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Refusing to Relinquish Domain Name After Termination of Distribution Agreement

The conjunctive rule for proving bad faith weighs heavily on manufacturers who entered into distribution arrangements authorizing use of their trademarks in domain names without anticipating the consequences of termination. The issue is illustrated in Danshar (1963) Ltd. v. Joey Gilbert/ Daisy Li, D2011-2304 (WIPO March 11, 2012) (Complainant acquired the business for which Respondent without formal contract was an authorized distributor). Complainant’s burden is not satisfied by withdrawing permission prior to commencement of proceedings. Proof of authorized registration is fatal to complainant’s case.

If respondent registered the domain name pursuant to a licensing agreement without complainant expressly reserving right for its return at the expiration of the contract, then the respondent’s continued use after termination of its business relationship is either arguably legitimate for the reason that the registration was in good faith, The Prudential Insurance Company of America v. Sheri Jones, FA0510000584625 (Nat. Arb. Forum December 19, 2005) )); Miss Universe L.P., LLLP v. A Visual Group, D2005-0738 (WIPO August 29, 2005), or (because authorization refutes registration in bad faith) beyond the scope of the Policy.

The result is similar when a respondent registers a domain name with the explicit permission of complainant who later withdraws it, or the contract is silent on the post-termination use of the domain name. Continued use may be in bad faith but not registration. Green Tyre Company Plc. v. Shannon Group, D2005-0877 (WIPO October 5, 2005). The respondent may lack rights or legitimate interests, but complainant is trumped by its authorization. The Respondent in Danshar continued using the domain name to sell competitive products:

The redirection of the disputed domain name to a website selling products competitive with the Complainant’s MINERAL CARE brand is plainly use in bad faith (in the absence of rights or legitimate interests). That is a necessary finding, but not sufficient in itself to establish this requirement as there must also be registration in bad faith.

Panels have recognized that respondents whose rights have expired may nevertheless continue to have a legitimate interest. Loss of portal could be particularly harmful to respondents with inventories and customers to service in which the factual circumstances support a legitimate interest that overrides complainant’s right. International E-Z UP, Inc. v. PNH Enterprises, Inc., FA0609000808341 (Nat. Arb. Forum November 15, 2006) (“Respondent is not claiming a legitimate interest that comes from a right to resell Complainant’s goods, but a legitimate interest in maintaining its reputation and avoiding disruption.”). The Panelist in E-Z UP noted that respondent”is merely unwinding the detail that comes from having stock already acquired that it must dispose of…. [It] is not claiming a legitimate interest that comes from a right to resell Complainant’s goods, but a legitimate interest in maintaining its reputation and avoiding disruption” (Emphasis added). The Panel acknowledged: “Clearly this interest cannot last forever…. [But it] seems contrary to common sense and all business practice to deny that these situations give rise to interests that are legitimate.”

The complainant’s “right” to prevent a respondent from continuing its use of an infringing domain name is barred by the conjunctive rule. The Panel notes in Danshar that some panelists “have been willing to rule that a registration was in bad faith where the respondent’s continued use of the domain name was inconsistent with the terms on which the domain name had been registered.” They would hold an authorized registration in bad faith on the fiction that had the later circumstances been contemplated by the parties at the time of the registration it would have been bad faith. Subjective intent is inferred. However, the logic of this view is undercut by too many subjunctives. The view has not gained traction, anymore than the theory of retrospective bad faith which it resembles.

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