When not to use the UDRP against domain name pirates

Pirate Ship

Intellectual Property and Technology News

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"Did any of you gentlemen want to have it out with ME?" Long John Silver, Treasure Island

Pirates. They’re the worst. The first reaction to many domain name pirates is that they deserve swift, decisive action, and the Uniform Domain-Name Dispute-Resolution Policy (UDRP) can provide a reasonable path to do so. The policy allows trademark owners to take possession of wrongfully registered domain names after a quick and relatively cost-effective dispute process, wresting them back from the pirate.

A winning claim under the UDRP requires prevailing in a three-prong test:

  1. the offending domain is identical or confusingly similar to the complainant’s trademark;
  2. that registrant has no rights or legitimate interest in the domain name; and
  3. the domain name was registered and is being used in bad faith. The dispute is generally over within a few months without any discovery or hearing. In short, it is a quick and powerful alternative to litigation.

That being said, the policy should not always be used. Discussed below are five scenarios where the UDRP is often considered but is unlikely to result in a successful outcome. 

Lack of priority

A threshold question in every domain name dispute is: who was first? In other words, do a complainant’s trademark rights predate the domain name’s registration date? Domain name speculation is not unlawful and does not violate the UDRP.

Thus, if a third party registers a domain name before a company has established trademark rights, a UDRP complaint is highly unlikely to be successful. The actionable claim arises when the domain name pirate registers the domain name even after a trademark right is established.

Many domain names, especially highly desirable domain names or those with common names, are registered once and then transferred or sold many times. A UDRP claim may be successful where the domain name was purchased before the creation of trademark rights if the current registrant purchased the domain name from a previous owner after the creation of the senior user’s trademark rights. However, it is often difficult to determine exactly when that sale and transfer occurred, and complainants generally need a good-faith basis to allege that their trademark rights arose prior to the registrant’s purchase of the domain name.

Genuine trademark dispute

Many times, companies look to the UDRP as a way to short-circuit litigation and procure a domain name. This often occurs where a new business starts operating at a domain name, but the business and its domain name is the same as, or similar to, a senior user’s trademark.

However, if the new business is operating in good faith (even if it is technically an infringement), a UDRP complaint may be unsuccessful because the second and/or third prongs of the UDRP test may not be met.

An argument that the new business is operating in “good faith” generally is not a valid defense if the business is clearly attempting to infringe the senior user. This creates some close calls, but there is often a relatively clear difference between a company that happens to use the same or a similar trademark for similar goods or services and a company using the same exact mark for the same goods in such a manner that confusion is obviously going to arise. In that case, UDRP panelists often can tell the difference between what is truly “good faith” use and what is merely a pretextual attempt at shaking down a trademark owner.

Business relationships gone bad

The UDRP should not be used to recover domain names that exist as the result of terminated licenses or business relationships.The UDRP should not be used to recover domain names that exist as the result of terminated licenses or business relationships. The common scenario is as follows – a licensee or business partner registers a domain name, and after the relationship is terminated, the licensee/business partner refuses to transfer the domain name back or cancel it. UDRP complaints in these types of situations are often unsuccessful because the third prong of the UDRP requires that the domain name was used and registered in bad faith. These domain names, while they are used or retained in bad faith, were often not originally registered in bad faith.

The question is more complicated if the licensee or business partner registered the domain name in violation of a contract or franchise agreement which prohibited them from doing so. While there are fewer cases that address this issue, these cases suggest that this may be a viable claim under the UDRP because the original registration was prohibited by agreement. 

Free speech

Domain names used for the purpose of criticizing or commenting on a trademark owner’s brand or products and services are generally not actionable under the UDRP. These types of activities are often considered a legitimate non-commercial purpose under the policy, sufficient to defeat a claim. Moreover, attempting to take a domain name from someone using it for criticism or comment can often create more bad publicity for the brand owner. 

Common law trademarks

UDRP claims based on common law trademarks are not necessarily a red light, but companies relying on common law rights should carefully consider the merits of their case before proceeding.

If relying on a common law trademark, a complainant must provide strong evidence that its mark is distinctive and has acquired distinctiveness such that consumers associate the trademark with the owner’s goods and/or services. UDRP panels generally take this requirement seriously and will closely examine the type and volume of evidence submitted. Perfunctory or uncompelling evidence is often insufficient to establish trademark rights sufficient to succeed under the dispute policy.

Therefore, while a UDRP claim is not impossible, in cases of disputes involving common law trademarks, trademark owners need to take great care.

The UDRP may be a powerful weapon against the pirates of the Internet, but it should be wielded carefully.