United States: Be Sure Your Catchy Domain Name Does Not Infringe Another Party’s Trademark

Article by Kevin Young and Kathryn Doi

One of the first steps taken by eager entrepreneurs is to acquire an on-line domain name for their company that they feel is sure to garner mass appeal from customers and investors alike. Unfortunately for some, recent legal authority suggests that even this simple step of registering a domain name can lead to trouble if not done carefully. A recent ruling in a domain name dispute indicates that a registrant of a domain name can lose the name if it fails to perform a trademark search prior to registering the name. What is unique about this ruling is that the panel governing domain name disputes essentially expanded the definition of bad faith required under the Uniform Domain Name Dispute Resolution Policy, or the "UDRP." The definition of bad faith under the UDRP may now include "inaction" on the part of the registrant, specifically 1) failing to check the name availability with a trademark search, and 2) letting the domain name rest idle instead of creating a web site for it or linking to another web site.

When one registers for a domain name, the accrediting agency that is responsible for approving the registration is the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit entity formed in 1998 by the U.S. Department of Commerce. Once a domain name is registered with ICANN, the registrant will fall under the policies contained in the UDRP. The World Intellectual Property Organization, or "WIPO," is an intergovernmental organization headquartered in Geneva, Switzerland and one of the United Nation's eleven specialized agencies. Under the UDRP, any trademark holder who believes that a domain name is being used to the economic detriment of its trademark may initiate an administrative dispute resolution proceeding by submitting a complaint to WIPO. Most domain name disputes are resolved by mediation and arbitration administered by WIPO under the mandates of the UDRP.

Often when domain names are registered by an individual or entity other than the designated trademark holder, the domain name registrant will attempt to bargain with the trademark holder for ownership of the name. More often than not, the registrant of the domain name asks an exorbitant amount of money from the trademark holder for transfer of the rights to the domain name. In such case, if a trademark holder feels that he or she is being extorted, he or she can resort to the decision of an arbitrator from WIPO.

Several recent decisions made by WIPO panels stress the importance of safeguarding oneself from these so-called "cybersquatters," or people who reserve domain names in bad faith. Conversely, to avoid being designated as a cybersquatter, a domain name registrant should be sure to have a legitimate intent to use the domain name in commerce, and not to just have reserved the name "just in case," or worse, to have reserved the name for the specific purpose of extorting the legitimate user for ownership of the name. As the two cases below illustrate, however, even a domain name registrant who supposedly has a legitimate reason for registering the name may lose the name if he or she could have discovered that the domain name was already being used in commerce by its trademark holder.

Women's accessories designer Kate Spade, Inc. recently won a ruling that allowed the company to take back the domain name "www.jackspade.com" from the person who had originally registered the name on-line. The registrant argued that he had reserved the name in honor of his deceased college friend who loved card tricks, and especially one that involved the jack of spades. However, he had not yet used the name to establish a web site, and furthermore, had owned the name without making any use of it for more than three years, despite receiving several cease-and-desist letters from Kate Spade. Moreover, Kate Spade had a trademark pending for its Jack Spade men's accessories brand, a fact which the panel agreed would have given the registrant notice if he had performed a trademark search. Thus, based on the facts above, particularly the registrant's failure to perform a trademark search and his inaction with regards to the development of a web site for the domain name for over three years, the registrant was found to have registered for the domain name "www.jackspade.com" in bad faith. Consequently, the panel compelled the registrant to surrender the domain name to Kate Spade, Inc.

In another case, the registrant's failure to perform a trademark search similarly contributed to the decision by a WIPO arbitration panel to order the registrant to surrender its domain name. In this second case, a biotechnology company, Cepheid Corporation, filed a complaint to get back the name "www.genexpert.com" from its registrant, Healthexpert LLC, a company that purported to be an on-line health care information provider. Yet, Cepheid had already registered a trademark for the brand name "GENEXPERT" in connection with a device it produced for DNA biotechnology. The registrant's owner, Mr. Johnson, had reserved two other domain names, "www.healthxpert.com" and "www.medicinexpert.com," in anticipation of launching his business. However, the WIPO panel found that Johnson did not have a legitimate business interest in the domain name, due to the fact that he did not offer any evidence of his company's existence, such as articles of incorporation or a business plan. Nor did he intend his web site to be an information service for genetics or biotechnology; instead, it was advertised as a site that was aimed at "providing low cost quality health care." The panel pointed out that Johnson could have performed a trademark search that would have uncovered the pending application for "GENEXPERT." Furthermore, Johnson had done nothing with the domain name or the web site it was linked to for almost two years. Under all of these facts, then, the panel ordered Johnson to surrender the domain name "www.genexpert.com" to Cepheid, its trademark holder.

These cases illustrate the need for a business owner to check whether a domain name is available as a trademark, in addition to checking its availability as a domain name. Business owners who do not perform a trademark search for the domain name they desire to use may find themselves fighting for ownership of the domain name in a WIPO dispute, or they could even be sued for trademark infringement. Certainly, corporate entities that have invested a sizeable amount in their trademarks are often the ones that will be the most likely to pursue legal action in order to prevent dilution of their valuable trademarks. Yet, even smaller companies may pursue the relatively modest WIPO proceedings necessary to force turnover of a domain name. Therefore, one should take care when choosing a domain name and check on its availability through a comprehensive trademark search.

This Legal Update is published by Ross & Hardies to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation.