Arbitration Centre orders revocation of '.pt' domain name in landmark decision

On February 13 2013 the Portuguese Arbitration Centre for Industrial Property, Domain Names, Trade Names and Corporate Names (ARBITRARE) issued a landmark decision ordering the revocation and transfer of a domain name on the grounds that it infringed the industrial property rights of the complainant.

The complainant is a Portuguese company which is the exclusive owner of the Community trademark FLY LONDON, an extremely well-known Portuguese brand of footwear. The complainant also owns the domain name 'flylondon.com'.

The dispute arose when, in mid-2012, the complainant received an e-mail signed by the respondent, informing the latter of the recent domain name liberalisation (from May 1 2012, any natural or legal person is allowed to register a '.pt' domain name without proving that it corresponds to a corporate name or a registered trademark) and proposing to rent the domain names 'flylondon.pt', 'flylondon.es' and 'flylondon.eu' to the complainant for €7,500 per year or sell them for €350,000.

Since the settlement of disputes concerning '.pt' domain names is under ARBITRARE’s jurisdiction, the complainant submitted the matter to the ARBITRARE Arbitral Tribunal, requesting the revocation and transfer of the domain name 'flylondon.pt' on the grounds that its registration infringed the '.pt' Domain Name Registration Regulations (DRR) issued by the Foundation for National Scientific Computing (a private non-profit institution charged with managing, registering and maintaining '.pt' domains within the scope assigned to it by the Internet Assigned Numbers Authority (RFC 1032/3/4 and 1591)).

In particular, the complainant invoked:

• Article 9(1)(c), which prohibits the registration of domain names that correspond to names that would mislead or cause confusion about their ownership, namely by, inter alia, coinciding with well-known or prestigious trademarks that belong to others; and
• Article 43, which sets the criteria that the arbitrator should take into account for the purpose of determining whether a domain name is legitimate.

The cumulative criteria under Article 43 correspond to a series of three questions that the arbitrator must consider to ascertain whether a domain name complies with the DRR:

1. Does the domain name coincide with, or is it identical to, or susceptible of causing confusion with, a name or designation protected, according to a legal rule, in the name of the claimant in the arbitration proceedings?
2. Was the domain name registered without being based on any rights or legitimate interests previously acquired by its registrant?
3. Has the domain name been registered or is it being used in bad faith?

In the present case, the arbitrator answered the three questions in the affirmative and thus concluded that the use of the domain name 'flylondon.pt' by the respondent was not legitimate.

First, the Arbitral Tribunal considered the claim based on Article 9(1)(c) and held that:

• There may be confusion even if the trademark at issue is not well known or prestigious; this can be inferred from the use of the expression 'inter alia' in the wording of Article 9(1)(c). Other reasons should be accepted as long as the complainant can show the existence of a misjudgement or confusion as to the ownership of the domain name. In this regard, the tribunal considered that the products bearing the trademark at issue were largely disseminated via the Internet in association with the complainant’s company, in particular through the complainant’s website, which is accessible at the complainant’s domain name 'flylondon.com'. Thus, the tribunal came to the conclusion that it was “highly probable” that the domain name 'flylondon.pt' would mislead average internet users into believing that the website attached to it belonged to the owner the FLY LONDON mark or that it had some kind of relationship with that company.
• Since the core element of the domain name 'flylondon.pt' is the reproduction of the trademark FLY LONDON, trademark counterfeiting had occurred.
• Therefore, the respondent would not be in a position to guaranty that “the registered name and its ownership do not conflict with the established rights of others” (Article 9(2) of the DRR).

Replying to the first question, the Arbitral Tribunal concluded that, in light of the reasons mentioned above, the domain name at issue was susceptible of causing confusion with the complainant’s trademark in the mind of the average internet user or anyone else who came into contact with the domain name.

With regard to the second question, the tribunal stated that:

• the respondent did not assert any right or legitimate interest that could represent a basis for the registration of the domain name: in particular, it did not claim to be the holder of any trademark, trade/corporate name, logo or any other distinguishing sign including the FLY LONDON mark, as a whole or in part;
• the respondent was not in any way licensed by the complainant to use the trademark;
• there was no indication that the respondent operates in the footwear industry or that it carries out any other activity related to the complainant’s business;
• there was no indication that the respondent has used the trademark within the context of any commercial activity; and
• the wording of the email sent by the respondent to the complainant led the tribunal to conclude that, “clearly”, the respondent did not claim, nor had the intention of claiming, any right over the mark.

The tribunal concluded that the respondent had no legitimate interest in the domain name. In this respect, the fact that the respondent did not present a statement of defence to the complainant’s application was crucial.

Finally, regarding the third question, the tribunal used the criteria set forth in Article 43 of the DRR. One of these factors is whether the domain name was registered or acquired with a view to selling it at a later date. The tribunal found that the respondent not only offered to sell the domain name to the complainant only 10 days after acquiring it, but also asked for an exorbitant and disproportionate price in light of the costs incurred for the registration of the domain name. This proved that the registration was made with the intention of obtaining a huge profit.

As the three conditions had been met, the tribunal ruled that the domain name should be revoked and transferred to the complainant.

One interesting aspect of this decision is the fact that the tribunal put the case in the context of the increasing cybersquatting problem. This is important in the present case because, as the respondent acted as a typical cybersquatter, the resolution of the case through arbitral proceedings could have been hampered from the very beginning - indeed, ARBITRARE’s jurisdiction, like most arbitral tribunals, derives from the parties’ agreement under the terms of the Portuguese Law on Voluntary Arbitration. Arguably, to enter into an arbitration agreement with a cybersquatter would prove to be a difficult, if not impossible, task. Fortunately, Article 41(2) of the DRR provides that, when registering a domain name, the registrant will agree to the arbitration convention governing the resolution of domain name dispute, designating the ARBITRARE for that purpose.

This is exactly what happened in this case: when registering the domain name 'flylondon.pt', the respondent agreed to the arbitration convention and the complainant subscribed to an arbitration clause after submitting its application to ARBITRARE. Therefore, without this provision contained in the DRR, the complainant would most likely still be trying to bring the respondent to justice.

Another interesting aspect of the present matter is that it is only part of a larger cybersquatting case. As mentioned above, the respondent not only registered 'flylondon.pt', but also 'flylondon.es' and 'flylondon.eu', and tried to sell all three domain names to the complainant.

The complainant thus filed two other complaints in parallel:

• a complaint under the alternative dispute resolution (ADR) procedure for '.eu' domain names before the Prague-based Arbitration Court regarding the domain name 'flylondon.eu' (the Czech Arbitration Court administers ADR proceedings according to the ADR Rules and ADR Supplemental Rules, and in line with the public policy rules for '.eu' (Regulation 874/2004)); and
• a complaint before the arbitration centre for '.es' domain names (Corte Española de Arbitraje) in respect of 'flylondon.es'.

All three proceedings were based on the same grounds and, in all three cases, the arbitration tribunal decided that the domain name registered by the respondent infringed the complainant’s industrial property rights. The Portuguese decision is a landmark one, as it is the first time that a cybersquatting practice by a Portuguese cybersquatter was fully condemned. Moreover, the three decisions, when considered together, prove that the arbitration system designed to deal with domain name disputes is globally effective.

Manuel Lopes Rocha and Carolina Leão d’Oliveira, PLMJ - AM Pereira Sáragga Leal Oliveira Martins Júdice E Associados - Sociedade De Advogados - RL, Lisbon