Sale of counterfeit goods harm the trademark owner, who invested time and money in developing and marketing its trademark. In addition, sale of counterfeit products might also harm consumers, including children, in case of dangerous small parts, or toxic materials. Counterfeited cosmetics or alcoholic beverages might also contain substances that are detrimental to consumer health. Moreover, sale of counterfeit electronic goods might pose a risk of fires or explosions.
Given the proliferation of online sales, the pandemic having a significant influence in that respect, protection against online counterfeiting is key.
In addition to relying on cooperation with competent authorities in the field (customs, police, consumer protection authorities, etc) and filing court claims, and in addition to other remedies, such as claims directed at the online platforms, trademark owners have access to a swift remedy to fight online counterfeiting activities.
Such remedy, available to trademark owners under certain conditions, is the swift UDRP procedure. I discuss in general terms the conditions to access this ADR tool in a previous post.
In this post I will look into practical probative issues that trademark owners should keep in mind when filing a UDRP complaint in case of counterfeit activities, with examples from recent UDRP case law. I will focus on the second and the third element of the UDRP, relevant for the discussion.
The Second Element: Lack of Rights or Legitimate Interests in the Domain Name
According to WIPO Overview 3.0, “Panels have categorically held that the use of a domain name for illegal activity (e.g., the sale of counterfeit goods or illegal pharmaceuticals, phishing, distributing malware, unauthorized account access/hacking, impersonation/passing off, or other types of fraud) can never confer rights or legitimate interests on a respondent.”
Probatory Aspects: Overview
In terms of establishing the facts, the consensus view of UDRP panels is that the burden of proof in establishing no rights or legitimate interests in respect of the domain name rests with the complainant in as far as making out a prima facie case that the respondent lacks rights or legitimate interests. Once such prima facie case is made, the burden of production shifts to the respondent, given the difficulty that complainants can have in proving a negative.
In case of counterfeit allegations, conclusory allegations are unlikely to be sufficient. To discharge the burden of proof, the complainants should submit a well pleaded case, supported with appropriate evidence.
If the above conditions are met, and depending on the factual circumstances of each case, the panels are prepared to accept circumstantial evidence that the goods are counterfeit.
Circumstantial Evidence: Recent Examples
Examples of recent cases include those where the prices of the goods sold at the respondent’s website were heavily discounted compared to the original products.
For instance, in the UDRP case concerning the domain name <rickowensvente.com> directed at RICK OWENS trademark, the panel has held with respect to the second element that:
“[t]he Panel notes that a simple comparison of prices should be sufficient to assess whether the products being offered through the website at the disputed domain name are counterfeit. The Panel took as an example, ankle boots, and compared the prices. On the Complainant’s website, the prices for such products are above EUR 1,000. Similar products are offered on the website to which the disputed domain name resolves for prices ranging between EUR 266 and 284. This means that the products are sold for almost quarter of the price of the products offered on the Complainant’s website. Therefore, it is only reasonable to conclude that these are counterfeit products. As a result, the Panel finds that the website to which the disputed domain name resolves offers counterfeits of the Complainant’s products.”
A similar solution in the UDRP case concerning the domain name <shopthefrankie.com> directed at the trademark THE FRANKIE SHOP, where the panel has held that: “[t]he Panel notes that the website is offering for sale what purport to be the Complainant’s products at very substantially discounted prices, which is consistent with the products in question being counterfeit.”
Application of Oki Data Principles: Recent Examples
In cases where panels are reluctant to accept unsupported (or not adequately supported) allegations of counterfeiting, including circumstantial evidence, they tend to apply the Oki Data test long established by the decision in the Oki Data case.
The mentioned test (normally applied to resellers cases) involves the existence of the following four cumulative conditions:
(i) the respondent must actually be offering the goods or services at issue;
(ii) the respondent must use the site to sell only the trademarked goods or services;
(iii) the site must accurately and prominently disclose the registrant’s relationship with the trademark holder; and
(iv) the respondent must not try to “corner the market” in domain names that reflect the trademark.
