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Tracking the Line that Separates Cybersquatting from Trademark Infringement

Gerald M. Levine

The Uniform Domain Name Dispute Resolution Policy (UDRP) is a rights protection mechanism crafted by the World Intellectual Property Organization (WIPO) and adopted by the Internet Corporation for Assigned Names and Numbers (ICANN) for trademark owners to challenge the lawfulness of domain name registrations. Cybersquatting or abusive registration is a lesser included tort of trademark infringement, and although the UDRP forum is not a trademark court, as such, in some ways it is since it empowers (assuming the right alignment of facts) to divest registrants of domain names that infringe a complainant's trademark rights.

The argument that any use of a domain name "inevitably entail[s] an infringement of the world-renowned [name of any] brand in the industry" is unavailing because regardless of future use (by a successor holder, for example), if the original registration is lawful, the complaint must be dismissed. Equipo IVI SL v. Domain Admin, WebMD, LLC, D2017-2240 (WIPO January 31, 2018) (<ivi.com>). The complaint must also be dismissed if the substance of the claim is trademark infringement. Force Therapeutics, LLC v. Patricia Franklin, University of Massachusetts Medical School, D2017-2070 (WIPO December 12, 2017) (<forceortho.org>:

[T]he Policy is directed to determining abusive domain name registration and use. This involves a more limited assessment than trademark infringement.

The term "infringed" in the domain name context refers to unlawful registration in breach of the warranties agreed to in the registration agreement and, by incorporation, Paragraph 2 of the UDRP. The evidentiary demands for proving cybersquatting under the UDRP are different and less demanding than proving trademark infringement, but nevertheless demanding in its way and if not properly understood will sink the party with the burden of proof or production, as it did in Equipo IVI SL.

If one has to look for an analogy for the UDRP it is to the commercial rules promulgated by arbitration providers, with this difference: the UDRP has its own special purpose law as expressly defined by the terms of the Policy and Rules, as construed by neutral panelists. I underscore this because while these neutrals are limited in their assessment of the facts to determine whether 1) domain names are identical or similar to trademarks, 2) registrants lack or have rights or legitimate interests, and/or 3) the domain names were registered in bad faith, they are not robotic. They apply this special purpose jurisprudence (consisting of a cabinet of principles) in a fair and balanced manner so that although the UDRP was crafted for trademark owners, it operates as a neutral forum.

But precisely where to draw the line separating cybersquatting and trademark infringement is not always so certain because they are both present in that area of the continuum that defines the outer limit of one and the beginning of the other. Where the facts support either or both cybersquatting and trademark infringement what is within and outside jurisdiction is in the eyes of the beholder. Some panelists will accept what others decline. There are several considerations that go into accepting jurisdiction, one of them is the residence of parties in different jurisdictions. If Panels are convinced, there is compelling proof of abusive registration (or convince themselves that there is!) they push the jurisprudential envelope to assure that "justice" is done.

Notable for accepting jurisdiction where the parties reside in different jurisdictions, and there is also potential (or alleged) trademark infringement are Boxador, Inc. v. Ruben Botn-Joergensen, D2017-2593 (WIPO February 27, 2018) (<brandbucket.org> and <brand bucket.shop>, U.S. Complainant, Norwegian Respondent) discussed further below in which the Panel awarded the domain names to Complainant, and Autobuses de Oriente ADO, S.A. de C.V. v. Private Registration / Francois Carrillo, D2017-1661 (WIPO February 1, 2018) (<ado.com>. Mexican Complainant, French Respondent) in which the Panel issued a Complainant's award that has already been challenged in an Anticybersquatting Consumer Protection Act filing. I discussed the ADO dispute in an earlier essay. (If Autobuses de Oriente has any claim at all, which I think dubious, it would be for trademark infringement and not cybersquatting. In other words, the dispute always belonged in a court of competent jurisdiction and should have been declined by the UDRP Panel).

Let me quickly say, though, that the vast majority of disputes are easily pigeonholed as being in or out of jurisdiction, and mainly within. Those that are not within are respectfully declined as belonging in courts of competent jurisdiction. In some instances, complaints may be denied with permission to refile if the facts warrant further consideration. Of this kind Air Serbia a.d. Beograd Jurija v. Domains By Proxy, LLC / Meijun Lu, D2017-1986 (WIPO December 16, 2017) (<jat.com>, Serbian Complainant, Singapore Respondent) is notable in which the Panel accepted jurisdiction, denied the complaint, but agreed that Complainant could "at some point in the future" refile if "subsequent evidence come[s] to light which would demonstrate a bad faith intent on the Respondent's part."

