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  • WIPO panel steals four letter domain from BuyDomains

    1. BY - Apr 26, 2012
    2. Policy & Law
    3. 23 Comments

    Panel hands down the wrong decision in FACI.com case.

    A three member World Intellectual Property Organization panel has found that BuyDomains (NameMedia) registered FACI.com in bad faith.

    The case makes no sense.

    It seems that the panel’s judgement hinges on the fact that BuyDomains knew about the complainant’s trademark for FACI upon acquisition of the domain.

    But BuyDomains made it clear that, although it became aware of the trademark, it was very limited in scope”.

    [u]pon our acquisition of the subject domain name, the results for a query on ‘faci’ revealed that while Complainant had active trademarks, such trademarks were limited to use as to metal castings and [other products]. Thus, given that ‘faci’ is a common four-letter acronym, Respondent determined Complainant’s trademark did not foreclose use of the [Domain Name] for goods and services unrelated to Complainant’s goods and services.

    When it comes to acronym domains, there is some burden on the owner to make sure it doesn’t show PPC links related to existing trademarks don’t appear. But according to the findings of the panel, no keywords related to the complainant’s trademarks appeared on the parked page.

    I also take issue with this conclusion by the panel:

    The Panel does not quarrel with Respondent’s overall business endeavor, but only with the registration of the Domain Name with actual knowledge of Complainant’s registered trademark rights and the offering of the Domain Name for sale at a hefty markup above out-of-pocket costs. As was observed by the panel in one of the cases cited by Respondent, the YIT case, “wholesale buyers of 3-letter combinations have to be careful when registering domain names.”

    Although it’s not clear from the write-up whether BuyDomains became aware of the FACI mark before or after it bought the domain, the panel’s conclusion doesn’t make sense either way. Yes, you need to be careful when you acquire short acronym domain names. But as long as you don’t infringe on the mark, you are free to register these domains and sell them at any price you want. (Once again, a panel is deciding what a “hefty markup” is. I didn’t know these guys were domain appraisers.)

    From how the panel describes the case, BuyDomains made sure not to infringe on the complainant’s trademark.

    The panelists were Robert A. Badgley (Presiding Panelist), Mark Partridge, and David E. Sorkin,

    I hope the company appeals to the courts.

23 Comments
  • Andrew,

    I agree with your analysis of this decision.

    It is all the more disturbing because it was issued by a 3-member panel that included panelists who are well-respected, and there was no dissent.

    This panel decision is a dagger to the heart of investment in generic and acronym domains. It declares that any generic term that has been trademarked is off limits to domain investment.

    The decision fails to make the critically important distinction that trademarks are limited as to use.

    Instead it buys into the bogus position of the trademark lobby that once a company has trademarked a common term, then any speculative ownership of a domain based on that term is in bad faith.

    To take an example, if a company has a trademark on ‘Crystal’ for an insect repellent, and you buy the domain crystal.com knowing about this trademark, but don’t use the domain to infringe on the trademark in any way – that should not be bad faith.

    Crystal.com does not become off-limits for investment simply because a company chooses to trademark it for a particular limited use.

    BuyDomains was in a ‘damned if you do, damned if you don’t’ position here.

    If they didn’t research the trademarks prior to acquiring FACI.com, then they could have easily allowed an ad to show up that related to FACI’s trademark use. And that would have been bad faith.

    Instead they did the right thing, they researched the trademarks, and made sure that they did not use it in an infringing way. And for that they get penalized since they were aware of the trademark prior to acquiring the domain.

    They can’t win.

    This decision attempts to make all trademark terms off limits for domain registration. Since most decent dictionary word and generic terms are trademarked, the decision is saying that only trademark owners get to reap the value inherent in these terms.

    These terms have meaning and value outside of any trademark use. Simply because a company chooses to pick a common term as their trademark, does not entitle them to exclusive control of all meaning and all uses of the word.

    BuyDomains could have sold FACI.com to dozens or hundreds of other buyers who could have made legitimate, non-infringing use of FACI.com. They should be allowed the freedom to do so.

    Like you, I hope that BuyDomains files in court to overturn this misguided decision.

  • I hope they go after them to get the domain back.

  • appeal for what? bd was in violation of a trademark. if they want to go after them in court they will insta-lose in federal court.
    they could also end up paying damages for lost revenue by screwing over the trademark owners for 9 years.

  • I think what might be lost in translation here is that BD is in the business of buying domains to resell them. And they admitted to knowing about the trademark.

    If this was an individual that owned the domain with the same circumstance, not a huge reseller, the decision would probably have been different, especially if the domain was not being offered for sale.

