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Time of Registration in Determining Cybersquatting

While Panels under the UDRP and judges under the ACPA draw upon a similar body of principles in determining infringement—both mechanisms, after all, are crafted to combat cybersquatting—and though arbitration panels and judges undoubtedly view alleged tortious wrongdoing by abusive registrations of domain names through similar lenses and apply laws that may be outwardly similar, each protective mechanism has developed its own distinct and separate jurisprudence. This difference necessarily follows because the UDRP is not centric to any national law, indeed in some respects, it diverges sharply from the law judges apply in ACPA disputes.

A sense of this divergence is illustrated in response to a series of UDRP decisions dating back to 2007 and forward in time in which the same Panel advocated that “UDRP decisions should conform to the likely outcome if domain name disputes were to proceed to litigation [in the U.S], [which would help] panels . . . ensure consistent application of the law and can help discourage unnecessary litigation, thus advancing the goals of expedience and efficiency that underlie the Policy.” His colleagues rejected this view of aligning UDRP law with local law, and the Panel years later fell in line. The consensus which he came to accept “provides a more reliable system of law where the parties can anticipate a result under the UDRP that will not depend on [local law or] the panel assigned” Dover Downs Gaming & Entertainment, Inc. v. Domains By Proxy, LLC / Harold Carter Jr, Purlin Pal LLC, D2019-0633 (WIPO May 22, 2019). There is no doubt that U.S. law has had some influence in developing UDRP jurisprudence, but whatever that influence is, it is arms-length.

Consistency of outcome is the goal of both the UDRP and the ACPA, and the reasoning is necessarily based on consensus, or we can say precedent—which is openly acknowledged in UDRP decisions and of course expected in federal law decisions—developed separately in each mechanism. On the surface, there is similarity of views, but Panels and Judges are committed to their own precedents, as they should. A dramatic illustration of this divergence of law is currently being played out in a case in which the losing domain name registrant in a UDRP proceeding, in challenging the forfeiture award, has prevailed in the ACPA action, Mehdiyev v. Qatar National Tourism Counsel, 1:19-cv-03353 (D. Colorado 4/1/21). It is too soon to know whether the summary judgment that ended the case in the district court will be appealed.

The district of Colorado is located in the Tenth Circuit. The Third and Eleventh Circuits in one corner and the Ninth Circuits in the other have weighed in and split on the focal question: What is the proper construction of the statutory phrase “distinctive at the registration of the domain name,” 1125(d)(1)(A)(i)(I)? The Tenth Circuit, though, has not considered the issue, but the district court essentially aligns itself with Ninth Circuit law that holds that time of registration means that the mark must be distinctive as of the time of the original registration. If that were not the case, then, in the words of the Ninth Circuit, the “rule would make rights to many domain names effectively inalienable, whether the alienation is by gift, inheritance, sale, or other form of transfer.”

The Third and Eleventh Circuits have construed the statutory language as including re-registrations so that if the disputed domain name registration postdates the registration of the corresponding mark, the mark owner has an actionable claim. The Mehdiyev Court granted summary judgment in plaintiff’s favor because the original registration of <visitqatar.com> predated the corresponding, albeit unregistered mark. Mehdiyev forfeited the domain name under the UDRP precisely because he acquired it after the first use of the mark in commerce, and the evidence, to the three-member Panel at least, pointed to conjunctive bad faith.

At the moment, it can be said that the law in the Tenth Circuit on this central ACPA issue is based on the Mehdiyev case. Whether the Circuit Court agrees is an open question that leaves us on tenterhooks, but if the summary judgment is affirmed (should it go to appeal), it will be a dramatic illustration of divergence from the law under the UDRP, with consequences for the future.

The UDRP consensus hews to the law expressed in the Third and Eleventh Circuits. A three-member Panel in Twitter, Inc. v. Geigo, Inc., D2011-1210 (WIPO November 2, 2011) noted (questionably because the UDRP does not owe any deference to national laws or courts!) that

A UDRP panel owes great deference to the national courts. Their rulings may well be part of ‘applicable law’ that a panel must consider (Rules, paragraph 15(a)), may become directly relevant in relation to mutual jurisdiction in the event of a court challenge (Policy, paragraph 4(k)), and are forged upon a record developed through full adversary proceedings. Nevertheless there are occasions when a [UDRP] panel may decline to follow a court’s interpretation. The Schmidheiny case [Schmidheiny v. Weber, 319 F.3d 581 (3rd Cir. 2003)] cited but not followed by the Ninth Circuit and its reasoning [in GOPETS Ltd. v. Hise, Digital Overture, Inc., 657 F.3d 1024 (9th Cir. 2011)] offer grounds for this Panel to follow the Third Circuit’s holding.

