Case No Domain(s) Complainant Respondent Ruleset Status
1675141 yeticuphandle.com
yeticuphandles.com
yetihandle.net
[1 MORE]
YETI Coolers, LLC Ryley Lyon / Ditec Solutions LLC UDRP CLAIM DENIED
11-Jul-2016

Analysis

Fair Use Incorporating Trademarks in Domain Names

08-Aug-2016 08:11am by UDRPcommentaries

About author

Gerald M. Levine
http://www.iplegalcorner.com

The paragraph 4(c)(iii) safe harbors of the Uniform Domain Name Dispute Resolution Policy are construed from a five word phrase, “legitimate noncommercial or fair use.” “Noncommercial” like “identical” in paragraph 4(a)(i) has a defined meaning; it does not include domain names inactively held (for any alleged purpose), although non-use is not necessarily fatal to rights or legitimate interests. “Fair use” has a larger canvass; it includes nominative (commercial) use that is fair and Constitutionally protected speech. These are large matters; at bottom the answer to whether domain names are unlawfully registered rests on the purpose for the registrations and the registrants’ actual use. I'll leave Constitutionally protected speech for another time.

Nominative fair use of others’ trademarks by incorporating them as trade names or into domain names is a well established doctrine in trademark jurisprudence. It acknowledges the possibility of their lawful non-consensual use as signifiers of non infringing products or services. The scope of nominative (commercial) use under UDRP jurisprudence was first defined in one of the most quoted decisions in the database, Oki Data Americas, Inc. v. ASD, Inc., D2001-0903 (WIPO November 6, 2001). The same panelist now revisits the purpose and use questions in YETI Coolers, LLC v. Ryley Lyon / Ditec Solutions LLC, FA1605001675141 (Forum July 11, 2016) (<yeti handles.net>, <yetihandle.net>, <yeticuphandles.com> and <yeticuphandle.com>). Coincidental for its timing is a decision from a different Panel in another Yeti dispute with a different set of facts and a different conclusion, YETI Coolers, LLC v. Asbille, Tony / Global Star Medical, FA1606001677837 (Forum July 5, 2016) (<yetistraw.com>).

I’m going to refer to the Yeti Coolers’ disputes by the names of the Respondents, ASD and Asbille. The Panel in ASD found the use of the domain names fair under a nominative use analysis (as he had in Oki Data); the Panel in Asbille, found the Respondent registered and was using the domain name in bad faith. Also set off against ASD is a third dispute in which Respondent (an attorney) argued fair use on nominative grounds, Diamond Consortium, LLC d/b/a Diamond Doctor v. Brian Cummings, FA160500 1675435 (Forum June 24, 2016). The Majority in that dispute held Respondent had no legitimate interests or rights and registered the domain name in bad faith; the dissenting panelist argued (against the grain in my view) that the domain names were similar but not confusingly similar, that Respondent had a right or legitimate interest in soliciting clients, and the registrations were lawful.

The three fact patterns illustrate how panelists resolve claims of nominative use under the UDRP; it's also an opportunity to comment on the current state of nominative use under U.S. case law.  The Respondent in ASD cites the 9th Circuit decision in Toyota Motor Sales U.S.A., Inc. v. Tabari, 610 F.3d 1171 (9th Cir. 2010), but in a recent decision in the Second Circuit, Int'l Info. Sys. Sec. Certification Consortium, Inc. v. Sec. Univ., LLC, (May 18, 2016) the Court held that the “district court erred in applying solely the Ninth Circuit's test for nominative fair use, instead of applying our Court's Polaroid test.” There is also an important case from the Third Circuit, Century 21 Real Estate v. Lendingtree, 425 F.3d 211 (3rd Cir. Oct. 11, 2005).

In remanding the case for further consideration, the Second Circuit noted that although “we ‘have recognized that a defendant may lawfully use a plaintiff's trademark where doing so is necessary to describe the plaintiff's product and does not imply a false affiliation or endorsement by the plaintiff of the defendant,’ [citing Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 102 (2d Cir. 2010)] . . . [t]o this point, this Court has not adopted either the Ninth Circuit or the Third Circuit's rule on nominative fair use.”

