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Abusive Conduct: Domain Name Registrants and Rights Holders

Gerald M. Levine

Abusive conduct or cybersquatting is the essence of disputes under the Uniform Domain Name Dispute Resolution Policy (UDRP), usually by domain name registrants violating their warranties of registration but also (in appreciable numbers) by trademark holders overreaching their statutory rights. The UDRP remedies are asynchronous: there is forfeiture of offending domain names; for abusive use of the process — "attempt[ing] to deprive a registered domain name holder of a domain name" (Rule 15(e)) — there is reverse domain name hijacking (RDNH), essentially a shaming remedy that substitutes for a monetary penalty. It is crafted for a purpose, as solace which I will explain in a moment.

On the statutory side, though, under the Anticybersquatting Consumer Protection Act (ACPA), the penalties for abusive conduct are synchronous. Both parties are liable for statutory damages, up to $100,000 per domain name and attorney's fees. That unhappy result has been visited equally on mark owners (where there is personal jurisdiction, the Beautiful People case) and on domain name registrants (the Vericheck and Trump cases are examples).

In the early history of the UDRP, some Panels began holding that RDNH is discretionary, as though by edict which it is not. The three-member Panel in The Chancellor, Masters and Scholars of the University of Cambridge v. Kirkland Holdings LLC, D2015-1278 (WIPO October 5, 2015) (), for example, citing earlier cases, held that "[while] [s]ufficient grounds for a finding of abuse plainly exist ... [a] finding of abuse ... is always discretionary with the Panel." Is that really so? Can a complainant be excused even though the conduct is abusive?

It is obvious from Panel's language in The Chancellor that there were "sufficient grounds" for RDNH but it declined to declare as such even though it also stated 1) "[the bringing of the complaint] raise[s] an unhealthy aroma that the Complainant brought this proceeding with an ulterior motive — either to bolster its case before the TTAB or to use the UDRP as a second front in a broader campaign", and 2) "cautioning the Complainant (or perhaps more accurately, its advocate) in future to limit its invocation of the Policy to proper cases fully and fairly presented." When "discretion" is exercised in this manner, where there is misplaced deference as I think is the case here, ignoring a complainant's abusive conduct is unfair to respondents who are denied solace for defending indefensible claims.

It is as though by repeating a mantra it becomes the law. The Policy does not use the word "discretion" in connection with RDNH. It is no more than a Panel created carbuncle. If ICANN intended RDNH to be discretionary it would have said so, as it did for 1) consolidation of claims (Policy 4(f)), 2) further statements (Rule 12), 3) in-person hearings (Rule 13), and 4) effect of court proceedings (Rules 18). Other than in those four instances, no mention is made of Panels having discretion for RDNH. Rule 15(e) is clear: if the facts support RDNH Panels have no discretion to give complainant a pass, except for some specific reason.

Read correctly, Rule 15(e) is not "discretionary" at all but "peremptory." It is peremptory because it authorizes a Panel "to declare in its decision that the complaint was brought in bad faith and constitutes an abuse of the administrative proceeding . . . [i]f after considering the submissions the Panel finds that the complaint was brought in bad faith." Certainly, this pronouncement implies a scaling of conduct that suggests a standard beyond a simple failure of judgment and more in the nature of a deliberate act, but it does not instruct Panels to deny RDNH if "sufficient ground[s] for a finding of abuse plainly exist" (The Chancellor).

While a number of complaints were dismissed as the UDRP got underway in 2000 it was not until the fourth quarter that RDNH was first applied. The Panel in Smart Design LLC v. Carolyn Hughes, D2000-0993 (WIPO October 18, 2000) (no fan of "discretionary) is a general warning to complainants their claims must be genuine. Had Smart Design LLC "sat back and reflected upon what it was proposing to argue, it would have seen that its claims could not conceivably succeed." Hence, a good start in measuring a rights holder's abusive conduct is to ask whether "a claim[ ] could conceivably succeed"?

