Saturday, July 2, 2011

Uniform Domain-Name Dispute-Resolution Policy (UDRP): To Catch a Cybersquatter

An issue that regularly arises for many brand owners is whether third party use of a certain domain name infringes their trademark rights. The analysis for each case of alleged trademark infringement may vary depending upon the facts. While some cases give rise to clear trademark infringement, some cases are not that clear and others verge on that fine line of “reverse domain name hijacking.”

Trademark owners concerned with third party use of their trademarks in domain names may utilize - what is known as - the Uniform Domain-Name Dispute-Resolution Policy (“UDRP”). The UDRP – as opposed to litigation – is a quick and economical procedure for seeking transfer of an “infringing” domain name. In many instances, respondents in UDRP proceedings tend to be domain name speculators and/or cybersquatters.

Domain name speculation is the practice of reserving or purchasing domain names for the purpose of later selling them for profit. Selling – or flipping – domain names are akin to what we saw in the real estate market several years ago. Those electronic “real estate” owners that speculate in domain names are known as “Domainers,” many of which have successfully built businesses around buying and selling domain names.

Domain name speculation should not be confused with cybersquatting. Domain name speculation is the practice of identifying generic or descriptive (not trademarks) domain names and utilizing them to develop web site traffic for purposes of generating revenue from what is known as “pay-per-click” advertising. Domain names may also be re-sold or “flipped” for profit. Much like real estate investment and speculation, Domainers evaluate electronic real estate and decide, based upon available information, what the “property” is worth. The goal: make a profit. No harm, no foul -- until Domainers use trademarks in domain names in violation of a trademark owner’s rights.

Cybersquatters on the other hand reserve or purchase domain names that use someone’s trademark. A cybersquatter may also engage in - what is known as - “typo-squatting” by reserving domain names of commonly misspelled trademarks for the purpose of capturing misdirected Internet traffic when a user misspells a trademark (www.Walmrt.com). The definition of a cybersquatter is one that registers, traffics in, or uses a trademark of another in a domain name with bad faith intent to profit from the goodwill belonging to that trademark owner.

When cybersquatters misuse trademarks in domain names, trademark owners may take action by filing UDRP proceedings. Complainants in UDRP proceedings must establish the following three elements to successfully compel transfer of a disputed domain name:

1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;

2. The registrant does not have any rights or legitimate interests in the subject domain name; and

3. The registrant registered the domain name and is using it in "bad faith."
Below are a few considerations when contemplating the use of the UDRP process or determining whether your company has rights in a disputed domain name:

1. May trademark owners of non-registered, common law trademarks utilize the UDRP process and successfully compel transfer of infringing domain names?

Yes. As long as complainants establish that consumers have come to recognize their marks as being distinctive identifiers associated with them or with their goods and/or services, they may successfully assert common law trademark rights and potentially compel transfer of subject domain names – even if they do not own a registered trademark.

2. Do trademark licensees have rights for purposes of utilizing the UDRP process?

Yes. Licensees are generally considered to have rights in trademarks under the UDRP. Licensees must, however, establish their licensee status and/or provide evidence that the trademark owner has authorized the filing of the UDRP complaint.

3. Is a domain name that incorporates a trademark and a descriptive or generic term (as viewed in relation with complainant’s products and/or services) still considered “confusingly similar” to the complainant’s mark?

Generally yes. The addition of descriptive or generic terms to the complainant’s trademark would normally be regarded as being confusingly similar and thus sufficient to find confusing similarity under the first prong of the UDRP test.

4. Are domain names that use misspellings of trademarks (i.e., typosquatting) considered confusingly similar to complainants’ trademarks?

Generally yes. As long as the misspelling is obvious or common, the misspelled domain name will generally be found to be confusingly similar to a complainant’s mark.

5. Can resellers or distributors of trademarked products have legitimate rights with respect to securing domain names that incorporate those products’ trademarks?

Maybe. If distributors or resellers use the subject domain name with the actual sale of the branded products and services, use the subject domain name for only the corresponding branded products and accurately and prominently disclose its relationship with the trademark owner, they may be regarded as having a bona fide interest in a subject domain name.

6. Can there be a finding of bad faith when a domain name has not been put to use and the domain name holder has not attempted to sell a subject domain to a brand owner?

Generally yes. Some panels have found that the act of holding domain names for years without putting them to a bona fide use - and even when there has not been an attempt to sell the subject domain name to a brand owner – does not preclude a finding of bad faith.

For read more about this topic, you can read some of my previous blog posts here, here, here and here.

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