A. Nattermann & Cie. GmbH (the Complainant), a subsidiary company of Sanofi-aventis, recently lost a complaint filed under the Uniform Domain Name Dispute Resolution Policy (UDRP) with the World Intellectual Property Organization (WIPO) concerning the domain name (the Domain Name) on the grounds that no bad faith was found at the time of registration.  

Regular readers of Anchovy News will know that, unlike many other alternative dispute resolution policies put in place for other domain name extensions, on its face the UDRP requires a complainant to prove that the domain name in question was both registered AND used in bad faith, rather than simply registered OR used in bad faith. The decision in question is interesting in that it was decided by a three member Panel, but one of the Panel members, M. Scott Donahey, dissented. Mr Donahey, who was responsible for deciding the very first UDRP decision in January 2000, filed a lengthy and complex dissenting opinion setting out why, in his view, the Domain Name should have been transferred despite the fact that there was no bad faith on the part of the Respondent at the time when the Domain Name was registered.  

The Complainant owned the trade mark in the term FERRLECIT which was used for one of its pharmaceutical products (intravenous treatment for iron deficiency). As early as 1993, the Complainant reached agreement with Watson Pharmaceuticals, Inc. (the Respondent), granting the latter an exclusive licence to import, use and sell the product as well as an exclusive right to use the trade mark FERRLECIT in several countries. The Respondent subsequently registered the Domain Name in 1999 in order to promote the product. Cooperation between the parties lasted for a decade but ceased following an arbitration which declared that their agreement would end at the end of 2009. The Respondent was ordered to stop selling the product and using the said trade mark following that date and to transfer various documents and materials to the Complainant. The award of arbitration, however, did not refer to the Domain Name.  

The Respondent thus retained the Domain Name and made it resolve to a website containing a statement that the product was now being marketed by the Complainant. Website visitors were then invited to provide contact details for the purpose of receiving information regarding an alternative product currently promoted by the Respondent.  

In 2010, the Complainant asked the Respondent to return the Domain Name but the latter refused and instead offered to sell it for $25,000. The Complainant therefore filed a complaint under the UDRP seeking transfer of the Domain Name.  

To be successful under the UDRP, a complainant must evidence that:  

(i) The domain name registered by the respondent is identical or confusingly similar to a trade mark or service mark in which the complainant has rights; and  

(ii) The respondent has no rights or legitimate interests in respect of the domain name; and  

(iii) The domain name has been registered and is being used in bad faith.  

Both parties and the Panel agreed that the first limb of the UDRP was satisfied, given that the Domain Name exactly reproduced the Complainant's trade mark in the term FERRLECIT with the mere addition of .COM, which is considered irrelevant in assessing the issue of confusing similarity between a domain name and a trade mark.  

With regard to the second limb of the UDRP, the Complainant contended that the Respondent was no longer licensed or authorized to use the Complainant's mark after the termination of the agreements between the parties and therefore had no rights or legitimate interests in the Domain Name. The Respondent tried to rebut this contention by emphasizing the legitimacy of registering and using the Domain Name in connection with a bona fide offering of goods and services.  

Based on the wording of paragraph 4(a)(ii) of the UDRP, the Panel considered that a right or legitimate interest in respect of the Domain Name needed to exist at the time of the complaint. In this respect, the fact that the Respondent registered and used the Domain Name while the agreements were in force did not prevent a subsequent loss of such an interest on the part of the Respondent following the withdrawal of the Complainant's consent to use its trade mark. Consequently, the second limb of the UDRP was satisfied and the Panel found that the Respondent had no rights or legitimate interests in respect of the Domain Name.  

Turning to the third limb of the UDRP and registration and use in bad faith, the Complainant alleged that the Respondent's offer to transfer the Domain Name for $25,000, a sum greatly in excess of its registration expenses, demonstrated the Respondent's bad faith. The Respondent's bad faith was further evidenced by its practice of promoting a competing product at the website to which the Domain Name resolved.  

In response to the Complainant's assertions, the Respondent claimed that it offered a reasonable price to sell the Domain Name in light of the time and costs incurred in registering, maintaining and promoting it. More importantly, it underlined that its subsequent offer did not alter the fact that the Domain Name was initially registered in good faith. Lastly, the Respondent justified its current use of the Domain Name by stating that website visitors were well informed that the Respondent had ceased to sell the product and then were directed to the Complainant for further information.

