Oakley, Inc. (“Oakley”), the maker of some very popular and trendy sunglasses, has also become a trend-setter in the area of UDRP law where it has been involved in two important decisions in the last few weeks.

First, Oakley lost a UDRP decision last month for the domain name www.myfakeoakleysunglasses.com. In that case, the panelist Mr. Houston Putnam Lowry denied Oakley’s Complaint on the basis that the domain was not confusingly similar to the OAKLEY mark. Specifically, Mr. Lowry explained that in his opinion the word “fake” actually distinguished the domain, stating:

“[t]his Panel does not see a confusing similarity between Complainant’s mark and the disputed domain name, see Homer TLC, Inc. v GreenPeople, FA550345 (Nat. Arb. Forum October 25, 2005). Everybody knows what the work ‘fake’ means. The word ‘fake’ appears before the trademark in the domain name. The web site makes it pretty clear these are counterfeit goods. People are going to this web site because they know it isn’t affiliated with Complainant. People are buying these good because the purchasers want to pretend they are Complainant’s goods. While it would seem obvious there is trademark infringement, that is not the test under the UDRP.”

The above logic, if broadly adopted, would create a Texas-sized loophole that would allow counterfeiters to protect their websites from UDRP proceedings by including the word “fake” in the domain, and would essentially reward “honest” counterfeiters. Further, it would also throw out the long established principal that descriptive or generic terms that are part of a domain name should not be considered when comparing the trademark at issue to the domain. See, e.g.,Time Warner Entertainment Company L.P. v. HarperStephens, WIPO Case No. D2000-1254. Although the UDRP is not a catch-all device for trademark holders to shut down any kind of potentially damaging web activity (as intimated by Mr. Lowry above), featuring a trademark in a domain name to attract attention to that domain and then selling counterfeit products which bear that same mark, seems to fall squarely into the purview of UDRP jurisdiction.

Then, just last week on September 7, 2012 Oakley won a UDRP for the domain www.myfakeoakleys.com against the same Registrant, an entity called “H intel” which is based in Xiamen (Fujian Province), China. The site was created in late February 2012 and Oakley filed a UDRP with the National Arbitration Forum in July 2012 seeking transfer of the domain.

Although the Registrant made no secret of the fact that it had created a “fake” Oakley site, it did so in as professional (and straightforward) a manner as seemingly possible. The Oakley mark was/is displayed prominently at the top of the site, there is a useful sitemap, a blog that has a number of recent entries, a privacy policy that states the site “... respects your privacy and takes your online safety seriously”, and even a Verisign Trust Seal at the bottom—which is as fake as the Oakley glasses the site is hawking. The site accepts payment via Visa, Mastercard and Western Union. There is a lot that seems to be “real” about the website, even the glasses at first glance, though a quick shopping comparison reveals it is selling counterfeit Oakley products at a STEEP discount. For example, a pair of fake Oakley Pro M Frame Hybrid glasses in a very nice blue metal color goes for US $15.05. The same real glasses are sold on the cheap side for US $120.00 at established retailers.

The panelist, Mr. Tyrus Atkinson, did not mention the earlier Oakley decision or the rationale concerning whether the term “fake” as part of a domain name can be used as a basis for finding that the domain is not “confusingly similar” to a mark. He did however state: “Complainant notes that Respondent’s disputed domain name combines Complainant’s mark with the generic terms ‘my’ and ‘fake.’ Past panels have found that the addition of generic terms does not adequately distinguish the disputed domain name from a complainant’s mark.”

But, if the UDRP is not the proper place for companies like Oakley to deal with counterfeit websites (as Mr. Lowry suggests) that are using the Oakley trademark in the domain name, then what other options does Oakley have?

Well, Oakley could file a lawsuit against “H intel” in the United States based on in rem jurisdiction of the website in the state of Virginia. Established case law holds that all .com domain names are subject to jurisdiction here due to the fact that Verisign, Inc. (the de factor “owner” of the .com registry) is located in the United States. By doing so Oakley could seek an injunction against H intel under the Anti-Cybersquatting Protection Act (“ACPA”) and ask a Court to force Verisign to shut the website down. Other companies have done this successfully. For example, Ralph Lauren, The North Face, and True Religion Apparel, Inc. are just a few of the companies that have shut down hundreds of fraudulent websites via ACPA lawsuits and been awarded judgments for hundreds of millions of dollars collectively. The downside here is that none of these companies will likely never recover a nickel from the judgments because there is no way to enforce a judgment against a company which is located overseas and does not have accounts or assets in the United States.

Oakley could perhaps file a lawsuit against the companies that process the credit card payments for the Registrant—without which they would not be in business. In 2010 Gucci America, Inc. (“Gucci”) filed a trademark lawsuit against three credit card processing services that worked with the counterfeiter arguing that the processors were at least liable for secondary or indirect trademark infringement by enabling the counterfeiter to sell its fake goods. The Court found that this was a plausible argument guided by its belief that in cases where a credit card processing company is assisting a “high risk” or known counterfeiter it has a duty to do some type of investigation into the companies business and can’t “knowingly provide a bridge between buyers and sellers of [counterfeit products], enabling them to consummate infringing transactions, while making a profit on every sale.” (citations omitted).

Although there is a time and place for companies to litigate matters that are beyond the jurisdiction of the UDRP, the better view in this case is that simply including the term “fake” as part of a domain name does not eliminate the element of “confusing similarity” under UDRP law. Any consumer that goes to the websites at www.myfakeoakleys.com or www.myfakeoakleysunglasses.com is drawn to the site by the association with the Oakley mark. Further, in the on-going game of whack-a-mole that companies must play in order to try and frustrate (if not stop) infringers/counterfeiters and protect the public from fake and perhaps even dangerous goods, filing a lawsuit to shut down a domain in every case is simply not practical. The reality of a global Internet is that there must be fast and effective ways to shut down fake/counterfeit websites—and the UDRP is the best tool to protect brand owners and consumers in most cases, particularly where counterfeiters and infringers are harming domestic companies by using their presence in foreign jurisdictions as a weapon.