Home -> Law Blog Directory -> Trademark Law Blogs -> AntiCybersquatting Consumer Protection Act Blog

Trademark Law

: AntiCybersquatting Consumer Protection Act Blog

Failure to Respond To Trademark Threat Letters & Use of Privacy Services Can Support a Finding Of Bad Faith

By Enrico Schaefer

There are many risks to domain investors under the UDRP.   The opportunity to capitalize on strong generic or descriptive domain names is in many ways dependent on a solid understanding of UDRP decisions and avoiding behavior which would increase a risk of transfer. As investors purchase domains at higher prices, the ability to protect those domains from transfer later on becomes more important.  A serious domainer needs to understand that their own behavior can provide ammunition to a complainant seeking a domain transfer order of a high value domainvunder the UDRP.  The WIPO panelists in creditkeeper.com ordered a transfer of a domain purchased by a domain investor for $48,000 based, in large part, on avoidable behavior and poor decision making by the domain investor.

Of course, one of the hazards under the UDRP is the variability between panel decisions, and even between the two main domain dispute arbitration authorities NAF and WIPO. The WIPO panelists in creditkeeper.com ordered a transfer of a domain despite the domain's relatively descriptive word combination. The primary UDRP defenses were that  the words were descriptive, and thus without trademark protection. Alternatively, the respondent argued that the domain was registered by the original registrant before trademark rights could have attached, trying force the bad faith test to the time of pre-purcahse . The panelist rejected both arguments in ordering transfer.

There are three key things coming from this decision that every domainer should be aware of.

First, placing your head in the sand if you receive a trademark threat letter can be evidence of bad faith.

Prior panels have held that a failure to respond to a cease and desist letter can be evidence of bad faith.  See, e.g., Bayerische Motoren Werke AG v. (This Domain is For Sale) Joshuathan Investments, Inc., WIPO Case No. D2002-0787. Any such bad faith is compounded when the domain name owner or its duly authorized privacy service, upon receipt of notice that the domain name is identical to a registered trademark, refuses to respond or even to disclose the domain name owner?s identity to the trademark owner.  Such conduct is not consistent with what one reasonably would expect from a good faith registrant accused of cybersquatting.

Second, use of a privacy service or other perceived manipulation of  WhoIs data can also be used as a factor showing bad faith domain registration and cybersquatting. This is especially true of registrant data is changed after receipt of a trademark threat letter. Cyberflying, which entails the systematic transfer of the domain name to different registrants following the initial respondent?s receipt of notice of the complaint in order to disrupt the proceedings, really hurt the respondent in this case.

In this regard, the Panel is troubled by the Respondent?s use of multiple privacy services to cloak its identity following receipt of notice of this dispute and the commencement of proceedings hereunder. The Panel does not consider the Respondent?s use of a privacy service in and of itself to constitute bad faith under the Policy, but privacy services are subject to manipulation by a registrant seeking to evade enforcement of legitimate third-party rights or to obstruct proceedings commenced under the Policy or elsewhere.

The Panel finds substantial indication of such manipulation in the record of this case. Prior panels have held that a failure to respond to a cease and desist letter can be evidence of bad faith. See, e.g., Bayerische Motoren Werke AG v. (This Domain is For Sale) Joshuathan Investments, Inc., WIPO Case No. D2002-0787. Any such bad faith is compounded when the domain name owner or its duly authorized privacy service, upon receipt of notice that the domain name is identical to a registered trademark, refuses to respond or even to disclose the domain name owner?s identity to the trademark owner.  Such conduct is not consistent with what one reasonably would expect from a good faith registrant accused of cybersquatting.

Of even greater concern to the Panel is the persistent indication in the record of the phenomenon of cyberflying, which entails the systematic transfer of the domain name to different registrants following the initial respondent?s receipt of notice of the complaint in order to disrupt the proceedings. In this case, the apparent cyberflight is inextricably linked to the use of privacy services. In this case, the cyberflying phenomenon appeared first as change of registrant information to list a second privacy service as the respondent, a change clearly calculated to perpetuate the concealment of the Respondent?s identity, rather than disclose it, while simultaneously serving to disrupt the proceeding. The Respondent?s eventual decision to disclose its identity is little more than a novel iteration of cyberflying, given that the Respondent delayed until the disruption resulting from the initial act of cyberflight had run its course, thus bringing about further disruption. The Respondent even urged the Center to dismiss the Complaint, based on what the Panel considers to be a fairly specious argument that the Complainant had not exercised reasonable diligence to discover the identity of the Respondent.

Third, failure to do due diligence and determine whether there may be trademark issues before registering a domain can amount to "willful blindness."  Thus, domain registrants can not always hide behind "I did not know there was another use of the domain" defense.

This case is one in which several of these developments are in play, and one in which ? based on the Response ? the Respondent registered the disputed domain name with no exploration of the possibility of third-party rights, and with apparent disregard whether the domain name it was acquiring for use with a pay-per-click website corresponded to the distinctive trademark of another. The Panel concludes, in light of all of the factors discussed above, and given the particular circumstances of this case, that such ?willful blindness? on the part of the Respondent constitutes bad faith under the Policy.  See Media General Communications, Inc. v. Rarenames, WebReg, WIPO Case No. D2006-0964;  Mobile Communication Service Inc. v. WebReg, RN, WIPO Case No. D2005-1304.

Full post as published by AntiCybersquatting Consumer Protection Act Blog on April 11, 2008 (boomark / email).