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Trademark Owners’ Rights to Corresponding Earlier Registered Domain Names

As I pointed out in last week’s essay, having trademark rights that come into existence later than registrations of corresponding domain names only gets complainants to first base; they have standing but no actionable claim. I also noted a nuance (not a difference in substance) in standing requirements between the UDRP and the ACPA. However, standing depends upon the specific facts of the case, so that for example if the domain name is registered between the time of an in use trademark application and the issuance of the certificate the critical date is the date of the application. Standing can also be established on the basis of unregistered rights but requires substantive proof, and even assuming proof is persuasive weak marks are likely to favor registrants if their use is consistent with the semantic meaning of the characters and unlikely to support forfeiture.

An example of a weak mark with an alleged common law priority–alternatively, the plural of “micro”,  pronounced “mi-croes”—is examined in Micros Systems, Inc. v. SFR Funding, FA1602001659618 (Forum March 11, 2016). MICROS was registered in 2005 but the Complainant claimed 1977 as a first use in commerce. Respondent registered <microsretail.com> in 1997. While the Panel agreed that Complainant had common law rights and thus priority in the string, it failed to establish a prima facie case that Respondent lacked rights and legitimate interests (paragraph 4(a)(ii)). The Panel also found (which should be appreciated by entrepreneurs in the domain name business) against Complainant under paragraph 4(a)(iii):

Under the logic of Complainant, Complainant has rights to seize the domain names of Microsoft, Micro Instruments, Micro Instructional, and other NASDAQ companies making use of the formative expression micro.

In an ACPA context, where standing hinges on proving distinctiveness, the question is whether an unregistered mark with priority in commerce that postdates the registration of the domain name can be distinctive before applying for registration. If distinctiveness is a quality a mark acquires upon registration, then the answer would have to be “no.” However, in an analysis on a motion for summary judgment a district court reasoned that distinctiveness can adhere to a common law mark when subsequently blessed by the PTO as being inherently distinctiveness. Zinner v. Olenych, 108 F. Supp. 3rd 369, 383-84 (E.D. Va, Northern Division June 4, 2015):

[I]f the PTO issues a certificate of registration after requiring a showing of secondary meaning, the certificate is prima facie evidence that the mark has acquired distinctiveness only as of the time of its registration . . . . [However,] [i]n this case, the PTO’s decision to issue a certificate of registration for the ED ZINNER mark without a showing of secondary meaning requires the Court to reject Defendants’ contention that such registration is not probative of the distinctiveness of Plaintiff’s mark.

Thus,

the PTO’s decision to register Plaintiff’s mark without requiring proof of secondary meaning is prima facie evidence that Plaintiff’s mark was distinctive at the time Defendants registered the domain name because the PTO necessarily determined that Plaintiff’s mark is suggestive . . . and, therefore, inherently distinctive. . . . Accordingly, the certificate of registration is strong evidence from which a trier of fact could reasonably conclude that Plaintiff’s mark is distinctive.

Assuming the facts align in the right way, the reasoning in Zinner could equally apply in a UDRP context where there is a short period of time between the domain name registration and the application for trademark registration. Interestingly, this reasoning has never been applied to a UDRP case although there are a couple of recent decisions for which it could have been applied as an alternative reasoning for bad faith.

Arguably, Zinner is a special instance, but Micros is not. A cybersquatter is a registrant who acquires a domain name with knowledge that it infringes third-party rights. The greater the distance in time between a domain name registration and first use of a trademark in commence the more likely the complainant is abusing the UDRP process. The point is illustrated in four recent UDRP cases, DEGANI DESIGNS, LLC v. Chris Morling / Dot Zinc Limited, FA1603001664293 (Forum April 13, 2016) (<chooze.com>), Master Call Connections, LLC v. Richard Seay / MasterCall, Inc., FA1602001662809 (Forum April 12, 2016) (<mastercall.com>), Fiberstar, Inc. v. Merlin Kauffman, FA1602001663188 (Forum April 11, 2016) (<fibertar.com>), and Kids & Us English, S.L. v. Target Success.Com, Incorporated, D2016-0356 (WIPO April 8, 2016) (). It is not hard to understand why trademark owners commence these cases, but they’re clutching at straws under both the UDRP and the ACPA.

In Degani Designs, Respondent registered the disputed domain name in 2001, and Complainant registered its trademark in 2012. No dates are mentioned in Master Call Connections other than Respondent had been using the domain name for 23 years. Respondent in Fibestar registered the domain name in 2002 and Complainant “did not obtain a recognized trademark registration for its trademark until 2006.” And, Kids & Us English received registration in December 201o and the domain name was registered in May 1999. Even assuming respondents have no rights or legitimate interests in the domain names, but recognizing distinctiveness of all the terms in a statutory sense, it cannot be said that any of the trademarks in these four cases are particularly distinctive in a colloquial sense.

What these cases do illustrate, apart from Complainants’ frustrations when they learn that domain names corresponding to their trademarks are already taken and are costly to purchase, is the real or feigned misbelief as to what constitutes bad faith. It is unwise in today’s environment to use or apply for a mark without having in hand the corresponding domain name. A common error frequently asserted in these cases is that the offering of domain names at prices higher than complainant’s wish to pay (paragraph 4(b)(i)), “prevent[ing] the owner of the trademark …. from reflecting the mark in a corresponding domain name” (paragraph 4(b)(ii)), or using domain names for commercial gain (paragraph 4(b)(iv)) is evidence of bad faith. It could be evidence of bad faith only if the trademark was in existence at the time the domain name was registered and even then it has to be predicated on complainant’s proof that respondent registered the domain name “primarily for the purpose” of taking advantage of complainants for the commercial value of their trademarks.

Each of the parties was represented by counsel who argued the following typical losing positions:

1) [Degani Designs] Respondent has held passively the disputed domain name since the date on which Complainant applied for registration of its trademark with the USPTO. When contacted by Complainant regarding purchase of the disputed domain name, Respondent requested payment of $70,000, an amount far in excess of Respondent’s out-of-pocket costs associated with the name. Such passive holding of the disputed domain name for five years, and the demand for an exorbitant purchase fee, are conclusive evidence of Respondent’ bad faith.

2) [Master Call Connections] Respondent is a non-existing company that has no legitimate reason for maintaining the domain name in question. MasterCall, Inc., Respondent, currently holds the domain name mastercall.com. MasterCall, Inc. was a company in Georgia until it stopped operating in 2010. An exhibit showing a printout from the Georgia Corporations Division website is attached to the Complaint; the exhibit shows that Mastercall, Inc. was administratively dissolved on December 31, 2015.

3) [Fiberstar] Respondent has no rights or legitimate interests in the disputed domain name as the name is being used for no purpose and is listed for sale by Respondent. Respondent owns more than 15,000 domain names and is in the business of bad faith sales of those names.

4) [Kids & Us English] Respondent has not commonly been known by the disputed domain name . . . and is taking unfair advantage of the Complainant’s rights in the mark KIDS & US by using the disputed domain name for the purposes of a website which includes ‘pay per click’ links to third-party websites offering language tuition services which are competitive with those of the Complainant.

The first two Complainants were sanctioned for abusive use of the process. Apparently, Respondent in Fiberstar did not request sanctions and the three member Panel did not consider it sua sponte, which is not unusual although there is a developing willingness to declare reverse domain name hijacking in these cases even if not requested. Respondent defaulted in Kids & Us English and the Panel did not consider sanctions which arguably it should have done.

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

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