    BD showed they had no intention of using the domain, an individual investor could easily argue they had plans to develop the site without infringing upon a trademark they weren’t aware of. Who has ever heard of faci?

    I think this is a blow to “domainers” or resellers who simply flip domains but not necessarily to individual investors who have shown even a small history of developing domains.

    Not saying it is right or wrong, just saying that BD’s primary business is flipping domains, not developing them. This most likely lead to the decision IMO

  • So much B.S with all this stuff lately

  • If he knew about it and was trying to avoid any problems then there is nothing wrong with that, legally or otherwise. Faci.com “belongs” to nobody.

    There can be many companies using that term with no TM conflicts. There is no law or rule that says that domain is off limits, however the panel pulled that decision out of some fantasy land.

    These panelists should scare the hell out of everyone. If they are making such stupid and illogical judgments as this, many which they just jump to with no evidence, just imagine how many people wrongfully get sent to prison by some of these lawyers and judges who are panelists. Watch out.

    This decision is sickening and these kinds of decisions will blow up in the media eventually when regular people get robbed enough times of their domain names, which is essentially their business foundation, even if it is not built yet.

  • FarmerJohn says:

    April 26, 2012 at 8:45 pm

    According to USPTO,
    Description of Mark: The color(s) blue is/are claimed as a feature of the mark. The mark consists of the stylized letters “FACI” where the “F” and “A” are combined in blue inside a blue oval.

    Appears to be more of a design mark.

    This decision is fundamentally flawed.

  • “FarmerJohn” may be right.

    The Panel states:
    “Complainant markets its wares under the trademark FACI, which was registered as a word mark by the United States Patent and Trademark Office (“USPTO”) in 1998 and 2011.”

    The problem is that the 1998 word mark DIED in 2009. All that is left is Design/Logo 2011 mark which was filed in 2010, 7 years after the domain was registered. A Design/Logo trademark doesn’t apply towards domains.

    Does anyone here see this differently?

  • With outcomes like this, particularly with a company as well-funded as BuyDomains, the defendant must appeal to the court system, press for damages against the claimant and, more importantly, damages against the panel members. UDRP panel members must be made financially accountable for poor decisions or we’ll continue to see poor decisions.

  • Look let us be clear here, the UDRP does not in anyway whatsoever follow trade mark laws/rules,which IMHO is where it is grossly unfair. They will let a complainant use a trade mark to base a complaint (UDRP) on, but they will NOT let a Respondent use trade mark laws to answer/reply/defend to that UDRP . For example, if the Complainant has a trade mark for the class “selling bananas” UNDER TRADE MARK laws/rules it is ONLY entitled to protection against someone selling Bananas ,and doing so in the geographic location/Country that TM covers. Now is they issue a UDRP against someone using “bananas dot com” which domain is being used to advertise mental health services , the WIPO panelists in NO WAY would let the Respondent answer by saying it was not violating the trade mark because it was not selling bananas. This may explain why hardly any complainant issues Court claims under trade mark laws as they know full well they would lose, they thus issue
    a UDRP which allows them to use their TM to issue a UDRP and then WIPO effectively grants that Complainant the TM strength covering ALL classes and ALL Jurisdictions.

    If you get a cease and desist letter or threat of UDRP and you have a good domain worth saving then (a) transfer the domain to
    a registrar in Germany and get yourself an office address in Germany (b) issue immediate court proceedings in Germany. That will protect you and even if they issue and win UDRP they will not get your domain transferred to them !. I did it and though it took 2 years I won.

  • @John UK

    You describe the problem well.

    Trademarks are limited as to use and geographic area.

    Panelists are expanding the trademark owners rights to all uses in all locations, which is completely unsupported by trademark law.

    An IP attorney once explained to me that trademarks were created not primarily for the benefit of the company that registers the trademark, but for the benefit of consumers.

    “The heart of trademark protection revolves around protecting consumers from being misled.”

    The idea is that if you buy a drink called ‘Coca-Cola’ that the consumer will have some certainty as to what the drink will contain, to prevent the consumer from having the experience of buying a drink named ‘Coca-Cola’made by an entirely different company that tastes completely different than they expect.

    In the FACI.com case, there was no evidence of consumer confusion. BD went out of their way to ensure that not even a single link related to the trademark use appeared on the site.

    So the value of the FACI trademark was protected, and BD was not trading on the goodwill of the mark.

    Instead the panel treated the FACI trademark as entitling the FACI company to exclusive ownership of all uses and all meanings of the term ‘FACI’. This is clearly uncalled for as there are many other users of ‘FACI’ that co-exist with the trademark owner’s use.

