Bad Faith in UDRP domain name complaints

In-depth analysis

UDRP complaints are a necessary part of any brand protection strategy. Here, we look at the requirement to prove bad faith for a successful UDRP complaint, including some recent decisions.

What are UDRP complaints?

Uniform Dispute Resolution Policy (UDRP) complaints are a World Intellectual Property Office (WIPO) vehicle for cancelling domain names which infringe on other's trade mark rights. UDRP complaints are available against generic top-level domains (gTLD) such as .com and .net – complaints about other domain names must be filed with the relevant authority.

During proceedings, the domain is locked and not able to be transferred. The case is decided by the Internet Corporation for Assigned Names and Numbers (ICANN) who has the power to order that the domain name be transferred to the Complainant if the complaint is successful. All domain name registrars are bound by the UDRP and will transfer domains if ordered to do so.

What needs to be proved for a successful UDRP complaint?

To be successful in a complaint under the UDRP, a complainant must satisfy each of the following three requirements under Paragraph 4(a):

the domain name registered by the respondent is identical, or confusingly similar, to a trademark or service mark in which the complainant has rights

the respondent has no rights or legitimate interests in respect of the domain name

the domain name has been registered and is being used in bad faith.

We will explore ground (3) in further detail with some recent case law which illustrates what constitutes bad faith and when bad faith is not found.

What does the WIPO guidance say about bad faith?

The guidance is as follows:

For each of the Domain Names, paragraph 4(b) of the Policy provides that the following circumstances, “in particular but without limitation”, are evidence of the registration and use of the Domain Name in “bad faith”:

Circumstances indicating that Respondent has registered or has acquired the Domain Name primarily for the purpose of selling, renting, or otherwise transferring the Domain Name registration to a Complainant who is the owner of the trademark or service mark or to a competitor of that Complainant, for valuable consideration in excess of its documented out of pocket costs directly related to the Domain Name.

That Respondent has registered the Domain Name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that Respondent has engaged in a pattern of such conduct.

That Respondent has registered the Domain Name primarily for the purpose of disrupting the business of a competitor.

That by using the Domain Name, Respondent has intentionally attempted to attract, for commercial gain, Internet users to Respondent’s website or other online location, by creating a likelihood of confusion with Complainant’s mark as to the source, sponsorship, affiliation, or endorsement of Respondent’s website or location or of a product or service on Respondent’s website or location.

Although this list is not exhaustive, bad faith largely concerns whether the domain name registrant is unfairly targeting the legitimate owner of the trade mark in some way. Importantly, a UDRP complaint requires both bad faith use and registration (in contrast to a Nominet dispute which does not require both).

How has the guidance been applied in practice?

Hemlock Farms Community Association v Emma Djiya – good faith acquisition negates bad faith

The Complainant, Hemlock Farms, is a longstanding gated real-estate community in the USA. It owns a trade mark registration for the same name and has been using the domain name hemlockfarms.org since 2000.

The Respondent owned a business which operated buying and selling homes in the development. It claimed to have purchased the domain names hemlockfarms.com, hemlockfarms.net and hemlockfarmspa.com when it purchased an estate agency, ARE Hemlock. It therefore claimed that it had acquired the domain names in good faith.

Two of the domains, hemlockfarms.com and hemlockfarms.net, redirected to the Respondent's other websites; the hemlockfarmspa.com domain name was not active.

The Complainant was unable to show that the Respondent had acted in bad faith. On the facts, the Respondent had, in good faith, purchased the domains when it purchased the estate agency. At least one of the domain names in question had been used by the estate agency (or its predecessors) since about 2000 without objection from the Complainant. The Respondent itself had been using the domains for over a decade without being approached by the Complainant.

The case illustrates that it is the date on which the Respondent acquires a domain name (not on which the domain name was first registered) that the Panel will assess bad faith. A good faith acquisition might therefore negate a bad faith argument.

The Panel specifically stated that trade mark infringement arguments were not appropriate in this forum, and it should be remembered that UDRP claims are not the same as trade mark claims. The bad faith claim was denied, and the UDRP complaint failed.

