Domain Name Registrars Are "Intermediaries" Under Information Technology Act: Delhi High Court

The Delhi High Court has held that the Domain Name Registrars are "intermediaries", within the meaning of sec. 2(1)(w) of the Information Technology Act, 2000.

Justice C Hari Shankar was dealing with a suit filed by Snapdeal Private Limited regarding "SNAPDEAL trade mark". Defendants 1 to 32 were Domain Name Registrars who provide domain names for parties who may seek to register their respective websites under such domain names. Defendant 33 was the Department of Telecommunications and Defendant 34 is the National Internet Exchange of India (NIXI).

The plaint alleged that various third parties, with whom the plaintiff had no connection or association whatsoever, were registering domain names which include the "SNAPDEAL" thread. These domain names, it was alleged, were infringing in nature, as the plaintiff was the registered proprietor of the "SNAPDEAL" trade mark.

It was also alleged that such third parties were, through the websites operating under the said domain names, carrying out illegal activities, such as providing lucky draws etc. and were also, in certain cases, posing as customer care centres for the plaintiff's products.

The Court therefore framed the following issues:

- Are the DNRs "intermediaries" within the meaning of Section 2(1)(w) of the IT

- (Is the providing of brokerage services, by the DNRs, violative of the IT Act or otherwise illegal?

- Does providing of domain names containing 'SNAPDEAL' violate the trademark rights of the plaintiff?

- Is providing of privacy services, by the DNRs, illegal?

- Are the DNRs entitled to "safe harbour" under Section 79 of the IT Act?

- Is it not technologically feasible for the DNRs to ensure that aspiring registrants, who logged onto the websites of the DNRs, are not provided options which contain a particular thread or word?

- Would grant of the reliefs sought in the plaint required the DNRs to adjudicate regarding the infringing nature of any available domain name?

- How meritorious is the DNRs' contention that no substantial relief would ensue in favour of the plaintiff, even were the prayer is in the plaint to be granted, as there are several hundreds of DNRs from whom aspiring registrants could obtain domain names containing the 'SNAPDEAL' word/thread?

- Would grant of the reliefs sought in the plaint affects the rights of the DNRs or of aspiring registrants?

- Is the plaint bad for non-joinder of necessary parties?

- Is the plaintiff is entitled to the relief of a restraint, against the DNRs, from providing, in future, to any aspiring registrant, any domain name containing 'SNAPDEAL' as a quia timet relief?

On the first issue, the Court rejected the contention of the DNRs that they are not "intermediaries" within the meaning of sec. 2(1)(w) of the IT Act.

Going through various definitions of the Act, the Court observed that domain names would qualify as "electronic records", as defined in sec. 2(1)(t), especially as the domain names which are provided by the DNRs, according to them, are sourced from a common Domain Name Registry.

"As being persons who provide service with respect to the domain names, the DNRs would be "intermediaries" within the meaning of Section 2(1)(w)," the Court held.

On the second and third issue, the Court said that neither does the IT Act, nor do the 2021 IT Rules, delimit or delineate the functions which an intermediary can perform.

"The IT Act is completely silent in this regard, merely restricting itself, in Section 79, to certain circumstances in which an intermediary would, and would not, be entitled to the protection of the provision. The IT Rules merely contain provisions relating to observation of due diligence by intermediaries and do not restrict the activities in which intermediaries may indulge. I am in agreement, therefore, with learned Counsel for the DNRs that there is no statutory proscription against their providing brokerage services. As the discussion hereinafter would reveal, however, this would impact the entitlement, of the DNRs, to the benefit of Section 79 of the IT Act. That said, there is, I repeat, no bar against the DNRs providing brokerage services, even if the brokerage charges, charged by the DNRs for such services, are in addition to, and over and above, the commission which they charge for providing domain names to an aspiring registrant," the Court observed.

Therefore, the Court opined that merely on account of providing of brokerage services, it cannot be said that the DNRs infringed the intellectual property rights of the plaintiff in any manner.

It added that as the alternative domain name provided by the DNRs did not belong to the plaintiff, the DNRs were not required to obtain any permission from the plaintiff before providing such alternative domain names.

"The DNRs do not, in any manner, profess any association with the plaintiff, in making such alternatives available. Rather, it is the case of the DNRs – which the plaintiff has not been able to successfully traverse – that the alternative domain names are sourced from an existing Domain Name Registry, albeit using an algorithm devised by each individual DNR for the services provided by it. Inasmuch as the extraction/sourcing of alternative domain names from the Domain Name Registry is an automated process flowing from the manner in which the algorithm, devised by the DNR works, it cannot be said that the DNR is holding itself out to be either an agent of, or associated with the plaintiff, in providing such alternative domain names," the Court said.

