UDRP not designed to address all trademark-based domain name disputes

In a recent domain name dispute under the Uniform Domain Name Dispute Resolution Policy (UDRP) before the World Intellectual Property Organisation, an American company has obtained the transfer of a domain name incorporating its trademark but lost its complaint with respect to four others.

The complainant was Segway Inc, a world-renowned innovator in personal mobility devices that owned a number of US and European Community trademarks for SEGWAY. In addition, the complainant used the terms ‘segsolutions’ and ‘segcessories’ to promote diverse products and accessories.

The respondent was Chappell McPherson, an authorised distributor for the complainant in Costa Rica from 2007 to 2010, operating under the name Segway Costa Rica SA. The disputed domain names were ‘segwaycostarica.com’, ‘segwaysantacruz.com’, ‘segwayxperience.com’, ‘segs4kids.com’ and ‘segs4kids.org’.

The domain name ‘segwaycostarica.com’ was registered by the respondent in her own name, but in compliance with a distributor agreement between the parties. The respondent's distributor agreement expired on December 30 2010 and she was notified in February 2011 that she no longer had permission to make use of "any Segway trademark material" as of January 1 of the same year, and should remove SEGWAY from her trade and/or legal name.   

In early 2011 the respondent began operating a guided tour business in Santa Cruz, California, under the trade name Segway Santa Cruz. The domain name ‘segwaysantacruz.com’ was registered in April 2011 and resolved to the website at ‘www.segwaysantacruztours.com’, the respondent's business home page. The domain names ‘segwayxperience.com’, ‘segs4kids.com’ and ‘segs4kids.org’ were registered at the same time but did not resolve to active websites.

The complainant sent a cease and desist letter to the respondent on November 21 2013. The respondent did not reply. The complainant therefore filed a UDRP complaint on April 23 2014 in order to request transfer of the domain names.

To be successful in a complaint under the UDRP, a complainant must satisfy all of the following three requirements:

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.

The first prong of the requirement is a low-threshold test which was easily satisfied for three out five domain names.

Confusing similarity was easily found by the panel given the incorporation in full of the complainant's SEGWAY mark in the domain names ‘segwaycostarica.com’, ‘segwaysantacruz.com’ and ‘segwayxperience.com’.

However, the panel declined to discuss the potential application of the UDRP to ‘segs4kids.com’ and ‘segs4kids.org’, as the simple use of the terms ‘segsolutions’ and ‘segcessories’ by the complainant was deemed insufficient to establish a common law trademark in the term ‘seg’ or the existence of a ‘seg’ family of marks. Failure to prove trademark rights thus meant that the complaint was denied for these two domain names, and the panel did not need to go on to consider them further.

Turning to the second requirement of the UDRP and its application to the three remaining domain names, the panel found that the respondent did not have any legitimate interests in the domain name ‘segwaycostarica.com’, one of the reasons being that the complainant's cease and desist letter had requested transfer of any domain name incorporating the term ‘Segway’, in accordance with the distributor agreement, even though it did not specifically mention transfer of that particular domain name (and even though the original notice of termination did not refer to domain names at all).

The panel faced a greater dilemma upon examination of the use by the respondent of the ‘segwaysantacruz.com’ domain name. Yelp listings, newspapers and other evidence was provided showing that the respondent widely advertised her business under the names ‘Segway Santa Cruz’ and ‘Segway Santa Cruz Tours’, and that she was referred to by such names in the media. The issue was whether general knowledge of the complainant's will to safeguard its trademark rights due to prior business relations between the parties should bar the respondent from asserting any rights or legitimate interests in the domain name.

Under Paragraph 4(c)(ii) of the UDRP, rights and legitimate interests may be demonstrated when the respondent (as an individual, business or other organisation) has been commonly known by the domain name, even if the respondent has acquired no trademark or service mark rights. The panel held that the parties' previous relationship did not preclude the respondent from successfully asserting that she and/or her business was commonly known by the domain name ‘segwaysantacruz.com’, and thus found that the respondent did have rights and legitimate interest in ‘segwaysantacruz.com’. 

However, the domain name ‘segwayxperience.com’ had not been used and so the panel found that, given that the respondent no longer had any connection or affiliation to the complainant, she had lost the right to use the SEGWAY marks in domain names or in any other manner.  The fact that the respondent was considering future uses of the domain name for the development of an adventure-based attraction using the complainant's devices was therefore not deemed sufficient to establish rights or legitimate interests ‘segwayxperience.com’.

Turning to the third requirement of the UDRP, a complainant must demonstrate that the respondent registered and used the disputed domain name in bad faith. In this regard, the threshold is set high as both of requirements must be met under the UDRP to establish bad faith.

The panel did not need to consider ‘segwaysantacruz.com’ and bad faith as it had already found that the respondent did have rights and legitimate interests in this domain name. Given that the three requirements of the UDRP are cumulative, this meant that the complaint had failed for ‘segwaysantacruz.com’.

Going on to consider the two remaining domain names where a transfer order was still possible, the panel found that ‘segwaycostarica.com’ had not been registered in bad faith as it had been registered in compliance with the distributor agreement. Somewhat oddly there was a mystery surrounding this domain name as, at the time of the complaint, it was still owned by the respondent but the content of the website it resolved to belonged to the complainant's current authorised distributor in Costa Rica, who claimed that he thought it belonged to him and that he had paid the respondent $1,500 for it four years ago. The respondent also claimed not to have paid any hosting or renewal fees for this domain name for a number of years. In view of its findings on lack of bad faith (which was quite unusual, given that the panel had found that the respondent had no rights or legitimate interests in the domain name), the panel denied to make a transfer order. In this regard, however, the panel did note that the respondent had agreed to a transfer if the complainant made a specific request for ‘segwaycostarica.com’ in accordance with the distributor agreement.

The panel finally found that ‘sewayxperience.com’ had been both registered and used in bad faith. Given the strength of the SEGWAY mark and the parties' prior relationship, the respondent's knowledge of the complainant's contractual right to control the use of the SEGWAY mark and the passive holding of the domain name were sufficient to establish bad faith. The panel ordered the transfer of ‘sewayxperience.com’, but denied transfer for the other four domain names.

As the panel underlined, this decision shows how the UDRP was designed to address a certain limited category of trademark-abusive domain name registrations, and not to address all manner of trademark-based domain name disputes. It also shows that, even though the UDRP is supposed to be a quick, relatively straightforward procedure, most panels are very thorough and review each domain name individually, based on the specific facts and circumstances surrounding its registration and use. In this instance, the panel denied the complaint for four domain names but for very different reasons - two for the complainant's lack of trademark rights under limb (1), one as a result of the respondent's rights and legitimate interests under limb (2), and one for the respondent's lack of bad faith under limb (3). In this instance only one of the five domain names at issue was able to satisfy all three of the cumulative requirements of the UDRP and allow the panel to make a transfer order.

David Taylor and Jane Seager, Hogan Lovells LLP, Paris