Should High Volume Registrants Be Held to a Higher Standard of Diligence?

Should High Volume Registrants Be Held to a Higher Standard of Diligence?


There is a division among panelists whether high volume registrants in the pay-per-click (“PPC”) landing page business should be held to a higher standard for vetting their acquisitions. The PPC business was not dreamed of in the UDRP foundation documents and although there is no present consensus there is ongoing inter- and intra-Panel dialogue on the issue. The question being mulled over is, What amount of diligence, if any, does a high volume registrant have to exercise to be free of the imputation that it has acted abusively in acquiring the domain name?   The PPC business is a relatively recent phenomenon.
 
Not surprisingly, neither the WIPO Final Report, entitled “The Management of Internet Names and Addresses: Intellectual Property Issues,” dated April 30, 1999, nor the ICANN Implementation Report, the Second Staff Report, distinguish between high volume and a single user registrations and there is a degree of ambivalence about the amount of diligence a registrant must perform to avoid the imputation of abusive registration. On the one hand, the registrant is not required to perform a trademark search. The WIPO Final Report states at Sec. 105 that the “performance of a prior search for potentially conflicting trademarks should not be a condition for obtaining a domain name registration.”  On the other hand, the Final Report also called for appropriate language in the domain name application “encourage the applicant to undertake voluntarily such a search. The Registrar Accreditation Agreement provides
 
3.7.7.9 The Registered Name Holder shall represent that, to the best of the Registered Name Holder's knowledge and belief, neither the registration of the Registered Name nor the manner in which it is directly or indirectly used infringes the legal rights of any third party.
 
The typical Registration Agreement, in fact, contains the following language:
 
REPRESENTATIONS AND WARRANTIES. You agree and warrant that: (i) neither your registration nor use of the any of the Network Solutions services nor the manner in which you intend to use such Network Solutions services will directly or indirectly infringe the legal rights of a third party....  (From Paragraph 11 of Network Solutions’ Service Agreement)
 
There are three views on high volume registrants’ burden to legitimate their interest in the disputed domain name or good faith in registering it, although a consensus appears to be forming in favor of the first view.
 
Application of the first view has the effect of shifting the burden to the respondent to disprove that it has engaged in abusive registration. For example, the Panel in Mobile Communication Service Inc. v. WebReg, RN, D2005-1304 (WIPO February 24, 2006) states that where “a respondent registers large swaths of domain names for resale, often through automated programs that snap up domain names as they become available, with no attention whatsoever to whether they may be identical to trademarks, such practices may well support a finding that respondent is engaged in a pattern of conduct that deprives trademark owners of the ability to register domain names reflecting their marks.”
 
More recent expressions of this view are the majorities in BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft v. Future Media Architects, Inc., D2006-0534 (WIPO July 28, 2006) (<psk.com>) and The Carphone Warehouse Limited and The Phone House B.V. v. Navigation Catalyst Systems, Inc., D2008‑0483 (WIPO June 20, 2008) (18 domain names).  

 The Panel in Mobile Communication further stated that for registrants who regularly engage in the business of registering and reselling domain names, and/or using them to display advertising links, they must show that
 
– It makes good faith efforts to avoid registering and using domain names that are identical or confusingly similar to marks held by others;
 
– The domain name in question is a dictionary word or a generic or descriptive phrase;
 
– The domain name is not identical or confusingly similar to a famous or distinctive trademark; and
 
– There is no evidence that the Respondent had actual knowledge of the Complainant’s mark.
 
The 3-Member Panel mVisible Technologies Inc v. Navigation Catalyst Systems Inc., D2007-1141 (WIPO November 30, 2007) concluded that “it is reasonable to infer, based upon the circumstantial evidence available, that Respondent, a sophisticated party in the PPC landing page business, must have been aware of the relevant trademark.” The majority in Bewag suggested that registrants who use their vast accumulations to exploit a business opportunity have “a greater duty ... to verify that the use of a domain name ... is legitimate.” The Panel in The Carphone Warehouse also subscribes to this view.
 
The second view which is not gaining any traction is expressed by dissents in BAWAG  and Banco do Brasil, S.A. v. The Universal Kingdom, LLC, D2008‑0389 (WIPO June 6, 2008) (<bb.com>).   In Banco do Brasil the dissent’s view was that the Respondent had a duty to investigate and that it is failure was actionable negligence. He stated
 
In fact, when a registrant fails to observe a reasonable degree of diligence, failing to undertake an easy, fast and cost‑free trademark search on the Internet, as was already available both at the USPTO and the BTO in 2002, this Panelist understands that such negligence is tantamount to bad faith. Being a professional investor, the Respondent obviously knew that by purchasing the disputed domain name there was a risk of entering into the scope of a third party’s trademark rights, but the Respondent preferred not to look any further into the matter. By so doing, this Panelist understands that the Respondent assumed the risks that such omission could entail. (Emphasis added).
 
The majority in both cases rejected the dissents’ reasoning. In Banco do Brasil it “reject[d] the surprising assertion by the Complainant that bb is uniquely associated with its financial and banking services. As one might expect, a glance at a Google search produced by the Respondent shows numerous diverse uses of that term.”   In BAWAG  it rejected the suggestion by the dissent that bulk domainers should be found to have “accepted the risk of infringement” in registering two or three letter domain names, although it appeared to concede in dictum that in “appropriate circumstances [the analysis may] be broadened to encompass a knowing assumption of the risk of infringement.” However,
 
The traditional analyses of the rights or legitimate interests element should not apply in gross when a registrant is not seeking to use any particular domain name to conduct business, is not otherwise known by that name, and has no interest in the nature of the transferor’s rights.
 
The third view is represented by American Wealth Alliance, Inc. v. KB a/k/a Katarzyna Bieniek, FA0801001139762 (Nat. Arb. Forum March 17, 2008) (<breedersclub.com>). The Panel in this case takes a middle ground by more directly examining the respondent’s conduct and applying objective criteria. In his view, the question is not the respondent’s status as a high volume registrant but whether its denials and professions of good faith are plausible in view of the circumstances or simply a case of willful blindness to another’s rights. The Respondent argued that it conducted a bone fide business. However, the Panel’s analysis focused on specific elements to determine the parties’ rights. It stated that “[e]ven [in] bulk registrations or acquisitions of domain names by professional domainers, the critical consideration seems to be whether or not it can be said that the disputed domain name has been acquired because of its generic value, or because it is identical or confusingly similar to a third party’s trade mark.” 
 
Significantly, the Respondent rebuts the Complainant’s contentions only if “the links on a given landing page are truly based on the generic value of the domain name ... may [such use] be bone fide because [then] there are no trademark rights implicated by the landing page.” The American Wealth Alliance Panel concluded that it was “more likely than not that the attraction of adding the particular domain name to Respondent’s bank of domain names was because of its trademark value not because of any descriptive quality that the domain name might have.” For this reason the complaint was granted and the registration of the domain name ordered transferred to the Complainant. 
 
The dissent in Banco do Brasil concludes: “a registrant must exercise a certain degree of diligence is clear from paragraph 2 of the Policy.”   That seems to sum up the situation whichever view the panelist holds.