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Parsing Predatory and Parasitical from Innocent and Good Faith Domain Name Registrants

When the World Intellectual Property Organization began deliberating in 1998 and 1999 about creating an arbitral regime that the Internet Corporation for Assigned Names and Numbers transformed into the Uniform Domain Name Dispute Resolution Policy the curse words of choice were “predators” and “parasites” to describe cybersquatters. (In an early UDRP decision a Respondent who had also featured as a defendant in a trademark case asserted he had “just as much right to own the Domain Names [with typographic variations of the mark] as the person who owns the correct spelling of [the mark]”—Dow Jones & Company, Inc. and Dow Jones LP v. John Zuccarini, D2000-0578 (WIPO September 10, 2000)—he was quickly disabused).

Although WIPO recognized in its Final Report that there were also “innocent and good faith registrants” (Paragraph 172), there was no clear law at that time parsing the shades of difference distinguishing good faith registrants from parasites. At the time, the focus was primarily on threats to well-known and famous marks (as it was, incidentally, in the U.S. Congress; the Senate Hearing Report on the Anticybersquatting Consumer Protection Act stated that “[f]amous and well-known marks have been the special target of a variety of predatory and parasitical practices on the Internet.’”)

The metes and bounds of innocent and good faith registration began with Panels separating the wheat from the chaff by explaining and distinguishing different circumstances such as strength and reputation of mark, location of the parties, manner of use, priority, and other factors that had to be taken into account. This steady accumulation of principles and factors are the marrow of a living jurisprudence we now have. Respondents like the one in the Dow Jones case learned what conduct was predatory; trademark owners similarly learned (or should from the case) that simply having a mark is insufficient to prevail on a claim of cybersquatting.Burden is not a figure of speech! A good example is the overreaching by Guess? in Guess? IP Holder L.P. and Guess? Inc. v. The Web Group, FA1802001770358 (Forum March 20, 2018) (<g81.com>). The Panel found Complainants’ arguments were an “attempt[ ] to obfuscate the true facts and to mislead this Panel.”

“Abusive registration” is applied to registrants who are found (after a merits assessment of the facts) to have infringed complainants’ rights by targeting their trademarks or service marks. While the ultimate determination in a UDRP adjudication is a yes or no on cybersquatting, the means of reaching that conclusion passes through a critical assessment of 1) complainant’s evidence, not just contentions; and 2) respondent’s proof that it has rights or legitimate interests in the domain name or if it does not that it lawfully registered the domain name (as for example it has priority over complainant for the string of characters alleged to be infringing).

The WIPO Final Report gave as an example of innocent and good faith registration “[small businesses that are able to show] through business plans, correspondence, reports, or other forms of evidence, that [they] had a bona fide intention to use the [domain] name[s] in good faith.” The perception of “small business” conjures a commercial enterprise offering traditional goods and services—there was no secondary market at that time for the buying and selling of domain names so there was no conception in 1999 that Panels would one day construe “small business” to include domain name sellers, although one U.S. federal judge presciently noted that domain names could have independent monetary value unrelated to identical or confusingly similar marks (Dorer v. Arel, 60 F.Supp. 558 (E.D. Va. 1999).

Whether registration and use amounts to cybersquatting depends on the answer to the question of rights. Trademark owners (and the constituency as a whole) have learned over the eighteen years of decisions that the UDRP is not a rubber-stamp forum for owners of marks less well-known and formed of common elements. When targets are well-known and famous identifying predators and parasites is easily predictable (90% at least of claims are indefensible and rarely defended).

Speculating in and selling domain names, though, immediately raised an issue as to whether the practice amounted to a lawful registration as defined in Paragraph 2 of the Policy, Some Panels thought not, but they have been overtaken by the current consensus that buying, monetizing, holding, and selling domain names is not per se unlawful. The parsing (and the first contributions to the jurisprudence) began with the fifth decision which held that there was no actionable claim for marks acquired after registration of domain names. Then in the sixteen decision, the Panel held that offering a domain name composed of dictionary words could only be unlawful if complainant proved the registrant was particularly targeting its mark. Allocation Network GmbH v. Steve Gregory, D2000-0016 (WIPO March 24, 2000) (<allocation.com>). The Panel explained:

The difficulty lies in the fact that the domain name allocation.com, although descriptive or generic in relation to certain services or goods, may be a valid trademark for others. This difficulty is [com]pounded by the fact that, while ‘Allocation’ may be considered a common word in English speaking countries, this may not be the case in other countries, such as Germany.

In formulating the ground rules for determining abusive registration, the WIPO consensus agreed the purpose of the proposed arbitral process was

not to create new rights of intellectual property, nor to accord greater protection to intellectual property in cyberspace than that which exists elsewhere. Rather, the goal is to give proper and adequate expression to the existing, multilaterally agreed standards of intellectual property protection in the context of the new, multijurisdictional and vitally important medium of the Internet…. (WIPO Final Report, Paragraph 34).

