Recent Case Notes & Commentary

BAD FAITH -DISRUPTING THE BUSINESS OF A COMPETITOR

By Guest Contributor Charles A. Kuechenmeister


Charles A. Kuechenmeister is a FORUM panelist who was formerly a Judge in Colorado and in the US Marine Corps. His full CV can be found here.




THOUGHTS ON POLICY

PARAGRAPH ¶ 4(b)(iii)



Policy ¶ 4(b)(iii) describes one set of circumstances which if proven is evidence of bad faith registration and use of a domain name. It reads as follows: “you [the respondent] have registered the domain name primarily for the purposes of disrupting the business of a competitor” (emphasis supplied). Read according to its plain meaning, this paragraph seems limited to a very narrow set of facts, which would only in the rarest of circumstances ever be present. This paper describes how UDRP panels have interpreted ¶ 4(b)(iii), and suggests a proposed revision that would capture more accurately the perceived intent of the drafters of the Policy with respect to the registration and use of a domain name that wrongfully disrupts a complainant’s business.


Many complainants invoke Policy ¶ 4(b)(iii) in cases where the respondent registered an infringing domain name which resolves to a web site passing off as the complainant and offering (or purporting to offer) products identical or similar to the complainant’s products. This disrupts the complainant’s business at a minimum by causing confusion as to the source of any products actually furnished by the respondent. More frequently the complainant must deal with, and suffer the damage to reputation from customer complaints about products which were substandard or not delivered at all.


Another scenario in which complainants have invoked Policy ¶ 4(b)(iii) involves the respondent who does not use the domain name for a web site but instead uses it for an email address from which he sends fraudulent emails to the complainant’s customers directing them to remit invoice payments to a “new” bank account, controlled by the respondent, or to phish for sensitive private information from a complainant’s customers or business invitees.


Panels have typically found bad faith registration and use under Policy ¶ 4(b)(iii) in both types of cases. Bad faith certainly is present, as is disruption, and the panels are correct in so finding, but neither of these types of cases fits within the language of that paragraph. In the second case, competition is not present at all. In the first case it is at least arguably present because the respondent offers the same types of products as the complainant.


The concept of “competition” in the context of Policy ¶ 4(b)(iii) has been subject to various interpretations by UDRP panels. Some have interpreted that term broadly to mean someone who “acts in opposition to the complainant.” Mission KwaSizabantu v. Benjamin Rost, Case No. D2000-0279 (WIPO June 7, 2000). Others have limited the term to parties who vie commercially with each other in the same industry, offering the same or similar goods or services. Tribeca Film Center Inc. v. Lorenzo Brusasco-Mackenzie, Case No. 2000-1772 (WIPO April 10, 2000). This panelist favors the second view, concurring with the panel in Britannia Building Society v. Britannia Fraud Prevention, Case No. 2001-0505 (WIPO July 8, 2001) that to accept the interpretation first above described would “render so many parties ‘competitors’ as to dilute the Policy’s bad faith requirement beyond recognition.”


Another element of the competition factor, however, is that, in order for the respondent’s conduct to fall within ¶ 4(b)(iii), the competition must exist before the domain name is registered. Otherwise, the language of ¶ 4(b)(iii), paraphrased as “you registered the domain name primarily to disrupt the business of a competitor,” would have no meaning. The competition must exist before the registration. Even in the fact pattern first described above, the complainant and the respondent were not competitors when the domain name was registered. Any genuine competition between them arises only after the registration, and even then, it is questionable whether disrupting the complainant’s business was the respondent’s primary purpose in registering the domain name. In most cases it appears that the respondent’s motive is not so much to harass or burden an existing commercial adversary as it is to trade on the complainant’s goodwill and reputation by creating confusion as to the source, sponsorship, affiliation or endorsement of his site, which is covered by Policy ¶ 4(b)(iv). The respondent’s actions in this scenario simply do not fit within the circumstances described in Policy ¶ 4(b)(iii). This is even more true as regards the second scenario discussed above. There is not even color of competition there.


Panels considering Policy ¶ 4(b)(iii) allegations involving these circumstances have correctly found bad faith, but most of them have based that finding upon Policy ¶ 4(b)(iii), even when the respondent was not actually a competitor, and even when there is no evidence that the respondent’s primary purpose was to disrupt the complainant’s business. Most panels have essentially by-passed the competition and primary intent factors, focusing instead on disruption, and have simply found bad faith under ¶ 4(b)(iii), without further discussion or analysis.[1]


About the only kind of scenario that would actually fit within Policy ¶ 4(b)(iii) would involve a respondent, for example a retail outlet engaged in competition with another similar business, who, hoping to disrupt the competitor’s business, registered an infringing domain name and caused the resolving web site to impersonate the competitor and, posing as the competitor, offer goods at such a deep discount that the competitor could not possibly honor it. The competitor would experience serious disruption from this, having to expend considerable time and effort to convince irate and frustrated customers that the web site featuring the too-good-to-be-true offers was not in fact his. There may well be other similar scenarios which actually fit within ¶ 4(b)(iii), but these circumstances are extremely rare in UDRP proceedings. This panelist has not encountered a single one in over two hundred cases heard.


