Bad faith may be found only in specific circumstances when domain name predates trademark rights

German company Softway AG has filed an unsuccessful complaint under the Uniform Domain Name Dispute Resolution Policy (UDRP) with the World Intellectual Property Organisation (WIPO) concerning the domain name ‘softway.com’.

The complainant, a software design and consultancy firm, had been using the term ‘Softway’ as its corporate name since it was established in 1989. The complainant was also the owner of several SOFTWAY marks registered in Classes 9, 35 and 42 - namely two German figurative marks registered in May 2005 and April 2009, as well as one European Community word trademark registered in April 2013.

The domain name ‘softway.com’ was registered on December 7 1993 and pointed to a blank web page at the time of the present complaint. The respondent was an Indian company named Web Master Internet Services Private Limited.

On June 27 2007 the complainant registered the domain name ‘softway.de’ and used it as the address of its website. When the complainant noticed that the respondent had parked the disputed domain name and was offering it for sale, it decided, on November 7 2007, to make an offer of $100 for the domain name and also to ask for the minimum amount that the respondent was willing to accept. On November 16 2007 the respondent replied by indicating the amount of $6,500. On November 19 2007 the complainant declined this amount and made a counter-offer of $1,000. The next day, the respondent refused the counter-offer and explained that it had initially paid $1,300 for the domain name. The negotiations ended there.  

On December 24 2008 the complainant filed an application to register its figurative SOFTWAY mark in Germany. On March 11 2014 it filed a UDRP complaint seeking transfer of the disputed domain name.

In order to succeed under the UDRP, a complainant must satisfy all of the following three requirements of Paragraph 4(a):

1. The domain name is identical, or confusingly similar, to a trademark or service mark in which the complainant has rights;
2. The respondent has no rights or legitimate interests in respect of the domain name; and
3. The domain name has been registered and is being used in bad faith.

With regard to the first condition, the complainant asserted that the domain name was confusingly similar or identical to its registered SOFTWAY marks. The respondent argued that the term ‘Softway’ was generic and therefore could not be subject to any trademark protection.

The panel considered that "no doubt exists that the disputed domain name is identical to the complainant's marks", disregarding the generic top-level domain suffix, ‘.com’, in the domain name, as is customary in cases under the UDRP. However the panel explained that any assessment on whether any term was generic "must be left to competent governmental trademark offices and national courts, not a UDRP panel, to determine".

Concerning the second requirement of the UDRP, a complainant must establish that a respondent does not have any rights or legitimate interests in the disputed domain name. In this regard, Paragraph 4(c) of the UDRP sets out a non-exhaustive list of circumstances which may suggest that a respondent has rights or legitimate interests in a domain name as follows:

1. Before any notice to it of the dispute, the respondent's use of, or demonstrable preparations to use, the domain name in connection with a good-faith offering of goods or services;
2. The respondent has been commonly known by the domain name, even if it has acquired no trademark rights; or
3. The respondent is making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain, to misleadingly divert consumers or to tarnish the trademark at issue.

Given that the requirements of Paragraph 4(a) are conjunctive and that the third requirement of the UDRP could not be established (as explained below), it was therefore unnecessary for the panel to address the issue of the respondent’s rights or legitimate interests in the domain name.

Concerning the third requirement of the UDRP, a complainant must demonstrate that the respondent registered and used the disputed domain name in bad faith. In this regard, Paragraph 4(b) of the UDRP sets out a list of non-exhaustive circumstances that may suggest registration and use of a domain name in bad faith, as follows:

1. The respondent registered or acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring it to the complainant or to a competitor, for valuable consideration in excess of documented out-of-pocket costs directly related to the domain name;
2. The respondent registered the domain name in order to prevent the owner of the trademark from reflecting the mark in a corresponding domain name, provided that the respondent has engaged in a pattern of such conduct;
3. The respondent registered the domain name primarily for the purpose of disrupting the business of a competitor; or
4. The respondent is intentionally using the domain name in an attempt to attract, for commercial gain, internet users to its website by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of the respondent’s website.

The complainant claimed that the domain name had been registered and was being used in bad faith because the respondent had registered it for the purpose of selling it to the complainant or to a competitor thereof "for valuable consideration in excess of the Respondent's out of pocket costs directly related to the name".  In support of its argument, the complainant pointed to a web page where the respondent was offering the domain name for sale.

The respondent argued that it had no knowledge of the complainant when it registered the domain name in 1993, because the complainant did not own any trademark registrations at that time. The respondent also underlined that the complainant registered its domain name ‘softway.de’ approximately 14 years after the registration of the disputed domain name.

