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ICANN UDRP and Contract Disputes

Mark Partridge

When domain name conflicts between manufacturers and distributors rest on contractual disputes over the use of the trademark owners' marks, ICANN UDRP panels have frequently denied relief. 

See generally the cases cited and discussed in Western Holdings, LLC v. JPC Enterprise, LLC d/b/a Cutting Edge Fitness and d/b/a Strivectin SD Sales & Distribution, D2004-0426 (WIPO August 5, 2004) by Mark Partridge as sole panelist.

The decision summarizes other ICANN UDRP decisions involving contractual disputes. For instance, in Celebrity Signatures International, Inc. v. Hera's Incorporated Iris Linder, WIPO Case No. D2002-0936, the Panel explained the difficulty of finding a violation of the Policy when there is no specific prohibition on a dealer's registration of domain names incorporating the mark of the products it is allowed to sell:

"Complainant is correct in noting that a distributor's use of a manufacturer's mark as a domain name may constitute an infringement of trademark rights. However, such use may be permissible if there is license or consent. Here, Respondent was not prohibited by contract from using the Complainant's mark as her domain names, and in fact it appears that Complainant's representatives encouraged such use on at least two occasions....

Applying those principles here, I recognize without deciding the issue the possibility that Respondent's current use after objection might be an infringement of Complainant's rights and that Respondent may no longer be justified in believing its use is permitted after receiving Complainant's objections. Nevertheless, that possibility involves a dispute that is beyond the scope of this proceeding. Here, the Policy requires proof of bad faith registration and use. Based on the record presented, I find at the time of registration that Complainant had no distribution agreement or policy in place to prevent Respondent from registering and using the domain name. Further, Complainant's representatives appear to have known of Respondent's conduct and encouraged her in her use. She intended to use the domain name for a website selling Complainant's products, she was encouraged to do so by Complainant's representatives, she did so for over a year without objection. These facts have not been rebutted by Complainant. It does not appear that she did so with the intent to be a cybersquatter or to unfairly trade on Complainant's good will. To a significant degree, Complainant's own actions created the circumstances in which Respondent could reasonably concluded that her conduct was permitted. Thus, I conclude within the circumstances of this record that Complainant has not met its burden of proving that Respondent registered the domain name in bad faith."

The Complainant tends to prevail if there is a clear contractual prohibition against the use of the mark as a domain name. But that is not typically so if the contractual prohibition is unclear, for reasons more fully explained in the Western Holdings decision. 

By Mark Partridge, Managing Partner at Partridge IP Law
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Re: ICANN UDRP and Contract Disputes Konstantinos Komaitis  –  Sep 01, 2004 4:40 AM PDT

The reality is that the UDRP is a faulty Policy with a lot of omissions. Everybody knows that it was initially created to fight the crime of cybersquatting, however the discretionary power afforded to panels and their wide interpretations of the rules and principles have allowed the Policy to take a new direction, far away from its initial purpose. For instance, how can the Policy deal with the issues where there is a domain name registration by a European registrar who is a competitor with a US trademark owner? Why should panels apply the rule of the prior trademark registration? Traditional trademark law allows two identical marks to exist in different geographical spheres. Why should the domain name be taken away from the European registrar, because let's say he has a later trademark registration compared to the US one? It is obvious that there is a gap in the Policy and perhaps competition law should interfere.
If it were to adhere to the Rules of the Policy most of the decisions should never have been enforced and the domain names should never have been taken away from their registrants. Is it about time to activate a checking mechanism for the decisions?

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