'Renewal snatching' found to constitute unfair competition

Switzerland

A WIPO expert's decision under the SWITCH dispute resolution policy (for ‘.ch’ and ‘.li’ domain names) is the first case under Swiss law that deals with ‘renewal snatching’ - that is, the practice of registering lapsed domain names, also called ‘extension exaggeration’ or ‘alert angling’ (Case No DCH2014-0021, December 26 2014).

The claimant is the owner of the Swiss trademark SHOP4, covering various advertising and software-related services in Classes 35 and 42 of the Nice Classification, which was registered on January 19 2010.

A company affiliated with the claimant (Internet Explorer GmbH, which is managed and controlled by the same person and of which the claimant is a partner) was the owner of the domain name ‘shop4.ch’ until July 21 2014, until that company lost the domain name because of apparent problems of communication with SWITCH, which caused the renewal payment to be late.

The domain name was registered on August 5 2014. It resolved to a website on which sport shoes were offered for sale and redirected to another domain name for this purpose which reflected the NIKE trademark, where shoes of different brands were offered for sale (ie, Nike and Birkenstock).

The expert held that there was no clear infringement of the claimant's trademark rights, due to the lack of similarity between the products for which the SHOP4 mark claimed protection and the goods offered on the respondent's website.

He held, however, that the snatching of the domain name constituted unfair competition and ordered the transfer of the domain name. In the expert's view, the respondent's conduct violated the Swiss Unfair Competition Act. The respondent's action of registering the domain name immediately after a company affiliated to the claimant lost the registration because of an error during the renewal process amounted to an unfair and unlawful practice within the meaning of Article 2 of the act.

While the ‘first come, first served’ rule applies to ‘.ch’ domain names, as provided by Article 2.2 of the SWITCH General Terms and Conditions (for the registration and administration of domain names under ‘.ch’ and ‘.li’), this rule did not and could not prevent from holding that the registration and use of a domain name can constitute a violation of third-party rights in certain circumstances.

A company affiliated with the claimant was the registrant of the domain name until July 2014 and the claimant was the legitimate owner of a trademark for SHOP4 in Switzerland since 2010, which was reflected in the domain name. The respondent did not participate in the proceedings and it did not conclusively plead or prove any relevant grounds of defence. No justifiable reasons were brought forward by the respondent in order to justify its conduct, particularly as to its choice to register the domain name (which corresponds exactly to the trademark registered by the claimant in Switzerland) very shortly after it became available for registration. In addition, the expert noted that the respondent could not be reached by the claimant under the registered Whois contact information, which further corroborated the impression of unfair conduct in this case.

The outcome of the case is arguably correct, but the expert carefully avoided addressing the elephant in the room: under the SWITCH dispute resolution policy, domain names can only be transferred or cancelled in case of clear infringement of a right in a distinctive sign.

An elegant way of achieving substantially the same outcome might have been to simply point out to the registrar that the WHOIS information was likely to be false (given that no one could be reached there), which is a ground for cancellation of the domain name registration under Section 3.3.2 of the SWITCH General Terms and Conditions.

Mark Schweizer, Meyerlustenberger Lachenal, Zurich

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