Implicitly, the WIPO consensus accepted and ICANN institutionalized the proposition that domain names could be identical or confusingly similar to trademarks, yet lawfully registered as long as they were not targeting complainant’s mark (“Before any notice” etc. under Paragraph 4(c)(i) of the Policy).

In determining rights, Panels have construed the minimalist instructions of the Policy neutrally; in a sense, the Policy has been superseded by the jurisprudence; that is, the jurisprudence has become the UDRP, not the minimalist terms. The Panel in a recent decision held that the law is “concerned ... with defining the boundary between unfair and unjustified appropriation of another’s intellectual creations or business identifiers.” Anyclean Premium Limited v. Jethro Denahy, Any-Clean, D2017-0581 (WIPO April 28, 2017) (ANY CLEAN and <any-clean.com>). Whether a respondent crosses the boundary and its conduct is assessed to be abusive is a matter of proof and not assertion. The Respondent in Anyclean Premium was a legitimate small business, but the ruling applies equally to domain investors.

There is an even more explicit analysis in Wedding Flea Market, LLC v. Edward Panian, FA1712001762373 (Forum January 19, 2018) (<weddingflea market.com>). It perfectly captures irrelevant contentions as a legal basis for abusive registration. The Complainant argued Respondent (again a small business, not a domain investor) was liable because

[1) it] is not using the disputed domain names in connection with a bona fide offering of goods or services, or a legitimate noncommercial or fair use as the domain name resolves to websites which are not actively being used.

[2) its] sole intention is to profit from the sale of the disputed domain name after an inquiry from Complainant to purchase the disputed domain name in good faith.

[3) it] owns numerous domain name registrations, and cannot possibly have rights and legitimate interests in all of the domain names it registered. (Emphasis added)

Even assuming all of these facts were true, they are irrelevant if the domain name registration predates the earliest use of mark in commerce. To have priority over trademark owners is one form of innocent and good faith registration and the one for which complainants are most likely to draw censure as reverse domain name hijackers.

It is a well-established principle under trademark law that common words registered as marks cannot be monopolized if used by others in non-infringing ways. “Elle” for example (the name of a well-known, perhaps even famous brand in the magazine universe) cannot prohibit its legitimate use by a company that markets silk to women: Hachette Filipacchi Presse v. Perfect Privacy, LLC / Jing, Liu, D2017-2278 (WIPO January 25, 2018) (<ellesilk.com>).

Just how demanding the proof requirements are is illustrated in Marathon Savings Bank v. Domain Manager, Affordable Webhosting, Inc., Advertising, D2017- 1841 (WIPO November 20, 2017) involving <marathonsavingsbank.com> (held by a domain investor):

Complainant has not proved by a preponderance of evidence that Respondent registered the disputed domain name in bad faith. There is no basis to infer that Respondent had knowledge of Complainant’s rights when it registered the disputed domain name in 2004. Neither is there any basis to conclude that Respondent probably knew of Complainant’s rights when it registered in 2004. While Complainant provides print ads from 1996, 1997, and 2002, these ads appear to be in local circulars and there is nothing to indicate that the reach of the circulars extended beyond the local area in Wisconsin.

It should not go without saying, of course, that domain names composed of strings of characters that spell out words (dictionary or coined) or common phrases or expressions that are identical or confusingly similar to marks must be explained, or respondent fails as in Brandzy AB v. Daniel Niklasson, D2017-2456 (WIPO February 6, 2018) (<brandzy.com>. Respondent-consultant registered domain name in its own name rather than in the name of its client and refused to transfer it to Complainant).

In contrast, the Respondent investor in CSP International Fashion Group S.p.a. v. NameFind LLC, 2018-0163 (WIPO March 13, 2018) offered evidence that <myboutique.com> was a common expression that Complainant could not “own” even if had succeeded in demonstrating it had a common law right to it. Similarly in Kitchens To Go, LLC v. KTG.COM, Whoisguard Protected / HUKU LLC, D2017-2241 (WIPO February 6, 2018) (<ktg.com> in which Complainant had been in business for decades but only lately after the domain name registration did it become better known by its acronym, KTG. Both Respondents are investor.

What Kitchens To Go tells us is that the law does not give businesses statutory rights of precedence if the acronymic versions of their marks postdate the registration of domain names: “Even if there were stronger evidence of common law rights, the Panel notes that the Complaint would fail on other grounds.” The Panel not only denied the complaint that the registration was unlawful cybersquatting, but it went even further by castigating the trademark owner that the complaint should never have been brought and sanctioned it for reverse domain name hijacking.

Parties expect consistency in arbitrating disputes under UDRP jurisprudence. What they get is a neutral assessment of the facts regardless of the strength of the trademark, but most pronounced are assessments of facts by owners of weak marks who have little to complain about when registrants are holding domain names corresponding to their marks. One no longer looks to the Policy which after all provides minimalist instructions for determining rights and interests and bad faith but to the jurisprudence which has explicated and construed the Policy.

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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