There is in the Anticybersquatting Consumer Protection Act a provision not expressly found in the UDRP (at least, not in so many words) but the concept is nevertheless present in the Policy by construction. I’ll return to the UDRP in a moment. The relevant provision in the ACPA (15 U.S.C. §1125(d)(1)(B)(ii)) reads:

Bad faith intent described under subparagraph (A) shall not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.

The term “fair use” is built into paragraph 4(c)(iii) of the UDRP. The introduction to 4(c) and the wording of 4(c)(iii) read:

Any of the circumstances, in particular but without limitation, if found by the Panel to be proved based on an evaluation of all evidence presented, shall demonstrate your rights or legitimate interest in the domain name for purposes of Paragraph 4(a)(ii):

(iii) you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.

The term “fair use” is typically associated with protected speech (criticism and commentary), fan websites, and nominative use of domain names (see earlier essay here) but it is not limited to those uses. It’s a flexible principle in both trademark and copyright law. Notice that the provision does not say “without intent for commercial gain”; it says “without intent for commercial gain to misleadingly divert” etc. In trademark and cybersquatting disputes it recognizes there may be a likelihood of confusion but accepts this possibility in favor of opening the market to lawful uses.

Artists, for example, have been exonerated under this provision, Velcro Industries B. V. and Velcro USA Inc. v. allinhosting.com/Andres Chavez, D2008-0864 (WIPO July 28, 2008) (<velcroart.net>, and (same panelist) in Etihad Airways v. Whoisguard Protected, Whoisguard, Inc / Hamza Ali, D2016-0615 (WIPO July 3, 2016) a hobbyist who registered <vetihadairways.com> for a virtual airline website, distinguishing itself by the prefix “v” for “virtual.” (The panelist does not connect noncommercial activities with nominative use, but there are arguably similar considerations).

In finding no bad faith in Etihad Airways the Panel (as he had done implicitly in Velcro) acknowledges “[t]his is a nuanced area where there is scope for intelligent minds to diverge.” What respondents may see as fair use complainants see as bad faith for likelihood of confusion (paragraph 4(b)(iv) of the Policy). It is owing to this potential collision of fair use and likelihood of confusion that panelists have to be particularly clear in their reasoning why one prevails over the other. Nominative use for “commercial gain without intent” has been well served in both federal and UDRP disputes, but less so for fair use involving noncommercial social and cultural activities. That is why the reasoning in these cases is so useful in understanding why such registrations are lawful.

In Velcro Industries, the Respondents alleged and the Panel accepted that

their use of the word ‘velcro’ is “as a metaphor with the material ‘velcro’ for describing the meeting of both artists coming from a very different artistic and professional origin”, one of them being a fine arts graduate specializing in “plastic arts” and “the investigation of theatrical space and video art” and the other being a telecommunications engineer “with wide experience in the development of technological and educational projects”. They claim that their use of ‘velcro’ is a reference to the product and not the brand.

The Respondent in Etihad Airways explained that

the vEtihad domain [is] . . . an abbreviation for a ‘Virtual Airline (VA)’ that serves the popular flight simulation community. Please see www.en.wikipedia.org/wiki/Virtual_airline_(hobby) for definition of what VA’s are but in summary – A virtual airline (VA) is a dedicated hobby organization that uses flight simulation to model the operations of an airline. Virtual airlines generally have a presence on the Internet, similar to a real airline. Many hundreds of virtual airlines of significance are currently active, with tens of thousands of participants involved at any one time.

There can be little doubt that the incorporation of brand names in these disputes is confusingly similar to Complainants trademarks, or that consumers may be confused (at least, initially) “as to the source, sponsorship affiliation, or endorsement of [Respondent’s] website,” Paragraph 4(b)(iv) of the Policy.

The Panel begins its Etihad Airways assessment by noting that these Respondents “could have foreseen, had [they] thought about it” that the domain names “would give rise to a risk of confusion.” This is because “the website, featuring as it does, so many of the features (including trade marks and imagery) of the Complainant’s website was bound to be taken at first sight by visitors unaware that the website is a third-party virtual airline website to be a website of or authorised by the Complainant.”

One would ordinarily expect an observation such as this to precede finding bad faith registration but not in this case. Rather, it introduces an analysis of why (and under what circumstances) such registrations can be “otherwise fair . . . and lawful.” Fairness rests on two necessary ingredients namely 1) an intention to promote an activity that cannot “sensibly” be said to injure complainant; and 2) that the alleged belief in the legitimacy of the registration is reasonable. This  “common sense” approach is ordinarily applied to nominative use disputes but as the Panel notes in Etihad Airways it is hedged with conditions to avoid claims of reasonable belief of fair use that in actuality are cover ups for unlawful conduct.

The first rule in this branch of fair use cases is that the websites are what respondents claim for them, which means the defense fails in the absence of the two necessary findings mentioned; and the second rule is that the belief that underlies their registrations must be reasonable applying an objective standard.

In assessing the first of these two necessary findings, it is not the declared intention that counts but the actuality of the website; “why did the respondent register this particular domain name?” Having a hobby or being an artist is insufficient capital:

[i]f the intention of the Respondent had been to cause that confusion, it would not be difficult for the Panel to find that the Respondent’s registration and use of the Domain Name had been in bad faith.

But Respondent in Etihad Airways passes this test:

On the basis of the evidence before it the Panel accepts that the Respondent’s use of the Domain Name is non-commercial, that the use is for a virtual airline service based on the real life airline service of the Complainant for use by “virtual pilots” and that the Respondent has at all material times had an honest belief that his registration and use of the Domain Name is legitimate. Specifically, at no time did he intend to infringe the Complainant’s trade mark rights, nor did he intend to cause any confusion or damage.

However, this only takes us half way because it “would make no sense if, objectively, the registrant’s honestly held belief was a blatantly unreasonable one. In the view of the Panel there has to be an objective element to the assessment.” He finds in Etihad Airways that he is

unable to conclude that the Respondent’s honestly held belief that what he has been doing is legitimate is blatantly an unreasonably held honest belief. Insofar as the Panel is aware the creation and use of virtual airlines is an established online phenomenon and as such a legitimate exercise; the use of the name of the airline in the Domain Name might reasonably be regarded as necessary to indicate the nature of the virtual airline. . . . [It] seems to have honestly believed that the “v” prefix, a common abbreviation for “virtual”, would alert the visitor to the nature of the website and that if it did not, the visitor would very soon realise that it was not the Complainant’s website – not least because so far as the Panel is aware the website is not set up to cater for anyone other than “virtual pilots”.

There is (what we may call) a subjective layer to finding a belief to be “blatantly unreasonable.” The Panel is suggesting complainants have to prove the belief about the registration is not just “unreasonable” but something beyond that. It qualifies what that “something beyond” by explaining in Velcro it “cannot sensibly be said to indicate any malicious or exploitative design targeted at the Complainants.” That is equally true in Etihad Airways where the word “sensibly” is displaced in favor of the common sense assessment of the registration, that is there is no malicious or exploitative design.

The answer lies in a further observation in Velcro, namely that “it would take an exceptional case to succeed where there was no malicious or exploitative intent directed at complainant [or its trademark] at time of registration of the domain name.” This, I think, is the real clue. If “there [is] no malicious or exploitative intent” there is unlikely to be evidence of bad faith sufficient for forfeiture. The defense would not work, for example, for respondents to claim they register domain names as a hobby or purchase them as birthday presents, of which there are several examples in the database.

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.