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10|16|2009 01:08 pm EDT

Expanding Interpretation of UDRP Helps German Bank Win ‘Domain Lottery’

by Paul Keating in Categories: Legal Issues

Despite being clearly limited in scope, the purpose of the UDRP continues to be ignored by experienced panelists. The result is an ever-expanding environment for domain disputes that exists completely far from any legislative or judicial oversight.

In the recently decide Deutsche Kreditbank AG v. DKB Data Services (USA), Inc. D2009-1084 (WIPO Sept 30, 2009), the respondent registered a three letter domain name (dkb.com) in 2001. NB: DomainTools (my favorite research tool) shows a record creation date in 1996. During this period the domain had been registered with a single registrar with only 2 name-server changes in seven years. Evidently the domain had not been used recently. The panelist, Mr. Swinson, accepted the statement of the complainant’s private investigator’s that the respondent was dissolved after it had merged with another company in 2002. Mr. Swinson concluded that the dissolution, followed by non-use was sufficient to transfer it to the complainant. (Obviously, the panelist did not know that the company was a client of “The Mill House Inn” in Long Island.  It will also be a disappointment to cfsoftware who will no doubt have lost a customer.) Whether the “investigator’s” statement was a sworn declaration was not disclosed in the decision. Notwithstanding the apparent dissolution, however, the respondent did maintain the registration. Is this “cybersquatting”? According to this panelist, it is.

Respondent’s default meant the complainant’s allegations were not challenged. Nevertheless, an unchallenged complaint does not entitle a panelist to issue decisions that are so obviously contrary to the purposes of the UDRP. In case it has escaped anyone, the UDRP Policy was designed to deal only with the limited problem of “cybersquatting”. “Cybersquatting” is the “deliberate, bad faith, abusive registration of domain names in violation of others rights.” (WIPO Final Report, 1999, p29). Numerous decisions confirm that it is NOT designed to resolve trademark disputes, business disputes, contract disputes, employment disputes etc. Such “complicated” matters fall outside the scope. The Policy is not designed to decide who has a “better” right to a domain, but merely whether a registration is abusive according to certain standards.

In Deutsche Kreditbank, the panelist first found a lack of legitimate interest because none of the paragraph 4(c) descriptions of a possible legitimate interest could apply and, of course the Respondent, who was no longer in business, obviously had not provided any evidence of a bona fide use. The most troubling aspect, however, was the panelist’s fabrication of bad faith registration based on the Telstra decision. The panelist concluded that the current use was “passive” thus supporting a presumption of original bad faith intent.

The panelist’s application of Telstra leaves much to be desired. He openly doubted whether the complainant’s mark was well-known, holding that it was reasonable to conclude that the U.S. located respondent did not know about the German bank. Normally, if a respondent is unaware of the complainant, much more is required to show the kind of deliberate intent required for a finding of “cybersquatting”. The panelist then concluded that despite the fact that the respondent once was an existing company, it was not possible to conceive the respondent using the domain in any legitimate way. Finally, the panelist held that although the respondent may not have intentionally concealed its identity, it was not possible to contact him on a given address and respondent did not provide a response. Ultimately, Mr. Swinson justified his illogical decision by pointing out that the respondent “in all likelihood” was dissolved and thus the domain name would be of limited value to its operation as a business. This final point clarifies the inappropriateness of the entire decision.

The fact that the respondent had existed when the time the domain was registered is conclusive evidence of the absence of bad faith registration. The statements by the complainant’s investigator – that the respondent had been dissolved – are an admission that the respondent had in fact existed. The continued registration clearly indicates that a valid property right remained in the hands of the respondent. Dissolution does not cause property rights to evaporate – they transfer to the proper successor in interest. The lack of use here is irrelevant.

This decision typifies the continued expansion of the UDRP well beyond its intended scope. Without judicial oversight it is impossible to effectively challenge such wayward panelists and guide the UDRP process so that it is truly equitable. While Telstra may have been created to deal with a particular difficult factual situation, that decision itself went beyond the bounds of the UDRP. While the rationale of Telstra may be justified by the limited circumstances it was intended to address, the Deutsche Kreditbank decision shows the danger of a system where panelists with little or no judicial sense apply “precedent” to justify a decision to award a domain name to the person with a “better” use.

