Hobbex AB of Borås, Sweden, just won a UDRP on the domain name Hobbex.com which is owned by Vertical Axis Inc.

The case is disturbing because  the domain holder registered the domain four years before the trademark holder got their trademark yet the majority of the three member panel gave the domain to the trademark holder finding that they used the “trademark for many years before it secured its registration”.

Moreover the trademark holder registered it in 2006 and waited until late 2013  to file the UDRP.

Here are the relevant facts and findings by the three member panel including a dissent issued by the Honorable Neil A. Smith:

“The Complainant is a Swedish company that sells a variety of toys, radio controlled craft or vehicles and other hobby products. It has stores across Sweden and sells online in Sweden and Norway. The business has been carried on by reference to HOBBEX for some 50 years.

The application for this trademark was filed on February 20, 2006 and it was registered on June 16, 2006.

The Respondent registered the disputed domain name on February 1, 2002.

It is in the business of registering domain names which it says are descriptive terms.

It hosts the disputed domain name and others it has registered through “Hitfarm.com” which it says is a service that places pay-per-click (PPC) advertising links based on a Google advertiser feed on hosted domain names, sharing the advertising revenue with the domain name owners

According to the Respondent, it plays no role in the selection of the links placed on the website. The links actually displayed may vary according to the country where the browser is located. Accordingly, the screenshot included in the Response (generated after the Complaint was notified) shows links under topics including:

– Term Life Insurance

– Health Insurance

– Travel Insurance

– Dental Plans

– Business Insurance

– Online Courses

– Business Schools

– Home Degree

– Distance Learning

– Colleges

– Work from Home.

On the other hand, when accessed from Sweden before the Complainant’s representatives sent a cease and desist letter to the Respondent the website contained links to various online shopping sites offering products of the same kind as, but not sourced from, the Complainant.

5. Discussion and Findings

The second requirement the Complainant must prove is that the Respondent has no rights or legitimate interests in the disputed domain name

The Respondent does not dispute it has no licence or permission from the Complainant, but contends it does not need one. The Respondent notes, as is undoubtedly the case, that the use of domain names to generate PPC revenues is not per se in contravention of the Policy. It says it had no knowledge or awareness of the Complainant or the Complainant’s trademark when it registered the disputed domain name. Instead, it says it registered the disputed domain name “because ‘hobbex.com’ is a typographical variation of the common English work – hobby followed by “ex” standing for “exhibit” or “exhibition” to which [it] believed no party could claim exclusive rights.”

In support of that claim, it points out that it has registered many generic or descriptive domain names based on the word “hobby” such as:

“<aviationhobby.com>; <crafthobbyshopss.com>; <crafthobbysupply.com>; <creativehobby.com>; <directhobby.com>; <discounthobbys.com>; <discounthobbyshop.com>; <electrichobbystore.com>; <hobbiesandcrafts.com>; <hobbiestores.com>; <hobbycars.com>; <hobbyclasses.com>; <hobbyclay.com>; <hobbycollectible.com>; <hobbycrafters.com>; <hobbyenthusiasts.com>; <hobbygarend.com>; <hobbyrooms.com>; <hobbyshopsonline.com>; <hobbysupplyshops.com>; <internethobbys.com>; and <secrethobby.com>.”

and, further, it has registered many domain names that incorporate typographical variations of generic dictionary words such as:

“<aircondioners.com>; <airelines.com>; <alibama.com>; <ambassy.com>; <andriods.com>; <arilines.com>; <asthama.com>; <asume.com>; <attoreys.com>; <attornie.com>; <batterys.com>; <benifets.com>; <bibile.com>; <calandar.com>; <catolic.com>; <classifields.com>; <colllege.net>; <cometology.com>; <convertion.com>; <copuons.com>; <coupoons.com>; <creidtcards.com>; <cristian.com>; <deoderant.com>; <disabilty.com>; <disibility.com>; <facuet.com>; <fitnes.com>; <flemarket.com>; <freemuisc.com>; <furnitute.com>; <headaces.com>; <hemorroid.com>; <lotery.com>; <moblephones.com>; <partysuplies.com>; <partysuply.com>; <pattent.com>; <promdrsses.com>; <reantals.com>; <recepie.com>; <reigions.com>; <resaraunt.com>; <restauraunts.com>; <resteurant.com>; <saphires.com>; and <satifaction.com>.”

While recognizing that the use of a domain name for PPC revenue generation may be a legitimate activity for the purposes of the Policy, panels have repeatedly rejected the proposition that there is an absolute right to operate a PPC landing page based on a domain name which has as its primary meaning a descriptive term. Rather, as the three member panel observed in Balglow Finance S.A., Fortuna Comércio e Franquias Ltda. v. Name Administration Inc. (BVI), WIPO Case No. D2008-1216:

“[…] those who register domain names in large numbers for targeted advertising, often using automated programs and processes, cannot simply turn a blind eye to the possibility that the names they are registering will infringe or violate third-party trademark rights. See, e.g., Grundfos A/S v. Texas International Property Associates, WIPO Case No. D2007-1448; mVisible Technologies Inc. v. Navigation Catalyst Systems, Inc., WIPO Case No. D2007-1141; Mobile Communication Service Inc. v. WebReg, RN, WIPO Case No. D2005-1304.”

