the close and substantial connection rule for id.au should be relaxed to include domain names that refer to personal hobbies and interests.
  • That direct registrations under .au should not be allowed at this time.
  • the list of reserved names (i.e., those you can’t have) should be maintained and updated.
  • the misspellings policy should be continued in its current form (e.g. you can’t register acebook.com.au, aaami.com.au etc.).
  • A revision of the “domain monetisation” policy so that it will no longer be a standalone policy and “the definition of “domain monetisation” will be replaced with a description of permissible practice, to accommodate a range of monetisation models”.

When the “domain monetisation” policy was originally adopted:

a monetised website was easily recognisable and mostly followed a common format, which meant that enforcement of the policy was relatively straightforward. However, the practice of domain monetisation has significantly changed from a simple webpage with click-through advertising links, to incorporate other formats such as news articles, blogs, images and so on. Methods employed by domainers (ie. people who register domain names for monetisation purposes) are becoming increasingly sophisticated and complex. In some cases it may be that domainers are attempting to circumvent the policy. However, to be fair to the domainer industry, the practice itself is constantly evolving as domainers test and refine ways of generating revenue.

If this were a gTLD, the trade mark owners would be going ballistic – “to be fair to the domainer industry”?????

The proposed revisions, however, would still prohibit allow objection on grounds that “the domain name must not be, or incorporate, an entity name, personal name or brand name in existence at the time the domain name was registered.” See chapter 3 and p. 20 of the Name Policy Panel’s final report (pdf).

Some recommendations still under consideration:

  • That registrants should be able to license a domain name for a 1, 2, 3, 4 or 5 year period.
  • That, in the absence of any compelling technical or policy reason to maintain the restriction, single character domain names should be released (subject to the registrant being eligible to register the name).

Secondary Market working group

The accepted recommendations of this group effectively aim to put in place a mechanism to transfer domain names from one registrant to another in place of the current “workaround” involving surrender and (re-)registration (with the attendant risk that someone might get the name in between those two events.

Announcements: Names policy, Secondary Market

Reports: Names policy (pdf), Secondary Market (pdf)

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