Decisions like Deutsche Kreditban only encourage trademark owners to try to use the UDRP to obtain domains that they are not in any manner entitled to but desire nevertheless. They are but another reason to encourage the establishment of an appeals process (or at least an ombudsman) or to require a regular peer review of panelists.

Author Paul Keating, ESQ. is a California attorney who is lucky enough to both live and work in Barcelona, Spain.

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  • http://DomainAuctionCleaner.com Drew

    And as long as Registrants remain the only player in the system that does not have any direct representation/control in ICANN, this will continue.

  • FX

    this is another clear case of reverse domain name hijacking by a retarded panelist. John Swinson the Sole Panelist in this case should have his legal license revoked and banned from practicing law. He clearly made up his own rules that have no rhyme or reason or legal standing.

  • jaydee

    It is incumbent on the big players in the domain business–those with ample resources to give back to the community an appeal process. I know R. Schwartz was dismayed by the lack of support from the domainers, but pleeeze, we are small potato(e)s without funds or much of voice. So don’t lump us in with those that really can make a difference due to their power. Schwartz, Schilling, Latona, etc, etc, are the ones who must take the lead and put a bit back into the system to protect the whole structure. What the hell can a fellow with 100 mediocre domains do? Stop writing about the UDRP failures and do something about it! I wish I had your money, I would do something about it. You owe it to yourselves and to us indirectly as we are the crowd that fills your stadiums, we are the fans that cheer you along the way, we often pay the tickets to get into the game….

  • Helder

    If someone has its domain stolen by a stupid panelist, can’t that someone go to a court of law and suspend that decision, and have the decision taken in a court, by judges who know the law?

    Is there any law above UDRP? or they’re above the law and courts?

    Everyone is scared of losing domains with UDRP, but is anyone going to court to defend their property rights? Does anyone file a law suit against those panelists and UDRP?

    If someone would try to take away your home or land, wouldn’t you fight in a court? why not do the same with domains? domains are your land, your property

    This why i like cctld’s, specially european cctld’s, they are ruled by laws, not by some panelists who seem to be above laws and courts

  • http://www.FreshAvails.com Fresh Avails

    You can appeal the decision to a court but understand that you have agreed to a URDP decision with your registrar. I believe (a lawyer or someone who knows can weigh in here) you can fight the decision process but not the decision. I have heard many times from TM lawyers to make sure to get a multi person panel so that one misinformed person cannot derail the process. I do share the fear that the broader the “bad faith” application gets from it’s inital meaning, the worse it gets for everyone, big and small companies alike.

  • http://DomainAuctionCleaner.com Drew

    >I believe you can fight the decision process but not the decision.

    Other way around.

    You can fight the decision via the court, but the UDRP process is decided by WIPO and others who are “stakeholders” at ICANN.

    Us Registrants aren’t stakeholders. We just pay for the who mess.

  • Paul Keating

    “You can fight the decision via the court, but the UDRP process is decided by WIPO and others who are “stakeholders” at ICANN.”

    Not always the case. The UDRP allows a losing respondent to file a court action and prevent transfer but ONLY if it files within 10 days an action in a court located in the Mutual Jurisdiction (location of registrant or registrar at the election of the complainant). Many jurisdictions do not have a recognized claim for use by the respondent. In such a case the respondent is effectively precluded from taking advantage of UDRP 4(k). In such a case the respondent can file in any court having jurisdiction but must then request an order of the court preventing the UDRP decision from being enforced.

    There has been no direct challenge to the UDRP itself (yet) because most courts that do allow a losing respondent to assert a claim do not review the UDRP decision as such but merely make their own determination. That being said, I cannot see a reason why a challenge could not be maintained directly at the UDRP provided the case had good facts in favor of the respondent.