WIPO panellists at sixes and 7s on good-faith use

In 7(S) Personal GmbH v Luo (Case D2010-1953, February 3 2011), the registrant of the domain name ‘7s.com’ was allowed to keep the domain name and transfer was denied.
The complainant was 7(s) Personal GmbH, a staffing service provider with offices in over 110 locations in Germany. The respondent was Zhaohua Luo, an individual based in California. The domain name was registered on April 15 1998 and was pointing to a parking website at the time the complaint was filed. 7(s) Personal was the owner of several registered trademarks consisting of, or including, the terms ‘7S’ or ‘7(S)’, including a German trademark registered since 2000.
7(s) Personal filed a complaint with the World Intellectual Property Organisation (WIPO) requesting a transfer of the domain name. To be successful under the Uniform Domain Name Dispute Resolution Policy (UDRP), a complainant must prove that:
  • the domain name is identical, or confusingly similar, to a trademark or service mark in which the complainant has rights;
  • the respondent has no rights or legitimate interests in respect of the domain name; and
  • the domain name has been registered and is being used in bad faith.
First, 7(s) Personal contended that the domain name ‘7S.com’ was identical to a trademark in which it had rights.
Second, it argued that the respondent was not commonly known by the 7S mark and that the term ‘7S’ was neither a generic term nor a dictionary word. In addition, 7(s) Personal stated that the respondent had not been authorised or licensed to use its 7S mark and that the use of the domain name did not qualify as good faith, as it was merely used for the purpose of seeking monetary gain through a click-through website.
Third, 7(s) Personal alleged that the respondent was aware of its mark and that he had registered the domain name to trade on its goodwill and reputation. In addition, it submitted that the domain name had been registered in order to sell it to 7(s) Personal for a price significantly higher than the out-of-pocket expenses incurred by the respondent.
While the respondent accepted that the domain name was identical to the 7S mark, he pointed out that the domain name predated the registration of 7(s) Personal's earliest mark by over two years. The respondent added that 7(s) Personal had submitted no evidence that the mark 7S alone was well known or directly associated with 7(s) Personal's business. The respondent also explained that he had registered several other alphanumeric domain names in 1998, which were used for many years in connection with his website and online store at ‘geometry.net’. Finally, he asserted that his registration could not be considered as a bad-faith registration given that he was unaware of the existence of 7(s) Personal and that the domain name had been registered 31 months before 7(s) Personal first used the 7S mark.
While the panel was satisfied that 7(s) Personal had established the first requirement of the UDRP, the majority of the panel considered that 7(s) Personal had failed to establish the absence of a legitimate interest in the domain name on the part of the respondent. As a result of 7(s) Personal failing at the second hurdle, the panel did not consider the issue of bad faith.
In order to reject 7(s) Personal's assertions in relation to the second requirement of the UDRP, the majority of the panel highlighted that 7(s) Personal had failed to provide any evidence to show its tangible presence or reputation in the United States, the respondent's country of residence. In addition, the majority found that, as the domain name had been registered more than two years prior to the filing of the first trademark application for 7S, 7(s) Personal should have submitted evidence of common law use prior to May 2000, which it failed to do. This led the majority to infer that such common law use did not occur. The majority also took into account the fact that the respondent had registered a number of alphanumerical domain names, which was consistent with the characterisation of his business activities (ie, the "development and operation of a website having an educational purpose, with related commercial activities in the field of categorical geometry").
The dissenting panellist disagreed with the finding of the majority in relation to the second requirement of the UDRP. The panellist was of the view that the domain name had not been used in connection with a good-faith offering of goods or services, as "there is no plausible semantic connection between '7s' and categorical geometry, shopping or the generic PPC linking landing page". In other words, an arbitrary use cannot be a good-faith use.
To support his dissenting opinion, the panellist referred to an extract from the WIPO Overview of WIPO Panel Views on Selected UDRP Questions concerning whether a respondent automatically had a legitimate interest in a domain name comprised of a generic (dictionary) word:
"If the complainant makes a prima facie case that the respondent has no rights or legitimate interests, and the respondent fails to show one of the three circumstances under Paragraph 4(c) of the policy, then the respondent may lack a legitimate interest in the domain name, even if it is a domain name comprised of a generic word(s). Factors a panel should look for when determining legitimate use would include the status and fame of the mark, whether the respondent has registered other generic names, and what the domain name is used for (a respondent is likely to have a right to a domain name ‘apple’ if it uses it for a site for apples, but not if the site is aimed at selling computers or pornography)."
The panellist believed that this logic was just as applicable to domain names with no obvious meaning (such as ‘7s’) as it was to domain names with an obvious meaning (such as ‘apple’). However, this seems rather surprising given that the present instance can be substantially distinguished from the ‘apple’ example. The renown of the APPLE mark is clearly established, unlike the fame of 7(s) Personal's 7S mark outside of Germany, and thus the registration of the combination of the number 7 and the letter ‘S’ could have been motivated by any number of reasons (including the fact that two-character alphanumeric domain names are very sought after). It is difficult to see how the use of the word ‘apple’ for asite aimed at "selling computers or pornography"can be compared to the type of use made of the combination ‘7s’ by the respondent. The type of use referred to in the ‘apple’ example would undoubtedly take unfair advantage of, or be detrimental to, the distinctive character or the repute of Apple Inc's registered mark, but it is difficult to say the same for the respondent's use of ‘7s’. Moreover, there was no indication that the respondent's selection of the domain name was motivated in any way by, or targeted at, 7(s) Personal or its mark.
What is unusual is that the case was not particularly difficult on the face of it, because the respondent submitted credible evidence that he was not aware of 7(s) Personal's mark when he registered the domain name. Thus, it is difficult to see how the domain name could possibly have been registered in bad faith, and the panel was certainly correct to deny the complaint. However, because the majority of the panel found that the respondent had a legitimate interest, neither the majority nor the dissenting panellist found it necessary to consider the question of bad faith. It is thus not clear whether the dissenting panellist would ultimately have gone on to find in 7(s) Personal's favour and order transfer of the domain name, had he been the sole panellist. Given the facts of the case, this would have been a very odd outcome, but one which could nevertheless potentially have arisen. The disagreement between panellists illustrates the importance of selecting a three-member panel in the event of doubt over the outcome, however slight.
David Taylor, Vincent Denoyelle and Jane Seager, Hogan Lovells LLP, Paris 

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