The learned three member Panel explained:

“These Panel decisions are firmly grounded in an appreciation that paragraph 2 of the Policy requires registrants to make reasonable efforts to ensure they are not infringing upon third-party rights.

Moreover, as has been recognized in both Asian World of Martial Arts Inc., supra, and mVisible Technologies Inc., supra, many domain names have both dictionary word meanings and trademark-related meanings.

The disputed domain name at issue here falls into this category.

Bringing to bear the force of these Panel decisions in the context of this case, where the Respondent has not indicated that it explored the possibility of third-party rights before registering the disputed domain name, the Panel concludes that to establish rights or legitimate interests in the domain name the Respondent must come forward with credible evidence that the disputed domain name was registered because of its attraction as a generic or descriptive term, and not because of its value corresponding to a trademark, and credible evidence that there has been no use of the domain name inconsistent therewith.

“Simply stated, to demonstrate rights or legitimate interests under paragraph 4(c) of the Policy, it is not sufficient for the Respondent merely to show that the domain name has a commonly understood or descriptive meaning, while turning a blind eye to the use of the domain name with a pay-per-click landing page containing links to ads that relate at least in part to a trademark (as opposed to merely the generic or descriptive meaning of the domain name).

While the Panel acknowledges that the Respondent has used the disputed domain name to target paid advertising keyed to the domain name’s generic or descriptive meaning, the domain name also has been used to attract paid advertising that appears in part related to the CHILLI BEANS trademark (as opposed to any merely generic or descriptive meaning). In the Panel’s opinion, it is immaterial that this may be the result of the Respondent’s use of an automated relevance-matching system and advertising retrieval software that even the Respondent acknowledges is incapable of distinguishing between the generic or descriptive meaning and any trademark-related meaning.

Turning to the present case, the Panel observes that the disputed domain name is not in fact a descriptive or dictionary term. It is an invented or coined term – according to the Respondent being a combination of “hobby” and “exhibit” or “exhibition”. T

hat itself is a distinguishing factor from the “hobby” and “typographical” examples advanced by the Respondent and set out above.

In addition, all of the “hobby” examples include both syllables of the word and all of the “typographical” examples are obviously misspellings of the descriptive term or phrase rather than portmanteau constructions. Further, the Complainant has submitted evidence showing that, before the Complainant sent a cease and desist letter to the Respondent, the website featured links in Swedish to businesses in the same line as the Complainant, but which were not associated with the Complainant.

 

The Respondent says that the links vary from country to country and, in any event, it has no control over what links are placed.

As noted above, the illustration included in the Response features links for a range of activities which appear to be wholly outside the Complainant’s field.

The illustration, however, is of the website after the Complaint had been filed.

Moreover, the links do not appear to have anything to do with the asserted descriptive meaning or association of the disputed domain name.

Further, as the extracts from Balglow Finance S.A., Fortuna Comércio e Franquias Ltda. v. Name Administration Inc. (BVI), supra, show, a Respondent cannot absolve itself of any responsibility for the selection of links by leaving that to the unconstrained choice of the website host or PPC service provider.

In these circumstances, the Panel finds that the Complainant has established a prima facie case that the Respondent does not have rights or legitimate interests in the disputed domain name under the Policy and, further, the Respondent’s justification of its position does not rebut that case. Accordingly, the Panel finds that the Complainant has established the second limb under the Policy.

D. Registered and Used in Bad Faith

Under the third requirement of the Policy, the Complainant must establish that the disputed domain name has been both registered and is being used in bad faith by the Respondent.

The use of the disputed domain name for a landing page for PPC links to businesses in the Complainant’s field but not associated with it satisfies in this case the requirement of use in bad faith.

 

The Panel also accepts that typically a finding of registration in bad faith requires demonstration, either explicitly or circumstantially, that the Respondent did have some awareness of the complainant’s trademark before registering the disputed domain name.

On this part of the case, the Respondent has filed a declaration by the Respondent’s director of finance declaring that the disputed domain name was registered without any knowledge of the Complainant, its website, its business name or trademark and, as noted above, stating that the disputed domain name was registered for its purely descriptive significance. The Respondent also points out that it registered the disputed domain name four years before the Complainant registered its trademark.

In finding registration and use of the domain name <chillibeans.com> in bad faith, the learned three member panel in Balglow Finance S.A., Fortuna Comércio e Franquias Ltda. v. Name Administration Inc. (BVI), supra, noted:

“There are circumstances, however, where an unwavering adherence to conventional wisdom may unduly and unnecessarily frustrate the fundamental purposes of the Policy.

This is clearly the teaching of Panel decisions holding that that those who register domain names in large numbers for targeted advertising through the use of automated programs and processes cannot be willfully blind to the possibility that the names they are registering will infringe or violate third-party trademark rights.

