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Panels Draw Inferences Whether or Not the Parties Like It

It is unlikely complainants will admit to overreaching on claims of cybersquatting or respondents to unlawful conduct in registering and using domain names. Yet, overreaching and unlawful conduct are the staples of disputes conducted in UDRP proceedings. Given the summary nature of the administrative proceedings, there are likely to be more than the usual gaps in the evidentiary record and more occasions for Panels to draw inferences from what there is than would be the case in contested legal actions.

Drawing inferences involves the mental process of deducing conclusions from the palette of evidence placed in or (expected to be in but) left out of the record. The UDRP actually authorizes Panels to draw inferences. Rule 14(b) provides that “[i]f a Party, in the absence of exceptional circumstances, does not comply with any provision of, or requirement under, these Rules or any request from the Panel, the Panel shall draw such inferences therefrom as it considers appropriate.” Only “exceptional circumstances” would excuse a party from having to comply “with any provision of, or requirement under, these Rules.” I have rummaged through the database of decisions without coming upon any circumstances Panels have found exceptional, so the phrase written into Rules must be an indicator of just how high the bar is without excluding the possibility altogether. Request from the Panel refers to Rule 12 (Procedural Orders).

What are the provisions and requirements parties are expected to comply with? The list is short but comprehensive. Parties are expected to lay out their respective cases candidly and truthfully, hence the Rule 11 like provisions for certification, together with the evidence that support their contentions under Rules 3 and 5. Instances of false certification findings arise in reverse domain name hijacking determinations. Inferences for determining compliance with other provisions and requirement are necessary in the absence of hard or direct evidence.

Rule 3(ix) provides that complainant shall “[d]escribe, in accordance with the Policy, the grounds on which the complaint is made including, in particular,

(1) the manner in which the domain name(s) is/are identical or confusingly similar to a trademark or service mark in which the Complainant has rights; and

(2) why the Respondent (domain-name holder) should be considered as having no rights or legitimate interests in respect of the domain name(s) that is/are the subject of the complaint; and

(3) why the domain name(s) should be considered as having been registered and being used in bad faith

In Hallmark Licensing, LLC v. EWebMall, Inc., D2015-2202 (WIPO February 12, 2016) the Panel noted that for a complainant to prevail on its claim “requires some proof or inference of bad faith at the time of registration and not just bad faith use at the time a UDRP proceeding is initiated.” If there is either no “proof” (direct evidence) or “inference” (indirect or circumstantial evidence) then complaint fails the Rule 3(ix) test.

Although proof of intention may be hard to come by, proof of reputation when the domain name was registered is within the knowledge and control of complainant. In Hallmark Licensing, Complainant

has failed to provide any evidence [that is, direct] suggesting [circumstantial from which inferences may be drawn] or establishing bad faith registration by Respondent in 2001, when the disputed domain names were registered.

The Panel continued, “[even though] there may be evidence to [of bad faith registration] in Complainant’s control, there is nothing in the present record establishing the scope of Complainant’s rights or the use of the HALLMARK name and mark by Complainant in or before 2001.” Thus, the Panel drew a negative inference from the lacunae in the record that Complainant could have provided but failed to do so. (I’ve spoken about this problem before of parties, and not infrequently their representatives also, having no clue about the evidentiary requirements of the UDRP.)

For Respondent in UDRP proceedings, the Rules provide in 5(c)(i) that it shall “[r]espond specifically to the statements and allegations contained in the complaint and include any and all bases for the Respondent (domain-name holder) to retain registration and use of the disputed domain name.

In Bank of Scotland Plc v. Shelley Roberts, Diversity Network, D2015-2310 (WIPO February 15, 2016) Complainant submitted evidence establishing that Respondent had offered to sell which was identical to one of its trademarks and which on its face constituted a violation of paragraph 4(b)(i) of the Policy. Respondent also created other “halifax” domain names at the same time. From this direct evidence, absent proof to the contrary, intention can be inferred of bad faith in registering the domain name. Bad faith can be rebutted, but it requires hard evidence, such as respondent was responding to an offer rather than initiating it; and that the domain name was registered before complainant’s trademark.

Neither of these rebuttal possibilities were available to Respondent in Bank of Scotland, which is why it was concerned about inferences from conduct; so concerned that it requested the Panel to refrain from drawing any. However, the asking of restraint drew the following response:

The Respondent asks the Panel not to make any inference from the Respondent’s later actions in order to inform its opinion of the Respondent’s intention at the time of acquisition and registration of the disputed domain names. The Panel considers that it is entirely appropriate to make such inferences. Indeed, such subsequent actions may be all that is available to a panel to help inform its decision on registration in bad faith, particularly where, as here, a respondent has provided no contemporaneous material other than an acquisition contract to vouch for its intentions.

The Panel continued:

Contrary to the Respondent’s submissions regarding mistakes and awkward handling, its actions post-acquisition of <> strike the Panel as those of a prototypical cybersquatter, in the absence of any evidence to the contrary which, if it existed, could have been adduced by the Respondent.

That Respondent had paid $175,000 for the domain name was irrelevant:

The fact that the Respondent may have paid a large amount of money to acquire the domain name <> does not necessarily mean that the acquisition must have been made in good faith.

Inferences of bad faith registration—that is, in acquiring the domain name for unlawful purposes—are drawn solely from Respondent’s actions (which “speak louder than words”) taken immediately following the registration:

On the contrary, where the domain name concerned has been swiftly made the subject of an unsolicited offer of sale to the owner of an identical and very well-known trade mark in the Respondent’s location, coupled with a change of content to target the business of such mark owner, the inference to be drawn from the evidence is of a bad faith registration with the aim of making a quick profit.

In navigating the shoals in UDRP proceedings, actions (as illustrated above) are a major source for drawing inferences. The other is silence in the form of withholding evidence or explanation when its absence undermines a party’s argument. That is why, although default is not conclusive against respondent, it can support a negative inference unless the registration is of a common word or phrase that predates complainant’s acquisition of its trademark.  Panels look to both in assessing rights.

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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