Brand owners can often be frustrated by the acquisition of key assets, like top level domains, by third parties. While it may seem as though third party acquisition of these assets is an attempt to thwart the legitimate interests of the brand owner, this Uniform Domain-Name Dispute-Resolution Policy (UDRP) decision shows that this is not always the case.

What has happened? 

• The complainant was Foundations Worldwide, Inc. the owner of various trade mark rights in GAGGLE. The GAGGLE brand is in use in respect of children's products such as pushchairs and buggies.

• The respondent was Ammar Kubba, afterthought, Inc., who operates a secondary market for domain names and has registered some ordinary, dictionary words as domain names.

• Foundations claimed that Mr Kubba, through purchasing www.gaggle.com and offering it for sale alongside pay-per-click adverts, had registered and was using the domain name in bad faith. Mr Kubba had also offered to sell the domain name to Foundations during negotiations for a high price.

• Mr Kubba asserted that he was not aware of Foundations' trade mark rights, that GAGGLE is a common term and that he had not registered or used the domain name in bad faith, but merely as part of his legitimate business activities.

• World Intellectual Property Office (WIPO) held that "the sale of domain names that are common, dictionary terms can be a valid enterprise" and that the offering for sale of www.gaggle.com to the complainant at a high price was not in bad faith.

• The case emphasises the importance of acquiring domain names up front as part of the brand creation and protection process. 

• The secondary market in domains seems now to be regarded as legitimate in all cases, save where the acquirer actively pursues a brand owner for financial compensation in exchange for the transfer of the domain name. As this fact pattern occurs fairly infrequently, it is imperative that brand owners acquire core domain name assets at the outset.

Want to know more? 

The UDRP complaint

There are three requirements that need to be met for a UDRP complaint to be successful and the domain name at issue to be transferred to the complainant:

• the domain name must be identical or confusingly similar to a trade mark in which the complainant has rights

• the respondent must have no rights or legitimate interests in respect of the domain name 

• the domain name must have been registered and used in bad faith.

While Foundations had no trouble in proving that Mr Kubba's www.gaggle.com domain name was identical to its own trade mark rights, its claim fell at the second and third hurdles.

No rights or legitimate interests 

WIPO held that Mr Kubba had demonstrated that he, in fact, had a legitimate interest in respect of www.gaggle.com. It accepted his claim that he had no knowledge of the complainant's GAGGLE brand before purchasing the domain name (although this could have been different if Foundations had proven that its GAGGLE brand was well-known). GAGGLE is a dictionary – not an invented – term and numerous third parties around the world own trade mark rights in GAGGLE for various different goods and services. 

Registration and use in bad faith

There was no evidence that Mr Kubba was aware of the complainant's GAGGLE brand when he registered the domain name or had ever used his domain name in respect of children's products.

Offer for sale of gaggle.com

The secondary domain name market and the acquisition of domain names for the purpose of selling them is not, in and of itself, illegitimate. In fact, WIPO held that, unless there was evidence that the respondent actively targeted the complainant and demanded a high price for the domain name, then such activity will likely be a valid enterprise.

Given these findings, it is unsurprising that WIPO went on to hold that the mere offering for sale of the domain name to the complainant could not be deemed to be registration and use in bad faith, despite the fact that, during negotiations, a high price was demanded.

What does this mean for you?

• This decision highlights the importance for brand owners of clearing and registering key assets, such as top-level domains, prior to launching their brands. The UDRP process cannot be seen as a "fail-safe" route to domain name acquisition from a third party later down the line.

• The secondary market in domains seems now to be regarded as legitimate in all cases, save where the acquirer actively pursues a brand owner for financial compensation in exchange for the transfer of the domain name. As this fact pattern occurs fairly infrequently, it is imperative that brand owners acquire core domain name assets at the outset.