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'Palpable nonsense' backfires for owner of Citigroup.co.uk

A former intellectual property lawyer who grabbed citigroup.co.uk on the very day in 1998 when it was announced that two financial giants were merging to form Citigroup Inc. has been ordered to transfer the domain name and could face substantial damages.20 Oct 2005

Advert: Phishing conference, London, 27th October 2005Jim Davies is the Managing Director of Global Projects Management, an IT security firm based in London that targets its services at law firms. He lost his High Court battle this week. The judge delivered a 33-page opinion in his own handwriting.

Travelers Group and Citicorp announced their $140 billion mega-merger on 6th April 1998. But in what seems like a remarkable oversight, neither firm had registered either citigroup.co.uk or citigroup.com. Jim Davies registered citigroup.co.uk later the same day. He tried for citigroup.com the following day – but that had just been snapped up by a US opportunist, Peter Tarquinio.

Citigroup's US lawyers, Skadden Arps, sued Tarquinio for trade mark infringement and dilution. They won the case, getting citigroup.com transferred. Davies tried a different tactic in his attempt to keep the .co.uk name: he sued Citigroup before it sued him.

Citigroup's lawyer, John Linneker, head of intellectual property litigation at Denton Wilde Sapte, first wrote to Davies, asking him to transfer the UK name to Citigroup. When that failed, Linneker's team applied to Nominet, the UK domain name registry which offers a dispute resolution service. But proceedings before Nominet grind to a halt if someone files a court action. That's exactly what Davies did.

In a courageous pre-emptive strike, Davies sued Citigroup for making groundless threats. This is a remedy that exists in the Trade Marks Act: as soon as you accuse someone of infringing your registered trade mark, you expose yourself to damages unless you can prove your accusation. But Davies' groundless threats action was struck out by the judge.

It may be that Davies was just hoping that by suing, Citigroup would quietly settle the case with its cheque book – although there was no evidence of such a motive in the case. (Neither Davies nor his lawyers responded to OUT-LAW's request for comment.) Instead, Citigroup was up for a fight: it countersued, seeking a transfer of the name and damages for trade mark infringement and passing off.

Davies had never used the domain name or attempted to sell it to Citigroup or anyone else. The High Court also acknowledged that neither he nor his company had any history of cybersquatting.

But when Davies suggested to the High Court that the timing of his domain name registration was mere coincidence, Mr Justice Park did not believe him, describing Davies' assertion as "palpable nonsense".

Mr Justice Park said the evidence showed "irrefutably" that Davies and his company's object was to obtain a domain name that carried the threat of deception harmful to Citigroup. Davies had been receiving emails intended for Citigroup; Davies even attempted to use the information in them to trade in shares.

The court said that the mere registration and holding of a domain name that leads people to believe that the holder of the domain name is linked with a person is enough to make the domain name a potential "instrument of fraud" and amounts to passing off. The phrase has been applied in previous cybersquatting court cases, the most famous being a landmark victory for Marks & Spencer, Virgin, BT and other famous brands against a cybersquatting operation called One in a Million in 1999. Mr Justice Park referred to and followed that case.

He ruled in favour of Citigroup in Monday's summary judgment. He said a trial would be "pointless" because it was obvious that Davies knew of the press announcement when the name was registered. He concluded that there was passing off and trade mark infringement by Davies and Global Projects Management.

It was only the evidence around the registration that made the name an instrument of fraud: the timing, the thousands of emails received in error, the high profile and distinctive spelling of the brand involved.

Davies has been ordered to transfer the name to Citigroup. He has also been ordered to pay £30,000. But that is only an interim payment. The final damages have still to be assessed together with Citigroup's legal costs and that Davies could be facing a substantial loss for his attempt to keep the domain name.

Linneker said, "Citigroup are delighted with this win and very pleased to get their domain name back."

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