Offer To Sell For $1M Not Necessarily Bad Faith

Brand owners policing the Internet are alive to the implications of offers to sell conflicting domain names. Where the facts suggest that a respondent registered or acquired a domain name intending to sell it to a brand owner for more than the out-of-pocket registration expenses, a panel is entitled to find both bad faith registration and use under Para. 4 (b) (i) of the UDRP.

Recent decisions have clarified the parameters of this provision, however, and confirmed that not all offers to sell, even for vast sums, point to bad faith. In Leineweber GmbH & Co. KG v Braxton Manufacturing Co., Inc. (WIPO Case No. D2008 – 1057), the three-member panel gave useful guidance on factors to take into account.

Battle of the Braxes

The case concerned the domain name brax.com, registered by Braxton Manufacturing Co. Inc. Braxton was a US manufacturer of precision parts for medical and other high-tech industries, founded in 1964.

Braxton registered the disputed domain name in July 1997 along with a suite of other domain names incorporating “brax” or “braxton.” Between January 2000 and May 2001 the brax.com domain name pointed to Braxton’s main website at www.braxton.com; later it resolved to no website at all.

Leineweber, a German clothing company, owned German, CTM and International trade mark registrations for BRAX predating the registration of brax.com. In July 2008 it brought an administrative action seeking transfer of that domain name on the basis of identity with its registered BRAX trade mark, claiming that Braxton had no rights or legitimate interests in the domain name and that the domain name had been registered and used in bad faith.

Leineweber relied in particular on Braxton’s statement, during negotiations, that it would be prepared to sell the disputed domain name, but would not sell it for less than US $1 million.

BRAX in Business

Leineweber fared poorly. Although the disputed domain name was indisputably identical to Leineweber’s registered BRAX trade mark, the panel found against Leineweber on each remaining element.

The panel held that Braxton enjoyed a legitimate interest in brax.com. There was evidence that Braxton had used the domain name to link to its own website for at least a year, together with affidavit evidence that the complainant had instructed (albeit without apparent effect) its ISP and DNS to refer the domain name back to its main website later, when the link was no longer functioning.

There was, moreover, evidence that Braxton had used the abbreviation BRAX in its business, including on personalised number plates, and that the company founder, Braxton Nelson, was nicknamed “Brax.”

BRAX was an obvious abbreviation for the company name Braxton, and there was no evidence that Braxton knew or should have known of the German clothing company’s BRAX mark at the time the domain name was registered. The panel was satisfied that the respondent had proved a legitimate interest in the domain name.

Quite An Offer

The panel also rejected Leineweber’s contention that Braxton had manifested bad faith intent in registering the domain name by indicating that it was prepared to sell it, but not for less than US $1 million.

The panel noted that not all offers to sell a domain name necessarily reflected bad faith. Prior panel decisions had held that the buying and selling of domain names was essentially legitimate in the absence of evidence to suggest that the domain name was registered with the intent to profit from a sale to a trade mark owner (among others, CeWe Color AG & Co. OHG v Shenbun Ltd., WIPO Case No. D2008-0810).

In this case, there was evidence that the respondent enjoyed a legitimate right to a domain name, and it was no surprise that the respondent had expressed a willingness to sell, but only for a price vastly exceeding its likely registration expenses. Moreover, the panel noted that it had been Leineweber, not Braxton, who first broached the topic of a sale.

Braxton’s reaction, in those circumstances, could not be regarded as indicative of bad faith.

Comment

This decision is a helpful reminder that a respondent’s offer to sell does not necessarily lock up victory for a would-be UDRP complainant.

Certainly, offers to sell can be persuasive, particularly where they are unsolicited and there are other circumstances indicating that the registration was made in the knowledge of the complainant’s rights and with the intention of profiting from the identity or similarity of the domain name to those rights.

These days respondents are savvy to the risks of appearing too eager to sell, though, and outrageous demands for the transfer of a domain name are less common than they used to be. Moreover, respondents are more frequently waiting to be asked whether they would be willing to sell and allowing complainants to make the first overtures, to further dampen the impression that they registered the domain name with a view to profiting from a sale to the brand owner.

Complainants who rush in with offers to buy domain names in the hope of eliciting an unreasonably high price tag in reply may not be helping their case, since respondents can and do claim that selling domain names is a legitimate trading activity. Such an argument can be compelling where the respondent has a basis for arguing that it has a legitimate right or interest in the domain name.

Where a case is finely balanced, there is arguably little utility in attempting to extract an unreasonable demand from a potential respondent. A complainant may do better to focus on undermining a potential case for legitimate rights or interests, while trying to fit its case into one of the other examples of bad faith registration and use in Para. 4 of the Policy or arguing that some other relevant circumstances prove this arm of the test.

A focused approach with good evidence is more likely to win the day than an eye-catching but potentially excusable offer to sell: or in other words, all that glitters is not gold.