Contract disputes & the UDRP
One of the ways your UDRP can get dismissed by the Panel without a decision one way or the other is if there is some sort of underlying business or contract dispute, or even litigation, going on at the same time as the UDRP. This recent NAF dismissal highlights some of these contract dispute circumstances. The domain at issue there was naturalsapphirecompany.com. Apparently it was registered by the Respondent as part of a deal with the Complainant to set up a website, or websites, even using the Complainant’s credit card to do so. Of course, the Respondent was still listed as the owner of the domain name.
This is an important consideration, as a best practices issue: under no circumstances should you ever, as a business, allow someone else to register domain names on your behalf. If for whatever reason they need access to them, you can give (limited) access to whoever you need to, for example to run the website’s content, whatever. But actual ownership of the domain name property should always remain with you as the business. Period! (You can, of course, put some sort of statement in your contract indicating that you have all right and title in the domain names, which is fine … until something goes wrong and the other side doesn’t give up the domain names. Then what do you have to do? Sue on the contract, of course. And that’s expensive. You don’t like wasting money, do you? No, you don’t. Trust me!)
There’s several pages of summary from both the Complaint and the Response, and the additional submissions from both Complainant and Respondent, before we get to the Panel’s decision. Curiously, the Panel actually makes it a point to note that it can hear the UDRP even though there are concurrent court proceedings (in criminal court in India, apparently), in other words, it’s not required to dismiss the complaint immediately.
Of course, that doesn’t matter, ultimately, because “the Panel finds that this is a business and/or contractual dispute between two companies that falls outside the scope of the UDRP.” The Panel goes on to cite some language from a few prior UDRP decisions, and closes with:
This dispute cannot be resolved by simply determining whether domain name and asserted mark are identical; whether Respondent has rights in the name; or, whether Respondent has used the asserted mark in bad faith. Therefore, the Panel has decided to dismiss this case.
Then the Panel went on to discuss a potential fatal flaw in Complainant’s case, that its claimed rights in the The Natural Sapphire Company mark were quite weak. I’m not sure if there’s a typo in the Panel’s decision or not, but it discusses the Complainant’s claim that its common law rights attached from the date that it registered “thenaturalsapphirecompany.com” (with “the” added) as not being strongly proved. Common law rights in marks are often difficult to prove, and abundant evidence may be required. And don’t forget the geography defense. Of course the Panel closes out by saying that it’s not reaching this issue in deciding the case, but I think it’s clear that if it had, it would not have found for the Complainant.
UDRP v. ACPA: damages
I had an interesting inquiry today about the availability of damages and attorney’s fees in cybersquatting cases. Obviously, under the UDRP no damages are available, as its only purpose is to transfer domain names from cybersquatters to the proper owners (usually brand owners of trade/service marks, but also individuals, especially famous celebrities).
The ACPA was an amendment to the Lanham Act, which is the federal law that governs trademarks. 15 USC 1125(d) controls civil actions for cybersquatting. The damages provision of the Lanham Act is codified at 15 USC 1117, and says that a plaintiff may recover
(1) defendant’s profits,
(2) any damages sustained by the plaintiff, and
(3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party. (emphasis added)
In a case involving a violation of section 1125 (d)(1) of this title, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits, an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just. (emphasis added)
Koch bypasses UDRP, goes straight for lawsuit
Koch Industries has sued the anonymous creators of a video that spoofed its (alleged) stance on global warming. The anonymous group Youth For Climate Change put the video on “koch-inc.com” … clearly a domain name that would, and probably should, be transferred under the UDRP. But Koch bypassed the UDRP and filed a lawsuit under the ACPA, which creates some interesting tactical realities for both parties. I discuss the lawsuit in a little more detail over on my trademark blog.
Business agreements should clearly address domains
If you are entering into a business agreement, particularly when it is with a distributor in another country, your agreement should clearly address the prospect of the other party using your trademark in a domain name. This happens often, and it seems like the parties always forgot to specifically address domains, even though they will spell out the conditions on trademark usage. Why does this matter?
