Domain Name Infringement, S.34 Restrains Judicial Interference In Issues Of 'Subjective Satisfaction'; Delhi High Court

The Delhi High Court on December 13 held that the ambit of Section 34 of the Arbitration & Conciliation Act 1996 strictly restrained the Court from interfering in issues of interpretation of contractual conventions and those matters where the arbitrator is required to be “subjectively satisfied” on questions of facts.

The single-judge bench of Justice C. Hari Shankar in a petition against an arbitral award also discussed the application of the observations made by the Hon'ble Supreme Court in the landmark case of Satyam Infoway Ltd. v. Siffynet Solutions Ltd. in cases relating to domain name infringement

The facts of the case are that the Respondent filed a complaint seeking cancellation of the domain name www.quantumuniversity.edu.in (in which “quantumuniversity” is known as the “Secondary Level Domain” or “SLD” and “.edu.in” is known as the “Top Level Domain” or “domain extension”) registered in favour of the petitioner on 4 August 2017. The respondent alleged that it was a prior registrant of the domain name www.quantumuniversity.com as well as various other domain names, all of which used the SLD “quantumuniversity” with various extensions. The respondent was based out of Hawaii while the petitioner was recognised as a “Quantum University” by way of legislation passed by the Uttrakhand Legislature in 2016.

The respondent alleged that the petitioner's domain name, www.quantumuniversity.edu.in, was infringing upon the respondent's domain name, quantumuniversity.com, which had been registered earlier, due to the shared "quantumuniversity" second-level domain (SLD).

Clause 10 of the.IN Domain Name Dispute Resolution Policy (INDRP), which contemplates the cancellation of an infringing domain name, was thus invoked by the respondent. Having referred the matter to arbitration, the Learned Arbitrator held the award dated May 4, 2021, in favour of the respondent and cancelled the petitioner's domain name for being registered in bad faith under section 4 of INDRP.

The High Court in an application under section 34 of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”) filed by the petitioner was tasked with the question of whether the arbitral award be set aside on being perverse, illegal, contrary to public policy and fundamental policy of Indian Law.

Appearing on behalf of the petitioner, Senior Advocate Mr Jayant Mehta challenged the award on the following- firstly, the award effectively rendered the provisions of the Quantum University Act, 2016 as redundant and otiose; secondly, the respondent not being a “University” u/s 23 of the UGC Act is not entitled to use the term as part of its name in India; thirdly, the respondent failed the qualify the cumulative satisfaction of pre-conditions u/s (4)(a),(b) and (c) of INDRP for the complaint to be maintainable before the.IN registry.

On the other hand, the respondent was represented by Senior Advocate Mr. Sudhir Makkar who argued that the arbitral proceedings did not concern trademark infringement but rather focused on domain name infringement, specifically regarding the petitioner's use of a domain name that was deceptively similar to the 'quantum university-formative domain names owned by the respondent. Further, the respondent being well aware of the fact that “edu. in” can only be used by educational institutions in India was not intending to use “edu. in” as part of its domain name.

Secondly, the reliance placed by the petitioner on S.23 of the UGC Act was completely misplaced as the respondent had not set up any university in India, and was not intending to do so. The services provided by the respondents were entirely online. The mere fact that those services could be accessed in India, would not result in the respondent falling foul of Section 23 of the UGC Act.

The Court in its decision, analysed two aspects, firstly the scope of interference of the Court u/s 34 of the Act of 1996 by the Court with regards to the arbitral interpretation of contractual covenants; secondly, whether the learned Arbitrator's addressal of submissions and interpretation of the relevant clauses of the INDRP suffers from patent illegality or perversity, or are contrary to the fundamental policy of Indian law, as would justify interference by this Court under Section 34 of the 1996 Act.

The Court essentially outlined the restrictive scope of intervention u/s 34 of the 1996 Act and made several key observations while holding that the award suffered from no such illegality or perversity.

Restricted Scope of Judicial Interference on Arbitral Interpretation of Contractual Conventions:

Relying upon the observations made by the Apex Court in Hindustan Construction Company Ltd. v. National Highways Authority of India 2023 SCC OnLine SC 1063, the bench held that the occasion for the interpretation of contractual provisions by the Court would only arise if, based on such interpretation, the correctness of the decision—whether it be an order or an award—under challenge before the Court could be assessed. The law strictly prohibits interference by the Court with the award solely because, in the Court's perspective, the contractual clauses should have been interpreted differently. It was stressed that the Court can only intervene where the Tribunal's interpretation of the contract leads to patent illegality or perversity.

The bench further observed, “This Court, while exercising jurisdiction under Section 34 of the 1996 Act, would forbear from interfering with the manner in which the learned Arbitrator has interpreted the clauses of the INDRP, unless there is any clause which has not been considered by the learned Arbitrator or in respect of which the construction accorded by the learned Arbitrator is so perverse or illegal that no man, properly instructed in the law, would so interpret that clause. Absent that standard, the arbitrator has necessarily to be regarded as the final arbiter on interpretation of the contractual covenants – or, in the present case, the covenants of the INDRP – before him”

Finding that the arbitrator had considered each argument proposed by the petitioner as claimed to the contrary, the Court ruled that the “Impugned award is not, therefore, vulnerable to evisceration for reasons of not having considered any of the relevant issues that were urged before the learned Arbitrator Tribunal and have now being urged by Mr. Mehta before this Court”.

Issues Involving “Subjective Satisfaction” or Fact Finding by the Arbitrator are Immune from the Lens of S.34:

The Court restrained itself from re-entering into the findings of the tribunal which were a matter of “subjective satisfaction of the court or the authority seized with the challenge raised in that regard”. On the issue of applying the deceptive similarity test, the Court noted that since its a question of subjective satisfaction, “The decision in that regard is even for that reason substantially immune from interference under Section 34 of the 1996 Act.”

