District court interprets UDRP rules

In General Media Communications v Crazy Troll, 2007 WL 102988 (SDNY, January 16 2007), the US District Court for the Southern District of New York has had the rare occasion to interpret the substance of a National Arbitration Forum panellist's decision in a domain name proceeding under the Uniform Domain Name Dispute Resolution Policy (UDRP).

The former parent company of General Media Communications, the publisher of Penthouse magazine, had allowed the registration for the domain name 'penthouseboutique.com' to lapse during insolvency proceedings. The domain name was subsequently registered by Crazy Troll, a business which registers and sells domain names for profit, after General Media had licensed use of the PENTHOUSE BOUTIQUE mark to a related entity.

After several failed attempts at settlement, General Media commenced a UDRP proceeding with the National Arbitration Forum to reclaim the domain name.

When its complaint denied the existence of lengthy settlement negotiations, admitting instead to only some limited correspondence with the respondent, Crazy Troll asserted that it had indeed "offered a complete resolution of the dispute by transferring the domain to General Media, without cost or the necessity to any agreement". Crazy Troll further argued that General Media's proposed settlement agreement was manifestly unreasonable and oppressive.

The single panellist found that General Media successfully showed only the first of three required elements of its claim, namely that:

• the registrant's domain name is identical or confusingly similar to the complainant's trademark;
  
  
• the registrant had no rights or legitimate interests in the domain name; and
  
  
• the registrant registered and used the domain name in bad faith.

Then, he shifted focus from the facts leading to the dispute to the behaviour of the parties during the proceedings, citing:

• General Media's "lack of candour" in its filings;
  
  
• "failure to provide the panel with highly significant facts"; and
  
  
• the unreasonable nature of its demands.

The panellist interpreted the UDRP rules as requiring him to characterize the claim as a bad-faith attempt at reverse domain name hijacking on the basis of General Media's omission of potentially material details regarding its failed settlement negotiations.

General Media then brought a suit in the US District Court for the Southern District of New York for a declaratory judgment, requesting, among other things, a declaration that it had neither filed the UDRP proceeding in bad faith nor committed reverse domain name hijacking.

The magistrate disagreed with the panellist's decision, finding that General Media had effectively asserted all three required elements for its UDRP claim. Because the claim was valid, the court held that General Media could not have brought its proceeding in bad faith. According to the magistrate, the disclosure of failed settlement negotiations was not required and could not be the basis for a finding of bad faith.

One might expect that courts would defer to the findings of a UDRP panel regarding the interpretation and application of the UDRP rules in a UDRP proceeding. In granting General Media's motion for partial summary judgment, the court, here, has interpreted and applied the substance of those rules on a de novo review basis.

Dennis S Prahl and Matthew Asbell, Ladas & Parry LLP, New York