The Third Circuit expressly labels nominative use an affirmative defense (that is, defendant’s burden), which the Second and Ninth Circuits reject in favor of placing the burden on plaintiff to prove likelihood of confusion. I would argue that an affirmative defense fits more easily with UDRP because it focuses on respondents demonstrating rights or legitimate interests in the domain names; if they can’t the Panel moves on to consider the elements of bad faith—that is, likelihood of confusion. The Second and Ninth fit less easily in UDRP because their heavier evidentiary demand (assuming Panels literally adopted the requirement) would confront complainant with a double challenge under paragraph 4(a)(ii) of th Policy: not only to prove respondent’s lacked right or legitimate interest but to establish likelihood of consumer confusion.

There is language in Toyota Motor Sales that suggests the steepness of complainant's challenge (which I think is carried over into the UDRP):

It is the wholesale prohibition of nominative use in domain names that would be unfair. It would be unfair to merchants seeking to communicate the nature of the service or product offered at their sites. And it would be unfair to consumers, who would be deprived of an increasingly important means of receiving such information.

“Unfair to merchants and consumers” could be said to underlie the Panel’s achievement in Oki Data. In essence (anticipating the Third Circuit and giving voice to the mantra from the Ninth) he treated nominative use as a (or kind of) affirmative defense. Complainants cannot meet this challenge by simply marshalling a prima facie case; because if that’s all they can do, if they can’t show respondents crossed the line, respondents prevail.

The Panel in ASD is correct that “[a]though [the Oki Data] decision does not reference the trademark law principle of ‘nominative fair use,’ the standards are functionally equivalent, and the four-part test articulated in Oki Data is shaped by the same underlying policy concerns”— that is it protects businesses who use the mark in a truthful way (Ninth Circuit) even if there is a likelihood of confusion (Third Circuit). But unsaid (at least “unsaid” explicitly) is that Panels are not concerned with likelihood of confusion at all in considering rights or legitimate interests (they accept that there's likely going to be some confusion); that only comes into play if the nominative use defense is rejected.

To succeed under the Oki Data test respondents

i. Must actually be offering the goods or services at issue;
ii. Must use the site to sell only the trademarked goods, otherwise it could be using the trademark to bait Internet users and then switch them to other goods;
iii. Must accurately disclose the relationship between the registrant and the trademark owner; and
iv. Must not try to corner the market in all domain names, thus depriving the owner of the trademark from reflecting its own mark in a domain name.

If respondents pass the tests they prevail under paragraph 4(c)(iii); if they fail, then and only then does the Panel assess the bad faith elements under paragraph 4(b)(iv) of the Policy. This means that likelihood of confusion may never be reached, notwithstanding a literal reading of the Second and Ninth Circuit requirements. The Panel in ASD explains further that

[t]he Oki Data test was developed in the context of an authorized retailer, and as Complainant points out in its Complaint, Respondent was never authorized to sell Complainant’s products. Nevertheless, the Oki Data standard has repeatedly been applied in the context of unauthorized resellers as well.

In ASD the Respondent (a manufacturer of handles for Yeti products that also fit products of other manufacturers) persuaded the Panel that it had a legitimate interest in incorporating the trademark even though it served aftermarket products for Yeti’s competitors; an argument, incidentally, that may possibly give pause under the proof requirements of the Second Circuit. In any event, the persuasive argument having been made the Panel closed the proceedings in Respondent's favor.

Respondent in Asbille also argued nominative use but because it offered no evidence of any market activity for “straw” (as there was, and is, for handles) and relied on future plans (which fails as a defense under paragraph 4(c) of the Policy) it was unable to rebut Complainant’s prima facie case that it lacked rights or legitimate interests:

Respondent currently presents no disclaimer as to its association with Complainant, and the addressed pay-per-click website does not offer any such product for sale, or even provide evidence that such a product is in the works. To the contrary, Respondent’s <yetistraw.com> website promotes Complainant’s competition. What Respondent may or may not intend to do in the future does not [excuse] Respondent’s actual use of the domain name.

In other words, there must be a predicate marketplace presence to sustain a claim of nominative fair use. Only active use (or demonstrable preparations to use) qualifies the possibility of a meritorious claim.

