Demonstrable Preparations Defence in Domain Name Disputes

June 10, 2024

As discussed in previous posts, the Uniform Domain Name Dispute Resolution Policy (UDRP or the Policy) is a swift method for the solving of disputes concerning abusive registration of Internet domain names.

To succeed in a UDRP complaint, a trademark owner must prove three cumulative conditions: (i) that the disputed domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; (ii) that the respondent has no rights or legitimate interests in respect of the disputed domain name; and (iii) that the disputed domain name was registered and is being used in bad faith.

With respect to the second element above, paragraph 4(c)(i) of the Policy provides that a use is legitimate also if, prior to commencement of a dispute, the respondent made demonstrable preparations to use the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services.

According to UDRP panels “non-exhaustive examples of prior use, or demonstrable preparations to use the domain name, in connection with a bona fide offering of goods or services may include: (i) evidence of business formation-related due diligence/legal advice/correspondence, (ii) evidence of credible investment in website development or promotional materials such as advertising, letterhead, or business cards (iii) proof of a genuine (i.e., not pretextual) business plan utilizing the domain name, and credible signs of pursuit of the business plan, (iv) bona fide registration and use of related domain names, and (v) other evidence generally pointing to a lack of indicia of cybersquatting intent. While such indicia are assessed pragmatically in light of the case circumstances, clear contemporaneous evidence of bona fide pre-complaint preparations is required.” (WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Third Edition, section 2.2)

Recent cases where demonstrable preparations were proven

In a recent WIPO case concerning the domain name <goin.com>, the respondent, a Germany based software company, argued, in addition to other aspects, that it intends “to use the disputed domain name for a project called “goin.com” (as short for “goin’” or “going”) that is in the works since Respondent acquired the disputed domain name in 2014, with the mark up of the “goin.com” landing page existing since then on a hidden subpage and ongoing talks with investors for this project, whose further development has been delayed, but not abandoned. Since January 2021, both Respondent’s Twitter and Reddit accounts are linked to the index page of the website under the disputed domain name and a technical prototype of such website is still being worked on, but not yet fully developed, which is why a full launch is not yet possible and which is why the concept has still to be kept confidential.”

While the panel noted that it is highly disputed between the parties if the respondent indeed made preparations to use the domain name in dispute, it held that the respondent successfully provided evidence for preparations to use the domain name in dispute for a bona fide offering of goods or services unrelated to the complainant, its business or trademark.

To reach this conclusion, the panel took into account the evidence submitted by the respondent, such as screenshots of the “so-called “FTP (File Transfer Protocol) folder” demonstrating that mockup subpages to a website under the disputed domain name have been set up in June 2014, thus shortly after the acquisition of the disputed domain name”, and evidence of contractual arrangements between the respondent and staff members in relation to the “goin.com” project.

The fact that the respondent had opened up a Reddit account “reddit r/goin” after the registration of the domain name in dispute and also established a Twitter account “@goin_com” were also taken into account by the panel. With the overall circumstances of the case, and also given the nature of the domain name, consisting of a four letter combination “goin” that has a broad meaning, the panel, while recognising the time passing since the acquiring of the domain name by the respondent in 2014 and the date of the complaint, gave prevalence to the evidence on file with respect to the preparation to use.

In another recent WIPO case, concerning the domain name <akrosgroupllc.com>, the panel considered that paragraph 4(c)(i) of the Policy applies, as the respondent proved it intends to use the domain name in dispute in relation to a start up business in the healthcare sector. The panel took into account the fact that the respondent had registered a company, Akros Group LLP, and that the “the Complainant does not allege that Akros Group LLC is a sham or fraudulent company, or assert that this company was established for an improper purpose. There is no evidence before the Panel to suggest that Akros Group LLC is not a bona fide startup business.”

As discussed in an earlier post, rights in a company name by respondents might be considered within the second element of the Policy either to prove they are commonly known by the domain name (under article 4(c)(ii) of the Policy), or that they are making a bona fide offering of goods or services (under article 4(c)(i) of the Policy), or both. In the above case the defence was considered under paragraph 4(c)(i) of the Policy concerning bona fide offering of goods or services.

Similar solution in older cases concerning e.g. the domain name <asbach.com>, where evidence such as joint venture agreements or proof of the respondent having registered other domain names incorporating other similar geographical identifiers were considered; similar solution in the case concerning the domain name <ushuaiavoyages.com>.

Recent cases where allegations of bona fide preparations were denied

In a recent WIPO case the complainant, Sony Corporation, the well-known Japanese company acting, inter alia, in the field of consumer and professional electronics, filed to recoup the domain name <sonyzee.com>.

The respondent argued that the website is under progress but claimed it was used at some point for jewellery related business. He also claimed to be working on the development of an app. The respondent also claimed he is a “small business man who lacks funds and exhibits an email he apparently sent to Goldman Sachs in India dated September 22, 2015 which appears to attach a business plan (“Sonyzee BPlan”) although the business plan itself has not been provided to the Panel”.

The evidence before the panel did not show any trading activities by the respondent’s company. As to the type of evidence the panel would have expected, the panel indicates as example “accounts showing trading activity, copies of invoices, advertising and promotional material, copies of relevant website material, evidence from actual customers and so on”, which the panel did not find in the record. Also, the panel found no website activity even if the respondent argued it has used the domain for an active website back in 2015-2016. As for the claim by the respondent that he has been working on the development of an app called YOYOSM, the panel found no information in the record on such app and what connection it has with the domain name in dispute.

The panel concluded that “the Respondent’s case is entirely based upon conclusory statements unsupported by any real evidence, and such evidence as does exist (for example the company accounts and the absence of content on the “wayback machine”) all suggest that there has been no trading activity”.

In a similar case concerning the domain name <vrbo.homes>, the respondent argued she was planning to use it for a business involving virtual reality for the real estate industry, but the panel found no evidence in the record for the statements regarding the alleged planned business. The composition of the domain name, identical to the complainant’s trademark, also casted doubt on the respondent’s explanation on the intended use. A similar solution in an older case concerning the domain name <happydiamonds.com>.

Takeaways

The evidentiary threshold on demonstrable preparations is not high: as UDRP panels have held, “even perfunctory preparations have been held to suffice”.

Nevertheless, evidence should be brought by respondents, or their defence might not overcome the prima facie case that complainants should make to succeed under the second element of the Policy on the lack of rights or legitimate interests of the respondent in the domain name at issue. As also stipulated in the WIPO Overview of panels decisions, “acknowledging that business plans and operations can take time to develop, panels have not necessarily required evidence of such use or intended use to be available immediately after registration of a domain name, but the passage of time may be relevant in assessing whether purported demonstrable preparations are bona fide or pretextual.” (WIPO Overview 3.0, section 2.2)

About Me

Mihaela Maravela is an experienced international arbitration counsel, commercial arbitrator and domain name panelist. She also acts as a transactional lawyer.

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