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Who Contacts Whom: A Material Factor in Selling Domain Names Corresponding to Trademarks

Gerald M. Levine

Acquiring domain names for the purpose of selling them to complainants is the second most heavily invoked of the four circumstances that are evidence of abusive registration. Because no self-respecting domain name reseller will ever admit to acquiring domain names "primarily for the purpose" of selling them to complainants "for valuable consideration in excess of [their] documented out-of-pocket costs directly related to the domain name" evidence of bad faith is typically deduced from the timing of the registration, the strength or weakness of the trademark, and (most importantly) the party who initiates contact.

If the alleged purpose for registering domain names is selling them, then registrants and trademark owners should be clear on what is lawful. It is not unlawful per se to own a supermarket of domain names for sale to the public; or to offer domain names corresponding to trademarks, even to owners and their competitors as long as registrants acquire the domain names for legitimate purposes. Take a typical case. In Mark Overbye v. Maurice Blank, Gekko.com B.V., D2016-0362 (WIPO April 15, 2016) (<gekko.com>), the Panel found that "Respondent's offer to sell the disputed domain name to Complainant is not relevant as Respondent was first approached by Complainant to sell the disputed domain name."

However, who approaches whom or who initiates contact becomes relevant when the respondent acts first. This is particularly true with strong marks, as in the first reported UDRP decision, Entertainment, Inc. v. Michael Bosman, D1099-0001 (WIPO January 14, 2000) in which the Respondent registered <worldwrestling federation.com>. But because weak marks have less protection, who approaches whom is likely to be a material factor in determining bad faith, and when that party is the respondent it becomes a window to its intentions, as it was in Bank of Scotland Plc v. Shelley Roberts, Diversity Network, D2015-2310 (WIPO February 15, 2016) and Dollar Bank, Federal Savings Bank v. Paul Stapleton, The New Media Factory, D2016-0518 (WIPO April 24, 2016). In both these cases, respondents registered weak marks, respectively a geographic identifier and a descriptive phrase. I'll return to the Bank of Scotland in a moment because it attracted critical comment against the Respondent from the community that ordinarily supports resellers even though the Complainant prevailed in gaining a valuable geographic indicator which it would not otherwise have been entitled to.

While it is not probative of bad faith that a respondent is in the business of buying and selling domain names, neither is it a defense to a claim of bad faith. In Dollar Bank, the Panel noted:

Respondent wishes to claim legitimate business interests as a buyer and seller of domain names, yet at the same appears to rely on a lack of knowledge regarding how to determine whether a third party has service mark rights.

As the marketplace for domain names has matured, so too has an understanding of how parties' actions support or rebut bad faith. In considering whether offers to sell domain names corresponding to trademarks are proof of cybersquatting, we have to look for answers to the following two questions: first, which party has priority of right to the string of characters in the second level domain, and second what is the strength or weakness of the mark. If the registrant has priority and the registration violates no exception to liability, it should make no difference that the registrant is offering to sell the domain name to the world, which includes the mark owner. However, if the mark owner has priority, it makes all the difference who initiates contact in offering the domain name for sale.

Woe be the impatient respondent! Even domain name bloggers and industry insiders who are generally quick to criticize panelists who award generic domain names to complainants agreed that the Respondent in Bank of Scotland had only itself to blame for losing <halifax.com>. Domain Name Wire which is one of the more prominent domain name industry blogs summarized the situation in its March 1, 2016 as follows:

A company in the United Kingdom just lost a domain name it paid $175,000 for in a UDRP. It should be viewed as a lesson on what not to do with a domain name that has both a generic/geo value as well as that of a brand.

What did the Respondent do that it should not have done?

Diversity Network acquired Halifax.com in September 2015 for $175,000 and then proceeded to make a series of stupid attempts to get Bank of Scotland, which operates a financial services company called Halifax, to buy the domain name.

Just days after completing the acquisition of the domain name, Diversity Network registered the domain names halifaxcarfinance.com and halifaxliving.org. The first of these names is squarely aimed at the complainant in this case, Bank of Scotland.

