a. Primary Purpose to Sell the Name to the Trademark Owner or a Competitor

The UDRP suggests that the respondent has acted in bad faith if its primary intent was to sell the domain name to the trademark owner or one of its competitors for a price in excess of out-of-pocket expenses related to the name. See UDRP 4(b)(i). Since the primary purpose of the UDRP was to combat cybersquatting, numerous cases have been brought where some sort of attempt to sell was alleged or inferred.

But an offer to sell is not a prerequisite for proving intent to sell. In Home Interiors & Gifts, Inc. v. Home Interiors (homeinteriors.net, homeinteriorsandgifts.com) D2000-0010, a panel decided that the posting of only a counter on a web site indicated an intent to illustrate the site's value and offer it for sale. Furthermore, panels have found bad faith even in the absence of any offer to sell the domain name directly to the complainant or a competitor. The Panel in toefl.com D2000-0044 decided that an offer to sell generally was sufficient evidence for a finding of bad faith. And in Mondich v. Brown (americanvintage.com) D2000-0004, the Panel determined that simple failure to make good faith use of the domain name indicated that the respondent's primary intent was to sell.

It should be noted, however, that a respondent's offer to sell does not necessarily prove that its primary purpose in registering the name was to sell the name. Where the respondent had a legitimate prior interest in the domain name, its offer to sell the name for a mutually agreeable price did not establish bad faith. See Avnet, Inc. v. Aviation Network, Inc. (avnet.net) D2000-0046; but see Biofield Corp. v. Kwon (biofield.com) AF-0102.

The second factor evidencing bad faith is the registration of a domain name in an attempt to block the trademark owner from using it, as long as the registrant has engaged in a pattern of such registration. Early cases under the UDRP reflect some degree of conflict among the panels as to what constitutes a pattern of bad faith registration for purposes of the 4(b)(ii) requirement. Some Panels have held that the registration of two or three names does not constitute a pattern (Home Interiors & Gifts, Inc. v. Home Interiors (homeinteriors.net, homeinteriorsandgifts.com) D2000-0010); Ingersoll-Rand Co. v. Gully (ingersoll-rand.net, ingersoll-rand.org, ingersollrand.org) D2000-0021). But another panel decided that the registration and subsequent failure to use just three domain names can constitute such a pattern when the respondents have defaulted and offered no evidence of good faith. See Bellevue Square Managers, Inc. v. Web (bellevuesquare.com) D2000-0056. Though it is impossible to specify a magic number at which point bad faith registration becomes a pattern, panels are likely to look at the surrounding circumstances, including whether the registrant responded to the complaint, the degree of similarity between trademarks and the registered names, and the accuracy of the contact information provided in the registrations, as well as to the number of registrations per se. Though panels have equivocated when presented with two or three names, it is hard to imagine any equivocation when presented with a significantly greater number. For information on searching for bulk registration of domain names, click here.

 

d. Intent to Attract Users for Commercial Gain by Creating Confusion with a Trademark

The final instance of bad faith that the UDRP highlights occurs when the respondent has attempted to attract users to its web site for commercial gain by creating and exploiting confusion between the disputed domain name and the trademark. Like the last guideline, instances of this abuse are typically rather obvious. For example, in The British Broadcasting Corp. v. Renteria Case (bbcdelondres.com, bbcenespanol.com, bbcenespanol.net, bbcenespanol.org) D2000-0050, the Respondent used the Complainant's logo, framed Complainant's content, gave a description of services consistent with the Complainant's activities, and placed advertising on the page. There was no indication of Respondent's own activities on that site. Given the rather obvious attempt at profiting on the Complainant's accrued good will, the panel was quick to find bad faith in both the use and registration.

3. Other Indicators of Bad Faith

Since the UDRP specifies that bad faith is not limited to the specific circumstances enumerated in 4(b), panels have taken the liberty of finding bad faith beyond the 4(b) factors. Consider this excerpt from Home Interiors & Gifts, Inc. v. Home Interiors (homeinteriors.net, homeinteriorsandgifts.com) D2000-0010, in which the panel found bad faith notwithstanding the Complainant's failure to prove any of the specific indicators of bad faith: "The combination of the descriptive terms 'home interiors' and 'gifts' into one phrase results in a name that is more distinctive than descriptive, and an Internet user entering 'www.homeinteriorsandgifts.com' is more likely than not expecting to arrive at a web site hosted by Complainant, the holder of numerous registered trademarks and service marks dating back to as early at 1958. Moreover, the generic Top Level Domain ('gTLD') <.com> has come to suggest a commercial enterprise bearing the tradename of the web site host as the Second Level Domain ('SLD') name which precedes the <.com>. Finally, the fact that the Respondent has posted only a counter at the web site which records traffic to the site is tantamount to an advertisement that the web site is for sale and is an indicator of its value." See also Tourism and Corporate Automation Ltd. v. TSI Ltd. (tourplan.com) AF-0096 (involving an employee who left his job "more or less unhappily," then registered a domain name identical to the trademark of his former employer with no demonstrable plans to use the name).

