Bad faith directed at third parties may constitute bad faith under UDRP

International
In evoq communications AG v Dynamo.com LLC (Case D2010-0538, June 16 2010), Swiss company evoq communications AG has failed to obtain the transfer of the domain name 'evoq.com' under the Uniform Domain Name Dispute Resolution Policy (UDRP).
 
evoq, which specialises in the development of trademarks and corporate entities, filed a complaint under the UDRP with the World Intellectual Property Organisation (WIPO) against US company Dynamo.com LLC, seeking the transfer of the domain name. Dynamo.com provides services relating to branding, name conception and logo design.
 
To achieve the transfer of a domain name under the UDRP, a complainant must demonstrate that:
  • the domain name is identical, or confusingly similar, to a trademark or service mark in which the complainant has rights;
  • the respondent has no rights or legitimate interests in respect of the domain name; and
  • the domain name has been registered and is being used in bad faith.
The background of this case is a little convoluted. In 1999 General Motors, the well-known US car manufacturer, revealed a concept car, the 'Cadillac Evoq', but the car was never put into production. General Motors had registered the trademark EVOQ in Class 12 of the Nice Classification in Switzerland and Germany. It had also applied for registration of the mark in the United States, but later abandoned this application.
 
In May 2004 Dynamo.com registered the domain name 'evoq.com'. The domain name redirected to a holding page. Three years later, evoq's company was founded and started to trade under the name evoq. evoq registered the EVOQ trademark in Class 35 in Switzerland and other European countries. In addition, evoq operated a website at 'evoq.ch'.
 
To satisfy the first limb of the UDRP, evoq contended that the domain name was confusingly similar to its EVOQ mark. Dynamo.com did not reply to this submission and the panel found that the first requirement of the UDRP was satisfied. The fact that evoq acquired its rights only after the domain name had been registered was irrelevant, according to the consensus view of WIPO's panellists, to satisfy the first limb of the UDRP. However, this circumstance was considered under the third limb of the UDRP.
 
Turning to the second limb of the UDRP, evoq alleged that:
  • it had not consented to Dynamo.com's registration of the domain name;
  • Dynamo.com was not commonly known by the domain name;
  • Dynamo.com was not conducting any activity under the name evoq and did not hold any rights in this name; and
  • Dynamo.com was not using the domain name in connection with any good-faith offering of goods or services, and the value of the domain name derived from evoq's mark.
Furthermore, evoq alleged that Dynamo.com's interest in registering the domain name was due to the use of the name Evoq by General Motors. In this respect, evoq provided evidence that Dynamo.com had offered the domain name for sale for $95,000.
 
In response, Dynamo.com submitted that it had registered the domain name for a client which had eventually chosen not to adopt the name Evoq. Dynamo.com then decided to keep the domain name for future clients. However, the domain name had not been offered for sale to the general public and Dynamo.com's offer stated that, before acquiring the domain name, a potential buyer would have to declare that it "had no malicious intent to threaten the data security nor defraud the customers of any existing entity using a similar name, but intends to build a new and bona fide trademark in good faith".
 
According to Dynamo.com, such a declaration precluded any misuse by potential purchasers. Dynamo.com also stressed that it had registered the domain name before evoq's company had been set up and that it was not using the domain name to promote products confusingly similar to evoq's services, to host illegal content or to redirect traffic maliciously.
 
The panel was doubtful as to whether Dynamo.com could claim rights or legitimate interests in respect of the domain name. However, in light of its finding on the bad-faith element, it was unnecessary to resolve this aspect of the complaint. Nevertheless, it would have been interesting to see whether the declaration the potential purchasers had to sign had any impact on a finding of legitimate interests.
 
Regarding the third prong of the UDRP, evoq claimed that:
  • Dynamo.com had registered the domain name after General Motors' announcement that it would call its new concept car Evoq; and
  • since Dynamo.com did not offer any products or services under the domain name, Dynamo.com must have registered it primarily for the purpose of selling, renting or otherwise transferring it to evoq or others for valuable consideration.
According to evoq, the high price requested by Dynamo.com evidenced that it was aware of General Motors' rights in the term 'evoq'.
 
Dynamo.com contended that a fee of $75,000 was routine for the conception of a naming option for a new enterprise. Moreover, selling a domain name is not per se contrary to the UDRP. In any event, evoq could not prove bad-faith registration by relying on General Motors' rights in the name evoq since:
  • the Evoq car was not an ongoing product; and
  • General Motors had abandoned its US trademark application prior to the registration of the domain name.
Some of the panel's members were inclined to conclude that, under the third prong of the UDRP, evoq had to prove that Dynamo.com had a bad-faith intention with regard to evoq's mark, not the mark of a third party. However, the panel decided that, even if bad faith directed at third parties could constitute bad faith for the purpose of the UDRP, there was no evidence of the existence of any such bad faith in this case. By the time the domain name was registered, General Motors had abandoned its interest in the name Evoq, at least in the United States. The panel went further and stated that, even if General Motors had not abandoned its interests in the name Evoq in the United States, the domain name could still have been registered and used in good faith in relation to unconnected products or services.
 
The panel thus considered that use of the domain name in bad faith had not been established. The fact that the domain name had merely been directed to a holding page with no attempt to profit from, or damage, evoq's reputation was not considered as being passive holding under the circumstances of the case.
 
The landmark case Telstra Corporation Limited v Nuclear Marshmallows established that holding a domain name in a passive manner can be considered as an element of bad faith under certain circumstances. This case raised the question of which circumstances of passive holding could constitute use in bad faith. The panel in Telstra explained that the question could be answered only in light of the particular facts of the case, and that a panel must pay close attention to all the circumstances of the respondent's behaviour.
 
Taking this into consideration, the panel in the present case decided that Dynamo.com's willingness to sell the domain name for a substantial price to a purchaser who confirmed its intention to "build a new and bona fide trademark in good faith" did not substantiate bad faith. Finally, the panel noted that a four-letter domain name may have an intrinsic value on its own, beyond any association with other marks, so as to justify a significant selling price. Transfer was thus denied.
 
The panel had an opportunity to clarify the question of whether bad-faith registration could be applied in relation to any existing trademark, and not just evoq's mark. It mentioned that bad faith directed at third parties could constitute bad faith for the purpose of the UDRP, but there is still an open question as to whether a complainant can use third parties' trademark rights in its own complaint for the purposes of showing registration in bad faith.
  
Interestingly, evoq argued that Dynamo.com had registered the domain name in bad faith simply because the domain name had been registered after a third party had registered the trademark EVOQ. If evoq had been allowed to trade under the name Evoq years after General Motors acquired trademark rights, it follows that Dynamo.com was also justified in registering the domain name notwithstanding General Motor's rights. Taking into account that Dynamo.com had registered the domain name three years before evoq came into existence, it seems that Dynamo.com had more justification to hold the domain name than evoq. If evoq was to follow its own argument, it should cancel the registration of its own domain name, 'evoq.ch', as it is also using General Motors' mark.
 
David Taylor, Hogan Lovells, Paris 

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