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.