Additionally, in most cases the respondent defaults by failing to submit a timely response, leading to an even greater likelihood of a finding of bad faith, since the dispute is then resolved solely on the complaint. In several cases, the panel has interpreted a respondent's default as a virtual admission of the complainant's allegations. See Mondich v. Brown (americanvintage.com) D00-0004 ("It is a general principle of United States law that the failure of a party to submit evidence on facts in its control may permit the court to draw an adverse inference regarding those facts"); Alcoholics Anonymous World Services, Inc., v. Raymond (alcoholicsanonymous.net) D2000-0007 (citing Mondich and finding "Respondent’s failure to respond to the Complaint allows the inference that the evidence would not have been favorable to Respondent"); Noodle Time, Inc. v. Max Marketing (benihanaoftokyo.com) AF-0100 (holding that the failure to respond "should be considered as an admission that such claims are true"). For more information on the filing process of the UDRP, please click here.

As of April 19, complainants have prevailed in nearly 80% of the cases (150 out of 192) decided under the UDRP. Although those are fairly good odds for complainants, because of respondent defaults, a number of these disputes were decided in the absence of any response by the domain name registrant. In cases where the respondent has submitted the requisite response, the resolution of the dispute in favor of the trademark holder is much less assured.

For instance, in Telaxis Communications Corp. v. William E. Minkle (telaxis.com) D2000-0005, after the parties began to dispute the domain, the registrant used the domain to redirect visitors to the sites of competitors of the Complainant and to pornography sites. Nonetheless, the Panel refused to interpret this behavior as sufficient to find in favor of the Complainant. The panel ruled that the "redirection of the disputed domain names to the websites of Claimant's competitors or to pornographic websites were acts of bad faith by Respondent. However, Paragraph 4(a)(iii) requires that the domain name 'has been registered and is being used in bad faith'. The Respondent's registration of the domain name (telaxis.com) was not in bad faith" (italics added).

In Infospace.com, Inc. v. Infospace Technology Co. Ltd. (microinfospace.com) D2000-0074, even the likelihood of bad faith was deemed insufficient in the face of the registrant's well-supported response. The panelist noted that "the evidence the Complainant has filed raises an arguable likelihood that the registration of the Domain Name was in bad faith. However, the Complainant has filed no direct evidence going specifically to the issue of bad faith. In contrast, the Respondent has filed evidence touching directly on this issue."

B. Rights and Legitimate Interests in a Domain Name

1. Elements of a Successful Response

As discussed above, the trademark holder must prove all three of the required elements stated in 4(a) to force the transfer or cancellation of a domain name under the UDRP. In theory then, a domain name registrant can prevail by negating any one of the three required elements, either by showing that the domain name is not "identical or confusingly similar" to the trademark, that the registrant has "rights or legitimate interests" in the domain name, or that the domain name was not registered and is not being used in bad faith. In fact, trademark holders generally prevail solely on their rights or legitimate interests in the name. Apart from the specific provisions in the UDRP providing for this defense, there may be two other explanations for the focus on legitimate uses. First, trademark holders are unlikely to bring a suit over a domain name unless it was at least somewhat similar to their mark, even if it failed to meet the "identical or confusingly similar" threshold. Second, the bad faith registration/use analysis is so intertwined with the presence or absence of rights or legitimate interests in the name that respondents can only defend against the allegation of bad faith by proving some sort of right or legitimate interest which trump the complainant's allegations.

a. Use or Preparations to Use in Connection with a Bona Fide Offering of Goods and Services

Cases decided in favor of respondents on the basis of the first factor of the legitimate interest prong can be divided into two types: those in which the respondent is selling goods and services and those in which the respondent is selling the domain name itself. A typical case decided in favor of a respondent on the basis of sales or preparations to sell goods and services is EAuto, L.L.C. v. Triple S. Auto Parts (eautolamps.com) D2000-0047. In that case, the Respondent, an operator of a long-standing business that sold autolamps, decided to begin selling the same products on the Internet. The panelist held that "the letter 'e' preceding [a product] has come to be understood as an electronic, Internet-based form of the same" product. Therefore, "eautolamps" is an example of internet-based description of a generic product. On this basis, the arbitrator ruled for the Respondent. A number of cases have focused on the generic quality of the domain as a principal indicator of whether or not a domain is logically connected to a bona fide of offering of goods and services.

