OTHER ISSUES IN UDRP CASES

IVAN HOFFMAN, B.A., J.D.


        A recent Uniform Domain Name Resolution Dispute (UDRP) case presents some interesting legal questions.

        Here is the situation presented in Thrifty, Inc. and Thrifty Rent-A-Car System, Inc. v. Peter George.  Thrifty (Complainants) owned a number of federally registered trademarks to the name “Thrifty” in regard to rental cars and related uses.  At one point, Complainants received an inquiry from the owner of thrifty.org, Colony Holding, about whether or not Complainants would like to acquire that said domain.  The parties negotiated and finally reached an agreement whereby Colony Holding agreed to transfer the said domain to Complainants for a sum of $6,000.00 conditioned “on Thrifty’s ability to effect transfer of the domain address to our account.”  A transfer agreement was prepared but apparently never signed by Colony Holding.  Instead, some correspondence was exchanged in which Colony Holding stated, as set forth in the opinion:

“The procedure to transfer the address is very simple and I believe you can even transfer it via E-Mail.” Exhibit 10. He added, “I have also faxed you the Network Solutions papers that are in our possession.”
        Despite the lack of a signed transfer agreement, the money was paid.   It does not appear that the Network Solutions forms were ever completed and/or filed with NSI to effect the transfer.

        Two years later, Complainants checked the WHOIS database only to find that the domain was still in the name of Colony Holding.  It sought to get Colony Holding to sign the transfer document.  A reply to that inquiry came instead from Respondent, who indicated that he had purchased all of the assets of Colony Holding, was unaware of the indicated transaction and claimed that, as a result, he owned the rights to the domain, which he called “generic.”  He offered to sell the domain to the Complainant for $75,000.00.  Complainant claimed that the Respondent held the domain in trust, a claim Respondent denied. The UDRP proceeding followed.

The Ruling

        The Panel ruled that although the domain was identical to that of the registered marks of Complainant and that Respondent was not using the domain as a trademark nor had any registered mark in this regard, these facts alone did not establish any lack of “legitimate interest” on the part of the Respondent.  Read “Legitimate Interests in Domain Name Disputes.”   Instead, the Panel stated that the domain was generic.

Registration of an ordinary English language word as a domain name, and use of that domain name for that ordinary, English language, non-trademark significance, can be a legitimate interest.
        See in this regard “Descriptive Domain Names” as well.

        However, more to the point of this article, the Panel stated:

The limited evidence before the panel shows that the question of whether Respondent was a bona fide purchaser is contested throughout the parties’ [i.e. Complainant and Respondent] correspondence.  While the evidence suggests that, as between Complainants and Colony Holding, Complainants have the better argument as to rights in the domain, the same is not true as between Complainants and Respondent.

Throughout the correspondence between TRAC [Complainant]  and Respondent’s predecessor, Colony Holding, TRAC makes it clear that its payment to Colony for the domain is conditioned upon TRAC’s ability to get the domain transferred to its name. The evidence, all submitted by Complainants, unquestionably establishes that TRAC was to prepare and file the necessary paperwork to transfer domain before the check would be released[emphasis added]

        The Panel reasoned that since an express condition of the transfer was that Complainant be able to effect the transfer and that it was Complainant’s responsibility to do so, Complainant now was unable to prevail against the Respondent, an assignee of Colony Holding, because of Complainant’s own defaults in follow through.

        Given that Complainants let two years pass after the alleged purchase from Colony Holding before bothering to check to make sure the domain was properly registered, and that the lack of proper registration was due solely to Complainants’ inaction, the Panel cannot conclude that Complainants have established that Respondent, who claimed to have acquired the domain without knowledge of any agreement between Complainants and Colony Holding, has no legitimate interest in what Respondent terms a “generic” domain.

        The Panel went on to state:

While it certainly is conceivable that Respondent, once learning of Complainants’ asserted interest in the domain, saw the situation as an opportunity to benefit financially from what Complainants term “an oversight regarding transfer of record ownership” -- this alone, under the unique circumstances of this case, does not establish bad faith registration and use. In his initial correspondence, Respondent claimed to have legitimately acquired the domain from Colony Holding, without knowledge of a prior sale to TRAC; in subsequent correspondence Respondent indicated that, at some undefined point, Colony Holding had denied that a sale to TRAC was ever consummated.
        Thus, apparently 2 factors influenced the Panel’s decision.  The lack of follow through on the part of the Complainant and the descriptive, generic nature of the domain.

        The Panel went on to distinguish another case, Familiar Limited v. CTD Technologies, Inc., as different in factual set up from the present case.   The Panel stated:

While there are some similarities, in that case the evidence clearly established that the burden had been on the assignor [i.e. seller] of the domain to record the name change and that the parties had operated for two years as if the transfer had occurred with the assignee making active use of the domain. Thus, the successor in interest to the assignor’s domain name assets had to have been aware of the prior sale, and the subsequent offer to sell was deemed bad faith. The record before this Panel does not signal the same conclusion.
Conclusion

        The moral being that contracts to transfer domains must be thoroughly drafted including details about which party is to do what.   The moral is further that follow through is essential.  And the other moral is that there are limits to the UDRP procedure.

        This is best stated by the Panel itself:

Had Complainants duly recorded the Registrant Name Change Agreement as TRAC, itself, had insisted was a condition of releasing the payment to Colony Holding, this matter would not be before this Panel. Complainants, by their own inaction and apparent lack of true interest in the domain, created a situation that Colony Holding apparently took advantage of by selling the domain a second time, to Respondent. Complainants may have causes of action against Colony Holding, its principal Mr. Kaplan, or even against Respondent, in other fora. But here, Complainants ask the Panel to remedy a situation Complainants themselves have created; Complainants essentially ask the Panel to save them from themselves. This the Panel cannot do. To do so would be inconsistent with both the purpose and the intent of the Policy.
© 2002 Ivan Hoffman.  All Rights Reserved.

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This article is not intended as legal advice.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  You should consult with an attorney familiar with the issues and the laws.  This article does not create any attorney client relationship.

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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.

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