The shoe is still on the other foot in '' dispute

In Sao Paulo Alpargatas S/A v Luca’s World Inc (May 25 2009), a Canadian Internet Registration Authority (CIRA) panellist has declined to order the transfer of a domain name that was essentially identical to the trademark of the complainant. 
Sao Paulo Alpargatas S/A is a Brazilian shoemaker with significant worldwide revenues for its HAVAIANAS-branded footwear. Alpargatas alleged that HAVAIANAS is a registered trademark in 126 countries (and is also registered as a design mark in Canada). Alpargatas and Luca’s World Inc entered into a distributor agreement as of January 1 2003 for the territory of Canada. The subject matter of the agreement was rubber sandals. The agreement permitted Luca’s World to use the HAVAIANAS mark in accordance with the agreement. It provided that upon termination or expiration of the agreement, the distributor would immediately discontinue every use of any mark suggesting that the distributor was affiliated in any way with Alpargatas. 

Luca’s World registered the domain name '' 18 months into the three-year initial term of the distributor agreement. The agreement was terminated in 2006, without cause. Thereafter, a series of communications ensued in which Luca’s World agreed to transfer the domain name to Alpargatas. For reasons which are not clear, however, the transfer was not completed and Luca’s World ceased to cooperate with Alpargatas.
To succeed under the CIRA Domain Name Dispute Resolution Policy, a complainant must prove, on the balance of probabilities, that:
  • the registrant’s '.ca' domain name is confusingly similar to a mark in which the complainant has rights prior to the date of registration of the domain name and continues to have such rights;
  • the registrant has registered the domain name in bad faith; and
  • the registrant has no legitimate interest in the domain name.
The panellist held that the domain name was confusingly similar to the registered trademark HAVAIANAS. However, he further found that the domain name had not been registered in bad faith. Bad faith requires that one of the following three conditions be met:
  • the registrant registered the domain name primarily for the purpose of selling, renting, licensing or otherwise transferring it to the complainant or a competitor of the complainant for consideration in excess of the actual registration cost;
  • the registrant registered the domain name to prevent the complainant from registering the mark as a domain name, provided that the registrant, alone or in concert with others, has engaged in a pattern of registering domain names to prevent persons who have rights in trademarks from registering the marks as domain names; or
  • the registrant registered the domain name primarily for the purpose of disrupting the business of the complainant, or that of the complainant’s licensor or licensee, which is a competitor of the registrant.
The panellist concluded that bad faith had not been shown since Luca’s World:
  • had registered the domain name while a licensee and used it to promote only the products of Alpargatas; and
  • had not used it for any improper purpose or sought special compensation for its transfer. 
Finally, it was found that the operation of the website '' in 2004 by Luca’s World as licensee to promote the sale of Alpargatas's Havaianas footwear constituted use of the mark in good faith with rights in the mark.
Accordingly, even though Luca’s World did not respond to the CIRA complaint, Alpargatas was unsuccessful in having the domain name transferred to it.
The decision points out the necessity of contractually dealing with the registration of domain names by licensees or distributors to ensure that they cannot control such domain names following the termination of a licensing or distribution agreement. Although it might be assumed that a terminated licensee or distributor has no legitimate interest in maintaining a confusing domain name, CIRA appears to contemplate that this is insufficient to prove bad faith.
Gordon J Zimmerman, Borden Ladner Gervais LLP, Toronto

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