A  UDRP decision handed down today shows why the UDRP system is still a mess and why we get some many bad decisions.

The UDRP system has been handing down decisions for over 13 years and today’s case points out panelist still disagree on the meaning of  1 of the 3 elements required to prove  a UDRP claim bad faith and what the language of the rule means.

Writing for the majority In the case of Guru Denim Inc. which found in favor of the domain holder of truereligion.com;

“There are broadly two views of the interpretation of the requirements for bad faith under the third element of the Policy, namely the “unitary” and the “conjunctive” views

“The majority’s view of registration in good faith is only reinforced by the exceptional circumstance in this case that the Respondent made an apparently bona fide noncommercial use of the domain name for ten years after registration. ”

“It was only after this time that the Respondent started taking advantage of the opportunity to earn pay per click type advertising income from the increasing amount of Internet traffic seeking out the Complainant’s business and website. ”

“Even though the Respondent’s subsequent use might be considered to be a diversion of Internet users for commercial purposes in terms of paragraph 4(b)(iv) of the Policy, the majority, similar to the approach of the panel in the Validas decision, does not consider that this provision can be interpreted to deem evidence of use in bad faith as evidence of both registration and use in bad faith in circumstances that there is clear evidence of good faith registration.”

By its own rules WIPO UDRP Panels, panelist don’t have to follow the WIPO overview rules nor prior UDRP decisions:

“While predictability remains a key element of dispute resolution systems, neither this WIPO Overview nor prior panel decisions are binding on panelists, who will make their judgments in the particular circumstances of each individual proceeding. ”

A ridiculous way to run a legal process.

On the issue of bad faith WIPO rules say:

“Consensus view: Generally speaking, although a trademark can form a basis for a UDRP action under the first element irrespective of its date [see further paragraph 1.4 above], when a domain name is registered by the respondent before the complainant’s relied-upon trademark right is shown to have been first established (whether on a registered or unregistered basis), the registration of the domain name would not have been in bad faith because the registrant could not have contemplated the complainant’s then non-existent right.””

Makes perfect sense

However in this UDRP the Dissenting Panelist, Scott Donahey says:

“the plain literal meaning of the third element of the Policy is that both registration and use in bad faith must be found individually before the requirements of that element are fulfilled.”

The majority begins the defense of the majority position on bad faith with the statement:

“Suffice it to say here that the majority subscribes to the “conjunctive” view or in other words that the plain literal meaning of the third element of the Policy is that both registration and use in bad faith must be found individually before the requirements of that element are fulfilled.”

This panelist (Mr. Donahey) disagrees that “the plain literal meaning of the third element of the Policy is that both registration and use in bad faith must be found individually before the requirements of that element are fulfilled.”

The third element of the Policy should be read as a unitary one or should be found to be ambiguous.

If the Policy were to state clearly that both bad faith registration and bad faith use must be found individually, it would read: “your domain name has been registered [in bad faith] and is being used in bad faith,” the bracketed portion would necessarily have to be added to the third prong of the test (Policy, paragraph 4(a)(iii)) in order to attain the “plain literal meaning” that the majority purports to find.

As written the phrase “in bad faith” modifies “has been registered and is being used”, clearly suggesting that bad faith applies to the entire concept of registration and use, not separately to each.

But this panelist concedes it is not as clear as it should be; indeed, it may be said to be ambiguous. Thus one needs to look at other provisions and to the legislative history to determine precisely what is meant.

One must first look at what the drafts persons chose to give as examples of bad faith registration and use. Paragraph 4(b) of the Policy, entitled “Evidence of Registration and Use in Bad Faith” [and not “Evidence of Registration in Bad Faith and of Use in Bad Faith”].

It gives four examples of circumstances, which “if found by the Panel to be present, shall be evidence of the registration and use of a domain name in bad faith.” The first three examples of bad faith registration and use speak only of registration, and say nothing of use. Policy, paragraphs 4(b)(i), (ii), and (iii). How can evidence concerning only the state of mind of the registrant at the time of registration be evidence of bad faith registration and use, if one is required to prove both bad faith registration and bad faith use? The fourth example focuses only on the ultimate use of the domain name, without reference to registration. Policy, paragraph 4(b)(iv). How can evidence concerning only the subsequent use of the domain name be evidence of bad faith registration and use, if one is required to prove both bad faith registration and bad faith use? Not a single example given in the Policy involves both bad faith registration and bad faith use.

The majority sets up a dispute that does not exist between the majority and minority view.

The minority view has never contended that one need only prove bad faith registration or bad faith use.

That would be a conflict between a conjunctive and disjunctive view, a view which the minority has never held.

Rather the dispute is that the majority treats bad faith registration and use as a binary concept. One must separately prove bad faith registration, than separately prove bad faith use.

Under the majority view one must prove one plus one.

The minority view treats bad faith registration and use as a unitary concept. One is required to prove that under all the facts and circumstances that the respondent is acting in bad faith by intending to profit from the good will developed in the complainant’s trademark.

There is no arithmetical calculation required.

The majority cites the decision in Validas, LLC v. SMVS Consultancy Private Limited, WIPO Case No. D2009-1413 in primary support of that decision.

The panel in Validas correctly pointed out that the panel in the first decided UDRP case, World Wrestling Federation Entertainment, Inc. v. Michael Bosman, WIPO Case No. D1999-0001, determined that a finding of bad faith required both evidence of bad faith registration and also evidence of bad faith use, and cited the Second Staff Report on Implementation Documents for the Uniform Domain Name Dispute Resolution Policy for that proposition, a proposition that was faithfully followed for years by UDRP panelists.

