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Actionable Opportunism Does Not Include Registering a Domain Name Before Complainant’s Acquisition of Trademark and Offering to Sell it for its Commercial Value

UDRP jurisprudence requires the complainant to plead and prove that the respondent registered and is using the domain name in bad faith. It implies opportunism in the first instance projected into future use. The two “bad faiths” must exist jointly. Country code policies are constructed on a different theory; a disjunctive rather than conjunctive requirement. Opportunism under those policies in either registering or using is sufficient to satisfy the bad faith requirement. The Panel in Editions Milan v. Secureplus, Inc., D2010-0606 (WIPO June 10, 2010) notes that the “disjunctive approach to bad faith demonstrated by the Nominet and similar Policies, used for ‘.uk’ and ‘.nz’ disputes for example has much to recommend it.” However, this approach is not importable into the UDRP. It is “not for this Panel to in effect alter the wording of the existing UDRP.” The Panel is emphatic in rejecting the Octogen line of cases that construe the Policy to hold respondents retroactively liable for subsequent opportunistic conduct.

The disjunctive approach (whether in country code policies or the Octogen construction) is insular rather than international. It protects complainants against subsequent opportunistic use of domain names that take advantage of later acquired or little known trademarks that subsequently establish themselves in the marketplace. Under UDRP jurisprudence a variant of the disjunctive approach has caught hold in one area of construction, namely against UDRP high volume respondents for failing to perform due diligence on trademarks. In these circumstances, a respondent’s disclaimer of knowledge of the trademark is insufficient to rebut a finding of opportunism.

This was emphasized recently by the majority in Oregon Freeze Dry, Inc. v. Vertical Axis Inc., FA1003001316531 (Nat. Arb. Forum June 10, 2010): “The profitability of PPC links engendered by a well-known name must, over time, increase the saleability, and therefore, the price, of the disputed domain name.” The majority found acquisition of the domain name opportunistic because although the Respondent was using the domain name for PPC revenue which is a bona fide use, it was also offering the domain name for sale. It was the latter that persuaded the majority to find conjunctive bad faith. Nevertheless, the decision gives the plaintiff a boost by reducing its burden of demonstrating actual knowledge of the trademark when it acquired the domain name.

The Panel in Editions Milan, on the other hand, reaffirms the precedential view in balancing parties’ rights. A complainant of a later acquired trademark does not have an actionable claim against a respondent for its retroactive registration (how could it?). This applies whether or not the respondent puts the domain name to active use. To hold passively a domain name in which the respondent has a “right” does not transform good faith into bad. “[I]f [the Respondent is] found to have registered the disputed domain name in good faith, then it can be said to have rights or legitimate interests in the disputed domain name.” In fact the analysis can go further. In such a case the respondent can be said to have both “rights” and “legitimate interests.” A respondent with a “right” has the power to alienate the domain name for its market value, which is certainly “in excess of [its] documented out-of-pocket costs directly related to the domain name.” The Panel stated

The Panel considers it irrelevant to consider the history of the transactions between the parties regarding the sale and purchase of the disputed domain name. The Respondent was perfectly entitled to deal with the disputed domain name. It was just its good fortune that Mr. Hill decided years ago to register a domain name in connection with an interest he had in Kokeshi dolls, that has turned out to have a popular use and which is sought to be used by a business of which he then could have had no knowledge.

While there is certainly opportunism in selling an earlier acquired domain name to a complainant of a later acquired trademark, it is not of the actionable kind. In fact, to commence a proceeding under those circumstances is sanctionable.

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

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