When in the Fall of 1999 the Internet Corporation for Assigned Names and Numbers (ICANN) implemented the Uniform Domain Name Dispute Resolution Policy it did not come with a fully formed jurisprudence. Panelists were essentially on their own in creating it. They had some guidance from a lengthy and detailed report published by the World Intellectual Property Organization, The Management of Internet Names and Addresses: Intellectual Property Issues, Final Report of the World Intellectual Property Organization Internet Domain Name Process (April 30, 1999) (referred to early on as the travaux preparatoires of the Policy) and a basket of principles derived from trademark law, but panelists had to build the jurisprudence from scratch.
It developed incrementally from a solid foundation. The WIPO Final Report states that the proposed arbitral regime is “concerned … with defining the boundary between unfair and unjustified appropriation of another’s intellectual creations or business identifiers” (Paragraph 13). This insistence on balancing (by “defining the boundary”) is a significant factor in its success and for creating a secondary market for domain names. What I mean by this is that by defining the boundary (in effect creating certainty as to when registering and holding domain names are lawful) it encouraged investors to create a new market for these assets which (as a side affect) challenged owners of preexisting weak marks.
The first UDRP decision, World Wrestling Federation Entertainment, Inc. v. Michael Bosman, D1099‑0001 (WIPO January 14, 2000) was released in January 2000. In it the Panel construed paragraph 4(a)(iii) of the Policy as requiring Complainant to prove registration in bad faith and use in bad faith; a conjunctive burden. This contrasted with the Anticybersquatting Consumer Protection Act (ACPA) (by happenstance it became law also in 1999) which Congress designed as a disjunctive model. For the “and” of the UDRP the ACPA has an “or.”
Let’s call conjunctive bad faith the first principle. It remains the core of the UDRP but in two 2009 decisions, City Views Limited v. Moniker Privacy Services / Xander, Jeduyu, ALGEBRALIVE, D2009-0643 (WIPO July 3,2009) and Octogen Pharmacal Company, Inc. v. Domains By Proxy, Inc. / Rich Sanders and Octogen e‑Solutions, D2009‑0786 (WIPO August 19, 2009) the same Panel who determined World Wrestling Federation Entertainment announced he had got it wrong the first time. He now construed paragraph 4(a)(iii) as a unitary requirement; any breach of registrant’s warranty and representation (paragraph 2 of the Policy) supported a finding of “retroactive bad faith.”
The new construction appealed to a small number of panelists but by a buildup of consensus continuing into 2017 it has been soundly and roundly rejected. Group One Holdings Pte Ltd v. Steven Hafto, D2017-0183 (WIPO March 28, 2017). If in the year 2000 the Panel had ruled as it did in 2009, it would likely have aborted the creation of a secondary market in domain names.
The introduction of retroactive bad faith and its rejection is discussed in a valuable essay by the Internet Commerce Association (ICA) published on <circleid.com> May 8, 2017 entitled “The Rise and Fall of the UDRP Theory of ‘Retroactive Bad Faith (not attributed to any particular author). The thrust of the essay is to put a stake through the heart of the intended replacement for the first principle. It is not a lamentation! I won’t repeat its elation in reporting the gathering voices in opposition, but the essay doesn’t explain all that needs explaining. It complains that the Second Edition of WIPO’s Overview appeared to give status to the retroactive bad faith construction by indicating that “[t]his is a developing area of UDRP jurisprudence.”
In a follow-up to the essay the ICA refers to the revision in the newly published Third Edition of the Overview in which the editors revise the language to read “NB, a number of cases in 2009 and 2010 (including Mummygold, Octogen, Parvi, and Jappy) explored application of registrant representations in UDRP paragraph 2 in finding so-called ‘retroactive’ bad faith registration; while this particular concept has not been followed in subsequent cases, UDRP paragraph 2 may be relevant on its own terms.” (What the editors of the Third Edition could have said is that the concept in the form announced in Mummygold and applied in City Views is a dead-end. Perhaps the Third Edition editors will be more specific in the Fourth Edition in 2020 that the Panel got it right the first time.)