Datacap Systems v Domain Admin, XYZ Invest – use of drop catch service to acquire domain can be permissible

In this case, the Respondent had registered the domain name datacap.com in July 2022 through a "drop catch" service – a service that will quickly acquire a domain name when it becomes available. The Respondent was in the business of buying and selling domain names. By September 2022, the datacap.com domain name pointed to a website offering it for sale and containing links to competitors of the Complainant.

The Complainant had provided payment processing services under the DATACAP brand since about 1983. It had applied to register the brand as a US trade mark in October 2022. Since this was after the Respondent had acquired the domain name, it was deemed irrelevant. However, the Complainant was shown to have common law rights in the DATACAP name.

The Respondent denied knowledge of the Complainant and said that it used the WIPO global brands database to ensure that it did not acquire domain names conflicting with other parties' rights. It had not come across the Complainant's business since it did not - at the time the domain was acquired - have a pending trade mark application.

Since the Respondent had made an effort to ensure it was not acting in bad faith when acquiring the domain and there was no evidence that DATACAP was uniquely associated with the Complainant, the bad faith claim failed (although the Panel acknowledged that this was a "fairly close call").

Given that, largely, a Claimant must show that the Respondent had it in mind or was targeting it when acquiring the domain name, it can be seen why this particular claim failed. The fact that the domain name was not particularly distinctive or necessarily unique to the Complainant was also a relevant factor. Previous cases have held that, “Trademark rights alone do not demonstrate the Respondent’s requisite knowledge or targeting. Especially is that so when the mark is descriptive.”

Sanosil v Ammar Matouk and SANOSIL MENA Detergents & Disinfectants – does lack of knowledge and lack of permission mean bad faith?

The evidence in this case showed that the domain name was registered by the Respondents in contemplation of a joint venture agreement between the Complainant, Sanosil AG, and the Respondents. There is now an ongoing dispute regarding termination of this agreement by the Complainant.

The Complainant argued that it did not know about the domain name registration and did not give the Respondent's permission to register it. There was no express prohibition in the joint venture agreement regarding registration of domain names.

The Panel expressly stated that, in order for this to be bad faith, the Respondent would have had to have acted maliciously, for example, with a view to diverting business from the Complainant or taking unfair advantage of its rights. In this case, there was no evidence of that, and the Respondent would not have known or contemplated the acrimonious nature of the dispute when it registered the domain name.

The Panel rejected the Complainant's arguments that bad faith should be applied retroactively, stating that it is not appropriate to impose malicious intent on something that was not malicious at the time, but now could be considered tainted due to the relationship breakdown between the parties.

The Complainant was unable to prove that the domain was registered in bad faith, and the alleged breaches of the Joint Venture agreement which led to the relationship breakdown are not within the scope of the UDRP. Lack of knowledge and permission did not equate to bad faith.

TicketSms and Mr Andrea Vitali v Franklin Iziren – false claims and abuse of process

In this case, the second Complainant, Mr Vitali, began using the name TICKETSMS for a business in 2015, registering the first Complainant company, TicketSms S.R.L, two years later. He then registered TICKETSMS as a trade mark three years after that, in 2020.

The disputed domain name was registered by the Respondent in 2009 – before the Complainants had an interest in the domain. The Complainant did not address the issue of how this possibly could have been registered in bad faith, and so the claim was denied.

Although the usual rule is that bad faith is not found when the Complainant does not have any trade mark rights, there are exceptions to this if the domain name is registered to unfairly capitalise on the Complainant's up and coming trade mark rights.

In this case, as there was no way the Respondent could have known about the Complainants' business six years before it was started, the Panel concluded this was an attempt at reverse domain name hijacking.

This occurs when companies bring unnecessary bad faith UDRP claims to harass a legitimate domain name holder into giving up its domain. As the Complainants in this case were represented by solicitors, the Panel concluded that the complaint was an abuse of process and was itself brought in bad faith.

What does this mean for you?

While UDRP complaints are a fairly quick and relatively inexpensive way to protect your domain name portfolio, and the vast majority are successful, there are sometimes limitations. UDRP complaints are not the same as trade mark infringement claims or breach of contract disputes, and care should be taken to ensure all of the UDRP complaint grounds are satisfied (or arguably so) before bringing a claim.

Bad faith will generally not be found where:

The domain name in question was acquired before the Complainant had rights in the trade mark in question (although there have been exceptions to this).