Gerald M. Levine, Esq. is a UDRP Panelist and counsel, and is the author of the Domain Name Arbitration, A Practical Guide to Asserting and Defending Claims of Cybersquatting (2019). His new book, Clash of Trademarks and Domain Names on the Internet is now available. He also has an upcoming book with David Weslow on the ACPA.
CHALLENGING UDRP AWARDS IN AN ACPA ACTION: SOME PRELIMINARY OBSERVATIONS
It would be most unusual were there never any errors in deciding UDRP disputes. I’ll address these issues of error and “appeal” over several articles beginning here with some preliminary observations. Commentators have flagged a good number of errors over the years in which panels have awarded disputed domain names to complainants. Rarely is It the other way round, but neither is it unheard of.
The question that naturally arises is whether in these circumstances the losing party has any remedy from panelist error? It does, but not within the UDRP as there is no built-in appeal mechanism. However, the UDRP is a nonexclusive mechanism that contemplates either before or after an award the matter may be removed or the losing party can take its grievance to a court of competent. Removal before a matter has been adjudicated is almost unheard of (the rare example is <sdt.com> in which the registrant negotiated a settlement and retained control of the domain name). I’ll focus on post-award litigation to dramatize the process and outcome.
Contemplated subsequent court action is codified in paragraph 4(k) of the Policy. A losing respondent has a brief window of 10 business days to file a complaint in a court of competent jurisdiction before the transfer is carried out. Upon the filing of the complaint the transfer is stayed pending the final ruling of the court. In the US, the court of competent jurisdiction would be a district court for declaratory and injunctive relief under the Anticybersquatting Consumer Protection Act (ACPA), an Act within the Lanham Act of 1946 (as Amended). Most likely for the reasons I will briefly mention in a moment the complaint will be filed in a district court at the location of the registrar of the disputed domain name.
Whether other national courts will entertain a claim for declaratory and injunctive relief from the transfer depends on whether those courts have subject matter jurisdiction to adjudicate and annul a UDRP award. Courts in the UK for example do not have subject matter jurisdiction—the UDRP award is the end of the line—but the ACPA expressly provides a remedy against overreaching trademark owners.
Challenges are not appeals in the ordinary sense, but rather are de novo actions. Courts pay no deference to UDRP decisions. They proceed on a new record. I’ll have more to say about this in later pieces. There have not been a great number of challenges, mostly because in the vast number of awards since January 2000 (over 100,000) respondents, generally, have no meritorious defense to cybersquatting. Of the 94,000 or so transfer awards over the past 25 years, there have been, perhaps, twenty successful challenges. This does not represent the full number of errors commentators have noted.
This low number of “appeals” is attributable in significant part to the prohibitive cost of litigation in federal court versus the dollar value of the domain name. Again, this is a subject for a later piece. In the number of successful challenges I do not include settlements dismissing actions, which in some notable cases have concluded with the domain registrant retaining control over the disputed domain names (<ado.com> for example) and in other cases money settlements in which mark owners take control of the domain names.
The earliest UDRP award to be challenged involved <clarins.com> (UDRP decided in April 2000). In a separate action preceding UDRP, the domain registrant sought $30,000 plus interest and attorney’s fees, alleging breach of contract to settle the domain name dispute.” The Panel found that “Clarins” is a coined word and transferred the domain name to the Complainant. Like the Panel, the district court would have none of this and the judgment was affirmed in a Fourth Circuit per curium decision. This, of course, was decidedly not error on the Panel’s part. Respondent’s representative in the UDRP proceeding and a large law firm on the APCA action were no doubt full of confidence that they had the winning argument but (not surprising at this early date) they simply did not understand the evidentiary demands of the UDRP nor when it came to “appealing” the award, the evidentiary demands of the ACPA. I’ll expand on this observation in due course.
Evidentiary demands are, of course, a central concern for both the UDRP and the ACPA, although they have different priorities. This is because the UDRP complaint is essentially a motion for summary judgment whereas the ACPA complaint only requires so much as to give notice of the claim, although as we shall see miscalculation of allegation may have adverse consequences.
In addressing error, though, I’m talking about a small pool of disputes in which there are genuine issues of contested facts in which a single panel or in some cases 3-member panels have erred in their application of the law, or worse, have cited theories that have no foundation in UDRP jurisprudence such, for example, the amount demanded for the domain name, or the rejected theory of retroactive bad faith, or in a recent case the panel’s failure to recognize a theory of law that inoculates the respondent from liability for cybersquatting, in that case “nominative fair use.” Textron Innovations Inc. v. Ron Dawes, FA2405002096887 (Forum June 26, 2024) (<cessnawindowlock.com>). The Panel does not even refer to nominative fair use and cites cases as authority that are easily distinguishable. Will Respondent “appeal”? He’s in a favorable jurisdiction, District Court of Arizona (a court within the 9th Circuit Court of Appeals. I’ll leave this issue of “favorable jurisdiction” for a later discussion).
