'.limited' and '.express' not awarded to fashion retailers

In Express LLC v Sea Sunset LLC (Case No LRO2013-0022) and Limited Stores LLC v Big Fest LLC (Case No LRO2013-0049), two World Intellectual Property (WIPO) panels have rejected objections filed against the ‘.limited’ and ‘.express’ extensions.

As part of the new gTLD process, ICANN put in place an objection process, the legal rights objection (LRO) procedure, allowing third parties to file a formal objection to an application for a new gTLD prior to its approval by ICANN, on the ground of legal rights held by the objector.

The companies Limited Stores LLC and Express LLC filed two different objections regarding the ‘.limited’ and ‘.express’ extensions, respectively. These extensions were applied for by subsidiaries of Donuts Inc, namely Big Fest LLC and Sea Sunset LLC. Donuts Inc is an investment group which has applied for over 300 new gTLDs, such as ‘.academy’, ‘.food’ and ‘.style’, mainly in the name of its subsidiaries.

The two objectors were fashion retailers, mainly known in the United States. Both companies demonstrated their fame by providing evidence of trademark registrations, showing that they operate successful websites, and that they have spent considerable amount of money on advertising and promoting their brands. Limited Stores indicated that it had over 250 retail stores in the United States and was present in 90 countries via the Internet, and its sales had exceeded $10 billion over the past 20 years. According to Limited Stores, its website, ‘thelimited.com’, received more than 25 million visits in 2012. Limited Stores also stated that it spent $13 million during the past five years to promote its e-commerce activities.

As far as Express was concerned, it indicated that its earliest registration for the trademark EXPRESS dated back to June 12 1979. It further stated that, in 1991, its retail sales exceeded $1 billion. In addition, Express indicated that it had registered over 150 domain names incorporating the term ‘express’ and, since 1986, had spent over $800 million on advertising and promotion.

The objections filed by Limited Stores and Express were denied by two different WIPO panels. The main element of explanation provided by the panels was that both ‘limited’ and ‘express’ were generic terms; therefore, the applicants, who intended to operate a registry that would permit registrants to register second-level domains that may take advantage of the wide variety of meanings of these terms, were not taking unfair advantage of the distinctive character of the objectors' registered trademarks. The panels stated that both objectors faced such a risk when they adopted common words as their trademarks.

To be successful in a LRO proceeding, the objector must demonstrate, first, that it has existing legal rights, such as trademark rights, that are "recognised or enforceable under generally accepted and internationally recognised principles of law" and, second, that the potential use of the applied-for gTLD by the applicant either:

1. takes unfair advantage of the distinctive character or the reputation of the objector’s registered or unregistered trademark or service mark;
2. unjustifiably impairs the distinctive character or the reputation of the objector’s mark and/or
3. otherwise creates an impermissible likelihood of confusion between the applied-for gTLD and the objector’s mark.

The panels had to consider eight non-exhaustive factors under the procedure to determine whether the applicants' anticipated use of the strings ‘.limited’ and ‘.express’ did fall foul of these three tests.

It is interesting to note that objectors bear the burden of proof under the procedure.

The first factor was whether the applied-for gTLDs were identical or similar, including in appearance, phonetic sound or meaning, to the objectors' existing trademarks. In the case of Limited Stores, the panel noted that its trademarks included the prefix ‘the’, whereas the gTLD applied for did not; therefore, ‘.limited’ was similar to Limited Stores' existing mark, but not identical. The applied-for gTLD ‘.express’ was found to be identical in appearance and sound, but not similar in meaning, as the objector stated that the term was used in an arbitrary manner to identify apparel, whereas the applicant intended to use its generic meaning.

The second factor was whether the objectors' acquisition and use of rights in the trademark had been in good faith. Both panels easily decided from the evidence brought that the objectors' acquisition and use of right in their trademark were in good faith.

The third factor was whether, and to what extent, there was recognition in the relevant sector of the public of the sign corresponding to the gTLDs, as the trademark of the objectors, of the applicants or of a third party. In this respect, Limited Stores argued that the extension generated recognition of its trademark. However, the applicant responded by proving that the term was seen as a concept, and not necessarily as a fashion brand. Once again, the panel agreed with the applicant, raising the problem that the extension being applied for did not include the prefix 'the', and therefore that there was no recognition to the trademark of the objector. As for Express, the panel concluded that it was not a "'strong' mark in the sense of legal capacity for excluding others from uses not within the class of goods or services provided under the trademark".

The fourth factor was the applicants' intent in applying for the gTLDs - including whether the applicants, at the time of application for the gTLDs, had knowledge of the objectors' trademarks, or could not have reasonably been unaware of the trademarks, and whether the applicants had engaged in a pattern of conduct whereby they applied for or operated TLDs, or registrations in TLDs, which were identical or confusingly similar to the marks of others. The panels agreed that the fourth factor was not satisfied in both cases. According to the panels, the applicants were not acting in bad faith and there was no pattern of dishonest conduct, despite Limited Stores trying to prove otherwise by showing that the applicant had applied for other fashion-related gTLDs (eg, ‘.coach’ and ‘.express’).

The fifth factor was whether, and to what extent, the applicants had used, or had made demonstrable preparations to use, the signs corresponding to the gTLDs in connection with a good-faith offering of goods or services or a good-faith provision of information in a way that did not interfere with the legitimate exercise by the objectors of their trademarks. The panel in the ‘.limited’ case found that Limited Stores' concerns were exaggerated, as its trademark and the extension applied for differed and would not necessarily be confused by internet users. The panel stated that this "is a problem that [Limited Stores] will face because it has adopted a trademark that is a common dictionary or generic term, while using it in an arbitrary way".

The sixth factor was whether the applicants had trademarks or other IP rights in the sign corresponding to the gTLDs and, if so, whether any acquisition of such a right in the sign, and use of the sign, had been in good faith, and whether the purported or likely use of the gTLDs by the applicants was consistent with such acquisition or use. The seventh factor was whether, and to what extent, the applicants had been commonly known by the signs corresponding to the gTLDs, and if so, whether any purported or likely use of the gTLDs by the applicant was consistent therewith and in good faith.

Regarding both factors, the panels noted that the applicants had no trademark or IP rights and were not commonly known by the signs corresponding to the gTLDs in question. As such, these elements were found to be in favour of the objectors.

The eighth factor was whether the applicants' intended use of the gTLDs would create a likelihood of confusion with the objectors' trademarks as to the source, sponsorship affiliation or endorsement of the gTLDs. Both panels decided that the risk of confusion was not sufficient enough to deny the applicants the ability to secure the ‘.limited’ and ‘.express’ gTLDs, in particular in the case of Limited Stores, given that the prefix 'the' was inexistent in the gTLD in question.

In light of all of the above elements, both objections were denied.

The non-exhaustive list of factors to be taken into account under the procedure sets a high threshold for succeeding and, unfortunately for the objectors in these cases, it proved too high a threshold. It is thus important for objectors to have a strong claim that the application of a gTLD by another party will interfere with one's activity and notoriety, especially in cases where generic terms are used respectively as brand names.

The new gTLD objection period for submitting LROs was closed on March 13 2013 but, out of nearly 70 filed cases, only 18 decisions had been issued at the time of writing. It will be interesting to see if other LRO decisions follow the panels' views in the ‘.limited’ and ‘.express’ cases.

David Taylor and Sarah Taieb, Hogan Lovells LLP, Paris