The following article will briefly describe the Hungarian regulation of domain names, mainly concentrating on the eventual defenses and legal measures a trademark holder or a reputable company can utilize in order to protect its interests.



The Internet and the domain names as a closely associated area are primarily regulated in Hungary by an association, called the Council of Internet Providers ("CIP"), which is a body consisting of the Internet providers of Hungary and having great freedom and self-government and also having the main deterring power: having signed a contract with ICANN, the international administration of the Internet.

The CIP is aided by two other organizations: the Advisory Board ("AB") and the Arbitration Court supported by the CIP ("AC").

The CIP has issued a set of rules called the Rules of Registration, recently this code was slightly redrafted and renamed to Principles of Domain Registration ("Principles"). These Principles contain the most important rules concerning the domain name regulation, and although they are by no way legal rules, they are enforced as the binding legal rules of the domain name registration.

Another very important document that creates rights and obligations (mainly for the applicant of a domain name) is the Application Form necessary for the proper registration (also called delegation) of any domain name. This Application Form contains provisions such as (i) the applicant submitting himself to the decision of AC and the AB, (ii) the obligation to carefully select the domain name without infringing the rights of other persons or entities, (iii) the declaration of the applicant to claim sole responsibility for any damage caused during the procedure, etc. Practically, the Application Form contains all the main rules in a compressed form. Upon the application, this Form is signed by the applicant and submitted to the Registrator, the company that takes care of the registration on behalf of the applicant. Currently there are over 40 Registrators, each having signed a contract with the CIP for the providing of the services related to domain name registration.



There are two types of procedures depending on the circumstances of the application:



A claim has priority if the domain name to be registered is identical to the registered trademark owned by the applicant or the company name of the applicant. In both cases, the domain name must be identical to the trademark or to the full or abbreviated company name, no deviation is allowed, except for technicalities, such as spaces between words and the natural differences between Hungarian and English spelling (e.g. the Hungarian letter "o" is written in the domain name as "o") Very important that the trademark must be registered, it is not enough if the applicant filed the trademark application; and also the company name must be proven by a formal decision of the Court of Registration registering the company in the company registry. (A typical example for the strict nature of this identity is that company names such as XXX Hungary Kft. may serve as a basis for priority in the case of the domain name, but it may not claim as a priority claim.)

The registrations of priority claims take place without the publication (please see below), in a timely order, on a "first-come, first-served" basis.



In cases of ordinary claims (where the applicant cannot prove any priority), the selected domain names are published on the main server of the CIP together with the date of publication. Counted from the date of publication, applicants with the priority claim of that domain name have 14 days available to file an objection against it or file an application to register for themselves the domain name that was originally requested as an ordinary claim. In case of an objection is filed within the 14-day period, the registration is placed on hold until the final settlement of the case.
The Registrator has certain limited authority to refuse the registration of domain names that obviously "belong to" another person or entity, but they hardly ever utilize this power, they prefer to wait for the ultimate binding decision of the AB or the AC.

In case no priority claim arises, then the domain name is delegated to the original applicant.



For both types of registration, the applicant must sign the Application Form as described above, which Form also prescribes certain obligations to the applicant concerning the careful selection of the domain name and which also includes the obligation to renounce the domain name if the use of the domain name infringes the interests of another party. Furthermore the applicant must declare that it is aware of the possibility to check whether the domain name to be registered is protected by a trademark protection.
Although this declaration creates a clear obligation, the applicants often fail to comply with it and they force the other party to initiate legal measures, such as lodging a claim before the AC.



The registration procedure becomes legally significant if the application is challenged by another person or entity. In this respect, we must distinguish between objections submitted during the publication (before registration) and objections submitted after the registration. It is important to emphasize that if the registration was based on a priority claim, then this cannot be later challenged by another rightholder; if the trademarks or company names are identical, then the principle of "first come, first served" is applied. This rule also applies if, for example, a less known trademark is registered, then the owner of a second trademark appears, claiming that its trademark is widely known (notorious) and objecting to the registration of the first trademark. Since the use of one's own trademark excludes the possibility of trademark infringement, the second owner does not have any choice (if it intends to use that domain name) but to somehow reach an agreement with the first owner for the sale or use of the domain name.



If an application is published, it means that it does not have any priority, therefore the objecting party has two options: it must either prove its priority claim to the domain name or otherwise prove that the delegation to the original applicant would be otherwise illicit or deceitful. For the proving of the priority claim the same rules apply as during the original application (trademark, company name, identity).

