In a recent decision issued under the UDRP, the complainant succeeded in its request for the transfer of a domain name consisting of dictionary terms that was registered for resale by a company that was in the business of buying and selling domain names comprised of descriptive terms, common phrases, and combinations thereof. The panel has held that the respondent registered the domain name in dispute to target the complainant: not for its dictionary meaning, but because of its value as a source identifier of the complainant’s products.
The complaint was filed by Khadi & Village Industries Commission, from India. The complainant relied on the trademark KHADI for which it has obtained various national and international trademark registrations.
The respondent was a domain name trader. The domain name <khadiindia.com> was registered on May 17, 2015; at the time of the complaint it was offered for sale for USD 294,888.
The complainant argued, with respect to the second and the third element of the Policy, that the respondent has failed to make any bona fide use of the domain name and that the respondent’s primary aim is to sell or transfer the domain name in dispute to the complainant or any third party, for valuable consideration. The complainant also argued that the fame of the KHADI trademark and its long-standing use make it extremely unlikely that the respondent created the disputed domain name independently, without any knowledge of the complainant’s trademark.
The respondent filed a response, arguing that its use of the disputed domain name in connection with the business of reselling premium domain names (comprised of descriptive, geographic, and generic terms, common phrases, and combinations thereof) is a bona fide offering of goods or services. The respondent believed the term “Khadi” to be a generic term for a garment worn in India, without knowledge of the complainant and its trademark.
The respondent argued it registered the domain name in good faith, for the potential resale value of a domain comprised of a generic term for a common item clothing and the geographical designation for where such garments are worn. The respondent also argued that it acquired the domain name in dispute well before the complainant filed its first trademark application in the United States, where the respondent is located, and that the complainant offered no proof that its trademark was famous in the United States at the registration of the domain name in dispute.
The panel allowed the complainant’s request for the transfer of the domain name in dispute.
With respect to the second element of the Policy, the panel has held that the respondent has not used the domain name in dispute in connection with the alleged dictionary meaning. It only offered it for sale. The panel also noted that the respondent has failed to prove that “khadi” is a dictionary term, while the complainant has proved that KHADI is a registered trademark in a number of jurisdictions in relation to items of clothing from India.
As regards the third element of the Policy, the panel has held inter alia that the evidence on the record shows that the respondent registered the domain name in dispute because of the value of “khadi” as a source identifier of certain type of products (i.e. the complainant’s products). It also held that the respondent acquired the domain name in dispute not for use in connection with its relied-upon meaning, but for the purpose of selling it.
Also, as the domain name is registered under “the global (and globally-accessible) gTLD “.com””, the respondent should have checked outside the US boarders for conflicting trademarks, especially in India as the domain name included “India”.
The panel also considered that the value at which the domain name in dispute was offered for sale was quite significant, which makes it more likely than not that “the respondent’s intentions would have been to find a buyer such as the complainant (or possibly a competitor) who would value the name for its relation to the related trademark”.
The decision is important, as it underscores what it takes for complainants to succeed in cases where the domain names in dispute have a(n alleged) dictionary meaning and which are registered by domainers for resale.
The Second Element: Rights or Legitimate Interests
With respect to the second element, the WIPO Overview 3.0 provides inter alia that:
“In order to find rights or legitimate interests in a domain name based on its dictionary meaning, the domain name should be genuinely used, or at least demonstrably intended for such use, in connection with the relied-upon dictionary meaning and not to trade off third-party trademark rights.” Section 2.10, WIPO Overview 3.0
Dictionary terms are considered valuable as an investment for resale. Nevertheless, panels usually view such situation as insufficient to confer rights or legitimate interests unless the respondent has taken steps, for example, to develop a website (e.g. decision in the WIPO case no. D2021-2174 concerning the domain name <hotelbnb.com>).
