According to the China Internet Network Information Center (CNNIC), the number of Chinese Internet users reached 253 million by June, and has already surpassed the United States as the world's largest Internet population. Moreover, the year-on-year growth rate was 56.2 percent, a record high. The told number of ".cn" domain names was 12.18 million and has exceeded .de, the country-code Top Level Domain for Germany.

With all this growth, foreign and Chinese companies need to seriously consider how to establish a presence in China's cyberspace, which is increasingly becoming crowded with English- and Chinese-language domains.

Competition has brought down the costs of acquiring domains dramatically. This low costs of domain registrations has, however, opened the door for unscrupulous actors to seek to register domains involving the names of companies or their products.

The registrant, if he is registering a name that might otherwise belong to another company, might try to sell it to a company who may heretofore been unaware of the problem. This is "Cybersquatting" - registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else.

The Administrative Measures for Internet Domain Names promulgated by Ministry of Industry and Information Technology (MIIT), the former Ministry of Information Industries (MII), gives the responsibility for both accepting applications of domain name registration and completing registration to service organizations.

A website http://www.cnnic.cn/ provides information on domain name registrations and a list of approved service organizations. By going to the website you can check to see if a registrar is authorized to register either Chinese or English language domains names by MIIT.

Alternatively, you can also check on line to see if the domain is registered and thereafter seek to register it in your own name. Extensive English language content is available on this site.

An ounce of prevention in this area is worth the much higher costs of trying to obtain your rights back. Companies who have registered trademark and service mark owners have legal remedies they can take against such activities.

In fact, in another related trend over the past six years another high growth area has been in the application for trademarks. The Chinese trademark office is the most active in the world.

Companies should register their trademarks and service marks in both English and Chinese. Trademarks in China, unlike in the United States are granted based on "first to file" not "first to use". Without either a trademark or a domain name, it will be difficult for a foreign brand to establish a presence in China's market

What should you do if you believe someone has registered your company's name in bad faith as a domain?

You might be able to buy the registration at a reasonable cost and resolve the problem. However, if the registration was in bad faith, this may encourage continued unfair activity. If you are considering a legal challenge, the most important thing is to first determine whether you have an appropriate basis to challenge the registration.

As mentioned, the disputed domain name needs to be identical with or confusingly similar to the your name or mark in which you have civil rights or interests. The disputed domain name holder should have no right or legitimate interest in respect of the domain name or major part of the domain name; and the disputed domain name holder has registered or has been using the domain name in bad faith.

Keep in mind that a domain name merely identifies an address on the Internet, it is not a label that one attaches to a product to identify a source. Certain trademarks may be owned by different companies for difference classes of goods. Such companies may have legitimate rights to register the mark in their name, even if the domain name may attract mistaken hits.

For example, on July 18, 2008 there were 144 records at the US Patent and trademark office with the letters "ABA" in them, including the American Bar Association and American Bankers Association. In this circumstance it is possible that different companies may have interests in use of "ABA" under various domains.

You may also find that you are in good company should such a dispute arise. You can go to the websites of the two agencies authorized to arbitrate domain name disputes - China International Economic and Trade Arbitration Center or Hong Kong International Arbitration Center (HKIAC) - and look over the cases they have handled or are handling. A substantial number of these cases involve foreign companies.

HKIAC's website, for example, shows that the most recent cases filed involved, many of which are well-known Chinese and foreign companies. The success rate of the parties challenging abusive registrations also appears high.

Considering the rapid growth of China's markets, an investment in the domain can be an important part of a company's brand identity in China's growing markets.

The author is of Counsel of Jones Day Beijing. The views expressed here are his own.

(China Daily 09/01/2008 page9)