First, it’s just good contract drafting practice. Second, the UDRP will not save you from bad drafting, because even though you may have revoked your authority to allow the other party to use your trademark, and they therefore no longer have rights or legitimate interests in the domain name at issue, under the third prong, it will be highly unlikely that you could successfully argue that the opposing party registered the domain name in bad faith originally, since they did it pursuant to a license agreement with you to use the trademark. If your contract spelled out that they can register domain 123.xyz, and that at the expiration of the agreement domain 123.xyz must be transferred back to your control, then you’re got a very clear and easy contract dispute to resolve – likely at minimal cost, but probably still in a court. If you don’t spell that out, then you’ve got a messy contract dispute to resolve in court, fighting out what the intent of the parties was, etc etc. You don’t want to do this. It will be expensive.
Case in point: pelikan.ir, the subject of a recent WIPO decision.The Panel noted in its description of the facts that
The Respondent has had an exclusive license from the Complainant to produce and sell in Iran certain stationary and office products under the Complainant’s trademark. The Respondent also owns the domain name, <pelikaniran.com>, which is not under dispute in these proceedings.
The Complainant, a German company, admitted that
[t]he Respondent was once a licensee of the Complainant, but that relationship was concluded as of December 31, 2005, per a letter sent by the Complainant to the Respondent. The Respondent contests receipt of that letter. The license between the parties never permitted the Respondent to file trademarks or domain names containing the Complainant’s PELIKAN trademark. (emphasis added)
Well, that may be – but did it permit the licensee to use the mark in any other way? And how come they didn’t complain about PelikanIran.com, you ask? Here’s why:
in this case, the Complainant has presented the Panel with three agreements between the parties (Annex E of the Complaint): a “Licensing Agreement concerning the Use of Know-How and Trademarks”; a “Sub-Licensing Agreement for Trademarks”; and a “Licensing Agreement for Patents and Technical Know-How”. Upon examination of these documents, certain issues present themselves immediately to the Panel. The first agreement referred to above ostensibly authorizes the Respondent to use the trademark, PELIKAN, in its corporate name (Article I, paragraph 6) – such authorization to be withdrawn upon termination of that agreement (Article XII) – but the Panel observes that the two latter agreements, both of which predate the former agreement, name the Respondent as “Pelikan Iran Corporation”. This situation draws the Panel’s attention because paragraph 4(c)(ii) of the Policy allows the Respondent to establish rights or legitimate interests in the disputed domain name if the Respondent was commonly know by that name prior to the instant dispute between the two parties. Given these contractual circumstances, how is the Panel to determine exactly how “Pelikan” came to be an integral part of the Respondent’s name?
. . .
Since the nominal termination date . . . , December 31, 2005, has the Respondent continued to produce and sell some products labeled with the Complainant’s trademark in Iran up to the date of the filing of the Complaint in 2010? If so, has this been with or without the Complainant’s (at least tacit) permission? (emphasis added)
What a tangled mess. And it’s no wonder that the Panel wants nothing to do with unraveling this deal.
The evidentiary and direct examination limitations inherent under the Policy do not permit the Panel to adequately address the questions and concerns raised above. As a result, the Panel finds that adjudicating the contractual complexities and business relationship between the parties in this case is beyond the Panel’s purview and the scope of a UDRP proceeding, which is designed instead to address circumstances of abusive cyber-squatting.
And if the description of the agreements by this Panel are a true indication, any competent court (in Iran? Germany? no idea…) is going to have a not very fun time figuring out what the end result should be.
Moral of the story: good drafting will cost you some time and money on the front end, but can save you far more than it cost on the back end.
