Invoking UDRP’s Mutual Jurisdiction Under Paragraph 4(k) and Rule 18(a)

Registrants in acquiring domain names and trademark owners in complaining of abusive registration are both required to submit to the jurisdiction of stipulated courts with regard to the adjudication of disputes. The requirement in the registration agreement is traceable to ICANN’s Registration Accreditation Agreement with the registration. Paragraph 3.7.7.10 reads: “For the adjudication of disputes concerning or arising from use of the Registered Name, the Registered Name Holder shall submit, without prejudice to other potentially applicable jurisdictions, to the jurisdiction of the courts (1) of the Registered Name Holder’s domicile and (2) where Registrar is located.” The requirement that binds the complaining trademark owner to the same jurisdictions is found in the UDRP at 3(b)(xiii) and Rule 1 of the Rules that defines “Mutual Jurisdiction.” The jurisdiction is mutual in that both parties accept it, but the language in the RAA and Rule 1 is not identical. Rule 1 does not say that complainant’s submission is “without prejudice to other potentially applicable jurisdictions.”

The registrar in Shandong Lingong Construction Machinery Co., Ltd. v. Stanley Pace and Whois Privacy Service Pty Ltd., D2012-1626 (WIPO November 12, 2012), Fabulous.com is located in Australia. Its registration agreement, or terms of sale with the registrant contains the identical language of the RAA. Ultimately, that clause is traceable to the WIPO Final Report:

142. While a submission to jurisdiction can create greater certainty, it should not have the effect of imposing the exclusive possibility of litigation in venues that are perhaps remotely connected to the allegedly infringing activity that is taking place through a domain name or to the location of the domain name applicant. Furthermore, a submission to jurisdiction by the domain name applicant should not inhibit a third party’s freedom to seek to obtain jurisdiction over a domain name holder in any location where there may be an independent and sufficient nexus to support local jurisdictional requirements. On this basis, an agreement to submit to jurisdiction in a domain registration agreement should be without prejudice to the possibility of establishing jurisdiction under normally applicable law and should not exclude that possibility.

In Shandong Lingong Construction, the Respondent (U.S. domicile located in Texas; Complainant in China) moved to suspend or terminate the administrative proceedings under Rule 18(a) on the grounds that it had commenced an action in district court in Texas. The 3-member Panel denied the motion and proceeded to an award in complainant’s favor. The Panel clearly believed (although not expressly stated) that Respondent filed the complaint to avoid having to answer for its choice under the UDRP. The express reason for denying the requires is that

Respondent has chosen for his own reasons not to bring proceedings in the jurisdiction to which the Complainant has voluntarily submitted. The jurisdiction chosen by the Respondent may qualify as a Mutual Jurisdiction under the Rules. However, the Policy gives the Complainant a choice in which jurisdiction it chooses to fulfill its obligations and the venue chosen by the Respondent is not the jurisdiction the Complainant has chosen. It is plain that the Complainant does not consent to transfer of the dispute to the venue the Respondent wishes to adopt.

It is most likely true that the Complainant did not consent “to the venue the Respondent wishes to adopt” but if the Respondent having lost in the UDRP wishes to challenge the award there is nothing in law that prevents it from pursuing a remedy in the district court of choice as one of the locations of “mutual jurisdiction” and retaining control of the domain name if it acts timely under paragraph 4(k) for a stay of transfer. I am not aware that Respondent in Shandong Lingong Construction has taken any steps or plans to challenge the award within the ten (10) day window for the stay, but if it does and the attorney is reading this Blog I would like to know about it.

I bring up the issue of mutual jurisdiction and paragraph 4(k) because the respondent’s exercise of its right (without regard to the merits of its challenge) can have a significant effect on trademark owner if respondent having timely filed a complaint in a court of competent jurisdiction continues to control a disputed domain name. The problem can be experienced by a foreign complainant – Shandong Lingong Construction, a Chinese business entity, for example – as well as a domestic one – Ezquest, the trademark owner of EZQ in EZQUEST, INC. v. BAORUI, FA1205001445631 (Nat. Arb. Forum July 12, 2012) (Award in favor of Complainant, but Respondent acted timely under paragraph 4(k) for a stay by filing a complaint in a court in China.

The Ezquest case is unusual only in that Complainant was the victim of a fraudulent transfer of rather than complaining about the 3 letter combination for which it claimed a common law (not a registered) right. (Interestingly, the UDPTO database shows 2 registrations for EZQ to other companies). The domain name was Complainant’s window to the world; loss of use was devastating to its business. In order for Ezquest to protect itself from the automatic stay resulting from Respondent’s filing of a complaint in (allegedly) a court of competent jurisdiction (exercising a right under the “Mutual Jurisdiction” provision) trademark owner had to seek intervention from a federal court under the ACPA, Ezquest, Inc. V. Baorui, 2:12-cv-730 (D. Utah, Central Division). The court (non appearance by defendant) granted an injunction that had the effect of negating and superceding the paragraph 4(k) stay. The order directed the registry, Verisign, Inc. to transfer the domain name from the Chinese registrar to an escrow account under plaintiff’s control. Plaintiff ultimately obtained a default judgment releasing the domain name from escrow. Although a significant accomplishment by counsel, the Ezquest result would have been more important if the issues had been contested to challenge jurisdiction in a district court sitting in Utah.

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