More discriminating Panels have accepted the peremptory view. The "ought to have known" test is reflected in a line of cases stretching back to Smart Design and forward to current decisions. In Clearly Agile, Inc. v. Jonathan Jenkins, Clearly Agile, Corp, D2018-2087 (WIPO November 13, 2018) (<clearlyagile.com>) the Panel noted that the "Domain Name was registered before the Complainant business was even formed" which would have been proof that Complainant could not have proved registration in bad faith. Worse, Complainant was represented by competent counsel, presumptively knowledgeable of the law. Pressing forward with a case knowing it could not succeed is a factor in determining RDNH. Pet Life LLC v. ROBERT RIESS / blue streak marketing llc, FA1810001810870 (Forum November 11, 2018) (<petlife.com>).

Although the Panel in Clearly Agile did not invoke the "ought to have known" language (the Panel in Pet life did), it is nevertheless implicit in the decision. Although not the earliest panelist to criticize rights holders and representatives, the Panel in Pick Enterprises, Inc. v. Domains by Proxy, LLC, DomainsByProxy.com / Woman to Woman Healthcare / Just Us Women Health Center f/k/a Woman to Woman Health Center, D2012‑1555 (WIPO September 22, 2012) noted

The fact that Complainant is represented by counsel makes the filing of this Complaint all the more inexcusable. The matters identified in the preceding paragraph are not Policy arcana; each is a precedent of long standing and derived from scores of cases, and each addresses a fundamental Policy requirement.

Other recent decisions expressing this view include: Voys B.V., Voys United B.V. v. Thomas Zou, Case No. D2017-2136 (WIPO January 9, 2018) (<voys.com>. ("With the benefit of experienced intellectual property advisors, the Complainant should have been aware that, in these circumstances, its Complaint could not succeed. However and presumably in an effort to acquire the disputed domain name with minimal cost, it proceeded with the claim regardless. This is an abuse of the Policy and the Panel, therefore, finds this to be a case of reverse domain name hijacking." Even more recently, DIGITI limited liability company v. Privacy Administrator, Anonymize, Inc / Michele Dinoia, Macrosten LTD, D2018-2148 (WIPO November 15, 2018) (<digiti.com>. "[t]he Complaint in the form presented had no realistic prospect of success and should not have been filed.")

"Ought to have known" is arguably either intentional overreaching or studied obliviousness of the law, but more likely the latter rather than the former. Using the UDRP as leverage to gain control of the domain name includes the Plan B and other stratagems deliberately attempting to mislead decision makers. In Patricks Universal Export Pty Ltd. v. David Greenblatt, D2016-0653 (WIPO June 21, 2016) (<patricks.com>) the Panel found that "Complainant's only real gripe is the price Respondent demanded for the Domain Name, making this a classic 'Plan B' case." These kinds of cases are regularly on the docket. Pilot Fitness, LLC v. Max Wettstein / Max Wettstein Fitness, FA1808001799942 (Forum August 30, 2018) (<pilotfitness.com>) is an example: "[Complainant] offered trifling sums to buy the domain name. Having failed, it then moved to Plan B to try to enforce a transfer.").

Omitting facts is as willful as misstating them. The three-member Panel in Airpet Animal Transport, Inc. v. Marchex Sales, Inc / Brendhan Hight, FA121100 1470056 (Forum January 2, 2013) (alleged common law trademark) was unanimous is finding RDNH:

Complainant applied for a trademark after knowing about Respondent's domain name and did not disclose that fact to . . . the Panel. Once again, the question is why not? Presumably, Complainant wanted to improve its chances in registering its mark and this proceeding."

The several indicia of overreaching statutory rights are set out as consensus views in WIPO Overview 3.0, section 4.16. In one way or another, each of these overreaching offenses are violations of the certification requirement in the Policy, Rule 3(b)(xiii) in which the signatory certifies that "this Complaint is not being presented for any improper purpose."