The other ground for objection (illicit or deceitful registration) is identical to the objection presented after the delegation of the domain name, so I will discuss it there.



After the registration, it might not be enough for the objecting party to prove that its claim is a priority claim, but furthermore it must also prove other facts, such as the illicit, deceptive nature of the registration. This obligation also reflects the above cited principle of "first come, first served", it forces even the rightholders to constantly check the status of their trademark and company names to make sure that it has not been registered as a domain name.

The ground for objection can be the illicit or deceptive nature of the registration or such use of the domain name. The question what constitutes illicit and deceptive is answered by the specific acts on trademark protection and on unfair market practices, thus the actions of the party first registering the domain name must be sanctioned in these specific acts in order for the objections to be successful:



According to the practice of the AC, the registration of a domain name (that happens to be a trademark) is considered as a use of the domain name, so the domain name holder may not claim that it does not conduct any business under the domain name, thus its actions do not qualify as trademark infringement.

If the trademark is not notorious, then the owner may only claim the deletion of the registration if the domain name is used for the same classes of goods or services that the trademark was registered for.

If the trademark is notorious, then regardless of the classes, the owner may claim deletion. The fact that a third party registered a trademark as a domain name usually is sufficient to prove that the third party knew that trademark, thus it is easier to prove the notorious nature of the trademark.



There are two provisions in the Act on Unfair competition that may be applied for domain name disputes:
Section 2 on the general prohibition of unfair economic activity and section 6 on the use of an identical or confusingly similar design, name, packaging and mark that are associated with another competitor or its products. These rules may be applied not only if damage has been caused, but also if its possibility or threat exists.
For example, in one case, the AC held that registration of a significant part of the company name (not the full name, because that would have been decided based on priority) of a competitor as a domain name by another competitor conflicts with section 6 of the Act on unfair competition.
Regarding the specific piece of market the two competitors are interested, one ruling of the AC held that they do not have to operate on the same market, whereas another held that this rule applies only to direct competitors, thus this question does not seem to be settled yet.

If the commercial name of a competitor is not protected by trademark or it is not the company's name, then it may also cite the above rules of unfair competition to challenge the domain name registration of another party. In this case, however, the proving procedure is more complicated, since no official document evidences the existence and use of such commercial name.



The Registrator must refuse the registration of an application if there is high suspicion that the use of the domain name would be illicit or deceitful. Nevertheless, the Principles declare that the Registrators do not guarantee that they recognize each and every illicit or deceitful registration, and they seem to prefer not to bring decisions themselves but to forward the problem to the AB or signal to the parties the possibility of settling the case before the AC. It is very important that only Registrators are entitled to file an inquiry before the AB to bring a ruling on specific domain names before their registration.



There are three possible forums for the resolution of a dispute:



The Advisory Board has the authorization to decide in the question whether a specific domain name may be delegated to an applicant in cases where there is objection from a rightholder or the Registrator has suspicion about the domain name. It is important that once the domain name has been delegated, the Advisory Board does not have any competence to decide in the issue.



Once the domain name has been delegated, the resolution of any dispute concerning the domain name falls into the competence of the Arbitration Court supported by the CIP. This Court is a fairly inexpensive and quick way for bringing final and enforceable judgments. The applicant of a domain name must declare in the Application Form to submit itself to the Court and accept its judgment.



If a party that is not an applicant (thus it has not submitted itself to its authority) and wishing to bring a lawsuit, may also do so before the ordinary courts, mainly before the Municipal Court of Budapest as the one court exclusively competent in deciding trademark infringement cases. The ordinary court would bring its judgment applying the relevant legal rules, but it cannot be stated for sure that it would also apply the Principles of Registration, as these rules are not legal rules and they are not signed by the applicant either. Nevertheless, the current general practice of the courts, when cases can last for years, will probably be a strong argument for parties to choose the Arbitration court instead of ordinary courts.



The legal framework for the protection of domain names indeed exists in Hungary and there are various ways and forums that enable a company to step out for the protection of its business interest. Nevertheless, one must also be aware that the Internet prefers and requires swift responses and the traditional measures of the old economy are not always sufficient. Therefore, the awareness of the rightholder concerning domain names is a crucial factor and preventing the problem becomes even more important as the damage that may be caused exceed the scope that is expectable in the non-Internet related business.

Dr. Csaba Szőke
Attorney at Law

Bogsch & Partners