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Overreaching Trademark Owners and the Misguided Better Right Theory of Domain Name Ownership

In Blogs devoted to news from the domain name industry and domainers, there is great glee in reporting about overreaching trademark owners. The reason for the glee, I think, is that it’s a form of collective sigh from domainers and the domain industry that the UDRP is working as it should, which means that Panels are careful in their assessments of parties’ rights. “Oh, the irony. A cybersecurity firm has been busted for trying to nab a domain name through a baseless cybersquatting claim,” from Domain Name Wire commenting on Cyberbit Ltd. v. Mr. Kieran Ambrose, Cyberbit A/S, D2016-0126 (WIPO February 26, 2016) (<cyberbit.com>). What a shocking accusation, “trying to nab” and even “steal,” but fortunately thwarted! The glee is enhanced by complainant getting its comeuppance by being sanctioned for abusing the administrative process, which I’ll return to below.

There is a similar level of enthusiasm in reporting on losing domain name holders obviously taking aim at trademark owners. Whoever gives the industry a bad name deserves what it reaps. Take for example the recent case of <halifax.com> which reporters also pounced on and which I discussed in an earlier blog post. Domain Name Wire noted that “Diversity Network acquired Halifax.com in September 2015 for $175,000 and then proceeded to make a series of stupid attempts to get Bank of Scotland, which operates a financial services company called Halifax, to buy the domain name… It should be viewed as a lesson on what not to do with a domain name that has both a generic/geo value as well as that of a brand.” Bad faith was an easy call under paragraph 4(b)(i) of the Policy. Respondent’s attempts to justify its conduct undermined rather than supported its case.

Cyberbit is an equally good lesson of “what not to do” in commencing a UDRP proceeding without any understanding of Complainant’s evidentiary burden. Worse still (even if Complainant’s counsel understood the requirement) it was beyond Complainant’s reach even to marshal any supporting evidence of cybersquatting for two reasons: 1) the domain name was registered years prior to the trademark, and 2) complainant’s evidence indicated the domain name is owned by a company of that name. Alleging that default is conclusive in complainant’s favor or that non use “suggest[s] that the holding of the Domain Name is no longer of interest to the [Respondent]” and warrants forfeiture to the trademark owner are not proof. Neither is complainant’s position improved by alleging that when the domain name was active the “website . . . was [allegedly] ripping-off its customers and involved in monetary scams ” Moral turpitude directed to the public at large in no way advances complainant’s position, so it’s useless to build a case on these kinds of allegations. The tort of cybersquatting specifically concerns conduct either intentionally aimed at taking advantage of an owner’s trademark or being willfully blind to owner’s rights.

The “willfully blind” charge can also be made about complainants. The Panel in Cyberbit criticized the Complainant for alleging lack of rights or legitimate interests when the proof demonstrated the opposite. The allegation made no sense because “[i]n the Complaint the Complainant acknowledges that the Respondent has an email address connected to the domain name, and quotes from a website indicating that the Respondent has a company named Cyberbit A/S, which is also referred to simply as “Cyberbit”. True, the website from which the extracted quote was taken accuses the Respondent’s company of ripping off its customers, but quite clearly the Respondent’s company is (or was at that time) commonly known as either Cyberbit or Cyberbit A/S.” The Panel continued,

While it is the case that the Respondent is an individual with a name which in no way resembles the Domain Name, it is a fact that in the Complaint the Complainant treats the Respondent and his company as one when it talks of the Respondent’s use of the Domain Name . . . . The Panel regards this as a reasonable approach for the Complainant to have adopted and proposes to do the same.

Although “[t]he Complainant has produced evidence showing that some of the Respondent’s customers believe the Respondent’s style of business to be a ‘rip-off’, but there is no suggestion that the Respondent’s business is or was anything other than a genuine commercial operation.” Complainant’s argument on this and its other contentions fundamentally misconceives the law. It proposes what can be called the “better right theory” of domain name ownership, which in this case was reinforced by Complainant’s failure to plead or prove abusive registration.

It appears that Panels are showing a growing intolerance for overreaching complainants (particularly where they are represented by counsel and particularly where “the deficiencies [of proof] must have been obvious to anyone remotely familiar with the Policy”) and a corresponding determination to sanction them “[i]f abuse is apparent on the face of the case papers.” While the burden is ordinarily on respondent to prove abusive conduct the Panel in Cyberbit held (correctly, I think) that “such a finding is not dependent upon a request from the Respondent,” citing two decisions in support of this proposition. In Goway Travel Limited v. Tourism Australia, D2006-0344 (WIPO June 6, 2006) the Panel held that the “Rules specifically put the burden on the Panel to determine whether a complainant has tried to use the Policy in bad faith to attempt to deprive a registered domain name holder of a domain name.” This holds true even “where no such finding has been sought by the respondent, but also in cases where there has been no response,” M. Corentin Benoit Thiercelin v. CyberDeal, Inc., D2010- 0941 (WIPO August 10, 2010).

The intolerance is connected I think to an uptick in the number of overreaching complaints, a likely sign of rising frustration among owners who opt for trademarks without thoroughly vetting whether corresponding domain names are available. Or, perhaps, they own trademarks on the lower end of the spectrum that work equally well for domain name registrants without knowledge of existing trademarks and using the domain names for their semantic value. The UDRP was not implemented to award trademark owners without proof that it is they specifically who respondents are targeting.

By Gerald M. Levine, Intellectual Property, Arbitrator/Mediator at Levine Samuel LLP

Information about the firm can be found on the Firm’s website at iplegalcorner.com. Mr. Levine has a litigation and counseling practice representing clients in Intellectual Property rights and management, Internet and Cyberspace issues, domain names and cybersquatting, as well as a diverse range of legal and business matters from working with client to resolve commercial disputes, to copyright and trademark counseling and registrations. He is the author of a treatise on Trademarks, Domain Names, and Cybersquatting, Domain Name Arbitration: A Practical Guide to Asserting and Defending Claims of Cybersquatting Under the Uniform Domain Name Dispute Resolution Policy. A Second Edition of the treatise was published July 2019 and is available from Amazon or from the publisher, Legal Corner Press (LCP). For inquiries to LCP write to .(JavaScript must be enabled to view this email address) or Mr. Levine at .(JavaScript must be enabled to view this email address).

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