We occasionally have previews of error from vigorous dissents. To take one of a number of examples (none of which incidentally were “appealed” ) the dissent argued that the Majority’s view creates a dangerous and unauthorized situation whereby the registration and use of common generic words as domains can be prevented by trademark owners wishing to own their generic trademarks in gross. I cannot and will not agree to any such decision, which is fundamentally wrong.
Why? Because the Majority made acquiring generic terms unlawful on the theory that the Respondent is “a speculator who registers domain names in the hopes that others will seek to buy or license the domain names from it,” J. Crew International v. crew.com, D2000-0054 (WIPO April 20,2000) (<crew.com>).
The jurisprudence has moved on from the <crew.com> decision with blips along the way to the present. Trademark owners cannot claim rights to letters or words drawn from the lexical commonplace without proof that the intent of the acquisition of the domain name was to capitalize on the value of the trademark. That issue is firmly lodged in the jurisprudence, as is “nominative fair use.” Panels, like judges, are expected to know the law, which is not an easy task given the volume of decisions and the skill in separating the wheat from the chaff.
When I say that the respondent has a brief 10-day window I do not mean that it has no claim if it “appeals” after the closing of the window, but it will no longer enjoy the stay and will lose control over the disputed domain name. My plan for these pieces, though, is focusing on issues arising from the timely filing of a federal complaint. The fact that the domain name has not been transferred but is only threatened on failure to file a complaint does not affect the domain registrant’s right to maintain an ACPA action. The threat of transfer is itself sufficient to state a claim for declaratory and injunctive relief under the Lanham Act.
The general view is that challengers are required to bring suit in that particular mutual jurisdiction to which the defendant-mark owner has submitted in order to prevent the transfer of the disputed domain name from occurring. I skip over discussion of mutual jurisdiction and refer the reader to 4(k) of the Policy and definitions in the UDRP Rules (Rules 1 and 15(e)). This would seem to restrict the plaintiff from filing in any other judicial jurisdiction even though in its domain name registration agreement it will have “agree[d] to submit, without prejudice to other potentially applicable jurisdictions, to the jurisdiction of the courts (1) of your domicile, (2) where registrar is located or (3) where the registry operator is located.” In this manner, each party has submitted to jurisdiction somewhere.
Thus, in Green Jacket Auctions Inc. v. Augusta Nat’l Inc., Lead No. CV-18-00084-PHX-GMS, at *5 (D. Ariz. Oct. 24, 2018), the defendant argued it was an inconvenient jurisdiction. The Court held:
Under the UDRP rules, Green Jacket was required to bring suit in a jurisdiction where defendant submitted in order to prevent the transfer of its domain name. And Green Jacket properly followed those procedures when it filed the lawsuit in this District. Any arguments about the inconvenience of litigating this case in Arizona by ANI are undercut by the fact that ANI itself selected this forum in its ICANN Complaint.
This didn’t help Green Jacket. The parties stipulated to dismiss the complaint without prejudice, but Augusta took control of <greenjacketauctions.com>.
In a recent case discussed in the ICA UDRP Digest May 28, 2024, Universal Music Group N.V. and Universal City Studios LLC v. JT U Animation / U Animation, NAF Claim Number: FA2402002085375, a 3-member Panel concluded that the “evidence submitted by the Respondent in support of [his] contention[s] to be a series of clumsy and obvious forgeries.” (The author was a member of the Panel).
The domain registrant no doubt deeply wounded by the accusation of committing “obvious forgeries” commenced an action in the Eastern District of New York, the location of its domicile, rather than suing in Arizona, the location in which the defendant submitted to jurisdiction. The Court was skeptical and issued an Order to Show Cause why the case should not be transferred to the Southern District of New York where the defendant maintains a business address. However, the Court rejected plaintiff’s argument why it should not and transferred the case to the Southern District in which the plaintiff moved to return it to the Eastern District of New York, which the Court rejected. It is likely that even having transferred the case, the Southern District of New York will be the wrong venue because the mark owner opted for mutual jurisdiction in Arizona, the seat of the Registrar GoDaddy. More to come on this case as the issue develops.
In suing for declaratory and injunctive relief, there has been a significant misunderstanding of which of two statutory theories must be pleaded. The ACPA provisions are scattered over three sections of the Lanham Act: Sec. 1125(d), 1114 and 1117(a) (attorney’s fees, although district courts in Florida have interpreted the provision as not applying to prevailing domain registrant-plaintiffs. (The Eleventh Circuit has not ruled on this issue). This can only be regarded as a mean interpretation that discourages counsel from taking a case on contingency). I will revisit this issue in a later article because together with the prohibitive cost of litigation it reduces incentive to “appeal.”
