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Recent Case Notes & Commentary

Complex Contractual Disputes Fall Outside the Scope of the UDRP

Redox Power Systems, LLC. v. Paul Faulkner

Claim Number: FA 1504001615480

June 1, 2015

Paragraph 4(a) of the UDRP expresses that only disputes relating to an alleged abusive registration of a domain name can be decided by arbitration under the UDRP. Potential complainants should bear in mind this narrow scope of the Policy will limit situations to which it will apply, meaning they may need to seek a more appropriate forum for their claim.

The facts of this case revolved around the souring of a contractual relationship. Complicated issues such as ownership and control of the company were in dispute, with litigation due to commence shortly to determine a number of legal issues.

Given complex business disputes are outside the clearly delineated purpose of the Policy, the Panel ultimately dismissed the Complaint.

Disputed Domain Names

The disputed domain names are used in the sale of fuel cell power systems to consumers:

<> and <>

Parties’ contentions

The Complainant, Redox Power Systems, LLC, submitted the <> website contained its business name, while the <> domain name incorporated its product that was earmarked for future release. Additionally, the Complainant contended it directed the Respondent to register the disputed domain names.

In reply, the Respondent submitted the Complainant did not possess rights in the REDOX POWER SYSTEMS or POWERSERG marks, and that it registered the disputed domain names following a request by the Complainant’s Board of Directors. The Respondent also disputed the UDRP was applicable, as there was an upcoming court case to determine ownership of the Redox Power Systems company itself, which would include the disputed domain names.

Preliminary Issue: UDRP Not Applicable

The Panel refrained from undertaking an analysis of the elements, ruling the matter was a complex business dispute and therefore outside the intended scope of the UDRP. In arriving at this determination the Panel cited Love v. Barnett, FA 944826 (Nat. Arb. Forum May 14, 2007):

A dispute, such as the present one, between parties who each have at least a prima facie case for rights in the disputed domain names is outside the scope of the Policy … the present case appears to hinge mostly on a business or civil dispute between the parties, with possible causes of action for breach of contract or fiduciary duty.  Thus, the majority holds that the subject matter is outside the scope of the UDRP and dismisses the Complaint.

The Panel ruled the multi-faceted nature of the dispute required full examination by a court, and therefore fell outside the intended scope of the UDRP. With impending litigation to resolve, amongst other things, the right to control Redox Power Systems organisation, the Panel ruled the case involved too many other legal issues outside the alleged abusive domain name registrations.

Accordingly, the Complainant’s action was dismissed.

The UDRP Implemented to Resolve Abusive Cybersquatting

The UDRP is intended as a mechanism to prevent trademark infringement through cybersquatting. However, it is not the appropriate forum to decide complex business disputes, such as this one. Panels are not equipped to undertake extensive investigations into evidence submitted by parties and then to assess its credibility.

Courts are better equipped to undertake a factual analysis of the case, as they can probe the evidence and, hopefully, unearth the truth. The UDRP does not allow discovery or the examination of witnesses, with Panelists arriving at a decision following electronic submissions by the parties. This limited scope provides a quick and cheap administrative procedure in which a domain name may be transferred in cases of cybersquatting, but nothing more.

The UDRP is only applicable in clearly delineated circumstances. Therefore, when the issue goes beyond simple cybersquatting, to save time and money Complainants should instead commence proceedings in a national court, which are better prepared to assess the credibility of evidence.

NOTE: Research for this article was carried out by Jacob Bayley, but the opinions expressed are those of the Editor.


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