It is not surprising the ICA takes the position it does given its membership. But the question is, why is the first principle so important? The answer (I think) is that it creates certainty for investors; the retroactive bad faith concept takes that certainty away. In essence, the first principle is registrant friendly; retroactive bad faith is trademark friendly. If you think of a jurisprudence as being the result of deliberative conversations among parties and Panels over time (the common law tradition) then it should come as no surprise that the offered replacement to the first principle was rejected for the reason that it overturns settled law. Some concepts survive to become principles; others fail to make the grade. So, for example, while some panelists questioned the standard for proving abusive registration (whether it should be by a preponderance or clear and convincing evidence) none openly opposed the first principle.
The first principle is one of a basket that defines the boundary. Together with the first principle they have provided the oxygen for the development of the secondary market for domain names. Investors want to know that their investments are safe (that is, that they can own and sell marketable assets). What are the other principles?
Principle number two flows directly from the first. Unless complainant has priority (registered or unregistered) it cannot prove registration in bad faith. In other words, the dispute does not belong in a UDRP proceedings. Correspondence of domain names to marks is only actionable if marks predate registrations of the domain names (there is an exception but I won’t deal with it here). FastTrak v. Virtual Point, D2017-0652 (WIPO May 16,2017) (<fasttrak.com>) is illustrative in which the Panel affirms the principle that earlier registered domain names are unassailable from complainants of later acquired trademarks.
Principle number three flows direct from the second, namely that trademark rights do not extend to monopolizing words, phases, and combinations of arbitrary letters that are (or can be) used without interfering with complainants’ trademark rights; in other words lawful registration(or good faith) presupposes an absence of intention to commandeer the goodwill created by another and by this means mislead consumers into believing there is an association with the mark owner.
Principle number three is illustrated in a number of recent decisions for dictionary word-marks. In Jason Johnson v. Ramesh Mahadevan, FA1704001727694 (Forum May 17, 2017) (<curvage.com>) and Graftex Prodcom SRL and Graffitti – 94 R.B.I. Prodcom S.R.L. v. Piazza Affari srl, Michele Dinoia, D2017-0148 (WIPO March 22, 2017) (<bigotti.com>). In Jason Johnson Complainant asserted it had common law rights in its CURVAGE mark—“[it claimed it had] consistently used the mark since 2007”—but there was contradictory evidence in the record. Complainant could not have consistently used the mark because the prior owner denied.
In Graftex Prodcom the Panel noted that it “considers the business of registering domain names including dictionary words to be, in itself, a legitimate commercial activity. It is readily apparent that a dictionary word in one language may function as a protectable trademark in another language, and examples of this are legion. The Panel also considers it unsurprising that a practice of registering domain names with dictionary words can, unwittingly, lead to disputes with the owners of these words as protectable trademarks.”
Finally, the point is also made with three or four letter domain names that for investors may be arbitrary combinations and for complainants acronyms. SOG Specialty Knives and Tools, LLC v. Val Katayev / Poise Media Inc., FA170400 1726464 (Forum May 23, 2017) (<sog.com>) and ATC Group Services LLC v. BatchMaster Software, Inc., FA1703001722646 (Forum May 15, 2017)(<atc.com>).
In SOG Specialty Knives a three-member Panel in affirmed two core (investor friendly) principles of domain name jurisprudence that if either were taken away would destroy the secondary market. The first is the reasonable belief that the registration was lawful “because no one party ha[s] a monopoly on such a commonly used acronym [or generic element].” The second which flows from the first demands that complainant prove that “the generic Domain Name was registered solely for the purpose of profiting from Complainant’s trademark rights.” Absent proof of either there can be no finding of bad faith registration and use.
In ATC Group while Complainant does not have to have a registered mark to have standing, if it claims to have a common law mark it only has standing by proving secondary meaning earlier than the registration of the domain name. Failure of proof warrants dismissal of the complaint. Here, “Complainant claims common law rights in the ATC mark based on its claimed extensive use and secondary meaning acquired in the mark…. Respondent argues Complainant has failed to show common law rights in the ATC mark…. Complainant, itself, has submitted proof of use of the letters ATC as part of various corporate names, but no proof of use of ATC as a trademark brand, let alone sufficient proof of secondary meaning.
Each of these decisions ultimately rests on the application of the first principle. That’s why the ICA is so insistent on making sure everyone knows the retroactive bad faith concept is dead. Had that concept been the first principle (or replaced it) there would not be the vigorous secondary market there now is for domain names.
Gerald M. 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. Supplement and Update through August 2016 published January 2017. The Supplement and Update is also available in pdf format free on the publisher’s website, www.legalcornerpress.com/dna-supplement.