Boxador is exemplary in a number of ways for the Panel accepting jurisdiction and granting the requested remedy. First, Complainant had to make a case for common law rights for the reason that it let lapse its USPTO trademark. However, the Panel explained that it found the Complainant's submission wanting:

While it would have been possible to infer on the balance of probabilities — from inter alia the Respondent's knowledge of the Complainant and its business when he registered the Domain Names — that the Complainant's business was an established business of some substance, the Panel majority were reluctant to accept bare assertions of unregistered trade mark rights without any supporting evidence of the kind set out in section 1.3 of the WIPO Overview 3.0.

"Reluctant to accept" is ordinarily fatal but Complainant was fortunate in two ways: first, in drawing a three-member Panel clearly appalled by Respondent's conduct; and second, a Panel prepared to order Complainant to supplement the record (in effect allowing it to make its case):

In response to Procedural Order No. 1 a sufficient amount of the missing evidence was supplied, including a substantial number of independent press reports speaking of the standing of the Complainant and recommending its services for businesses looking for new brand names. Enough of them pre-date the registration of the First Domain Name to satisfy the Panel that industry and media recognition of the Complainant at that time was high.

Respondent did not deny that it knew of Complainant's business and its marketplace moniker. In fact, it offered similar services as Complainant in Europe and Norway:

The Respondent contends that since the Complainant has no rights to the BRANDBUCKET trade mark in Norway and Europe and since the Complainant is operating in totally different territories he cannot be said to have registered the Domain Names in bad faith.

The final clause misstates the law; operating in different territories does not shield a party from abusive conduct. In any event, Respondent knew of Complainant because it conducted a trademark search:

The Respondent claims that he investigated the trade mark rights position when setting up his business and found no registered rights in either Norway or the United States. He also noted that the Complainant's United States registration had lapsed. He points out that the Complainant has no rights in Europe or Norway, the geographical area in which the Respondent trades. He, on the other hand, has trade mark rights in both Norway and the United States.

Having learned that Complainant had allowed its trademark to lapse, Respondent applied for the BRAND BUCKET trademark in the U.S, which in the normal course (there being no opposition) advanced to registration. The contention that the parties operated in different national jurisdictions did not impress the Panel. It pointed out that the Internet is a global marketplace and "that for the most part websites connected to gTLDs are in general terms accessible from all jurisdictions."

While Respondent's trademark was lawful, the Panel concluded that its application was (although it put it more mildly) fraudulent:

[While] [t]he Panel is not in a position to assess the significance of that declaration [the formal declaration of use in commerce in the United States] ... it seems to the Panel to be a strange declaration to make if, as is the impression given by the Response, one has no intention of using the mark in the United States.

The Panel gave no credence to Respondent's statements justifying its conduct and explained why:

The position becomes clearer when one studies the chronology set out in section 4 above. The Respondent prudently conducted 'freedom to operate' searches, one of which was a search at the United States Patent and Trademark Office. From that date at least, if not before, he would have been aware of the Complainant's business being conducted under the Respondent's chosen name. He would have known then that the Complainant's claimed first use was in 2007. The Complainant's business at that time was a business, which according to [Respondent's] email of December 17, 2016, he respected and appreciated. Indeed, in that same email he suggested that there might be scope for collaboration between the parties. (Emphasis added).

On this basis, and because the Panel found "on the evidence before it and on the balance of probabilities that the Respondent's adoption of the name 'Brandbucket' for his business was an opportunistic move to take a free ride on the back of the goodwill associated with the Complainant's unregistered trade mark" it rejected Respondent's defenses entirely; although rejecting the validity of a U.S. trademark is extraordinary. In fact, to rule unenforceable a facially valid trademark is a decision that is ordinarily only within the jurisdiction of a court of competent jurisdiction.

I will posit (which most certainly will be denied as fanciful) that Panels are willing to accept disputes in the unclear area in which there is either or both cybersquatting and trademark infringement when the parties reside in different national jurisdictions and Panels have come to believe respondents have acted opportunistically. But granting a remedy under these circumstances is taking on a judge's role and setting aside the Panel's (which should be constrained by the jurisprudence of the UDRP). However, what may be acceptable when respondent's conduct is truly outrageous (as it was in Boxador) is not so acceptable when the conduct complained about is non-infringing (that is, within the scope of respondent's business) as was the case in Autobuses de Oriente.

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. Visit Page
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