Since we’re talking about diamonds in Diamond Consortium, there’s one further facet to consider, namely whether offering a legitimate service qualifies for nominative use? The underlying purpose for registering <diamonddoctorlawsuit.com> and <dallasdiamonddoctorclassaction.com>was soliciting clients. The Respondent attorney is up front about this: “Respondent is not just seeking potential plaintiffs for “diamond lawsuits”; instead, Respondent is seeking potential plaintiffs that have been harmed through their purchase of diamonds from a specific retailer, Diamond Doctor.” But, there’s not even a current lawsuit! And even if there were (at least as the Majority sees it, correctly in my view) the use is not fair:

The Panel finds that these arguments are distractions from the Complainant’s uncontested claim that there are no pending lawsuits or class actions brought against it, whether or not Complainant may have in fact engaged in the overgrading of diamonds. . . . Finally, the resolving websites exist for commercial gain insofar as their mixed, if not principal, purpose is the solicitation of professional services, but with – in quantitative terms – incidental reference to Complainant’s business.

It should be noted that Oki Data has been extended to include services; but attorney solicitations cross the line. This was a second go around for Respondent against Diamond Doctor, K.M.A. Sunbelt Trading Corporation d/b/a International Diamond Center v. Brian Cummings / Cummings Manookian, FA 1601001654974 (Forum Feb. 17, 2016) with essentially the same result (although with a sole Panel).

Under UDRP it is lawful to incorporate a trademark in the domain name if the domain name is used truthfully to describe the product or service respondent offers; it implies that the use doesn’t cross the line into infringement even though acknowledging that some consumers may be confused (at least, initially) but that's no impediment to nominative fair use.

Mr. Levine is the author of a treatise on trademarks, domain names, and cybersquatting, Domain Name Arbitration, A Practical Guide to Asserting and Defending Claims of Cybersquatting under the Uniform Domain Name Dispute Resolution Policy. (Legal Corner Press, 2015). Learn more about the book at Legal Corner Press. Available from Amazon and Barnes & Noble.  Ongoing Supplement here.

Comments

  • smlevy42 12:10 pm 12-Jul-2016
    Quite a timely change in thinking from the Panelist who authored the original Oki Data opinion! Although the Respondent here registered four domains which incorporate the YETI trademark, the Panel did not find this to be an attempt to "corner the market" under the fourth prong of the Oki Data test. While admitting that this factor gives him pause, the Panel goes on to discuss the historical context of this prong as having been created during a time when only a few TLDs were available. Now that there are hundreds of new TLDs from which to choose, the harm to a brand owner may be lessened where a domain owner registers multiple variations on that brand.

    However, is such a change in thinking somewhat premature given the fact that legacy TLDs remain the addresses of choice ("dot-com is still king") and given the slow pace with which both consumers and brand owners have taken up use of new gTLDs? It may not have made a difference in this particular case since only 4 domains were involved but it will be interesting to see how this decision impacts some future case which clearly would have fallen within the original fourth-prong standard of Oki Data (e.g., 14+ domains as mentioned in the Mudjackers decision).

    As to the second Oki Data prong, the fact that Respondent's goods are after-market accessories for use in conjunction with the Complainant's products appears to have been critical since the Panel states that "the nature of the handles is that they can be used for other brands of cups and tumblers as well." In the original Oki Data case the respondent was only offering Oki Data products. However, the YETI decision indicate that, in the case of after-market accessories, it is those accessories and not the complainant's products which are the focus of the inquiry since Respondent's domains redirect to an Amazon page which mention brands other than YETI.

    Though not the current facts, I'm left wondering what would happen if the Respondent was using its disputed domains to promote its own accessories which were specifically designed for use with only YETI products as well as other accessories which are similarly designed only for use with the products of Complainant's competitors. True, such use might not be directly promoting competitive goods if website visitors are only shopping for accessories to products they already own, but there seems to be a risk of such promotion if a new buyer (one who hasn't yet decided upon which insulating cup to buy) is influenced by the design or features of accessories which may differ for various brands. In this hypothetical scenario the domain of the site selling accessories could, in fact, implicate the second prong of Oki Data by promoting the products of a complainant's rivals.

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