There are circumstances under which a later registered trademark can prevail over an earlier registered domain name, but the planets have to be in alignment. More typically, holders of later acquired rights who adventitiously select as their trademarks words or phrases already taken as domain names wish to capture the domain names on the theory that they have a better right to the domain names than the respondent. While the wish has not fallen on fertile ground there is at least one panelist (see Note for August 6th) who believes that speculative registrations of generic words and/or letter combinations with the intention of selling them at a profit “[o]nce someone wants to acquire the domain name ... were intended to be prohibited by the policy....” The American Automobile Association, Inc. v. QTK Internet c/o James M. van Johns, FA1261364 (Nat. Arb. Forum, July 25, 2009) (dissent).
Even if a respondent’s use is found to be in bad faith, an earlier registration of a domain name cannot be abusive against a nonexistent trademark. This principle applies to the original registrant, but not to a transferee who takes after the trademark’s use in commerce. A transferee’s right or legitimate interest is less secure for several reasons. First, it does not inherit its predecessor’s good faith registration. This was illustrated in Daimler AG v. William Wood, D2008-1712 (WIPO February 25, 2009) on a refiled complaint. Second, the new registrant is bound by its warranty. It would not surprise if the Daimler result is repeated more often against transferees who trade in domain names. There are already decisions that impose a higher investigatory standard on high volume registrants. Mobile Communication Service Inc. v. WebReg, RN, D2005-1304 (WIPO February 24, 2006).
The vulnerability of a transferee can be imagined by reading between the lines of such decisions as the one in Runway Beauty, Inc. v. Errol Z. Hernandez, D2009-0762 (WIPO July 28, 2009). The disputed domain names, all incorporating “runway magazine” were registered years prior to Complainant registering RUNWAY MAGAZINE, although the Complainant alleges (but failed to support) use in commerce predating the domain names. The Panel agreed with the Complainant that the Respondent lacked rights or legitimate interests in the domain names, but rejected the conclusion that the domain names were registered in bad faith. There is a coda to the decision, dicta that addresses the issue of passive holding that seems to suggest that if the evidence had supported passive holding the decision may have gone the other way. The dicta reads:
While the Respondent has admittedly held the disputed domain names for a significant period of time without apparent use, the Respondent has made attempts to provide content for its website, in accordance with his original intentions. The Panel therefore does not consider that the Respondent has been passively holding the disputed domain names in circumstances sufficient to establish registration and use in bad faith for the purpose of the Policy.
Regrettably, some panelists subscribe to this mantra, following neither precedent nor the WIPO Overview even where the domain name is registered years before the complainant acquires its trademark. The Panel in in Jordan Sparks d/b/a Open Dental Software v. Jee-Young Ko, FA0906001266265 (Nat. Arb. Forum August 5, 2009) found for the Complainant on inactivity coupled with the respondent’s response to a complainant’s inquiry that it would be willing to sell the domain name for a price. This is not the law, except as seen by that panelist.
The value of domain names for the entrepreneur lies in their revenue potential. Whatever resale value the domain names identical to RUNWAY MAGAZINE had before the proceeding has been significantly reduced by a holder’s intervening acquisition of a trademark adopting the same string of letters. This particularly effects word combinations attractive as trademarks. It may be as the dissent in The American Automobile Association believed (although skipping original registrants who have a pass under the UDRP) that speculative registrations by first generation domainers will come to haunt second and third generations who will have a diminishing field of use.
