On 12 July 2018¹, the court in Oost-Brabant had annulled an agreement regarding a domain name because there was evidence of fraud.
Our clients (hereinafter: ‘brand holder’), owner of brand X, are regularly approached by providers from distant countries (usually China). The providers assert that they are approached by a company that wants to claim one or more domain names similar to their brand, but including the .asia extension or the .cn extension. In the case of the .cn extension, it becomes brand.cn and in the case of .asia it becomes brand.asia. A particular Chinese provider had discovered that X is a brand of the Dutch brand holder and therefore, it has not yet bestowed brand.cn or brand.asia upon the company that applied for it. That is why the brand holder was approached so that it can still claim in a short time (usually one to five days) the brand.cn or brand.asia.
This is clearly a phoney story and is merely a trick for obtaining business by putting pressure on the brand holder to claim brand.cn and/or brand.asia via the provider. There is not a single foreign provider that checks the brand registers of other countries before it registers a domain name in its own country.
Similar practices have been around in China for a long time, but only in recent years they have also cropped up in the Netherlands. Providers in the Netherlands phone Dutch companies with similar announcements and give the brand holder the possibility to register a certain domain name for a long period – and for a great deal of money – via the domain name provider concerned as was the case with the firm Trademark Office BV(hereinafter: Trademark Office).
That way, a client (ultimately unintentionally) was approached by Trademark Office and over the phone agreed to register a domain name for a period of ten years. Trademark Office notified the client that an unknown party has tried to claim the domain name of this client. After the client had agreed by phone to the offer, the client did some research on the Internet and discovered that he was tricked into this deal. Two days later, the client terminated the agreement and refused to pay the invoice.
Trademark Office challenged the client in court and demanded the payment of the invoice. The client defended himself by claiming that this was a case of a sales trick and this was not contradicted by Trademark Office. The judge agreed with the defence of the client and declared that this was a case of deceit on the part of Trademark Office.
Because Trademark Office had not contradicted that they have used a ‘sales trick’ in order to lure the defendant into entering an agreement, by providing him with incorrect information that another unknown party had claimed the user name [domain name] .com (and that Trademark Office had secured for the client), there is evidence of fraud. A legal act that is the result of deceit is voidable.
Therefore, the claim was rejected.
Thus, the agreement was annulled by the judge. It is good to know that the court believes that there is evidence of deceit if parties attempt in similar manners to deceit entrepreneurs by ‘selling’ them domain names that the latter have neither requested nor require.
It should be clear that we always advise our clients to reject such offers. In case of doubt, you can always get in touch with us.