The Legality of Registering Generic Words And/Or Letter Combinations In Anticipation That Someone Sometime in the Future Will Acquire a Trademark and Wants the Domain Name
The underlying premise of the UDRP was protection of trademarks from predators and parasites. In testimony before the U.S. House of Representatives on July 28, 1999, Francis Gurry, then legal counsel of WIPO stated that the “most egregious manifestation of this problem is the exploitation in bad faith of the ease and simplicity of obtaining a domain name registration in order to register, as a domain name, the trademark of another person with a view to extracting a premium from the owner of the mark.” The word speculation in reference to registering domain names that were not identical or confusingly similar to trademarks words is not found in the WIPO Final Report. Nevertheless, the dissent in The American Automobile Association, Inc. v. QTK Internet c/o James M. van Johns, FA1261364 (Nat. Arb. Forum, July 25, 2009) opined that speculative registrations of generic words and/or letter combinations with the intention of selling them at a profit “[o]nce someone wants to acquire the domain name ... were intended to be prohibited by the policy....”
Prohibiting speculation is not just alien to our culture it is akin to forbidding commerce. The thought that speculation in anything was or could be legislated illegal is absurd. There is nothing in the WIPO Final Report or UDRP case law that outlaws registering generic words and/or letter combinations in anticipation that someone sometime in the future will acquire a trademark. If the law were as the dissent would have it then holders of later acquired trademarks would have a right to claim domain names earlier registered in good faith. The proposition has been advanced by complainants in past cases – NETtime Solutions LLC v. NetTime Inc. c/o Chad Wagner, FA0810001230152 (Nat. Arb. Forum December 19, 2008) (<nettime.com>) is paradigmatic – and soundly rejected. The Respondent in NETtime registered the domain name many years before the Complainant’s trademark right came in existence. The prospect that holders of newly minted trademarks can capture a domain name speculatively registered may excite a fair number into believing entitlement, but it is not the law. Forfeiture is not a penalty for speculation in domain names. The ability to foresee a third party’s future need and capitalize on one’s ability to read tea leaves or entrails is the engine of commerce.
A domain name registrant is a cybersquatter if it intentionally targets an existing (or in some instances an imminent) trademark. The Panel in Tomatis Developpement SA v. Jan Gerritsen, D2006‑0708 (WIPO August 1, 2006) defines cybersquatters as “people who register domain names knowing them to be the trade marks of others and with the intention of causing damage or disruption to the trade mark owners and/or unfairly exploiting the trade marks to their own advantage.” It is not an abusive practice to purchase domain names for which there are no corresponding trademarks and in some instances it is not abusive even if there are.
There are circumstances under which a later registered trademark can prevail over an earlier registered domain name, but the planets have to be in alignment. More typically, holders of later acquired rights who adventitiously select as their trademarks words or phrases already taken as domain names wish to capture the domain names on the theory that they have a better right to the domain names than the respondent, this is offset by the first to register principle. The first to register in good faith (whether or not later he uses the domain name in bad faith) has a pass under the UDRP. An earlier registration of a domain name cannot be abusive against a nonexistent trademark.
This principle applies to the original registrant, but not to a transferee who takes the disputed domain name after the trademark’s first use in commerce. A transferee’s right or legitimate interest is less secure for several reasons. First, it does not inherit its predecessor’s good faith registration. This was illustrated in Daimler AG v. William Wood, D2008‑1712 (WIPO February 25, 2009) on a refiled complaint. Second, the new registrant is bound by its warranty. It would not surprise if the Daimler result is repeated more often against transferees who trade in domain names. There are already decisions that impose a higher investigatory standard on high volume registrants. Mobile Communication Service Inc. v. WebReg, RN, D2005-1304 (WIPO February 24, 2006).
The vulnerability of a transferee to forfeiture can be imagined by reading between the lines of such decisions as the one in Runway Beauty, Inc. v. Errol Z. Hernandez, D2009-0762 (WIPO July 28, 2009). The disputed domain names, all incorporating “runway magazine” were registered years prior to Complainant registering RUNWAY MAGAZINE, although the Complainant alleges (but failed to support) use in commerce predating the domain names. The Panel agreed with the Complainant that the Respondent lacked rights or legitimate interests in the domain names, but rejected the conclusion that the domain names were registered in bad faith. There is a coda to the decision, dicta that addresses the issue of passive holding that seems to suggest that if the evidence had supported passive holding the decision may have gone the other way. The dicta reads:
While the Respondent has admittedly held the disputed domain names for a significant period of time without apparent use, the Respondent has made attempts to provide content for its website, in accordance with his original intentions. The Panel therefore does not consider that the Respondent has been passively holding the disputed domain names in circumstances sufficient to establish registration and use in bad faith for the purpose of the Policy.
The value of domain names for the speculator lies in their revenue potential. Whatever resale value the domain names identical to RUNWAY MAGAZINE had before the proceeding has been significantly reduced by a holder’s intervening acquisition of a trademark adopting the same string of letters. This particularly effects word combinations attractive as trademarks. It may be as the dissent in The American Automobile Association believed (although skipping original registrants who have a pass under the UDRP) that speculative registrations by first generation registrants will come to haunt second and third generations who will have a diminishing field of use.