In other cases, panels tend to analyse the situation in more detail under the third element of the Policy and do not enter a definitive finding under the second element; they consider at the same time that the listing for sale of the disputed domain name falls short of the type of abusive use as alleged by the complainant (e.g. decision in the WIPO case no. D2021-1850 concerning the domain name <thehypecompany.com>).
Panels have also held that acquisitions of domain names by domain name investors would normally be legitimate as long as no third-party trademarks are targeted (e.g. decisions in the WIPO cases no. DME2021-0010, concerning the domain name <zing.me>, no. D2021-3011, concerning the domain name <azulmusic.com>).
The decision in the Khadi case discussed here is important, as it underscores that in cases where respondents rely on use to prove rights or legitimate interests in a disputed domain name consisting of dictionary terms, simply putting the domain name for sale does not represent bona fide use.
The Third Element: Registration and Use in Bad Faith
With respect to bad faith registration, Section 3.2.2 of the WIPO Overview 3.0 provides inter alia that:
“where the complainant’s mark is not inherently distinctive and it also corresponds to a dictionary term or is otherwise inherently attractive as a domain name (e.g., it is a short combination of letters), if a respondent can credibly show that the complainant’s mark has a limited reputation and is not known or accessible in the respondent’s location, panels may be reluctant to infer that a respondent knew or should have known that its registration would be identical or confusingly similar to the complainant’s mark.”
As regards bad faith use, Section 3.1.1 of the WIPO Overview 3.0 provides inter alia that:
“Generally speaking, panels have found that the practice as such of registering a domain name for subsequent resale (including for a profit) would not by itself support a claim that the respondent registered the domain name in bad faith with the primary purpose of selling it to a trademark owner (or its competitor).
Circumstances indicating that a domain name was registered for the bad-faith purpose of selling it to a trademark owner can be highly fact-specific; [..]
Particularly where the domain name at issue is identical or confusingly similar to a highly distinctive or famous mark, panels have tended to view with a degree of skepticism a respondent defense that the domain name was merely registered for legitimate speculation (based for example on any claimed dictionary meaning) as opposed to targeting a specific brand owner.”
Applied in practice, panels have denied complaints where the domain name in dispute consisted of dictionary words and the complainants have failed to prove that the respondent was aware of the complainant or its trademark or that the respondent had an intention to create confusion and/or capitalize on the value of the complainant’s trademark to attract Internet users to its website for financial gain, noting also that the complainant’s trademark is not a highly distinctive trademark (e.g. decisions in the WIPO cases no. D2021-0997 concerning the domain name <chinaarm.com>, D2021-2174, concerning the domain name <hotelbnb.com>, D2021-1850, concerning the domain name <thehypecompany.com>).
Indeed, the less distinctive the trademark, the harder it is for the complainants to establish that the domain name was chosen for its trademark rather than dictionary value.
In Khadi, the panel considered relevant when allowing the complainant’s complaint the fact that the respondent alleged in its response that it registered the disputed domain name as a reference to a “common item of clothing worn in India and the geographic designation for where such garments are worn”, which was considered as a reference to the complainant’s products.
The panel concluded that “the evidence before the Panel is that the Respondent registered the disputed domain name because of the value of “khadi” as a source identifier of certain type of products (in this case, the Complainant’s products).”
The panel also took into account the significant amount of money for which the domain name was put to sale and the fact that the respondent should have known of the complainant’s trademark as it had a duty to look outside the US boarders to find about conflicting trademark rights.
As the Policy was designed to fight cybersquatting, for a complainant to succeed it must provide evidence that the respondent has targeted the complainant and its trademark.
To succeed in a UDRP case, complainants should prove that their dictionary term trademark has become distinctive and associated with the complainant, that it was well-known at the registration of the domain name in dispute, that the respondent should have been aware of the trademark at the registration of the domain name.
The less distinctive the trademark, the higher is the evidentiary threshold for the complainants to succeed.
In a previous post I discuss the particularities of UDRP cases where domain names with dictionary meaning are used to host PPC pages.