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Limitations and Laches as Defenses in Domain Name Cybersquatting Claims

UDRP Paragraph 4(c) states as a preamble that “[a]ny of the following circumstances, in particular, but without limitation, if found by the Panel to be proved based on its evaluation of all evidence presented, shall demonstrate your rights or legitimate interest to the domain name for purposes of Paragraph 4(a)(ii).” Three nonexclusive circumstances are listed. There is no specific mention of equitable defenses, and in fact, no length of delay in commencing a proceeding alone blocks forfeiture of the challenged domain name.

The consensus on this issue is long-standing. It finds expression in many decisions reaching back to the earliest cases. The New York Times Company v. New York Internet Services, D2000-1072 (WIPO December 5, 2000) (<newyorktimes.com>. “Even if NYIS’s contentions as to laches had been properly pleaded, it is apparent that NYIS could not prove laches.” Later cases include Lowa Sportschuhe GmbH v. Domain Admin, Whois Privacy Corp., D2017-1131 (WIPO August 1, 2017) (<lowa.com>) and Mile, Inc. v. Michael Burg, D2010-2011 (WIPO February 7, 2011) (Panels have “generally declined to apply the doctrine of laches.”) In Pet Plan Ltd v. Donna Ware, D2020-2464 (WIPO November 30, 2020) (<petplanprogram.com>, the Panel recognizes that the [laches] issue has been addressed in previous URDP decisions and that the doctrine or policy of laches or estoppel has not been applied to proceedings under the URDP.”

While the absence of a limitation period does not necessarily result in respondents forfeiting their domain names, the consensus is that equitable defenses are not applicable in defending against cybersquatting claims. This raises an important issue, namely what evidence is necessary, or what from the record can be inferred, that would support granting or denying the complaint. Clearly, a respondent cannot simply allege limitation or laches; it certainly puts itself at risk by defaulting in appearance.

To start with, delay by itself is a neutral fact. Yet, there are factual circumstances that call out for such a defense, and in fact, the defense is hidden in plain sight in Paragraph 4(c)(i) of the Policy. The Panel in Impala Platinum Holdings Limited v. Domain Admin, Privacy Protect, LLC (PrivacyProtect.org) / Domain Admin, Domain Privacy Guard Sociedad Anónima Ltd., D2020-2268 (WIPO November 13, 2020) (<implats.com> noted that

[i]n certain circumstances, it may be that a respondent can point to some specific disadvantage which it has suffered as a result of a delay by a complainant in bringing proceedings, which may be material to the panel’s determination.

One disadvantage, of course, is that in the extended interval, the respondent has built a business; it is using “the domain name in connection with a bona fide offering of goods or services.” While the circumstances were not present in Impala Platinum, the concept is a central feature of the jurisprudence (as indeed it is in trademark infringement cases). Where the proof establishes detrimental reliance, respondents retain control of their domain names. The Panel in Dealhunter A/S v. Richard Chiang, D2014-0766 (WIPO July 17, 2014) noted that “[o]pinions have differed on the applicability of laches or delay in UDRP proceedings”:

This Panel’s view is that delay in filing a complaint is not an automatic bar to a complaint, but nor can it be ignored, for all the facts must be taken into account in all proceedings and a decision made in the light of all the circumstances of the individual case.”

Paragraph 4(c)(i) of the Policy states that “[if] before any notice to you” you are “us[ing] the domain name . . . in connection with a bona fide offering of goods or services” your registration is lawful. It is useful to take note that no amount of accusation is sufficient to support a claim of cybersquatting, but it should also not be forgotten that some respondents have lost their domain names in some instances after holding them for over twenty years. This naturally raises serious concerns of bias in favor of trademark owners.

While “delay by itself” is not a defense—noting, however that delay of any long duration may undermine claims of cybersquatting—it is not the only factor in determining the outcome. In passing the baton in April 2000 for combating cybersquatting to ICANN, WIPO recommended that “claims under the administrative procedure [should not] be subject to a time limitation” (Final Report, Paragraph 199). ICANN agreed and the UDRP contains no limitation period for making a claim.

Rather, determining whether complainants “state a claim” depends on the factual circumstances each party marshals in support of its position. In Square Peg Interactive Inc. v. Naim Interactive Inc., FA 209572 (Forum December 29, 2003) (to take one of many examples) the Panel held that “[a]lthough laches by itself is not a defense to a complaint brought under the Policy, Complainant’s delay in seeking relief is relevant to a determination of whether Respondent has been able to build up legitimate rights in the Domain Name in the interim, and whether it is using the Domain name in bad faith” (emphasis added).

In AF Gloenco, Inc. v. CT PACKAGING SYSTEMS, INC., FA1805001785831 (Forum June 28, 2018) (<shrinkfast.com>) the Panel held that the delay “has cemented Respondent’s business reliance upon the disputed domain name to conduct crucial online operations and constitutes an implied authorization for that use of the name by Respondent.” “Implied authorization” means “acquiescence” (an equitable defense). This holding is not alone. See also Wiluna Holdings, LLC v. Privacy.co.com, Inc Privacy ID# 1100134, FA1805001789612 (Forum July 16, 2018) (“Respondent points to the nine-year delay in bringing legal proceedings. Therefore, the Panel may consider the doctrine of laches as additional evidence towards Respondent.”)

In COLAS v. Domain Administrator, Daruna, LLC., D2020-0560 (WIPO June 6, 2020) (<colas.com>), “the Respondent states that the disputed domain name was registered more than 18 years ago and calls for the ‘doctrine of laches’ to be applied to the case.” Although the Panel declined to rule on laches, it nevertheless found that Complainant failed to prove bad faith:

Where PPC links directly target a complainant’s rights, this may lead to a reasonable inference, in and of itself, that the domain name used for the corresponding website was registered in the knowledge of such rights and with intent to target them. However, it is not clear from the evidence in the present case that the PPC links do target the Complainant’s mark.