The respondent further stated that it had never, on its own initiative, contacted the complainant "for the purpose of renting, selling or otherwise transferring the disputed domain name to the complainant". The respondent also explained that it did not register the disputed domain name "to disrupt a competitors business - as the parties are not competitors and the complainant had no web presence for 14 years after the respondent registered the name". Moreover, the respondent also noted that the complainant never explained "why it waited more than 20 years, after the respondent registered the disputed domain name, to file the present complaint".

According to the panel, there were "simply no facts of record which indicate that the respondent had any knowledge whatsoever of the complainant in December 1993 when the respondent registered the disputed domain name" and the "facts which do exist convincingly persuade the panel of the opposite conclusion: at that time, the respondent was completely unaware of the complainant".

The panel pointed out the fact that the complainant did not register its own domain name and start establishing a web presence until 14 years after the respondent's registration of the disputed domain name. The panel noted that the complainant’s trademarks all considerably post-dated the date of registration of the disputed domain name by at least 12 years.

In addition, the panel underlined the fact that the complainant did not provide any evidence (eg, public relations materials, market surveys, advertising campaigns or other market-based evidence) in order to establish that "it may have acquired a reputation in its marketplace or industry in late 1993 such that it would be reasonable for the panel to infer that the respondent then knew or reasonably should have known of the complainant when it registered the disputed domain name" and that, consequently, "in the absence of any such knowledge, the respondent was incapable of harbouring any intent at that time with respect to the complainant, whether adverse or not and let alone one that, in some manner, would reflect any desire to exploit or somehow injure the complainant through registration of the disputed domain name, and thus reflect bad faith" (see WIPO Overview 2.0, Paragraph 3.1). The panel therefore concluded that the fact that the domain name matched the complainant's trademarks was "mere coincidence".

The panel also underlined that Paragraph 4(a)(iii) of the UDRP was "conjunctive in requiring both bad-faith use and bad-faith registration" and, therefore, the fact that there was no bad-faith registration meant that the allegations of bad faith must fail, regardless of use.

Finally, the respondent requested a finding of reverse domain name hijacking (RDNH) from the panel. The UDRP Rules provide that complainants may be found guilty of attempted RDNH if it is found that they are using the UDRP in bad faith. The panel stated that the respondent must:

"persuade a UDRP panel that the complainant knew or should have known that its complaint was baseless and thus brought to basically harass the respondent. Mere lack of success is not sufficient. In that regard, if the complainant had a colourable basis for asserting its complaint, even if that basis was ultimately proven wrong, then a finding of reverse domain name hijacking will not lie."

In support of its request, the respondent underlined the complainant’s awareness, based on the WHOIS record, that the respondent registered the domain name in December 1993 - 14 years before the complainant first contacted the respondent in order to attempt to buy the domain name.

The panel considered that the complainant's conduct may have appeared to reflect harassment, but the complainant, having started use of the term ‘Softway’ as part of its corporate name when it was established in 1989:

"may have believed that it had (common law, unregistered) trademark rights that predated the 1993 registration date, rights that might have sufficed under Paragraph 4(a)(iii) of the policy. Hence, the complainant may have believed that it had a colourable basis for its complaint - however unsuccessful that basis might ultimately be found to be."

According to the panel, in assessing whether RDNH exists or not, "the intent of the complainant in instituting the proceeding governs, not the ultimate strength or correctness of its beliefs and positions". In this case the panel explained that it could not:

"conclude under the facts of record that the complainant's intent in filing the complaint was sufficiently egregious such that the complainant's conduct constituted an abuse of the administrative process and, as such, reverse domain name hijacking."

As a result, the panel found in favour of the respondent, but did not conclude that the complaint had been filed in bad faith and so declined to make a finding of RDNH.

The decision once again underlines the fact that only unsolicited offers to sell domain names to brand owners are generally of value with regard to proof of bad faith for the purposes of the UDRP. Moreover, the present decision acts as a reminder that bad faith may be found when a domain name was registered before the complainant's trademark only if it is clear that the respondent was clearly aware of the complainant at the time of registration, and that it can be shown that the disputed domain name was registered to take advantage of the confusion between the domain name and any potential rights that the complainant may eventually obtain. Finally, the decision demonstrates that, in order for a UDRP panel to find a complainant guilty of attempted RDNH, it is important to focus on the complainant's intent in filing the complaint and whether it was abusively brought to harass the respondent - simply filing an unsuccessful complaint is not sufficient. 

David Taylor and Jane Seager, Hogan Lovells LLP, Paris