The Panel concluded: “These two courts are co-equal; any difference in their rulings can only be resolved by the Supreme Court of the United States or superseding legislation. This Panel finds the Third Circuit’s reasoning in Schmidheimy more convincing than the Ninth Circuit’s in GoPets” (Emphasis added)

Which brings us back to the UDRP decision in Mehdiyev. The consensus view under UDRP jurisprudence is that the original registrant has superior rights to mark owner subsequent in time, but a successor acquiring the domain name subsequent to a corresponding mark is vulnerable to forfeiture. The three-member Panel recognized this, but found, first, that “[i]n terms of timing, the Panel considers the relevant evidence establishes that the Complainant’s rights had arisen by virtue of the social media usage—i.e., before the Respondent acquired the Disputed Domain Name.” This finding under the first requirement, although not conclusive by itself, is the kiss of death under the second (lacks rights or legitimate interests) and third requirements (registered and used in bad faith).

Which now returns us to the district court decision. In the Court’s view, it doesn’t even have to wrestle with the nine factors that courts consider in determining cybersquatting disputes because Qatar National Tourist Counsel doesn’t even get to first base: the unregistered mark was not “distinctive at the time of registration.” Mehdiyev is the first case in which any court has granted summary judgment on the standing issue. The Court based its decision on the Ninth Circuit’s analysis:

The court [that is, the Ninth Circuit] noted that reading “registration” to also mean “re-registration” would allow initial registrants to have rights in their domain name that would evaporate, at least practically if not legally, when transferred to another party because no one would buy rights to a domain name that would be rendered subject to a cybersquatting lawsuit upon the transfer. The court saw no indication that the statute would restrict the alienability of domain names in this way.

The Court concluded

There is no dispute here that Mr. Mehdiyev’s predecessor registered prior to the Council’s mark becoming distinctive and was thus not cybersquatting. And there is no dispute that Mr. Mehdiyev legally acquired the predecessor’s legal interest in the domain. Acquiring another’s legal interest in property (intellectual or otherwise) is not squatting…

... And this raises a final policy point. While § 1125(d)‘s obvious purpose is to prevent cybersquatting, it also helps provide those who own or are developing potentially distinctive marks an incentive to either choose marks that are not similar to domains that are already registered or, perhaps, to purchase those domains before they expend significant goodwill creating their similar marks. Allowing a mark owner to undo an otherwise valid, pre-existing registration by calling it cybersquatting would be akin to building a house on land subject to another’s lien and calling the lienholder a squatter. The incentives created by allowing that possibility undermines the broader purposes of the Act and are not necessary to prevent true cybersquatting.

Assume for the moment that the Court’s analysis in Mehdiyev is correct and conclusive of successor rights to domain names corresponding to trademarks postdating the original registration of the disputed domain name, what influence will it have with UDRP Panels? The answer, of course, is none since UDRP panelists apply UDRP law, which in this respect (as you see) differs from ACPA law. There is, though, a broader issue, one that impacts trademark holders whose rights predate the registration to the successor holder of the domain name. They can prevail at the UDRP but fail in an ACPA, with possible exposure to damages and attorney’s fees. So, in this respect, and assuming the value of the domain name warrants, the case will move into federal court.

This is the consequence of the divergence of law! But what if it were the other way, and summary judgment on the standing element is precluded for successor domain name holders and the case of bad faith actually has to be tried to the bitter end, as for example in Black v. Irving Materials, 398 F. Supp. 3d 592 (ND California 2019) or the middle-way a determination on a full analysis of the facts (on papers rather than trial) as in Dent v. Lotto Sports Italia SpA, (Arizona 2020), both districts in the Ninth Circuit. What if the Tenth Circuit finds its own way of construing the meaning of “distinctive at the time of the registration of the domain name” different from the finding by the district court without aligning itself with the Ninth Circuit?

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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