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Disputes Within and Outside the Scope of the Policy

The Policy is tailored for cybersquatting disputes. Other disputes are outside the scope of the Policy, but within the scope panelists should be consistent in their reasoning of the issues. Panelists’ general view formed early in UDRP the jurisprudence is that the UDRP should not be a roulette wheel. It “should consist of more than, ‘[i]t depends [on] what panelist you draw’.” Time Inc. v. Chip Cooper, D2000-1342 (WIPO February 13, 2001) (<lifemagazine.com>) The goal (as stated in many UDRP decisions) is achieved through “a strong body of precedent” which “is strongly persuasive” even if not binding. Pantaloon Retail India Limited v. RareNames, WebReg, D2010-0587 (WIPO June 21, 2010). This having been noted, nevertheless on some issues it truly does depend on “what panelist you draw.” Two issues in particular are striking for divergence of view: what speech qualifies for protection? [Yellowstone Mountain Club LLC v. Offshore Limited D and PCI., D2013-0097 (WIPO April 12, 2013) (“It might be said that Respondent must transfer two of the disputed domain names simply as a result of having the bad luck to draw two panelists who adhere to a variant of the ‘View 1’ approach [to the issue of fair use and free speech issues”)]; and scope of the Policy, what is within or outside of it. Two decisions illustrate the problem, Michael’s Bakery Products, LLC v. SD Onsite, FA130500 1499075 (Nat. Arb. Forum June 21, 2013) and Alaska Health Fair, Inc. v. Chris Jacobson, FA1305001500868 (Nat. Arb. Forum June 24, 2013).

In this Post I want to focus on scope of the Policy. Contractual disputes and fiduciary breach claims have a tendency to fall on both sides of the within/outside the scope of the Policy. Some of the decisions are understandable; some less so, stemming from a reluctance to give relief for breach of contract and fiduciary duty. In both Michael’s Bakery Products and Alaska Health Fair Complainants turned their domain names over to website vendors for ongoing maintenance or servicing. Michael’s Bakery is in interstate commerce; Alaska Health Fair provides local services. In Michael’s Bakery the Panel denied Complainant’s demand for transfer of domain names identical to its registered trademarks; in Alaska Health Fair the Panel ordered transfer of a trademark locally registered in Alaska.

Why the opposite results? The back stories are, first, in Michael’s Bakery:

Between 1999 and 2000, Complainant registered [its domain names] … [then in] 2005 [it] engaged with third party IT consulting services … to manage its domain names. Although still owned by Complainant, the michaelscookies.com domain and the bonzers.com domain were transferred to Deltyme Corporation for administrative management of these Internet properties. In 2006, at the direction of Complainant, Deltyme Corporation registered the michaelscookies wholesale.com domain.

The Panel focused on the voluntary transfer of domain names to Respondent (who, incidentally, did not appear in the proceedings) and concluded that in doing so Complainant cannot prove registration in bad faith. This is a harsh result. The effect is to condemn Complainant to a court of law. Nevertheless, it is clear that Respondent in Michael’s Bakery had no right or legitimate interest in the domain name and its failure or refusal to return the domain name was a breach of fiduciary duty.

The back story in Alaska Health (in which Respondent appeared and argued for its legitimate interest in the domain name ) is similar in some respects but the consequences of a voluntary (or perhaps involuntary) transfer are vastly different. The Panel notes that “[t]he Parties’ assertions clearly demonstrate that each had very little understanding of what the other expected from the business arrangement between them,” but its explanation for granting relief is more reasonable than the conclusion in Michael’s Bakery:

The Panel is not in a position to resolve all of the factual disputes among the parties, but it is clear from the facts not in dispute that Respondent does not assert any right to use the Domain Name for his own business purposes, as is the case in most UDRP proceedings. Based upon the screenshot of the website resolving from the Domain Name, it is clear that Respondent holds the Domain Name as security for the payment of his invoice; that is his only basis for refusing to return it to Complainant now, and it was an important, if not the primary reason, for his registering the Domain Name in himself in the first place. He is claiming a lien or some kind of security interest in the Domain Name to secure the payment of his fees…. [However, h]is attempt to do so without any lawful basis constitutes a breach of fiduciary duty and manifest bad faith.

In both Michael’s Bakery and Alaska Health the underlying actionable claim is for breach of fiduciary duty, failing or refusing to return registration of the domain name. It was unfortunate that Michael’s Bakery drew who it did and not the Panel who decided Alaska Health’s complaint.

Mr. Levine 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. (2015, 558 pages). Learn more about the book at Legal Corner Press. Available from Amazon and Barnes & Noble.  Ongoing Supplement here

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