Business name disputes under the UDRP
Just because somebody has a domain name that incorporates your trademark doesn’t mean that you have an easy avenue to grab the infringing domain name from them. In fact, under the UDRP, if the party that registered the domain name actually has a bona fide business that operates under a similar name, it is highly likely that a Panel will find that they have some rights and legitimate interest in the domain, and reject your complaint. In such a case, you might want to consider saving your money, as it is likely you’ll be told to pursue your claim – which is really a trademark infringement claim – in court.
For example, see this recent WIPO decision over blackrockacquisitions.com. The well-known investment company BlackRock, Inc., sought to stop a company in Texas from using the domain name. The Respondent Black Rock apparently invests in real estate for “clean, domestic energy” resources, and other development. The Complainant BlackRock argued that this was a competitor impermissibly associating with or trading on its good name. The Panel didn’t disagree, and found that the first prong of the UDRP – whether the domain incorporated a trademark that Complainant had rights in – was satisfied. But then the Panel held
. . . it is evident from a perusal of the website associated with the Domain Name that it concerns the business of a limited liability company bearing a name corresponding to the Domain Name. That company was registered in Texas in 2007, before this dispute arose, and it appears from the website that the Respondent offers commercial services under the name of the registered company. The Complainant may, of course, choose to explore trademark remedies against this business, but on the available record in this UDRP proceeding it appears that the Respondent has rights or legitimate interests in the Domain Name within the meaning of paragraph 4(c)(i) and (ii).
We should note that the Respondent’s company was apparently “not in good standing” with the state of Texas, so maybe the business is defunct? The Panel considered that this line of thinking might lead some where, although not in this particular case:
Absent evidence that this business was a sham or operated unlawfully, the Panel does not find bad faith in the registration and use of the Domain Name.
If these facts are similar to yours, you’ll need to build an argument that the Respondent is operating a sham business in some way, which is probably easier said than done.
9th Cir. slaps down AOL in Advertise.com appeal
HT: Eric Goldman/Venkat.
Eric Goldman’s blog is a goldmine of information on IP law, particularly Internet-related, and I’ve been following it for a long while now. Venkat‘s guest post hits the high points about the complete generic-ness of “advertising.com,” but I wanted to add a little bit of discussion that he didn’t touch on.
The 9th Circuit’s opinion goes through a lengthy analysis of AOL’s ADVERTISING.COM mark to arrive at the conclusion that “advertising” – a generic term defined by Webster’s as “the action of calling something (as a commodity for sale, a service offered or desired) to the attention of the public esp. by printed or broadcast paid announcement” – plus the TLD “.com” reflects a generic mark that only answers the question “What are you?” not “Who are you? Where do you come from? Who vouches for you?” which are answered by protectable trademarks. It takes them several pages to go through this analysis. They even note that the Federal Circuit has held that adding any TLD to an otherwise unprotectable term will only in rare circumstances result in a distinctive trademark.
Of course, in the UDRP space, there’s tons of panel decisions that have held that when dealing with the mark at issue in the complaint, the TLD is not part of the analysis. Here’s a venerable Playboy decision supporting that. (Lot less pages, too.) Basically, the addition of a TLD suffix doesn’t change the analysis of confusing similarity or incorporation of a trademark.
Personally, I think it would be pretty much impossible to have a .com or .net create a distinctive enough trademark to avoid either confusing similarity with an existing mark or fatal generic-ness; I’d be hard pressed to come up with “rare circumstances” that would work. I would certainly advise a client not to attempt to build a brand around a generic term, which is what the 9th Circuit noted in this case AOL had attempted to do.
Verizon UDRPs
This article highlights some very important points about Verizon’s recent UDRP spree. The point the author makes is a great one, and it deserves to be repeated: litigation is expensive, and even if you are awarded a large judgment against a cybersquatter, collecting on that judgment is not guaranteed (and might even be impossible – “You can’t get blood from a turnip” as they say in law school). This is why UDRPs are so attractive for trademark owners – they are cost effective. And fast!