Cybersquatting action backfires on PROM Software

In a decision which held that proceedings amounted to an attempt at reverse domain-name hijacking, an administrative panel of the World Intellectual Property Organization's Arbitration and Media Centre has given a short, sharp lesson in when not to take action for cybersquatting.

PROM Software Inc, a company based in the US state of Vermont, failed in its complaint against Reflex Publishing Inc of Florida to obtain Reflex's domain name, 'prom.com'. Under the Uniform Domain Name Dispute Resolution Policy, PROM had to prove three things:

• that the domain name is identical or confusingly similar to a trademark in which PROM has rights;
  
  
• that Reflex has no rights or legitimate interests in respect of the domain name; and
  
  
• that the domain name was registered and being used in bad faith.

PROM succeeded on the first point as it owns a US trademark registration of PROM for software.

It was on the second point, however, that PROM's decision to take action against Reflex backfired. The panel found that not only had PROM "failed to meet its burden of demonstrating that [Reflex] has no right or legitimate interest in the domain name" but worse, it had in fact "established the apparent legitimacy of [Reflex's] interest." Before commencing the action, PROM had twice emailed Reflex to ask to buy 'prom.com'. Each time, Reflex had politely refused to sell. By asking to buy the domain name, PROM showed that it was aware that it had no rights to the domain name. (This reasoning seems harsh and may be seen to discourage attempts to settle such disputes.)

PROM also argued that (i) Reflex had failed to use the domain name for some time after PROM's initial enquiry, which had pointed out that it was not in use, and (ii) that the website only had minimal content, which PROM said was an attempt "to circumvent bad faith charges and to veil the equally obvious fact that [Reflex] operates a warehouse for holding domain names for sale." The panel gave these arguments short shrift, holding that (i) a domain name holder is not under any obligation to begin to operate a website as soon as it registers a domain name, and (ii) there is content on www.prom.com that would appeal to its target audience.

It then got even worse for PROM. The panel decided that PROM's arguments on bad faith were specious. PROM claimed that Reflex had registered at least 200 domain names and had been involved in two earlier ICANN actions that it had won. The panel responded by stating that it is not bad faith to run a domain name registration service, and it was incredible to suggest that it was bad faith to be the prevailing respondent in two earlier actions.

In its conclusion, the panel described PROM's complaint as "knowingly flimsy". It held that the complaint constituted reverse domain-name hijacking, was brought in bad faith and itself constituted an abuse of the administrative proceedings.

The panel's judgment highlights the need to consider carefully a complaint before commencing proceedings and, in particular, to consider all aspects of the current owner's interests in, and actions in respect of, its domain name.

Charlotte Kearney, Bristows, London