The Court further opined that the right to obtain relief against infringement is independently available to the proprietor of a registered trademark under sec. 28(1) of the Trademarks Act in addition to the exclusive right to use the registered trademark in relation to the goods or services in respect of which it is registered.

"The right to proceed against infringement, as envisaged by Section 29, covers not only to use of the allegedly infringing trade mark in respect of the goods or services in respect of which the allegedly infringed trade mark is used, but also to other goods and services. Section 29(4)(b) specifically covers infringement by use of a trademark in relation to goods or services, which are not similar to those for which the trademark of the plaintiff is registered," it said.

Noting that while there is no dispute about the fact that the DNRs provide alternative domain names, in the event of the domain name that the aspiring registrant seeks being already taken, for a price and charge higher prices for domain names which are more "in demand", it added that the DNRs act commercially for a profit.

"In doing so, they use the allegedly infringing marks in the course of trade, by offering the domain names which constitutes the marks, for sale to aspiring registrants for a price. There is, therefore, clear user "in the course of trade", by the DNRs of the allegedly infringing domain names. More specifically, in the case of the plaintiff, the DNRs use the plaintiff's registered "SNAPDEAL" mark by offering the infringing domain names up to any aspiring registrant for a price. By doing so, the DNRs are clearly using, in the course of trade, the allegedly infringing marks. The contention, of learned Counsel for the DNRs, that any allegation of infringement by use in the course of trade of the allegedly infringing domain names, would only lie at the door of the registrants is, therefore, prima facie, misconceived and has to be rejected," it said.

In view of the fact that the domain names were deceptively similar to "SNAPDEAL", the Court sait that the defendants were indulging in infringement of the plaintiff's registered mark within the meaning of sec. 28 and 29 of the Trademarks Act.

Furthermore, the Court observed that an intermediary which provides services which are in excess of those which, in natural course, fall to its functions as an intermediary, cannot be entitled to the benefit of Section 79(1).

"Specifically, if the intermediary provides functions which are in excess of providing access to a communication system over which information made available by the third party are transmitted, stored or hosted, it cannot secure the benefit of Section 79(1). The intent and purpose are obvious. An intermediary, which operates for profit, as a business enterprise, cannot seek amnesty under Section 79(1). This would be, especially, in respect of liabilities which arise from such activities, which are beyond the activity of providing access to a communication system as contemplated by Section 79(2)(a)," the Court observed.

In this backdrop, the Court said in the present matter, it was not in dispute that the contesting DNRs are not merely providing access to a communication system over which information can be shared and were acting with clear intent to profit.

"They are providing alternative domain names for a price. Not only this, they are differentially pricing the alternative domain names, depending, obviously, on the "demand" for such alternatives. If, in providing such alternatives, therefore, the DNRs infringed registered trademarks of third party as such the plaintiff, they cannot seek immunity from the consequences of such infringement, by taking shelter under Section 79(1)," the Court said.

It added "The provision of "safe harbour" under Section 79 cannot, therefore, prima facie, in my view, be available to the DNRs, to the extent that the alternative domain names provided by them to aspiring registrants infringed the registered trademark of the plaintiff."

It further said that neither do the DNRs have any right to make available for registration, to aspiring registrants, domain names which infringe existing registered trademarks, nor does any registrant have a right to registration of such an infringing domain name.

"A situation in which the algorithms of the DNRs make available, to prospective registrants, infringing domain names, leaving the proprietors of the infringed trade marks to repeatedly knock at the doors of the Court cannot be allowed to continue in perpetuo," the Court observed at the outset.

The Court accepted the contention of the DNRs that a relief of interim injunction (injunction against Defendants 1 to 32 qua offering any domain names which incorporate the Plaintiff's SNAPDEAL trademarks) could not be granted under Order XXXIX Rules 1 and 2 of the CPC.

"For the aforesaid reasons, the prayer (a) in IA 5407/2021 of the plaintiff, to the extent it seeks an injunction against Defendants 1 to 32 "offering any domain names which incorporate the plaintiff's "SNAPDEAL" trademarks listed in para 10 of the plaint', is rejected," the Court concluded.

Title: SNAPDEAL PRIVATE LIMITED v. GODADDYCOM LLC AND ORS.

Citation: 2022 LiveLaw (Del) 336

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