    The reasoning of the panel was faulty, they gave the trademark holder overreaching rights to ‘faci’ and they overreached in misapplying the UDRP, which was intended for clear cases of cybersquatting only, to a case where there was no cybersquatting.

  • Say goodbye to domain selling in the future…Top guys already made their money selling domains before this all came down..Now its just a matter of time before investing in domains will be a risk rather than reward unless someone steps up..

  • A single case does not set a precedent. That’s the flaw with the UDRP process. Every case can be used for or against the registrant in a future case. It’s a circus.

  • @ Acro,yes entirely right.They are trying to expand much much further than the process was intended for OR deserves. What we are speaking of is a decision on the papers with no ability to challenge anything in person, yet they still try to say the decisions are of assistance. What I would like to see is when the complainant refers to “a” UDRP decision that says “offering for sale is bad faith”, and the Respondent in his/her reply refers to a seperate UDRP decision that says offering for sale does NOT equate to bad faith. What the F would the Panelist do then, toss a coin (or maybe himself) ??.

    What we need is someone in Europe who takes the decision all the way to Europe and gets them to shoot down WIPO process as being flawed and WIPO biased. That will take someone with determination, big pockets and time. Anyone ??

  • By “Europe” I meant “European Court of Human Rights” .

  • @ Nat Cohen Thanks, that im afraid comes from spending more time in Court than in my office !. I found out, again, the unfairness of UDRP and lost domain but reclaimed it via the Courts. These point may be noted from the German appeals court;

    1. The court declares itself internationally competent and authorized to judge
    this case

    2. The court declares the UDRP provisions irrelevent, as they should only be applied in dispute settlements outside of courts. The UDRP itself offers to submit the dispute to a court of competent jurisdication for _INDEPENDENT_ resolution, therefore the UDRP terms cannot apply.

    3. It has been ruled that XXXXX cannot force you to transfer the domain over to them.

    Still ,must keep looking for the best jurisdiction to base domains.

  • Andrew – One must wonder if Mark Partridge’s flawed logic in the MasterCard cases he lost has any bearing on how this Faci.com UDRP case was ruled.

  • Andrew, is there any chance that we could start a thread or discussion that can draw on the input of your readers from other Countries to try and pin down where in fact IS the best Jurisdiction (Country) in which to protect domains from UDRP complaints ?. On another thread someone (@Steve) has suggested Canada and quoted 2 interesting cases/judgements in support of that. What would also be interesting, for those who cannot afford lawyers, is to know which of those Countries allow litigants to act in person without a lawyer (some Countries do and some dont). Maybe I am asking too much but would be good to know for all of us I guess.

    • @ John UK – At the end of the day, you can be subject to US jurisdiction regardless of *your* jurisdiction if you own a .com. I don’t think fleeing to other countries will help people much.

  • @ Andrew Allemann -Agreed, BUT, under the UDRP rules of course a complainant MUST submit to either the Jurisdiction of Registrant as detailed in whois ,OR the Registrar’s head office jurisdiction (if that is included in the registrant/registrar agreement when regging). So let’s say my Registrar is in Canada and so am I (im not though). How then can the Complainant choose US jurisdiction , and/or once they have submitted to Canadian jurisdiction how could they then say legal proceedings should be in USA ?. I doubt the US Courts would in those circumstances go against the Canadian Courts and allow the complainant to issue in USA ?. What do you think ?

  • Although the complainant must submit to a suit in one of the two jurisdictions, they can still file a suit against you in any jurisdiction. I didn’t quite understand this until a couple months ago.

    Basically under UDRP if you want to fight a decision you can force the complainant to submit to one of the two jurisdictions. But that doesn’t mean someone could not sue you elsewhere over your domain.

  • @ Andrew Allemann Yes I guess the crucial words regarding the Complainants submission in UDRP are that it is ONLY submitting to either of those 2 jurisdictions strictly in regards to matters arising from that decision. I guess the thing to do would be to pre empt the issue of UDRP and issue proceedings (immediately you received a letter of threat from the complainant and before issue of UDRP) seeking a declatory judgment of the Court in your own chosen jurisdiction. For example ,I have trade marks on a number of domains in UK and if someone wrote and threatened UDRP I would immediately issue proceedings seeking protection of the Court etc. I only see things getting worse ,especially with the new tld’s giving people rights in names that conflict with many of the much older .com domains . For example if someone manages to register ,for example, aGoodSingleWord.newtld” and then uses it for a year or so and builds up IP rights in that
    aGoodSingleWord they could then go after the .com version and take it !.

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