Drug manufacturer Hoffmann-La Roche just lost a UDRP on the domain name diet-xenical.com.

Its a pretty amazing decision considering that Xenical is  a trademark term for a diet drug, the domain holder didn’t even response to the complaint and the domain resolves to a website that advertises Generic Xenical for sale.

Here are the relevant findings from the one member panel:

The disputed domain name is identical to the Complainant’s trademark except for the prefix “diet-“. It is well established, as the Complainant argues, that a mere prefix does not make a domain name distinct.

Whether use of the mark is likely to lead to consumer confusion is a different question.

The Respondent’s website does not suggest that it is marketing its products under the authority of the Complainant.

Indeed the Respondent’s website prominently displays a different trade name, “T+T Pharmacy” and also explicitly characterizes the sponsor of the website as a seller of generic drugs.

A reasonable consumer with basic knowledge of the fact that suppliers of proprietary drugs rarely market generic equivalents of those drugs would not conclude that the website is sponsored or approved by the Complainant.

The Complainant alleges that the disputed domain name “is confusingly similar to the trademark of the Complainant,” Complaint 10, at § A.

“The Complainant does not, however, allege any additional facts to support the conclusion that ordinary consumers would be likely to interpret the Respondent’s website as offering proprietary XENICAL when it explicitly states that it supplies generic drugs, or why they would believe that “T+T Pharmacy” is sponsored or authorized by the Complainant.”

Annex 5 of the Complainant’s submission shows webpages from Respondent dated 04.06.2013, each of which bears the running header, “Xenical – Buy Xenical Treatment Online for Obesity.” Respondent webpages retrieved by the Panel on September 26, 2013 showed no such header. The “About us,” “Frequently Asked Questions,” and “Contact us” pages of the Respondent’s website make no reference to the Complainant and make no suggestions that the Respondent’s products are authorized by the Complainant. They indicate that the Respondent is distinct.

In Toyota Motor Sales, the accused website had been modified by the time of trial to reduce the likelihood of confusion.

Similarly, in this case, it appears that the Respondent’s website has been modified since the screen shot presented by the Complainant was taken.

The Toyota Motor Sales court observed that forced relinquishment of a domain name is no less extraordinary a remedy than an injunction, and that “The important principle to bear in mind on remand is that a trademark injunction should be tailored to prevent ongoing violations, not punish past conduct. Speakers do not lose the right to engage in permissible speech simply because they may have infringed a trademark in the past.” 610 F.3d at 1182.

Likewise, in this case, the Respondent’s website, reflecting its use of the disputed domain name, appears to have changed since the Complainant gathered materials in support of its complaint. Following the sound guidance of the Toyota Motor Sales court, the Panel elects to consider current rather than past use of the disputed domain name.

Courts in the United States have considered what proof of the likelihood of consumer confusion is necessary when an alleged trademark infringer uses a mark to sell generic equivalents of a trademarked product.

U.S. courts have considered the likelihood of confusion when an alleged infringer claims nominative fair use. In Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010), the United States Court of Appeals held that use of the trademark “Tiffany” on the defendant’s websites did not constitute infringement because:

“The doctrine of nominative fair use allows a defendant to use a plaintiff’s trademark to identify the plaintiff’s goods so long as there is no likelihood of confusion about the source of the defendant’s product or the mark-holder’s sponsorship or affiliation. . . . To fall within the protection: First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. “600 F.3d at 102 (internal quotations and citations omitted).

B. Rights or Legitimate Interests

In a number of domain-name-dispute cases, the panels found that individuals or entities who had registered domain names similar to those in which a pharmaceutical company owned a trademark must be transferred or cancelled. See, e.g. F. Hoffmann-La Roche AG v. Private Whois buyvaliumg.com, WIPO Case No. D2012-0422; Hoffmann-La Roche Inc. v. ML, Matt Leavsi / WhoisGuard, WIPO Case No. D2012-0587; Sanofi-aventis v. Evangelos Sopikiotis, WIPO Case No. D2008-1459. In most of these cases, the Respondent offered to sell the brand-name drug without a license or prescription. In the cases this Panel has reviewed, the decisionmaker(s) did not consider the nominative-fair-use privilege. Indeed, a September 27, 2013 search of WIPO panel decisions found no documents using both the term “nominative fair use” and the term “generic drug.”

Earlier panel decisions have, however, accepted the nominative fair use defense as a doctrine. In Nelnet Business Solutions, Inc. d/b/a FACTS Management Co. v. Andrew Goldberger, WIPO Case No. D2013-0764, a case not involving the sale of generic drugs, the panel restated the elements of nominative fair use:

“Under the three-pronged test for nominative fair use, Respondent would need to show that (1) the Complainant’s tuition-related products are not identifiable without the use of the mark; (2) only so much of the mark was used as was reasonably necessary to identify the product; and (3) Respondent did nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.”

In this case, the Panel finds that the Respondent has satisfied the three elements of the nominative fair use doctrine.

It is difficult to market generic drugs effectively without use of the brand name under which the proprietary product is known. This means that the Respondent’s has a legitimate need to use of the Complainant’s trademark as a baseline to explain the nature of its products.

C. Registered and Used in Bad Faith

This is not a case in which the Respondent is cybersquatting—obtaining a domain name in order to extort a higher-than-market price for a domain name containing the Complainant’s trademark.

Nor is it a case in which the Respondent is using the disputed domain name to pass off its products as those of the Complainant.

It is not a case in which the Respondent represents that its activities have been authorized by the Complainant.

The content of the Respondent’s website supports the inference that Respondent is merely trying to sell generic drugs under its own trade name.

The Respondent’s failure to respond to the complaint is unhelpful, but a default in a UDRP proceeding does not, without more, indicate bad faith.