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When Inactivity Rises to the Level of Bad Faith

One of the central propositions of UDRP jurisprudence is that mere assertion of bad faith is insufficient for the complainant to establish infringement of its rights. This is so even if respondent lacks rights or legitimate interests in the domain name. The Panel in Murad, Inc. v. Stacy Brock, FA1202001430865 (Nat. Arb. Forum March 31, 2012) took the unusual position of making no formal findings under the first and second elements to focus on the bad faith: “for the reasons set forth below, the Panel finds that it need not rule on this element of the Policy.” Whether or not complainant prevails on the first two elements its fate hangs on the third.

Inactivity (or the expressive oxymoron, “passive use”) as a factor in determining bad faith “use” came into the UDRP vocabulary in the third decided case, Telstra Corporation Limited v. Nuclear Marshmallows., D2000-0003 (WIPO February 18, 2000). The Panel held that bad faith registration of domain names identical or confusingly similar to well-known trademarks can be found inferentially whether or not the domain name resolves to an active website. Inactivity by itself is not condemned. Although websites are “the prevalent use” [The Hong Kong and Shanghai Banking Corporation Limited v. Bill Lynn, D2001-0915 (WIPO September 28, 2001)] email, FTP and hosting services “are legitimate commercial uses …. [T]he lack of a formal web page does not detract from these real and viable commercial uses.” Innotek, Inc. v. Sierra Innotek, D2002-0072 (WIPO April 22, 2002). It is only where the trademark ascends in protectability do inferences of bad faith bend in the other direction.

In Telstra the Panel held that registration of a domain name incorporating a well-known trademark is justified only if respondent proves a defense under paragraph 4(c)(i-iii) of the Policy. The Panel construed the term “use” [paragraph 4(a)(iii) of the Policy] to include passive holding when it is “not possible to conceive of any plausible actual or contemplated active use of the domain name by respondent that would not be illegitimate.” Simply, “[o]ccupying an entry in the DNS is ‘use’ in any event, since it has a blocking function.” Time Inc. v. Chip Cooper, D2000-1342 (WIPO February 13, 2001) (over dissent who argued “Telstra is based on a conviction that the fame of the mark owner obliterates any possible legitimate use of the domain. This is simply not the law in the US, the jurisdiction where both parties [in Time] reside.”

However, where the domain name is composed of strings that can be independently used inference is weakened. There is no presumption of bad faith. Mediaset S.p.A. v. Didier Madiba, Fenicius LLC., D2011-1954 (WIPO February 4, 2012) (MEDIASET [trademark owned by an Italian television company] and). A three-member Panel denied the complaint with the following observation

In the present case, there are … various possibilities to use the disputed domain name in good faith in connection with its generic meaning. Even if future users landed on an active website of the Respondent, there would be no unfair advantage over the Complainant, as long as the Respondent uses the disputed domain name bona fide in connection with its generic meaning.

The Panel added a proviso that “should the Respondent start to use the disputed domain name in bad faith, this may constitute a material new development pursuant to which the Complainant could well have the possibility to re-file a new complaint under the Policy.” [Note: the Mediaset Complainant commenced a civil action in Rome and the court reportedly restored the domain name to it, although since the registrar is in the United States it is unclear how the judgment can be enforced.]

Returning to Murad and like disputes, where domain names are composed of dictionary words identical or confusingly similar to a trademark no definitive inference can be made under paragraph 4(b)(iv) of the Policy that its use is illegitimate. It is only after respondent launches its website is it possible to conclude that it does or does not violate complainant’s rights.

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