Though the passive holding of domain names for the purpose of selling them may evidence bad faith under 4(b)(i) if aimed at a particular mark owner, the marketing of generic domain names has been deemed a legitimate use by a number of panelists. In these cases, the "genericness" of the domain is an important determinant of the outcome, though other factors - such as the timing of Respondent's awareness of the existence of the mark - are also important. A typical approach to the marketing of domain names can be found in Allocation Network GmbH v. Gregory (allocation.com) D2000-0016, in which the panelist ruled in favor of a registrant on the grounds that it had a legitimate interest in using a common word as a domain name for sale. Note that in order to show a legitimate interest in the marketing of domain names, 4(b)(i) seems to require that the marketing occur prior to the registrant's knowledge that the trademark existed. Otherwise, it will likely be deemed a bad faith registration of the name. Nevertheless, one panel has ruled that if a party had a legitimate interest in selling descriptive domain names, then the offer to sell the "domain name to Complainant after inquiry by Complainant does not make its interest illegitimate" Car Toys, Inc. v. Informa Unlimited, Inc. (cartoys.net) FA0002000093682. See also General Machine Products Company, Inc. v. Prime Domains (craftwork.com) FA0001000092531, in which the panel concludes that because the registrant "is in the business of selling generic and descriptive domain names. . . [registrant] does have a legitimate interest in the domain name."

In order to mount a successful legitimate interests defense on the basis of a bona fide offering of goods and services, a registrant need only show "demonstrable preparations" to market the goods and services in question. So far, there has been no consistent interpretation of exactly what constitutes demonstrable preparation. Some panels have focused on capital expenditures dedicated towards plans to market goods and services, while others have upheld a very minimal threshold in showing demonstrable preparation. For example, in Shirmax Retail Ltd. v. CES Marketing Group, Inc. (thyme.com) AF-0104, the panel ruled that even "perfunctory" preparations to market generic domain names constitutes a legitimate interest. The Panel went on to say, "Where the domain name and trademark in question are generic - and in particular where they comprise no more than a single, short, common word - the rights/interests inquiry is more likely to favor the domain name owner. The ICANN Policy is very narrow in scope; it covers only clear cases of 'cybersquatting' and 'cyberpiracy,' not every dispute that might arise over a domain name."

b. An individual, business, or other organization that has been commonly known by the domain name.

A second source of legitimate interests involves indications that the registrant has been commonly known by the domain name even if it had acquired no trademark rights. Under US law, use itself generates common law trademark rights but only if the name labels goods/serviceds, not if it is used as a company's trade name. In most other jurisdictions, however, registration is required to obtain trademark protection. Therefore this "known by but without mark rights" defense is more likely to be used by non-US businesses and perhaps by non-commercial US parties. A typical case in this branch of legitimate interests is that of Avnet, Inc. v. Aviation Network, Inc. (avnet.net) D2000-0046. In that case, the registrant was known by the name "Avnet" for more than 10 years prior to registration of the domain name. A more novel interpretation of this branch of legitimate interests occurred in Pearson v. Byers Choice (buyerschoice.com) FA92015, in which the registrant had been known for years as "byerschoice," and the company later decided to register "buyerschoice" because of customer confusion. The panel responded positively to this argument in ruling that the Respondent did have a legitimate interest.

Another interesting case decided in favor of the registrant is that of Digitronics Inventioneering Corporation v. @Six.Net Registered (sixnet.com, six.net) D2000-0008. In that case, two domain names were in dispute: "six.net" and "sixnet.com." The panel upheld the registrant's rights to both domains, citing evidence that the registrant was commonly known as six.net, and that common knowledge gave it a legitimate interest in "sixnet.com." The ruling tends to diminish the distinction between various top-level domains. For the status of the gTLDs in US law, see USPTO, Marks Composed In Whole or In Part, of Domain Names.

c. Legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert customers or to tarnish the trademark or service mark at issue.

The third branch of the legitimate interests defense is the one that has least often been used successfully. The simplest explanation for the limited utilization of this type of defense may be that most of the registrants involved in disputes have appeared to seek commercial gain. The best example of a successful non-commercial use defense is Western Hay Company v. Carl Forester (westernhay.com) FA0001000093466. In this case, the panel accepted evidence that the Respondent operated a non-commercial web-based discussion group. It should be noted, however, that although the Complainant in the case was a business commonly known as Western Hay, it did not have the trademark or, in the view of the panelist, take significant action to acquire the mark. The Veronica and Pokey situations (non-commercial sites the homepages of young children who received cease and desist letters from trademark owners) that gave rise to the phrase "reverse domain name hijacking" have not yet come before the tribunals.

