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Transfer Between Commonly Controlled and Related Persons

A transferee cannot argue that it is untainted by its transferor’s male fide conduct during its ownership and use of a disputed domain name. The rule is that a respondent’s good faith is measured from its own not its predecessor’s acquisition of the domain name. Unless the evidence demonstrates otherwise, a transferee inherits only its predecessor’s bad and not its good faith. This is true as much for unrelated transferees as those related to the original registrant. However, for transfers between commonly controlled persons the Panel must also consider proof of a legitimate business purpose in transferring the disputed domain name. Schweizerische Bundesbahnen SBB v. Gerrie Villon, D2009-1426 (WIPO January 11, 2010) (<sbb.com>). This defense only works for a respondent who clearly sets out and proves the history of the domain name and its continuing use in its business.

Whether related or not a successor respondent is not entitled to capitalize on a complainant’s reputation in the marketplace on the theory that an earlier respondent (perhaps itself in another guise) registered the domain name in good faith when or even if at the time of registration no such trademark existed. In ehotel AG v. Network Technologies Polska Jasinski Lutoborski Sp.J., D2009-0785 (WIPO August 5, 2009), for example, the only conclusion that could be drawn from the evidence was that the original registrant transferred the domain name to an entity in which he had an interest for the purpose of taking advantage of the complainant’s trademark. Although there are instances in which respondents have been unfairly deprived of their domain names, as a general rule registrants whose rights accrue from an internal transfer made for a legitimate business purpose do not lose rights accrued by their related predecessors.

The Panel noted that “the Complainant’s only potentially plausible argument for establishing lack of rights or legitimate interests on the part of Respondent is that the formal identity of the registrant of the disputed domain name was changed in March 2008 from Small Black Box, Ltd. to Gerrie Villon.” The theory for this argument is that “when the formal identity of the registrant changed all rights and legitimate interests in the disputed domain name that might have accrued on behalf of the transferor were extinguished, and that Respondent should now be treated as a ‘disinterested’ registrant of the disputed domain name seeking to take unfair advantage of Complainant.” The theory is applicable to an ehotel type of case, but not to the factual circumstances in the Schweizerische Bundesbahnen record.

In Schweizerische Bundesbahnen the Panel drew a lesson from the ownership of trademarks. It held that “[b]usiness enterprises commonly assign and transfer trademarks among commonly controlled entities for a variety of reasons.” And when they do, “the assignees and transferees of those marks do not generally abandon prior rights and interests that have accrued in those marks.” There is no reason to treat domain names differently. “In the absence of some exceptional circumstance, there is no reason to conclude that transfers of domain names between commonly-controlled entities extinguishes pre-existing rights or legitimate interests in those domain names.”

Gerald M. Levine <udrpcommentaries.com>

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