Complainant's conduct held to constitute abuse of UDRP process

United States of America

In a decision issued by the National Arbitration Forum (NAF) in accordance with the Uniform Domain Name Dispute Resolution Policy (UDRP), Horizon Publishing LLC, an American company publishing magazines, was denied the transfer of the domain name ‘opulence.com’. The domain name was registered in 2004 by another American company, Opulence Communications Ltd.

The complainant published a magazine named South Florida Opulence and had filed an application with the US Patent and Trademark Office (USPTO) for registration of the trademark OPULENCE for its publishing/advertising goods and services. The complainant stated that it had established common law rights in the term ‘opulence’.

The respondent was an entity which was dissolved in 2011. The domain name was being used to redirect to either a parking page or a landing page, and the respondent appeared to have never made any active use of the domain name.

The complainant’s lawyer tried to contact the respondent using the email address indicated in the WHOIS for the domain name, but received a ‘failure of delivery’ notice. The complainant's lawyer then called the administrative contact for the domain name and the person he talked to indicated that the domain name was for sale. The complainant's lawyer offered the sum of $1,250. This offer was rejected and the administrative contact informed the complainant's lawyer that the minimum purchase price for the domain name was $250,000.

On February 27 2013 the complainant filed a UDRP complaint with NAF. To be successful in a complaint under the UDRP, a complainant must prove all of the following:

  • 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.

With regard to the first part of the UDRP, the complainant submitted three arguments:

  1. the complainant had established common law rights in the term ‘opulence’ dating back to October 13 2010 when it first made use of the term in commerce;
  2. it had filed a trademark application with the USPTO for OPULENCE and thus would be receiving a US federal trademark registration for this term; and
  3. it had established Florida State trademark rights for SOUTH FLORIDA OPULENCE.

The respondent did not reply to the complaint filed against it and the panel thus had to decide the case on the basis of the complainant's assertions only.

Regarding the complainant's assertion that it held rights over OPULENCE due to its USPTO filing, the panel found that a mere trademark application does not establish trademark rights under the UDRP. Turning to the complainant's alleged common law rights, the panel was not convinced by the evidence put forward and determined that the complainant had not demonstrated common law rights. Consequently, the panel determined that the complainant had not satisfied the first limb of the policy.

In cases such as this, where the complainant fails to demonstrate trademark rights and thus falls at the first hurdle, the panel is not required to rule on the two remaining limbs of the policy. However, in this case, the panel chose to consider the remaining factors.

With regard to the second limb of the policy, the complainant contended that the respondent was a dissolved entity that was no longer in existence and/or doing business and had never used the domain name for any legitimate business purpose.

The panel pointed out that the burden of proof was on the complainant to make a prima facie case showing that the respondent lacked rights and legitimate interests in the domain name, and that the burden then shifted to the respondent to evidence that it had rights or legitimate interests. Given the complainant's slight burden and the respondent's lack of reply, the panel considered that the complainant had made out the prima facie showing that the respondent lacked rights or legitimate interests in respect of the domain name.

Regarding the bad-faith criterion, and in particular registration in bad faith, the panel quoted the WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Second Edition on the following question: "can bad faith be found if the disputed domain name was registered before the trademark was registered/common law trademark rights were acquired?"

The consensus view on this question amongst WIPO panels is as follows:

"Normally speaking, when a domain name is registered before a trademark right is established, the registration of the domain name was not in bad faith because the registrant could not contemplate the complainant's non-existent right."

In deciding on the bad-faith element, the panel took the following factors into consideration:

  • According to numerous UDRP decisions, if a complainant does not have trademark rights at the time of registration of the domain name involved, there can be no bad-faith registration on the part of the respondent.
  • Even if the complainant had rights in the term ‘opulence’ at the time of filing its complaint, "such rights would not magically extend to the respondent's domain name or relate back to a time six years before the OPULENCE marks were claimed to have been first used in commerce".

Given the above, the panel considered that the complainant had failed to evidence the respondent's bad faith, and found that there was no conceivable way the domain name could have been registered and used in bad faith.

However, the panel then went further and, in addition to dismissing the complaint, also found that the complainant had acted in bad faith and was thus culpable of reverse domain name hijacking. Reverse domain name hijacking is defined under the UDRP Rules as "using the Policy in bad faith to attempt to deprive a registered domain name holder of a domain name".

As pointed out by the panel, there is no obligation for panels to raise the issue of whether there was an attempt at reverse domain name hijacking by the complainant when the issue was not raised by the respondent. The panel in this case still decided to consider this issue and determined that the complainant overtly disregarded facts and law which should have been well known to it, such as the fact that the domain name was registered about six years prior to the complainant having any possible right over the term ‘opulence’. According to the panel, the complainant knew or should have known that its complaint would fail, but still decided to file it. In the panel's opinion, the complainant did so either in the hope that the panel would overlook the complainant's lack of rights at the time when the domain name was registered, or with the intention to intimidate the respondent's and make a favourable deal with it. For the panel, such conduct constituted an abuse of the UDRP process and thus the complainant had engaged in reverse domain name hijacking.

This decision is one of the rare UDRP cases where reverse domain name hijacking was raised by a panel without the respondent first raising it. Aside from this unusual aspect, this decision clearly demonstrates that complainants who file against innocent respondents who registered their domain names a long time before the complainants' trademark rights came into being run the risk of a finding of reverse domain name hijacking being made against them.

David Taylor and Sarah Taieb, Hogan Lovells LLP, Paris

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