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Legitimate Activity and Legitimacy of Passive Holding in Defending Claims of Cybersquatting

December 30, 2014

 See Anthology of Commentaries — 2014

Of the three paragraph 4(c) defenses the first and third share a common element, namely that the domain names must resolve to active websites. Under neither head can a respondent passively hold a disputed domain name and prevail under paragraph 4(a)(ii) of the Policy. Paragraph 4(c)(i) requires proof of continuous use “before any notice” of infringement; or an intention manifested by “demonstrable preparations” (also “before any notice”) to use the disputed domain name for bona fide offerings of goods or services. A recent decision is Winfried Wengenroth v. Domain Admin / Pisces Online Investment, D2014-1901 (WIPO December 16, 2014) (<wup.com>. Earlier registered domain name; subsequently acquired trademark. Complaint denied, legitimate activity in that “the disputed domain name currently appears to resolve to a sort of “pay-per-click” advertising site” although Respondent “has not used the disputed domain name in the course of a business since registration.” The bona fide use rests on Respondent’s PPC activity.

Making demonstrable preparations is a form of legitimate activity even though the website not currently active. Medpay Systems, Inc. v AffiniPay, FA1404001553796 (Nat. Arb. Forum July 7, 2014). In MD On-line, Inc. v. Yenta Marketing, Inc., D2014-1468 (WIPO November 8,2014) the Panel held that

The Panel considers that there is generally nothing per se illegitimate in selling or dealing in domain names or linking them to pay-per-click parking sites. However, if the parking site links to competitors of the complainant, as is the case here, or if there is an intention by reason of the sale or threatened sale of a domain name to take advantage of the third party’s rights and reputation in a trademark represented in that domain name, that is quite a different matter. In the circumstances, the Panel finds that Respondent has no rights or legitimate interests in the Domain Name.

Where there are no demonstrable preparations then paragraph 4(c)(i) does not apply. However, failing the defense is not conclusive of bad faith because complainant must still prove bad faith. In the case of MD On-Line Complainant made “no case … that Respondent, at the time of registration registered the Domain Name with intent to sell it to Complainant, to disrupt Complainant’s business, or to prevent Complainant from registering its name or trademark in a domain name [although there was subsequent use in bad faith].”

Paragraph 4(c)(iii) is similar in demanding legitimate activity but focuses on a different kind of activity. Monetization is replaced by noncommercial or fair use of the domain name. A recent decision is MUFG Union Bank, N.A. v. William Bookout, DCC2014- 0002 (WIPO December 3, 2014). Complainant’s contention that Respondent’s content contains false and unproven allegations is not a claim actionable under the UDRP and would be insufficient to undermine the defense:

A UDRP proceeding … is not an appropriate or practical forum for ascertaining the truthfulness of the allegations published on the Respondent’s website, as would be necessary in a legal action for defamation. It suffices for UDRP purposes to determine whether the website is genuinely devoted to a free speech purpose such as commentary and criticism, rather than serving as “primarily a pretext for commercial advantage.”

Paragraph 4(c)(ii) differs from the other defenses in that it is not name based rather than use based. The term “commonly known” is construed to mean known prior to its acquisition of the domain name. The key element is not legitimate activity but legitimate name, although passive holding continues to divide Panels. In Career Group, Inc. v. The Career Group Ltd / Deborah Simonds, D2014-1296 (WIPO September 18, 2014) for example the Panel held that “[t]here is no evidence in the record of Ms. Simonds using a website, advertising, marketing, contracts, or invoices with the name “Career Group” since CG Ltd was dissolved. The Panel concludes that Ms. Simonds has not demonstrated that she or her business have been “commonly known” by a name corresponding to the Domain Name, within the meaning of the Policy, paragraph 4(c)(ii), since CG Ltd was dissolved.”) Nevertheless, Respondent prevails on the issue of bad faith.

Other Panels accept the defense despite no current activity but even if the defense is not accepted Complainant loses anyway. Microsonic Gesellschaft für Mikrotechnik und Ultraschalltechnik mbH v. Alex Rad, D2014-1715 (December 1, 2014) (business currently inactive):

It is clear to the Panel that the Respondent did operate a bona fide business for a period of years from 2000 onwards under the MICROSONIC.COM name or mark. Considering … that the Respondent operated in a quite different field of activity to the Complainant, the Panel finds on the balance of probabilities that the Respondent registered and used the domain name for a bona fide business purpose and has simply maintained the registration of the disputed domain name since that time.

Generally, there is both name and activity and passive holding it is not condemned. Recent decisions include Angelica Fuentes Téllez v. Domains by Proxy, LLC / Angela Brink, D2014-1860 (WIPO December 18, 2014) (domain does not currently resolve to an active website); ; or, in the case of Navigant Consulting, Inc. v. Bradley Shive / Navigant Technologies, FA141000 1587953 (Nat. Arb. Forum December 1, 2014) the domain name which is the Complainant’s corporate name is being redirected to another of Respondent’s websites. Respondent appears to be in the process of rebranding itself:

[However, this] fact does not negate that Respondent continues to be using the name “Navigant Technologies”, i.e. the name of the registrant organization in the WhoIs records for the disputed domain names, which corresponds to Navigant Technologies, LLC.

Of note is a distinction between the UDRP and the Lanham Act. The UDRP accepts that a person can operate a business in his/her own name even though the name may be identical to a complainant’s trademark. An example of this is Harrods Limited v. HDU Inc., D2004-0093 (WIPO April 27, 2004) (HARRODS and Brenda Harrod, thus <harrodssalon.com>, Complaint denied, respondent’s surname satisfies 4(c)(ii)). In a Lanham Act case the law favors the trademark owner. See Chanel, Inc. v. Chanel’s Salon LLC, 2:14-v-00304 (N.D. Indiana Dec. 16, 2014) (Parties entered into a consent judgment for permanent injunction, CHANEL and defendant’s given name Chanel Jones. One commentator has suggested Ms. Jones would have been more successful had she called her business “Chanel Jones Salon”).

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. (2015, 558 pages). Learn more about the book at Legal Corner Press. Available from Amazon and Barnes & Noble.  Ongoing Supplement here

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