However, in the alternative, the Court ruled the petitioner's domain name “quantumuniversity.edu.in is confusingly similar to the quantumuniversity formative domain names of the respondent”. Thus the arbitrator's finding of cancelling the former merits no interference.

Similarly, on the issue of reconsidering the question of whether there existed any “confusing similarity” under Clause 4 of INDRP (provides for filing of complaint to .IN Registry under 3 premises- confusing similarity, absence of Registrant's rights/interests, use of domain name in bad faith), the Court held :

“They are pure findings of fact based on a subjective assessment of the rival domain names, and cannot, therefore, invite interference under Section 34 of the 1996 Act. The fact that the quantumuniversity SLD is common is not in dispute. That being so, the question of whether the rival domain names are, or are not, likely to create confusion, is one of subjective satisfaction. In view of the common SLD, the decision cannot be regarded either as patently illegal or perverse, or as one at which no one instructed in the facts and law would arrive.”

With regards, to the determination under Clause 3 INDRP which required every person seeking registration of a domain name to ascertain that such domain name would not violate third-party rights, the Court held the finding of the tribunal to be a finding of fact. The tribunal held that the registration couldn't be deemed legitimate, and similarly, the utilization of the registered domain name couldn't be considered legitimate either as the petitioner despite knowing the prior existence of the respondent's domain went ahead with registration.

The Court observed, “This is a finding of fact. In the absence of any ground to characterise it as perverse, it is impervious to interference under Section 34 of the 1996 Act.”

Reiterating the same ratio, on the question of whether under Clause 7 of INDRP, the petitioner registered intentionally to attract internet users by creating confusion as to source, affiliation etc with the respondent, the Court held, “The question of whether the petitioner was, or was not, acting intentionally with a view to confuse internet users by adopting a deceptively similar domain name is essentially a matter of discretion of the learned Arbitrator. Such a discretionary finding cannot brook interference under Section 34 of the 1996 Act unless it is completely perverse. The Court, in exercise of jurisdiction vested in it by Section 34 of the 1996, cannot venture into a reappreciation of the facts and arrive at its own subjective satisfaction as to whether they make out, or do not make out, a case of intentional diversion of internet users by adoption of a deceptively similar domain name.”

Analysing Satyam Infoway Ltd. v. Siffynet Solutions Ltd :

The respondent in making its key arguments as mentioned previously relied upon the Supreme Court's observations in the landmark case of Satyam Infoway Ltd. v. Siffynet Solutions Ltd2004) 6 SCC 145 .

The landmark case was essentially discussed by the High Court to bring out two observations:

1. The Rights Flowing from the Domain Name is Global in Nature -

While discussing the contention of whether respondent's use of domain can lead to derogation of petitioner's right u/s 4 of the Quantum Univerity (QU) Act to call itself a “Quantum University”, which was conferred upon the petitioner by virtue of the QU Act passed the Uttrakhand Legislature in 2016, the Court observed that such right of the petitioner cannot ipso facto mean a consequential right to adopt the domain “quantumuniversity.edu.in”.

It stated that there was a difference between the name of the institution of the petitioner and the domain name, which could not be overlooked. Since domain name rights are global while trademark rights are limited to specific territories based on the institution's name, it's impermissible for an individual to use a deceptively similar domain name to another person's, even if that other person operates outside the territory where the first individual is using their domain name.

“The a priori registration of the the domain name “quantumuniversity.com” or any of the other quantumuniversity formative domain names in the respondent's favour confers, in the respondent's favour, a right to oppose registration of any deceptively similar name by anyone else, across the internet. The right is global in nature, and the decision of the Supreme Court in Satyam Infoway Ltd clearly recognises the global character of this right.”

2. Public Safety is the Raison d'Etre of the INDRP-

The counsel for the petitioner objected to the respondent's reliance placed on Satyam Infoway on the grounds that the case pertained to a passing-off action, unlike the present case dealing with domain name infringement. Clarifying upon the same, the Court observed while Satyam Infoway was not directly related to domain name infringement, it was nonetheless “concerned with domain name infringement, albeit in the context of an allegation of passing off.”

Explaining a notch further, the Court stressed on paragraph 13 of the judgement to note that the Supreme Court “Clearly held that a passing off action is not merely an action to preserve the reputation of the plaintiff but also an action to safeguard the public. Safeguarding of the public is the very raison d'etre of the INDRP. The INDRP envisages protection of registered domain names from the late registration of deceptively similar domain name with the sole intent of safeguarding the public from the likelihood of confusion”.

The Court concluded that the observations in Satyam Infoway apply mutatis mutandis to the present, especially in view of the tribunal's findings on issues of legitimacy of the interests of the petitioner's domain and whether the domain name was used by the petitioner in good faith.

The Court additionally agreed to the submissions of the respondent with respect to how the petitioner's argument of its “Quanutum Univerisity” status being compromised under the UGC Act and QU Act is misplaced. The Court ruled that Section 4 of the QU Act simply designates the petitioner as a private university under the name "Quantum University." The challenged award in no way undermines or affects this status. In addition, it was noted “ The QU Act has nothing to do with the domain name of the petitioner. As such, the QU Act, and its provisions, are, in my considered opinion, of no relevance whatsoever.”

The petition was therefore dismissed, upholding the Arbitral Award as it deemed no interference u/s 34 of the Act of 1996.

Case details : QUANTUM UNIVERSITY v. INTERNATIONAL QUANTUM UNIVERSITY FOR INTEGRATIVE MEDICINE INC O.M.P (COMM) 260/2021

Citation: 2023 LiveLaw (Del) 1343

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