2. Defenses to the Allegation that the Name is Identical or Confusingly Similar to a Trademark

Though complainants have generally found it quite easy to show that the word(s) used in a domain name bear a substantial resemblance to their mark, in those cases where panelists have looked into the validity and strength of the complainant's claim to a mark, findings of a weak mark have been used to bolster rulings in favor of the respondents. Complainants that have not acted promptly or sufficiently to protect their mark or trade-name have a particularly difficult time showing bad faith use. See Grodberg v. Rugly Enterprises LLC (phonespell.com, phonespell.net, phonesspell.com, phonspel.com, phonespel.org) FA92975 (questioning complainant's interest because he "did little in a timely manner to protect his exclusive interest in the [domain names] he now seeks to claim"). Though there were other factors in favor of the respondent, the complainant's relatively weak mark and subsequent delay in pursuing his claim clearly influenced the panel.

C. Choice of Law

The purpose of the UDRP was to create a single procedure for resolving disputes between parties in different legal jurisdictions; however, the framers did not specify a controlling legal doctrine that would be universally applied. Instead, Rule 15(a) was promulgated to give the panel full discretion in deciding which law, if any, to apply to any particular dispute. This all-important choice of controlling legal authority can be the difference between a Respondent's victory and a name transfer.

When the parties are from the same country, the laws of that country are applied. Decisions under these conditions are likely to be more consistent with the legal environment each party envisioned for their own case. In Mondich v. Brown (americanvintage.com) D00-0004, the panel relied on no more than "a general principle of United States law" to guide the weighing of evidence in light of a respondent's default. In another case involving two American parties, the decision states only that the panel chose to apply the "rules and principles of law set out in decisions of the courts of the United States." Home Interiors & Gifts, Inc. v. Home Interiors (homeinteriors.net, homeinteriorsandgifts.com) D2000-0010. This practice has been maintained in other jurisdictions as well. In a case involving a complainant and a respondent from the UK, the Panel chose to use "principles of law set out in decisions of Courts in the United Kingdom" to support its finding of trademark infringement (although the opinion also cites cases from New Zealand and the US, these are used for their persuasive authority). Which? Ltd. v. Halliday (goodfoodguide.net) D2000-0019.

The application of domestic law to domestic disputes (both parties are from the same country) is probably what the framers of the UDRP intended in drafting Rule 15(a). Consequently, several domestic disputes make reference to the laws of the host country. Independently, there is no problem with this practice; however, the growing number of panel decisions citing previous panel decisions may be causing foreign law to be applied to otherwise domestic disputes. Panel's have shown varying degrees of sensitivity to this issue. Some panels have not addressed the peril of applying domestic decisions to international disputes. For example, in a dispute between American and Korean parties (Biofield Corp. v. Kwon (biofield.com) DeC AF-0102) the panel cited a domestic case, (Nabisco Brands Co. v. The Patron Group, Inc. (wheatthins.com, wheatsworth.com, bettercheddars.com, harvestcrisps.com, milk-bone.com) D2000-0032), for its interpretation of what activities constitute bad faith registration and use. Other panels have paid particular attention to the potential for misapplication of a domestic case. In the case of SGS Société Générale de Surveillance S.A. v. Inspectorate (sgs.net, sgsgroup.net) D2000-0025, the panel distinguished this case from the holdings of Ellebogen v. Pearson (musicweb.com) D00-0001 on the grounds that Ellebogen was a domestic dispute and SGS was an international dispute. The panel resolved this choice of law issue by applying "a direct and exclusive application of the Policy and its Rules." For further discussion on the application of prior opinions, see the section below on Precedent.

When parties are from diverse jurisdictions, there is no easy way to ascertain the applicable legal framework. In some sense, it is precisely this absence of a unified legal framework that brought about the implementation of the UDRP. Unfortunately, the UDRP gives little guidance to panelists on how to determine which law to apply. The Rules require only that "a Panel shall decide a Complaint on the basis of the statements and documents submitted and in accordance with the Policy, these Rules and any rules and principles of law that it deems applicable." Rule 15(a).

