Citigroup, Domain Names and Instruments of Fraud

United Kingdom

The decision in Global Projects Management v (1) Citigroup Inc and (2) Davies from October taught two valuable lessons: number one, if you are contemplating a merger that would require or result in any sort of name change, it is worth considering a domain name registration prior to any public announcement; and number two, if you register a domain name which leads people to believe that you are linked to another organisation or person, that is enough to make that domain name a potential “instrument of fraud” which may amount to passing off.

On the day Citicorp and Travellers Group issued a press release stating they were planning to merge, Mr Jim Davies successfully applied to register the domain name for an IT security business, Global Projects Management Limited (GPM). GPM had no connection with Citigroup and did not attempt to sell the domain name, but anyone accessing the domain name was automatically taken to the GPM website and emails, possibly confidential and sensitive, sent to the address by mistake were held by the GPM system.

Citigroup only became aware of the existence of the domain name in 2003, 5 years after the merger, at which point it wrote to GPM alleging that the registration was an act of passing off and trade mark infringement. GPM issued proceedings claiming damages and other relief for unjustified threats under the Trade Marks Act. Citigroup counterclaimed and sought to have the domain name removed from GPM’s ownership and assigned to Citigroup. Citigroup also claimed damages from GPM and Mr Davies.

Citigroup succeeded in an application for summary judgment. It was obvious that the registration was made with knowledge of the press announcement and Citigroup had the requisite reputation in the UK for a passing off action. In addition, there clearly had been an infringement of Citigroup’s registered trademarks.

On the face of it, this decision went one step further than the infamous One in a Million Decision, which involved cyber-squatters attempting to sell the domain names in question. Here, the defendants were not attempting to sell the domain name. However, the defendants were receiving additional traffic to their website as a result of holding the domain name and the Judge was persuaded that the registration of the domain name on the day of merger was not a coincidence.

Although the decision was favourable to the Citigroup, the implicit dangers of confidential email exchange and possible re-direction of Internet traffic, together with the cost of requiring a cyber-squatter to hand over a domain name make it highly desirable to avoid any such situation. This could be avoided by simply applying for the required domain names prior to (or at least at the same time as) any public announcement of a merger or name change generally.

This article first appeared in our Technology Annual Review, March 2006. To view this publication, please click here to open in a new window.