This test has been extended to include false and deceptive statements. Credibility can be a major factor in determining parties' rights. While the Panel in Compañía Logística de Hidrocarburos CLH, S.A. v. DropCatcher.Info / Badminton, Inc., D2018-0973 (WIPO June 25, 2018) (<clh.com>) denied RDNH it identified the reasons for its decision: while the "Complaint was weak" there were

a number of the indicia of a complainant's conduct which are sometimes associated with RDNH, such as untrue assertions of fact, inappropriate personal attacks on the integrity of a respondent or heavy-handed conduct [that were] not present.

In other words, taking into account the totality of factual circumstances, RDNH is not warranted, even as in this case it was a close call — "declines, by a very narrow margin." But, the sanction is inappropriate where the facts do not add up to abusive conduct.

The failure of the discretionary view is that it excuses a pervasive reluctance by some panelists to grant RDNH which brings us to the present. The three-member Panel in Hims, Inc. v. Sharad Patel, FA181000 1810653 (Forum November 16,2018) (<hims.com> rejected RDNH because (it held) "Complainant had a colorable claim based on arguments of bad faith renewal of the disputed domain name, and therefore declines to find reverse hijacking."

The HIMS decision is not in harmony with the jurisprudence. There are three reasons why this is so: 1) Respondent had lengthy priority over use of the string "hims."; 2) Complaint had made a number of attempts to purchase the domain (which it did not disclose in the complaint) to which it was rebuffed; this suggests a classic Plan B filing; and 3) renewal of a domain name purchased many years prior to any commercial use of the mark cannot possibly be a legal basis for any claim of cybersquatting either under the UDRP or Anticybersquatting Consumer Protection Act (ACPA).

The reluctance to sanction is illustrated in WEDIA SA v. Office Yui Asia Limited, D2018-2083 (WIPO November 8, 2018) (<wedia.com>) the Panel held that

Without evidence that the disputed domain name was registered in bad faith in 1997 (or that there had been a subsequent transfer in bad faith), the Complainant should have known that the proceedings were bound to fail.

However, the abuse is excusable because

Complainant [as a pro se party] had sought to contact the Respondent prior to filing the complaint and made a reasonable offer of USD 3,000 to purchase the domain name but did not receive any reply from the Respondent. The Complainant appears to have prepared the complaint itself without taking external legal advice and does not appear to have been previously involved in UDRP proceedings. The Panel is, therefore, willing to give the Complainant the benefit of the doubt that it was not aware of the possibility of an RDNH finding. In the particular circumstances of this case, the Panel therefore determines that it is not necessary to make a declaration of Reverse Domain Name Hijacking.

Presumably, Complainant received a "get out of jail" because it represented itself, although it is one thing to be a small commercial actor and another to be a significant one as Wedia SA is!

The peremptory approach treats complainants and respondents alike: if there is abusive conduct, it is called out. For example, the Panel in Timbermate Products Pty Ltd v. Domains by Proxy, LLC/Barry Gork, D2013-1603 (WIPO November 3, 2013), held that Panels are "under an obligation to so declare" even if the respondent does not request RDNH. This view is in stark opposition to the discretionary view. Later decisions have extended this dictum to even include cases in which respondents have defaulted in appearance but who could not possibly have registered the disputed domain names in bad faith since they had priority of right over complainants.

What is often overlooked, but deserves more attention, is the meaning RDNH has to prevailing respondents. Winning (where respondents appear and defend) also entails a loss; a monetary and emotional penalty for defending their lawful registrations. Simply prevailing is less satisfying than prevailing with an RDNH sanction. That is what I mean by solace. Where the facts support complainant overreaching of its statutory rights there must be a penalty. In this respect, RDNH arguably serves two purposes: the sanction (the official reason) for "attempt[ing] to deprive a registered domain-name hold of a domain name" (Rule Definitions) and the unofficial reason, providing psychological closure for respondents in having complainants sanctioned for their abusive conduct. To have that satisfaction is respondent's only coin in offsetting the emotional turmoil and expense of defending a dishonest claim; call it a psychological payment for having to defend itself!

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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