As such, even if the goods were genuine, if the website at the domain name does not respect all the Oki Data principles above, the panel would conclude that the respondent lacks rights or legitimate interests with respect to the domain name, as it is not used in connection with a bona fide offering of goods or services.
For example, in the recent UDRP case concerning the domain name <g-styleusa.com> directed at the trademark G-STYLE USA, the panel concluded that:
“[e]ven if the products sold by the Respondent were the Complainant’s genuine products, from inspection of the Respondent’s website, the Panel finds that the use of the Complainant’s trademark and the lack of any disclaimer would falsely suggest to Internet users, under the Oki Data principles (see above), that the website to which the disputed domain name resolves is owned by the Complainant or at least affiliated to the Complainant, a fact also confirmed by the many email complaints sent to the Complainant by its clients.”
A similar solution in the recent UDRP case concerning the domain name <damartfr.online> directed at the trademark DAMART, where the panel did not took into account the circumstantial claim that the products are offered disproportionally below market-value. The panel applied the Oki Data test instead and concluded that the domain names were not used in connection with a bona fide offering of goods or services as “[f]rom inspection of the Respondent’s websites, the Panel finds that the use of the Complainant’s trademark and logo and the lack of any disclaimer would falsely suggest to the Internet users, under the Oki Data principles (see above), that the websites to which the disputed domain names resolved are owned by the Complainant or at least affiliated to the Complainant.”
A similar application of the Oki Data test in the recent UDRP case concerning the disputed domain name <therickowensshop.com> directed at the trademark RICK OWENS, where the panel has found no evidence that the goods sold at the website to which the disputed domain name was redirecting Internet users are counterfeit.
The Third Element: Registration and Use in Bad Faith
Evidence of Counterfeiting under the Second Element
In cases where panels conclude that the products are counterfeit under the second element, the panels would also conclude that the use of a website for offering counterfeit goods is bad faith use in the overall circumstances of the case.
For example, in the WIPO case concerning the domain name <rickowensvente.com>, the panel has held that:
“[t]here are many indications that the disputed domain name is registered and is being used in bad faith. The nature of the disputed domain name suggests affiliation with the Complainant as it incorporates the Complainant’s trademark in full. The use of the term “vente” reinforces the impression that the website at the disputed domain name is the Complainant’s website for selling its products online as the word “vente” means “sale” in French. The disputed domain name resolves to a website, which offers counterfeits of the Complainant’s products. As such, the disputed domain name suggests affiliation with the Complainant in order to attract Internet users and offer counterfeit products. It has been found by prior UDRP panels that the use of a website for offering counterfeit goods is bad faith use.”
A similar solution in the UDRP case concerning the domain name <shopthefrankie.com>.
Application of the Oki Data Test under the Second Element
In cases where panels applied the Oki Data test under the second element, they would consider that circumstance as bad faith use in the overall circumstances of the case.
For example, in the recent UDRP case concerning the domain name <danfosscompressors.com>, the panel has held that:
“[t]he Respondent registered the Domain Name for the purposes of operating a website specifically to sell either the Complainant’s products or counterfeit products that compete with the Complainant’s products. The Respondent is using the Domain Name that is confusingly similar to the DANFOSS Mark to sell products, be they genuine or otherwise, in competition with the Complainant and without the Complainant’s approval and without meeting the Oki Data test. Moreover, an individual viewing the Domain Name may be confused into thinking that the Domain Name refers to a website in some way connected to the Complainant.
Consequently, the Panel finds that the Respondent has intentionally attempted to attract, for commercial gain, Internet users to its website by creating a likelihood of confusion with the Complainant and the Complainant’s DANFOSS Mark as to the source, sponsorship, affiliation, or endorsement of the Respondent’s Website.”
Takeaways
Trademark owners can use UDRP as an efficient alternative dispute resolution tool in their efforts against counterfeiting activities in the online area.
Nevertheless, trademark owners should submit a well pleaded case supported with adequate evidence if they allege counterfeit activities on the website at the domain name they reclaim.