Indeed, the application of conventional wisdom to what once might have been considered an unconventional use of a domain name, but which today has become increasingly commonplace, would in effect render paragraph 2 of the Policy a nullity in such cases.

As noted by the panel in Mobile Communication Service Inc. v. WebReg, RN, supra, where a respondent registers large swaths of domain names through the use of automated programs that snap up domain names as they become available, with no attention whatsoever to whether they may be identical or confusingly similar to trademarks, such practices may support a finding that the respondent is engaged in a pattern of conduct that deprives trademark owners of the ability to register domain names reflecting their marks.

Under such circumstances, a claim of ‘no actual knowledge’ may not obviate a respondent’s ‘willful blindness’ to the existence of such third-party rights. Rather, those who register domain names in large numbers for targeted advertising through automated programs and processes must make reasonable good faith efforts to avoid registering and using domain names that are identical or confusingly similar to marks held by others.

In this Panel’s view, whether such good faith efforts have been undertaken by a respondent in any give case is best determined from the pertinent facts and circumstances reflected in the record of that case, bearing in mind that the burden of proof respecting all three elements of the Policy always rests with the complainant.”

The Respondent does not claim to have made any attempt to ascertain whether its use of the disputed domain name would or could infringe another’s trademark rights. Rather, it states that it believed no one could claim exclusive rights in the term “hobbex” because of its descriptive nature.

 

The Complainant, however, was using its trademark for many years before it secured its registration.

Further, as explained above, the Panel does not accept that the disputed domain name is a purely descriptive term and notes further that, even on the Respondent’s case, the disputed domain name is not in fact being used for its claimed descriptive significance. Moreover, there is clear evidence that the disputed domain name was being used before any objection was raised by the Complainant to take advantage of the trademark significance of the term “hobbex”.

In these circumstances consistently with the approach of many previous panels dealing with such cases, the Panel finds that the Complainant has established that the disputed domain name has been registered and is being used in bad faith.

Insofar as the Respondent invokes delay or laches, that is also not typically a defence: WIPO Overview 2.0, paragraph 4.10. Further, where, as here, the term in question is a coined term and not a descriptive term and there is no evidence that the Respondent has relied to its detriment on the Complainant’s inaction,¹ the Panel would not treat this case as an exception to the usual rule

Neil A. Smith filed this dissenting option:
I respectfully dissent, on the ground that I do not believe the Complainant has sustained its burden of proving that the disputed domain name was registered in bad faith. While the Complainant has proven ownership of Swedish Trademark No. 0381572, such registration was filed for and made many years after the registration of the domain name at issue, on February 1, 2002.

The application for this trademark was filed on February 20, 2006 and it was registered on June 16, 2006.

This dispute here was initiated in late 2013.

 

The majority assumes that “Given the length and extent of use, it is also likely that the Complainant would have protectable rights under Swedish law as an unregistered trademark including under the Swedish law concerning misleading market practices.”

However, while such unregistered trademark rights might exist under Swedish law, I do not know this to be the case, and, particularly, the Complainant has not made this argument or cited any Swedish authority for the proposition of law. I cannot presume that even if such is within what I would call the “common law” of Sweden, I cannot find that the Respondent should have or would have had such knowledge of the rights of mere user of a mark in Sweden, so as to make its acquisition of the domain name in bad faith under the Policy here

When the domain name was registered, the HOBBEX trademark was not yet registered in Sweden.

It is one thing to presume, perhaps, that registration is in bad faith if an identical trademark has been previously registered in a country different from that of the applicant or owner.

I cannot extend that assumption to the mere use of a trademark, even for a long time, in a faraway country.

As the panel noted in Trade Me Limited v. Vertical Axis, Inc., WIPO Case No. D2009-0093: “Certainly no trademark search in July 2001 would have revealed the Complainant’s trademarks since they were not registered until early 2004. And whilst we think it would not suffice for the purposes of the Policy, there is nothing in the provided record to establish that the Respondent actually knew, reasonably should have known, or could have any constructive notice of the Complainant’s common law rights in the trademark TRADEME mark at the time the Respondent acquired the disputed domain name.”

Here we have a sworn statement filed here on behalf of the Respondent that it was unaware of the Complainant and its use at the time of the acquisition of the domain name, which states, in part: “We did not register the Disputed Domain with Complainant’s trademark in mind and had no knowledge of Complainant, its website, its business name or trademark when we registered the domain name almost twelve (12) years ago.” Declaration of L. Wilfred-Boyce.

While I do not find the strict application of equitable laches, I agree with the Respondent that it is notable that the Complainant waited almost twelve years (6 years from the date it registered its trademark in Sweden) to initiate this Complaint.

As previous panels have noted, such a long delay in taking action can raise an inference that the Complainant did not truly believe the disputed domain name was registered in bad faith.

Accordingly, I would find that Complainant has failed to demonstrate that the disputed domain name was registered in bad faith, and would deny the Complaint on this basis