The opinion in Tourism and Corporate Automation Ltd. v. TSI Ltd. (tourplan.com) AF-0096 provides some insight into the reasoning of one panelist in addressing this issue. The Complainant was a New Zealand company with London offices, the Respondent had registered the name in Australia, and the panelist was American. In attempting to determine the appropriate interpretation of "confusing similarity," the panelist concluded that the term is drawn from "general principles of trademark and unfair trade law," but also noted that no specific legal system's general principles are indicated by the UDRP Rules. The opinion then concluded that it would be impossible for any panel to be conversant with the laws of every jurisdiction in the world. This quandary was resolved through the application of a "broad and common sense interpretation" suitable for the Internet; however, as noted in the opinion, the arbitrator's own background is in US trademark law. Thus, any "broad and common sense interpretation" applied by this arbitrator cannot help but be influenced by the trademark laws of the United States. Although this freedom to choose and apply law at the panelist's discretion is codified in the rules of the UDRP, one consequence may be that panelists will be influenced by the laws with which they feel most comfortable.

D. Precedent

One unique feature of the emerging arbitration process under the UDRP is the development of its own jurisprudence. While most arbitration is done with little, if any, public disclosure, the publication of UDRP opinions on the web has led to a practice of citing back to previous panel decisions. Some decisions have used the previous cases with only the weight of persuasive authority, while others appear to view themselves as being bound by precedent. This practices develops despite the fact that there is no authentication of any of the claims made in the pleadings by either party.

In several cases, panels have used opinions from previous cases as persuasive authority to help address a variety of procedural and substantive matters. For example, J.P. Morgan v. Resource Marketing (jpmorgan.org) D2000-0035 was a dispute involving an American Complainant and an American Respondent. The Respondent's reply was late and the Complainant argued for the inadmissibility of the late response (the Complainant cited Talk City, Inc. v. Robertson (talk-city.com) D2000-0009 as precedent for this position). The panel, reviewing the analysis in Talk City, noted that the respondent's reply was within the parameters of a late reply accepted by Talk City and chose to accept the response. The complainant also submitted a reply to the response. Although the panel noted four other decisions (Cedar Trade Associates, Inc. v Ricks (buypc.com) FA0002000093633; Aero Turbine, Inc. v. McAyman Ltd. (aeroturbine.net) FA0002000093675; Travel Services Inc. v. Tour Coop of Puerto Rico (destinationpuertorico.com, destinationpuertorico.net) FA0001000092524; Heel Quik!, Inc. v. Goldman (heelquik.com, heelquik.org) FA0001000092527) which had accepted replies/rebuttals without comment, the panel was unpersuaded by these precedents since "the distinguished panelists in these cases did not discuss this issue, [and] the Panel in the present case [JP Morgan] [did] not have the benefit of their reasoning." Instead, the panel "[was] persuaded that documents, whether designated 'replies' or 'rebuttals,' [were] not called for in the Rules" by the reasoning used in Easyjet Airline Co., Ltd. v. Steggles (easyjet.net) D2000-0024. The panel then cited four other cases to support its conclusion that multiple domain name registrations of popular company names suggests an intent to sell, which implies bad faith (Mondich v. Brown (americanvintage.com) D2000-0004, Stella D'Oro Biscuit Co., Inc. v. The Patron Group, Inc. (stelladoro.com) D2000-0012, Nabisco Brands Co. v. The Patron Group, Inc. (wheatthins.com, wheatsworth.com, bettercheddars.com, harvestrcrisps.com, milk-bone.com) D2000-0032, and Parfums Christian Dior v. 1 Netpower, Inc. (christiandiorcosmetics.com, christiandiorfashions.com, diorcosmetics.com, diorfashions.com) D2000-0022).

Other cases have used the prior decisions as bearing some binding precedential value for future cases. Zwack Unicum Ltd. v. Duna (zwackunicum.com) D2000-0037 was a case involving two Hungarian parties, an American registrar, and a WIPO arbitrator. In outlining the controlling law, the panelist noted that "both the applicable Hungarian law and at the same time the legislative history of ICANN and the decisions of [the] WIPO Center Administrative Panel have to be considered" in deciding this case. The panelist then cited the World Wrestling Federation Entertainment, Inc. v. Bosman (worldwrestlingfederation.com) D99-0001 opinion to establish the evidentiary burden as requiring proof of both registration and use in bad faith. To resolve the substantive issue of trademark infringement, the panelist used the "identical or confusingly similar" standard found in Article 27 of Law No. XI of 1997 on the Protection of Trademarks and Geographical Indications (Hungary).

At this stage, however, it may be too early to make sweeping conclusions as to the role precedent will play in this emerging jurisprudence. Although the trend appears to be that prior decisions will have at least some persuasive weight, the final determination will be left to the discretion of each panel.