Given the facts, the Panel had no difficulty in finding that the Domain Name had actually been used in bad faith. However, whether or not the Domain Name had been registered in bad faith was a complex question. The Panel first discussed whether the Respondent's offer to sell the Domain Name for an elevated price could lead to a finding of bad faith registration. In the Panel's view, bad faith registration could be invoked when an offer for sale was made shortly after the acquisition of a domain name, or when there was no other credible reason for a respondent to register a domain name. However in this case, the offer was made more than ten years after registration and the Respondent had a very good reason for registering the Domain Name, namely to promote the Complainant's product as a result of their agreement. Taking into account the totality of the evidence produced by both parties, the Panel was convinced that the Respondent had no intention of selling the Domain Name at the time of registration, or at least that was not its primary purpose when registration took place.  

The Panel went on to assess the possibility of inferring bad faith registration from the Respondent's subsequent use of the Domain Name in bad faith, which was well established in this case. The Panel noted that in a number of cases, previous panels had held that a domain name had been registered in bad faith on the grounds that the respondent had subsequently acted in bad faith. In the majority of the Panel's view, the concept of ''retroactive bad faith registration'', broadened the language of paragraph 4(a)(iii) and was inconsistent with the ordinary meaning of the wording of the UDRP. The majority of the Panel was therefore inclined to adhere to the generally accepted panel view that the original registration must be in bad faith.  

In view of the fact that the registration of the Domain Name in good faith was well established because the Complainant was well aware of the registration and did not complain about it prior to the expiry of the licence, the majority of the Panel concluded that the third limb of the UDRP was not satisfied because bad faith registration could not be proved, only bad faith use. The Panel thus denied the Complainant's request and refused to transfer the Domain Name.  

The majority of the Panel thought that the UDRP resembled an international convention in its preparation and function, rather than a statute, and thus that it was appropriate to consider the principles identified in the Vienna Convention on the Law of Treaties when deciding how to apply and interpret its terms. Such principles provided that the UDRP should be interpreted in accordance with the ordinary meaning of its terms in their context and in the light of its object and purpose.  

In addition, the majority of the Panel considered the preparatory documents that were produced at the time that the UDRP was introduced and concluded that they also supported the view that bad faith registration and use were cumulative requirements, not alternatives.  

In his dissenting opinion, Mr Donahey supported the panels in the so called Octogen trio of cases (named after Octogen Pharmacal Company, Inc. v. Domains by Proxy, Inc / Rich Sanders and Octogen e-Solutions (D2009-0786)) which advocated the view that if the legitimacy of a registration was subject to compliance with certain conditions, a subsequent non-compliance with those conditions may make it a registration in bad faith, even if the registrant was intending to comply with the conditions when it registered the domain name. Under that particular line of cases, bad faith registration and use was viewed as a unitary concept that could not be separated, and Mr Donahey felt this to be the correct interpretation.  

Furthermore, in Mr Donahey’s view, even though the UDRP was not a statute, it was a system of rules designed to remedy a specific wrong and so the rules of statutory construction should apply, in particular the so called “mischief rule” which meant the examination of what “mischief” or purpose the legislation was intended to prevent. According to Mr Donahey, the purpose of the UDRP would appear to be twofold: first, to prevent consumers from being misled and second, to provide trade mark owners with a relatively inexpensive mechanism to protect their rights. In Mr Donahey’s opinion, any decision that failed to find bad faith registration and use when it was found that the respondent, in all the circumstances of the case, was acting in bad faith was a decision that failed to fulfil the purpose for which the UDRP was intended.  

Finally Mr Donahey explained why he believed that it was intended that panels be vested with discretion in their interpretation and application of the UDRP, based on various preliminary reports and committees and the actual wording of the UDRP itself.  

Overall the decision is interesting as it highlights the fact that there is a very real difference of opinion between certain UDRP panels on the question of whether registration in good faith is necessarily fatal to a case. The majority of panels believe that it is, although a certain number, like Mr Donahey, do not. It is unfortunate that such a difference of opinion has arisen, as it introduces an element of uncertainty for complainants and devalues the UDRP as a straightforward, swift solution. The best advice for parties who wish to recuperate a domain name that was clearly registered in good faith but has since been used in bad faith is simply not to use the UDRP but a different forum instead, if a negotiated solution cannot be found. A complaint under the UDRP in such circumstances could nevertheless succeed with the right panel, but relying on this would be risky in the extreme.  

The decision is available at the following link: http://www.wipo.int/amc/en/domains/search/text.jsp?case=D2 010-0800.