Diversity Network then reached out to Bank of Scotland offering Halifax.com for sale. It said it was preparing to use the domain names, and that it was receiving lots of emails about problems with logins to the Complainant's service and added that this must be a security concern for the bank.

In Mark Overbye Complainant had priority of use in commerce (trademark registered in 1996, but its mark for GEKKO is a stylized NOT a word mark). Although Respondent in this particular case is not a domain name reseller — it registered the domain name in 2001 for a business in an entirely different field — the Panel's assessment is equally applicable. It pointed out that "the dominant word element of Complainant is descriptive, as it refers to a type of reptile." There is no monopoly on dictionary words. As the Panel stated,

normally a respondent has a right to register and use a domain name to attract Internet traffic based on the appeal of commonly used descriptive or dictionary terms, in the absence of circumstances indicating that the respondent's aim in registering the disputed domain name was to profit from and exploit the complainant's trademark.

Two other recent cases support this view, Bryn Mawr Communications, LLC v. Linkz Internet Services, D2016-0286 (WIPO March 29, 2016) (<eyetube.com>) and Fiberstar, Inc. v. Merlin Kauffman, FA1602001663188 (Forum April 11, 2016) (<fiberstar.com>). In the first case, "Respondent's offer to sell the Disputed Domain Name for USD 145,200 does not, without more, constitute bad faith." And in the second case, although Complainant alleged common law rights predating its trademark registration it,

has provided no evidence, in terms of notoriety, revenues, promotion, etc., to the Panel which might sustain a finding that Complainant had obtained common law rights in the FIBERSTAR mark prior to trademark registration in 2006, let alone prior to the disputed domain name registration in 2002.

In both cases, Complainants approached Respondents and because they were unsuccessful in negotiating a price asserted similar claims. Bryn Mawr: "Respondent's 'unreasonable and exorbitant' asking price for the Disputed Domain Name of USD 145,200 constitutes additional evidence of bad faith." Fiberstar: "Respondent's price for the disputed domain name is far in excess of other such [ways of] assess[ing] [value of the domain name]." The not unexpected results are, as the Panel states in Fiberstar, that "Respondent, as a legitimate reseller of generic-word domain names, is free to set the prices it deems reasonable for names in his inventory."

In evidentiary terms, the weight of such offers from resellers varies according to the mark's position on the continuum from weak to strong. For marks sitting on the weak end of the spectrum trademark owners must marshal significantly more persuasive narratives than complaining of respondents' predatory insistence in profiting from their investments. Sell House Fast, LLC v. Billie Funderburk, FA1603001667961 (Forum May 5, 2016). At the strong end of the spectrum of protectability, it is respondents who need significantly more persuasive narratives to avoid forfeiting their registrations, which they can rarely do unless they are able to satisfy the paragraph 4(c) circumstances.

By Gerald M. Levine, Intellectual Property, Arbitrator/Mediator at Levine Samuel LLP – Information about the firm can be found on the Firm’s website at iplegalcorner.com. Mr. Levine has a litigation and counseling practice representing clients in Intellectual Property rights and management, Internet and Cyberspace issues, domain names and cybersquatting, as well as a diverse range of legal and business matters from working with client to resolve commercial disputes, to copyright and trademark counseling and registrations. He 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. A Second Edition of the treatise was published July 2019 and is available from Amazon or from the publisher, Legal Corner Press (LCP). For inquiries to LCP write to or Mr. Levine at Visit Page
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generic value more relevant than priority Nat Cohen  –  May 10, 2016 9:10 AM PDT

Gerry,

Thanks for an insightful article and for highlighting that 'Who contacts Whom' is often a key factor in the outcome of UDRP disputes.

This has the consequence of suppressing communications between owners of non-distinctive domains and holders of marks on non-distinctive words, to the detriment of both.

I have had several conversations over the years with other domain investors about how it is unfortunate that it is too risky to contact a mark holder that may want a non-distinctive domain that we own, but who may not realize it is available for sale.  Perhaps we are approached by a start-up without trademark rights who will offer $x for the domain.  The domain may be of interest to several other companies who have trademark rights in the term, and who would gladly pay more than $x for the domain.  Nor should there be any bad faith found by a UDRP panel, since the domain was acquired for its generic value and not put to any use that targeted a mark holder. 

