As a general rule when “the licence of distribution arrangement has terminated, the respondent is generally found to have no rights or legitimate interests in a domain name which was only used in the respondent’s capacity as licensee or authorised distributor,” SPECS GmbH v. SPECS Scientific Instruments, Inc. d/b/a SPECS Technologies Corporation, D2009-0308 (WIPO April 27, 2009). A right or legitimate interest and, ultimately, a finding of bad faith depends on the circumstances under which the right came into existence, for example, whether by contract or acquiescence. In SPECS, “[t]he agreement prohibited the Respondent from registering the brands, trade names and other marks of the Complainant for the Respondent’s own use, and required the Respondent to return the Complainant’s property upon termination.” The Panel was “comfortabl[e] [in]infer[ing] bad faith on the part of the Respondent.”
In a more recent SPECS proceeding against a different Respondent, SPECS Surface Nano Analysis GmbH v. Rickmer Kose / Domain Name Administrator, PrivacyProtect.org, D2010-1173 (WIPO September 24, 2010) (hereinafter referred to as SPECS(2) the complaint was denied for failure to prove bad faith registration, because “the Complainant, on its own evidence, explicitly authorised the Respondent to register the disputed domain name in 2006. (Paragraph 5, Declaration of the CEO of the Complainant, attached to the Complaint.)” The Respondent lacked rights or legitimate interests, but retains the disputed domain name. The absence of contractual restriction cannot be cured after the fact by withdrawing permission, Western Holdings, LLC v. JPC Enterprise, LLC d/b/a Cutting Edge Fitness and d/b/a Strivectin SD Sales & Distribution, D2004-0426 (WIPO August 5, 2004).
The Complainant in SPECS (2) “argues that this registration should be retrospectively deemed to have been done in bad faith, because of the subsequent termination of the Respondent’s position as a sales agent of the Complainant.” This, the Panel rejected. Such an approach would be inconsistent with the majority of panel decisions. The distinction between contract restrictions and acquiescence is important. A respondent who registers a domain name with the trademark holder’s express permission and without restriction to or limitation of its right cannot be said to have registered it in bad faith, Green Tyre Company Plc. v. Shannon Group, D2005-0877 (WIPO October 5, 2005). There are similar holdings for acquiescence. Withdrawing permission after authorizing the registration of the domain name does not support bad faith, Ivanko Barbell Company v. Syclone Corporation c/o Adam Auerbach, FA0805001191122 (Nat. Arb. Forum July 22, 2008).
In contrast, a respondent whose right to a trademark incorporated domain name is extinguished upon termination but who refuses to relinquish it will be found to have registered it in bad faith. This appears to be the sole circumstance under which a respondent can be found liable for retroactive bad faith. It is based on an inference that the respondent executed the contract with the intention (then) of not honoring its obligation upon termination. Typical findings are: “[t]he Respondent had an ulterior motive from the beginning in registering the domain names,” Omnigraphics Capital (Pty) Ltd v. Fleximount, Guy Langevin, D2004-0471 (WIPO August 17, 2004); or, “in the absence of a transfer of the Domain names to the Complainant, the Respondent has failed to fulfill the first condition,” Exel Oyj v. KH Trading, Inc., D2004-0433 (WIPO August 9, 2004); or, “breach of such conditions can alter what would otherwise have appeared to have been a bona fide registration,” R&M Italia SpA, Tycon Technoglass Srl v. EnQuip Technologies Group, Inc., D2007-1477 (WIPO December 7, 2007).