We’ll look at crafting pleadings in later discussions. What is true of a mark owner in suing directly under the ACPA, is equally although oppositely true of a domain registrant as plaintiff. While a mark owner has to prove that the domain registrant violated 1125(d), a losing domain registrant must prove that it did not violate the statute, which means that it either (1) did not register, traffic in, or use a domain name that is identical or confusingly similar to a mark that is distinctive at the time of registration of the domain name, or (2) it did not have a bad faith intent to profit from that mark. To put this another way: the ACPA does not condemn domain names that are identical or confusingly similar to a mark where the intention or motivation for its acquisition is not to profit from the value of the mark.
In a terminated UDRP hearing involving <playgroundai.com> (the Claimant withdrew the complaint), it turns out that instead of being the victim of cybersquatting, the former complainant is the cybersquatter. The Respondent transformed itself into the plaintiff in Playground AI LLC v. Mighty Computing, Inc., 23-cv-05181-BLF (District Court, Northern District of California Mar 14, 2024. It included in its list of defendants the sole officer of the company. In denying defendants’ motion to dismiss the complaint, the Court found (citing earlier authority) “[A] corporate officer or director is, in general, personally liable for all torts which he authorizes or directs or in which he participates, notwithstanding that he acted as an agent of the corporation and not on his own behalf.” Yes, a cybersquatter is a tortfeasor!
When, then, is a registrant-challenger of a domain name corresponding to a mark not a tortfeasor? But not to get into the weeds at this point, the answer depends on the strength of the mark and, surprisingly, on the venue of the action. The Ninth Circuit jurisprudence is more favorable to registrants holding domain names created prior to a mark’s first use in commerce even though acquired later. But I will leave this interesting issue to another day. First, I want to address the statutory basis for finding that the registrant states a claim for reverse domain name hijacking.
The challenger must allege a statutory basis for claiming that it registered the disputed domain name lawfully. This is found in either Sec. 1114(D(2)(iv) or (D)(v). To confuse the two foretells disaster. (Litigators have fallen into this trap!). For (D)(iv) the burden of proof is so great that to allege it alone will result in a dismissal of the complaint or at best a positive outcome but no attorney’s fees. While there has been some judicial discussion of what evidence would satisfy the burden, no court has found liability under this theory of the case.
Sec. (D)(iv) provides in relevant part: “If a registrar, registry, or other registration authority takes an action described under clause (ii) [which includes a UDRP panel] based on a knowing and material misrepresentation by any other person that a domain name is identical to, confusingly similar to, or dilutive of a mark, the person making the knowing and material misrepresentation shall be liable for any damages, including costs and attorney’s fees, incurred by the domain name registrant as a result of such action.”
I underscore “knowing and material misrepresentation” as does the Court in Mira Holdings, Inc. v. ZoomerMedia, Ltd., CIVIL 22-cv-01997-PAB-SP, at *13 (D. Colo. June 7, 2023). This involved a challenge from a UDRP decision issued by the Canadian International Internet Dispute Resolution Centre. The Court cogently sets out the plaintiff’s problem:
Assuming that Plaintiff’s allegations of Defendant’s intentional misrepresentations to the panel are sufficient to survive a motion under Rule 12(b)(6), Plaintiff’s [First Amended Complaint] is devoid of any factual allegations related to WIPO’s decision-making process. To state a claim, the FAC [First Amended Complaint] must include facts to support a conclusion that the panel based its decision to transfer the disputed domain name on Defendant’s alleged misrepresentations.
Continuing:
“To state a claim [under Section 1114(2)(D)(iv)], a plaintiff must show that the disputed domain name was ‘suspended, disabled, or transferred’ by a domain registrar because of a knowing and material misrepresentation by [a] defendant.” Baklan v. All Answers Ltd., No. CV-20-00707-PHX-JZB, 2020 WL 6063254, at *2 (D. Ariz. Oct. 14, 2020).
But
Because Plaintiff’s FAC does not allege sufficient facts about what misstatements the WIPO panel relied on, Plaintiff has not sufficiently stated a claim for relief under Rule 12(b)(6).
Following the filing of an amended complaint, the parties in Mira Holdings settled the dispute under undisclosed terms (<ideacity.com>).
In the next essay I will move onto Sec. 1114(D)(v) and other statutory demands for evidence. To distinguish (D)(iv) from (D)(v) I will call the former RDNH Heavy and the latter RDNH Light. I will also look at a recent Florida case, Pirate Water Taxi v. Tampa Water Taxi Company (<tampawatertaxi.com> in which the losing domain name holder in the UDRP proceeding was successful on summary judgment in the ACPA but denied attorney’s fees. The UDRP decision incidentally was roundly criticized by commentators and discussed in the ICA Digest a few months ago.