Yet approaching a mark holder to inform it the domain is available for sale and will soon be sold to another interested party, can itself be viewed as an act of bad faith, and thus would create evidence of bad faith where there was none before.  Since many panelists refuse to recognize investing in non-distinctive domains as a legitimate interest, all three criteria for a UDRP will be present - confusingly similar to a trademark, no legitimate interest, and bad faith registration and use.  (The panel would infer that the domain was acquired for the purpose of selling to a mark holder, and thus the registration itself was in bad faith.) The mere act of informing a mark holder that a desirable non-distinctive domain is pending sale to another party therefore could easily result in the loss of the domain through a UDRP complaint.

An example may help clarify this point.  Let's pick crystal.com as one out of many possible domains based on an attractive, meaningful non-distinctive word.  If I acquire crystal.com today because I recognize that it is an inherently valuable domain that would serve well as an online identity, then any existing trademark registrant of a similar term could claim that I acquired the domain to target it and its trademark. 

If I just sit on it and don't attempt to sell it then a UDRP panel may be receptive to a defense that the domain was acquired for its inherent value and not to target a mark holder.  I then receive an offer for crystal.com from a start-up looking for a new corporate identity.  The offer is marginally attractive.  I expect that crystal.com may be worth more to a company that is already using 'crystal' as a brand.  Do I accept the offer from the start-up or do I reach out to other companies already using the term 'crystal' to ask whether they may be interested in acquiring crystal.com?

According to the USPTO, there are over 1,000 active marks, either pending or registered, incorporating the term 'crystal'.  As Mr. Levine noted, I would risk losing crystal.com in a UDRP if I reach out to contact any of these mark holders or applicants.  Since panelists often find determinative 'Who Contacts Whom', by approaching any mark holder I undermine my defense and risk losing crystal.com.

The illogic of this position becomes clear if I send a mass email to hundreds of mark holders of terms incorporating 'crystal'.  Any one of them could claim that I acquired the domain to target its mark.  Perhaps a dozen UDRP complaints would be filed against crystal.com simultaneously, each complainant claiming that it deserved to be awarded crystal.com because its mark was targeted.

The absurd outcome is that the weaker the mark, the less it is exclusively associated with one company, and the more widely it is used, the more risky it is to reach out to mark holders since it only takes one to move forward with a complaint to put the domain at risk.

The solution is to recognize that some words when used as domain names have tremendous inherent value, and that unless the owners of those domains are attempting to pass themselves off as a mark holder, or to infringe the rights of a mark holder, that a domain owner should not risk the loss of his or her domain simply by alerting one out of many non-exclusive holders of a mark on a similar term that the domain is available for purchase.

Thanks for the opportunity to comment.

Nat Cohen

Shopping the name around John Berryhill  –  May 10, 2016 10:09 AM PDT

"The absurd outcome is that the weaker the mark, the less it is exclusively associated with one company, and the more widely it is used, the more risky it is to reach out to mark holders since it only takes one to move forward with a complaint to put the domain at risk."

Nat, that type of circumstance was recently addressed in University of Cambridge v. Kirkland Holdings LLC, concerning the domain name cambridge.com.  That name was indeed shopped around by a broker to a lengthy roster of businesses in Cambridge, Mass.; Cambridge, UK; and businesses otherwise having "Cambridge" in their name. 

"[T]he Respondent could also demonstrate that there is an economic rationale underlying the offer for a possible transfer of the disputed domain name to a third party. Indeed, whereas the term “Cambridge” refers to different and relevant geographical locations, it is plausible that there may be other market players potentially interested in acquiring the disputed domain name. The consequence of this competition for the disputed domain name is the elevation of the price of its transfer."

While you are correct that "it only takes one" to move forward with a complaint, then it is important in those circumstances to show that the complainant wasn't somehow singled out.

But, yes, the upshot is that while there might be a dozen companies interested in purchasing a domain name that they don't know might be for sale, it is risky to let them know that fact.  Those circumstances which UDRP panelists have created, are not useful for anyone.

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