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A recent domain name decision under ICANN's Uniform Domain-Name Dispute-Resolution Policy (UDRP Policy), captioned Bin Shabib & Associates (BSA) LLP v. Hebei IT Shanghai ltd c/o Domain Administrator, found reverse domain name hijacking, under some rather interesting, if not questionable circumstances. The Rules that govern the UDRP Policy define Reverse Domain Name HiJacking as "using the Policy in bad faith to attempt to deprive a registered domain-name holder of a domain name." 

What caught my eye was the three-member panel's use of the ill-fated "knew or should have known" phrase in finding the requisite "bad faith" for hijacking; a phrase well-known to those who follow the trademark fraud case law and appreciate that recently this same "should have known" standard was flatly rejected by the Court of Appeals for the Federal Circuit (CAFC) in In re Bose, as being nothing more than a test for simple negligence. For more on the In re Bose decision, see here and here.

The Bin Shabib & Associates three-member panel, assigned by NAF, was unpersuaded that complainant had proven common law trademark rights in the acronym BSA (under the first UDRP element), so it declined -- as unnecessary -- to make any findings on the second and third elements under the UDRP, namely, the "lack of legitimate interest" and "bad faith" elements. Despite making no findings on either of these two key elements, the panel held as follows:

Also, the Panel finds that Complainant knew or should have known that it was unable to prove that Respondent lacks rights or legitimate interests in the disputed domain name or that Respondent registered and is using the disputed domain name in bad faith. Based on the foregoing, the panel finds that reverse domain name hijacking has occurred. See NetDepositVerkaik v. Crownonlinemedia.com, D2001-1502 (WIPO Mar. 19, 2002) (“To establish reverse domain name hijacking, Respondent must show knowledge on the part of the complainant of the Respondent’s right or legitimate interest in the Domain Name and evidence of harassment or similar conduct by the Complainant in the fact of such knowledge.”); see also Labrada Bodybuilding Nutrition, Inc. v. Glisson, FA 250232 (Nat. Arb. Forum May 28, 2004) (finding that complainant engaged in reverse domain name hijacking where it used “the Policy as a tool to simply wrest the disputed domain name in spite of its knowledge that the Complainant was not entitled to that name and hence had no colorable claim under the Policy”) (emphasis added).

A couple of curious points are worth discussion. First, putting aside for a moment the dubious "should have known" standard of bad faith, how can complainant be guilty of "bad faith" -- sufficient for hijacking -- in failing to appreciate that it had no chance of proving the very two elements for which the panel made no findings? Second, neither of the quoted parentheticals go far enough to support the quoted  "should have known" standard; instead, both speak only of actual knowledge.

As it turns out, however, there is some prior WIPO panel support for the "should have known" standard in finding "bad faith" sufficient for reverse domain name hijacking. Nevertheless, in each of these decisions, the panels made findings on all three UDRP elements before finding "bad faith" and ruling in favor of a claim for reverse domain name hijacking, see here, here, and here.

So, what do you think? Is the "should have known" standard defensible in reverse domain name hijacking decisions? If not, what about gross negligence? How about reckless disregard? What is the appropriate level of culpability? Does it even matter, or is a hijacking finding "of little import" to most complainants?

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This reminder is a bit late for new Christmas-season consumer products, but it bears repeating year round, as companies contemplate new products:  buy domain names associated with a new product before announcing the new product.  This seems like an obvious thing to do, but I regularly read stories where companies fail to perform this step of a new product launch, then have to go and spend thousands of dollars to secure related domain names that could have been purchased for perhaps $10 per year prior to launch. 

The latest lesson comes from the otherwise savvy Apple Inc., who just won an uncontested UDRP arbitration on the domain name "ipodnano.com."  As flagged by Domain Name Wire, Fusion Media Ltd. registered ipodnano.com two days before Apple announced the product.  In order to win a UDRP arbitration, the complainant must show that the respondent both registered and used the domain name in bad faith.  Having registered this particular domain name a mere two days before the product launch suggests that Fusion Media either (1) made a fortuitous guess, or (2) heard advanced news about the new product.  Even if Fusion Media's guess on the "nano" part of the name was completely in good faith, the "ipod" part of the name was not.  Fusion Media did not respond to the UDRP arbitration complaint, so we may never know, but it is interesting to note that Apple apparently only asserted its trademark rights in IPOD in the arbitration.  (And, as I think of it, maybe Apple isn't so savvy . . .)

To borrow a phrase from Steve Baird, other examples of this sort of thing can be found here, here, and here. 

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A bomb exploded in the domain name aftermarket world on Wednesday.  A well-known domain name auction house called SnapNames.com announced that one of its (now former) employees had been bidding as a shill in many online domain name auctions run by the company since 2005.  SnapNames has an FAQ page on the matter here. 

It is not difficult to decry the many abuses that have gone on in the domaining industry:  cybersquatting, typosquatting, domain name tasting, domain name kiting, pay-per-click fraud, and now shill bidding (to name a few).  As these abuses tend to make for the juciest news, it is not surprising that some (including trademark attorneys) accuse the whole domain name business (or "industry") of being dirty.  But law, being a generally slow, blunt instrument, has so far caught up with only the first two of the abuses listed above.  What is less widely reported is that, for all of its wild-westness, the DN business has policed itself (e.g. cybersquatting, domain tasting) without resort to government intervention.  This is as it should be. 

Even so, self-policing is also slow to catch up to opportunists, so caveat emptor is the rule of the day in domain name transactions, especially when bidding at an auction, especially an online auction.  I recommend reading any auction site's rules, terms and conditions carefully before engaging in a transaction.  Some of these sites will readily represent both buyer and seller, which is a situation well-known to lawyers and real estate agents as a "conflict of interest."  Caveat emptor, indeed. 

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In giving advice in the field of intellectual property, one hackneyed phrase repeatedly crosses my lips:  an ounce of prevention is worth a pound of cure. 

When it comes to protecting a brand or trademark on the Internet, I may start saying, "an ounce of prevention is worth a ton of cure."  A couple of weeks ago, the Corporation Service Company released the results of a study that found, among other things, that brand owners had spent more than $220 million to obtain domain names from third parties through the UDRP dedicated arbitration process.  The study found that if the brand owners had registered the disputed domain names privately (prior to the third party doing so), the costs to obtain the domain names would have been approximately $1.1 million.  An ounce of prevention, indeed.  That is a 200:1 ratio. 

As I noted previously, the going rate for a domain name registration for one year is somewhere around seven to ten dollars (retail, not wholesale).  At the National Arbitration Forum, the cheapest filing fee to initiate an arbitration on a single domain name is $1,300.  Attorney's fees to prepare a UDRP complaint will typically run anywhere from a couple to several thousand dollars.  Given the cost disparity, I think that a brand owner is well advised to sit down and contemplate this question:  "What domain names would I spend several thousand dollars to obtain if a third party came along and started using them to advertise confusingly similar goods or services?"  The domain names that answer that question are the domain names that the company should go out to register proactively.

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