As stated above, however, using a confusingly similar domain name to attract Internet traffic to a web site which passes off as and disrupts the business of a complainant, offering unauthorized or counterfeit versions of complainant’s products, is still bad faith. So is using the domain name for emails to commit fraud or conduct phishing schemes. Policy ¶ 4(b) is non-exclusive, listing some examples without attempting to enumerate all its varieties.[2] The non-exclusive nature of Policy ¶ 4(b) allows for consideration of additional factors in an analysis for bad faith, and using a confusingly similar domain name to disrupt the business of a complainant by passing off as and impersonating that complainant, whether by a web site or by emails, is sufficient evidence of bad faith to meet the requirements of Policy ¶ 4(a)(iii). A respondent’s primary intent in registering and using the domain name is less important than the effect of his conduct. A respondent knows or should know the disruptive impact this conduct will have upon a complainant’s business. Going forward with his plans in spite of that demonstrates bad faith independently of Policy ¶ 4(b)(iii) as currently written.


This panelist believes that rather than have panels continue to find bad faith under Policy ¶ 4(b)(iii) when the facts to support it are not present, it would be preferable to revise that paragraph to reflect what panelists have correctly identified as bad faith registration and use of a domain name. A ¶ 4(b)(iii) which reads as follows might be one way to accomplish this:


(iii) your registration and use of the domain name wrongfully interferes with or disrupts the business of the owner of the trademark or service mark; or


This form or something like it would expressly support a finding of bad faith in the commonly occurring scenarios discussed above. It would honor both the findings of bad faith articulated by many panelists in past decisions and the apparent intent of the drafters of the Policy for the circumstances addressed by this provision.

Denver, Colorado, USA

November 2020


[1] PopSockets LLC v. san mao, FA 1740903 (Forum Aug. 27, 2017) (finding disruption of a complainant’s business which was not directly commercial competitive behavior was nonetheless sufficient to establish bad faith registration and use per Policy ¶ 4(b)(iii)), Love City Brewing Company v. Anker Fog / Love City Brewing Company, FA 1753144 (Forum Nov. 27, 2017) (Finding that Respondent disrupts Complainant’s business by pointing Internet users to an expired webpage. This may create the perception that Complainant is closed, never existed, or is not a legitimate business. Therefore, the Panel finds that Respondent registered and uses the disputed domain names in bad faith per Policy ¶ 4(b)(iii).), Duracell US Operations, Inc. v. Emmanuel Onch, FA 191038 (FORUM September 29, 2020) (“Indeed, as already noted, Respondent impersonates Complainant in an email phishing scheme. Use of an email address associated with a disputed domain name to pass off as a complainant in furtherance of fraud may evidence bad faith under Policy ¶¶ 4(b)(iii) and (iv).), Norm Reeves v. Texas International Property Associates, D2009-1482 (WIPO December 22, 2009) (“Further, as an operator of a website that links to automobile dealerships that compete directly with Complainant, Respondent is competing with Complainant, itself a well known automobile franchise. Respondent's registration and use of the Disputed Domain Name thus amounts to disruption of the business of a competitor and thus to bad faith registration and use of the Disputed Domain Name as set forth under paragraph 4(b)(iii) of the Policy.”), Biofarma v. Oleg A. Fomin, D2014-1920 (WIPO December 15, 2014) (“By doing so, the Respondent intentionally confused those Internet users, then seeking the Complainant’s products but who were reached the Respondent’s websites and ultimately were directed to the rogue Internet pharmacy “www.onlinedrugstore24h.com”, into believing that the Respondent and/or the rogue pharmacy had a relation, affiliation or other legitimate connection with the Complainant when, in fact, it had no such relation, affiliation or connection whatsoever with the Complainant. As such, the Respondent, for its own pecuniary benefit, diverted sales of the Complainant’s products from legitimate pharmaceutical outlets to the detriment of the Complainant and its reputation. Thus, the Respondent violated paragraph 4(b)(iii) and (iv) of the UDRP.”).

[2] Worldcom Exchange, Inc. v. Wei.com, Inc., WIPO Case No. D-2004-0955 (January 5, 2005), Bloomberg Finance L.P. v. Domain Admin - This Domain is For Sale on GoDaddy.com / Trnames Premium Name Services, FA 1714157 (Forum Mar. 8, 2017) (determining that Policy ¶ 4(b) provisions are merely illustrative of bad faith, and that the respondent’s bad faith may be demonstrated by other allegations of bad faith under the totality of the circumstances).