The issue of delay and the application of limitations and laches has (not surprisingly!) become obsessive in some quarters, urging a Policy amendment that would have the effect of limiting rights holders’ in UDRP proceedings to claims within a declared limitations period. But, what would that period be, and should there be one? Under U.S. trademark law (and this is likely true of other jurisdictions), there is no explicit statute of limitations for trademark infringement or cybersquatting—when the need arises, U.S. federal courts refer to analogous state statutes of limitations in applying the corresponding presumption of laches. Analogous state statutes for limitations are either three or four years, but cybersquatting like trademark infringement is a tort so that the statute of limitations is forever refreshing.

But whatever the limitation may be, it is not conclusive because the Lanham Act also provides for equitable defenses, even against marks that have become incontestable. 15 U.S.C. § 1115(b)(9) provides that a person’s right to a mark is subject to “equitable principles, including laches, estoppel, and acquiescence.” Courts apply laches to address the inequities created by a trademark owner who, despite having a colorable infringement claim, has unreasonably delayed in seeking redress to the detriment of the defendant. UDRP decisions can be cited in which Panels have applied equitable principles in response to persuasive facts, and when such facts are present Panels have been extra careful in explaining the legal basis for denying complaints even if it is not explicitly for laches.

Understandably, this does not give total comfort to registrants whose business model is monetizing and reselling domain names. No wonder they grow apprehensive when they see Panels awarding generic three-letter domain names to complainants (<ado.com> and <imi.com> both held by respondents for over 20 years). Their anxiety is magnified each time a complainant is awarded a long-held domain name. There is some comfort in knowing that the consensus on laches is offset by a parallel consensus that unexplained delay will surely have consequences if either 1) complainant lacks proof the domain name was registered in bad faith, 2) the delay is unreasonable and unexplained, or 3) respondent rebuts by demonstration that it has either or both rights and legitimate interests in the domain name.

In a dispute involving (<aquafx.com>, to take another example, Aqua Engineering & Equipment, Inc. v. DOMAIN ADMINISTRATOR / PORTMEDIA HOLDINGS LTD, FA1805001785667 (Forum June 25, 2018), Respondent vigorously argued that Complainant had the burden of explaining why it had waited so long citing numerous cases including Bosco Prod., Inc. v. Bosco email Servs., FA94828 (Forum June 29, 2000) (“Without determining if the passage of considerable time would alone bar Complainant from relief in this proceeding, the Panel notes that Complainant does not explain why it has waited nearly four years to try and resolve [the domain name dispute].” As it happens, though, as with other cases already cited, the decision did not turn on delay. The Panel denied the complaint for Complainant’s failure to pass the “rights” test under paragraph 4(a)(i) of the Policy.

To come within the compass of Paragraph 4(c)(i), respondents must be able to marshal facts and argument for an equitable defense. However, much depends on marshaling the right facts, and this is not a skill in every party’s or representative’s toolbox or capacity to organize.

There is a substantial body of Lanham Act decisions denying complaints about unexplained or excessive delay. The factors isolated by judges are no less applicable to decision-making in UDRP cases. For laches to apply under U.S. trademark law the defendant must show (1) “that the plaintiff had knowledge”—actual or constructive—“of the defendant’s use of an allegedly infringing mark”; (2) “that the plaintiff inexcusably delayed in taking action with respect to the defendant’s use”; and (3) “that the defendant would be prejudiced by allowing the plaintiff to assert its rights at this time.” Chattanoga Mfg., Inc. v. Nike, Inc., 301 F.3rd 789, 792-793 (7th Cir. 2002). Determining parties’ rights “requires a qualitative examination of the parties’ words and conduct and an equitable evaluation of the length of the delay and the degree of prejudice to the defendant if the trademark owner’s rights are enforced,” which “generally requires a factual record.” Hyson USA, Inc. v. Hyson 2U, Ltd., 821 F.3d 935, 941 (7th Cir. 2016). Paragraph 4(c)(i) of the Policy embodies part of this concept, “[b]efore notice” but the “prejudice” element must be proved. See, for example, Leet Woodworking, LLC v. Zhong Jinzhang, D2018-1137 (WIPO July 10, 2018) (<boardstall.com>. “The Complainant brought no evidence showing previous or current sales of products under the BOARD STALL trademark. No evidence was proffered showing a website offering any products under the BOARD STALL trademark.”)

This is not to minimize registrants’ anxieties over potential unfair decisions transferring long-held domain names acquired for their inherent value. (The long-term holding issue has not emerged thus far with the Uniform Rapid Suspension System because new gTLDs only began arriving in the market in 2014—there has not been enough elapsed time). As already noted, the outcome in the ADO case (to take one example currently pending in federal court for a declaration under the ACPA) only heightens investor insecurity, although the incidence of divestment is extremely low. Nevertheless, some Panels may find bad faith in registering domain names composed of random letters and common terms regardless of the length of time held. As the time of holding continues to lengthen, it is likely that more long-held domain names will be challenged. Whether they are forfeited to complainants depends on the factual matrix.

Nevertheless (and recognizing there are exceptions) UDRP Panels take into account the same factors examined in federal actions in determining parties’ rights. Because the stakes are so high, domain name holders must learn what Panels expect from them. If Panels have to make “qualitative examination” it presupposes domain name registrants build a record, but in many cases, they default, and their silence condemns them. I am thinking of the IMI case, acquired 23 years earlier than the complaint, and there are other examples. Unless registrants curate their websites shrewdly and understand the evidentiary demands for rebutting or proving their rights, they will be vulnerable to losing their assets.

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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