Passive holding of domain name does not necessarily mean bad faith

International

In a recent case under the Uniform Domain Name Dispute Resolution Policy (UDRP) before the World Intellectual Property Organisation (WIPO), a panel has denied a domain name transfer on the basis that there was no bad-faith use, even though the respondent had held the domain name without using it for almost 13 years.

The complainant was Nanosonics Limited, an Australian company supplying medical products such as ultrasound probes for medical use. The complainant had owned trademark rights for NANOSONICS since May 2000 in Australia, and since 2006 in the European Union, Japan, New Zealand, the Russian Federation, Switzerland and the United States. The complainant had also registered a number of domain names that included its trademark.

The respondent was An Nguyen-Dinh of Vermon SA, a French company founded in 1984 manufacturing and selling piezoelectric transducers used in particular for ultrasound diagnostics. The respondent focused on designing and producing ultrasound diagnostic products, involving research in the field of nanotechnology.

The disputed domain name was ‘nanosonics.com’. It was registered in 2002 by the respondent, but had never been used in relation to the respondent's products. However, since 2008 the domain name had been used to direct internet users to the parking page of a French internet service provider displaying a message in French inviting users to visit its website. 

The complainant's investigator tried to contact the respondent several times in 2013 asking if it would be willing to sell the domain name. Eventually the investigator succeeded in contacting the respondent's representative by telephone, who ultimately said that the respondent's management would be prepared to discuss the matter only if the investigator first made a payment of €5,000 to the respondent. The complainant was not willing to proceed on this basis and instructed its lawyers to send a letter to the respondent in November 2014 referencing the complainant's use of the trademark NANOSONICS and asking for transfer of the domain name ‘nanosonics.com’ in return for reasonable costs.

To be successful in a complaint under the UDRP, a complainant must satisfy the following three requirements set out at 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 part of the UDRP, the panel found that the complainant had both registered and unregistered trademark rights in NANOSONICS and that the domain name was identical to the trademark. 

With regard to the second limb of the three-prong test, the complainant argued that the respondent had never used the domain name in relation to an active website, but instead to point to a parking page where the domain name was, according to the complainant, offered for sale. In addition, the complainant stated that the respondent had never made any attempt to use the domain name for any legitimate purpose in over 12 years and that it had never been known by this domain name. The complainant also contended that it had no connection with the respondent and it had not granted the respondent any licence or authorisation to use its trademark. Finally, the complainant claimed that the respondent had registered the domain name only for the purpose of capitalising on the complainant's goodwill.

The respondent argued that it had registered the domain name with a good-faith intent to use it in connection with its technology, and stated that the term ‘nanosonics’ was related to the field in which it was engaged, namely nanotechnology and ultrasound. The respondent added that the fact that it had registered the domain name for some time without using it did not constitute improper behaviour. The respondent asserted that it had no actual knowledge of the complainant's use of the NANOSONICS mark and that the mark was neither well known nor in wide use on the Internet when the domain name was registered. The respondent also denied that it had registered the domain name with the intent to sell it.

However, the panel found that the respondent had not used or made demonstrable preparations to use the domain name for a good-faith offering of goods or services and that it had not made any active use of the domain name. Neither was the respondent commonly known by the domain name. Furthermore, the panel observed that the possibility that the respondent may have registered the domain name in good faith was not sufficient to confer a right or legitimate interest in the domain name. However, in view of its conclusions on bad faith (see below), the panel did not feel it necessary to make a conclusive finding on whether the respondent had any rights or legitimate interests in the domain name.

With regard to the third limb of the three-prong test, the complainant reiterated its argument relating to the respondent's lack of preparations to demonstrate future use of the domain name. The complainant also argued that the respondent's registration of the domain name had prevented it from registering a domain name corresponding to its trademark. In addition, the complainant asserted that the respondent was operating in the same industry as it and that the trademark exclusively referred to the complainant's products and services. Therefore, the complainant contended that consumers would be misled or confused if the respondent was offering products and services via a website located at the domain name. Finally, the complainant inferred that the domain name registration was not a coincidence and that the respondent had registered it with knowledge of the complainant's prior rights and with the intention to take advantage of the complainant's goodwill or to create an impression of association with the latter.

The respondent argued that the complainant had not shown any indication that the respondent was acting as a cybersquatter, such as the acquisition of multiple domains, and that it had not monetised the domain name by posting pay-per-click advertisements on the corresponding website. Additionally, the respondent contended that it had only indicated a willingness to discuss the issue of a sale after being repeatedly pursued by the complainant, and only on condition that the complainant deposited funds to show good faith. The respondent submitted that a good-faith registrant's willingness to discuss a sale with a party who had asked to buy a domain name did not necessarily demonstrate bad faith.

In light of these arguments, the panel found that the complainant had not met its burden under Paragraph 4(a)(iii) of the UDRP and decided that the respondent had not registered and used the domain name in bad faith. As far as registration was concerned, the panel rejected the complainant's argument that the respondent must have been aware of its rights in the NANOSONICS mark when it registered the domain name, given the fact that the mark was registered in Australia but the respondent was a French company. Even though the term ‘nanosonics’ was made up, it did consist of descriptive elements and so it was not inherently impossible that two or more different companies may have independently had the same idea of combining these elements into a name. The panel further added that, even if the respondent had been aware of the trademark, it could not be presumed that any use of the domain name by the respondent would necessarily have resulted in bad faith.

Regarding bad-faith use of the domain name, the panel considered that the fact that the respondent had held the domain name for 13 years did not necessarily signify bad faith - merely retaining a domain name that could be used improperly, but without any attempt or intent to actually use it improperly, did not constitute use in bad faith. In principle, it was legitimate for businesses to register domain names that they thought they might want to eventually use in good faith, even if this did not happen. 

The panel also rejected the complainant's assertion that the respondent was planning to offer the domain name for sale, as the parking page to which it was pointing did not actually contain any indication that the domain name was for sale. Additionally, the panel considered that the respondent had not made any attempt to solicit a sale of the domain name and so it could not be inferred that the respondent had registered the domain name with a view to selling it. Indeed, the respondent ignored numerous invitations from the complainant to sell the domain name and eventually asked for a substantial payment before it would even begin to discuss the matter. 

The panel therefore refused to order a transfer of the domain name.

David Taylor and Jane Seager, Hogan Lovells LLP, Paris

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