This panelist cannot deny that this is true, because this panelist was also the panelist in World Wrestling Federation Entertainment, Inc. v. Michael Bosman, supra. It would have spared this panelist much abuse had this panelist maintained this original position, rather than acknowledging the contrary evidence in later legislative history which was unavailable in 1999 at the time decision in World Wrestling Federation Entertainment, Inc. v. Michael Bosman, supra was written. However, this panelist did discover this later available legislative history, which contradicted the view of the Second Staff Report, and this panelist could not ignore it.

 

In any event this panelist believes that the subsequent legislative history, as set out most recently in the dissent in A. Natterman & Cie. GmbH and Sanofi-aventis v. Watson Pharmaceuticals, Inc. WIPO Case No. D2010-0800, should not be ignored, but rather should be considered by any panelist honestly confronting the debate between the traditional binary view of bad faith registration and bad faith use and the unitary concept of bad faith registration and use in the recent minority view. Therefore, I quote that portion of the dissent in the Natterman decision that concerns this later discovered legislative history:

“The minutes of the initial ICANN Board meeting includes a reference to the establishment of a “small drafting committee’ to assist in formulating the dispute resolution policy:

The President or his delegate should convene a small drafting committee including persons selected by him to express views and consider the interests of the registrar, non-commercial, individual, intellectual property, and business interests.

Internet Corporation for Assigned Names and Numbers, Minutes of Meeting of August 26, 1999, formally approved October 24, 1999, Resolution 99-83, at #2. The five members of the “small drafting committee” selected were (1) Kathryn A. Kleiman, of the Association for Computing Machinery’s Internet Governance Committee; Member DNSO Non-Commercial Domain Name Holders’ Constituency; Co-founder, Domain Name Rights Coalition; (2) Steven J. Metalitz, General Counsel, the International I.P. Alliance; Member, DNSO Trademark, Intellectual Property, and Anti-Counterfeiting Interests Constituency; (3) Rita A. Rodin, Skadden Arps, Slate Meagher & Flom, retained by AOL, a member of the DNSO Registrars Constituency; (4) A. Michael Froomkin, University of Miami School of Law; Former member, WIPO Panel of Experts; (5) J. Scott Evans, Adams Law Firm, P.A.; Member, International Trademark Association’s (INTA) Internet Committee; Chair, INTA DNS subcommittee. Staff Report on Implementation Documents for the Uniform Dispute Resolution Policy, posted September 29, 1999, corrected October 1, 1999.

The only record that this panelist was able to locate which references the work of this committee were two law review articles by Professor A. Michael Froomkin: Wrong Turn in Cyberspace, Using ICANN to Route Around the APA and the Constitution, 50 Duke L.J. 17 (2000) (“Duke Article”) and ICANN’s “Uniform Dispute Resolution Policy” – Causes and Partial Cures, 67 Brooklyn L.Rev. No. 3, 655 (2002) (the “Brooklyn Article”).[i]

Professor Froomkin states that the “small drafting committee was established in response to criticism arising from the DNSO Names Council forwarding the Working Group report to the ICANN Board for Approval. Brooklyn Article, at 652, n. 139. The person who represented the President was then ICANN Counsel Louis Touton. When the “small drafting committee” was unable to reach a consensus, Mr. Touton decided the matters independently, and his recommendations became those of the staff. Id.

“In a number of important respects Professor Froomkin’s descriptions of the “small drafting committee’s activities coincides with that of the Second Staff Report. Professor Froomkin reported that the trademark interests pushed for bad faith registration or use. Brooklyn Article, at 655. The registrant interests responded that registration without use should not be actionable and insisted on the language bad faith registration and use. Id. However, unlike the Second Staff Report, Froomkin reports the reasoning behind the registrant interests’ advocacy of bad faith registration and use:

Registrant partisans countered that current trademark registration of a domain, without some kind of commercial use, did not constitute trademark infringement. Although courts had held that offering a domain for sale was commercial use, it could not follow that a plaintiff’s psychic conclusion that warehousing was in bad faith could substitute for actual conduct. They also argued that, large-scale cybersquatters excepted, the only way to tell that a registration was in bad faith was to look at subsequent conduct, i.e., use, and that the two therefore should not be separated.

Id., (emphasis added). This statement expressly sets forth the unitary nature of bad faith registration and use.”

“It was the “Small Drafting Committee” that issued the final version of the Policy that was ultimately adopted by ICANN and made part of every registration agreement.

“There are many other reasons that I believe the unitary interpretation of bad faith registration and use is the correct one, and they are most recently set out in the extensive dissent I filed in the Natterman case, and I commend it to anyone who is interested in learning the entire rationale for the unitary view. It would be much easier for this panelist to maintain that his original decision was correct, and not recant. But in view of the evidence, I am unable to do so.

“In the present case, when the Respondent registered the disputed domain name, the trademark did not exist. Respondent was therefore entitled to continue using the domain name <truereligion.com> as he had been using it, or to use it for any purpose whatsoever, so long as he did not intentionally use it to profit from the goodwill associated with Complainant’s later created trademark. However, as the Respondent candidly admitted, he is now using the disputed domain name to profit from the good will the Complainant created in the mark. I defy any panelist to show me evidence from any portion of the legislative history or from any other provision of the Policy that would indicate that the drafts persons or the provisions of the Policy as drafted intended that a registrant could use a domain name to target a trademark and profit from its goodwill, so long as at the time that the domain name was registered, the registrant had no intention of doing so.””