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Acquiring Domain Name through Merger or Acquisition

A transferee is likely to take possession of a disputed domain name under conditions factually different from the original registrant. It inherits its transferor’s bad faith use without any advantage of its good faith (were that the case) registration. This applies equally to transferees unrelated as to those related to the original registrant. Unless the evidence demonstrates otherwise, a transferee inherits only its transferor’s bad use and not its good faith registration. Thus, the rule that a “registration of a domain name that at conception did not breach Rule 4(a)(iii) but is found later to be used in bad faith does not fall foul of Rule 4(a)(iii),” Smart Design LLC v. Carolyn Hughes, D2000-0993 (WIPO October 18, 2000) does not apply to a successor respondent.

Ordinarily, a domain name identical or confusingly similar to a trademark that a transferee redirects to a different website calls into question its bona fides where the transfer occurred subsequent to the complainant’s acquisition of its trademark. Left unexplained, such a factual matrix supports abusive registration. In FTR v. Synopsys Inc., D2010-1264 (WIPO October 7, 2010) the parties contended over a domain name consisting of a three letter acronym, <lmc.com>. The matrix in FTR, however, is more complicated. The parties reside in different countries (France and the United States); the transfer occurred in 1994 on the cusp of the Internet’s growth and before its expansion; and the transferee acquired the domain name through a merger and acquisition transaction. The Complainant originally acquired its trademark LMC in 1986, but in June 2010 it obtained a European Community trademark, undoubtedly the triggering event for commencing the UDRP proceedings.

The Complainant argued that the Respondent lacked any legitimate interest in the domain name because “[s]ince the merging of the company, the Logic Modeling Corporation and the Respondent, the disputed domain name has not been used by the Respondent; instead the disputed domain name resolves to the website ‘www.synopsys.com’.” It also argued that the Respondent does not hold a trademark for LMC and could not, therefore, have a right. Both these contentions misstate (or fail to understand) the law.

Rather, it is not abusive for a respondent to redirect a domain name it legally owns to another of its websites, even though the acronym “is not a brand that is currently used by the Respondent.” The “Respondent contended that it systematically keeps and maintains key domain name registrations … obtained via mergers and acquisitions.” It redirects Internet users to its main website because “[p]roducts acquired under the [merged corporation] are still an active part of the Respondent’s business.” The correct rule is that there is no restriction on a respondent’s use of a domain name where “the evidence indicates [it] acquired [the domain name] legitimately as part of its merger with” a corporation that had a legal right to the name. Consequently, the Respondent was found to have both a right as well as a legitimate interest in the domain name.

Although unnecessary, the Panel continued with a ruling in FTR under paragraph 4(a)(iii) of the Policy. It concluded that offering to sell a domain name “for valuable consideration in excess of [the Repondent’s] documented out-of-pocket costs directly related to [it]” which the Respondent legally owned is not evidence of bad faith any more than redirecting the domain name would be. However, the Panel rejected Respondent’s complaint of reverse domain name hijacking. The circumstances did not warrant such a finding.

Levine Samuel, LLP <researchtheworld.com>
Gerald M. Levine <udrpcommentaries.com>
E-Mail gmlevine@researchtheworld.com

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