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Market Penetration as Proof of Awareness

Domain names can be identical or confusingly similar to trademarks and respondents can even lack rights or legitimate interests (as those terms are defined under the Policy) without infringing holder’s rights. Bad faith is defined as intentional conduct. The strength of the trademark, its penetration in the market, the businesses involved and the location of the parties are critical factors, Everglades Direct, Inc. v. HR Direct LLC, FA0908001278110 (Nat. Arb. Forum September 23, 2009). A factor in gauging strength and market penetration is whether the trademark is on the Principal or Supplemental Register, National Association of Competitive Soccer Clubs v. Bruce Binier, D2009-0957 (WIPO September 7, 2009). Weak marks do not travel well and those composed of elements common in the industry even less so.

The Complainant in Everglades Direct holds a trademark on the Principal Register for HR DIRECT; the disputed domain name is <>. Although the parties are competitors it does not follow that the Respondent acted in bad faith:

The fact that the disputed domain name is confusingly similar to Complainant’s marks and that the parties compete does not compel a determination that such name was registered and is being used in bad faith. The Panel notes that paragraph 4(b)(iv) of the Policy requires evidence that the respondent has intentionally attempted to attract, for commercial gain, Internet users to respondent’s site by creating a likelihood of confusion (emphasis added). Moreover, in the opinion of this Panel, the constructive notice provision of U.S. trademark law may not be relied upon to establish the requisite bad faith.

As a matter of objective fact, the Respondent in Everglades Direct is using the domain name to offer goods or services similar to the Complainant’s even if the offering is in a different market.

However, a respondent does not forfeit a domain name because it lacks rights or legitimate interests in it. The complainant has to prove bad faith. The first hurdle is to persuade the trier that the goods or services are associated with the trademark. In Everglades Direct the Panel “notes that the domain name <> is the sort of name that a human resources company, such as Respondent, might wish to use. The Panel is aware that the human resources field is frequently referred to as ‘hr’.”

The second hurdle is the different geographical markets serviced by the parties. On this point the Panel took note of the cases submitted by the Complainant and found that “[f]or the most part, they involve marks that have achieved great market penetration, such as GOOGLE®, CANON®, and DINERS CLUB®, and/or cases in which no response was filed.” Where the trademarks are not in the front rank of market penetration nationally, as in Texas Wind Power Company v. Wind Works c/o Savvy Dog Design, LLC, FA0903001252746 (Nat. Arb. Forum May 12, 2009), the respondent was found to be “engaged in the same line of business in the same territory [as complainant]” (emphasis added). Under the particular facts in the cases cited by Complainant, “it was reasonable to conclude that the disputed domain name was registered and being used in bad faith.” By contrast, “in this case [that is in Everglades Direct] there is no evidence relating to the strength or market penetration of Complainant’s marks.”

A recurring problem for complainants whose trademark lack “strength or market penetration” is to establish – respondents’ indignant denials to the contrary – that the respondent must have been aware of its trademark. But, panelists have rejected the concept of constructive knowledge; intention to take advantage of another’s trademark must be proved to establish bad faith; and suspicion is not mantra in these cases.

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.

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