UDRP Element 3: Bad Faith

In case you missed it, we provided a general overview of the UDRP process here, and a more in-depth look at the first and second element of the UDRP. This post, however, delves deeper into the third element of the UDRP test, whether the domain was registered in bad faith.

What is a bad faith registration for purposes of the UDRP?

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A bad faith registration is considered by ICANN (the Internet Corporation for Assigned Names and Numbers) as a domain name has been registered and is being used by the respondent in full recognition that the domain corresponds to a registered trademark.

Paragraph 4(b) of the UDRP sets out a number of examples which an Administrative Panel will consider as evidence of bad faith registration and use of a domain name, such as:

1. Circumstances indicating that the domain name was registered or acquired primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of the domain name registrant’s out-of-pocket costs directly related to the domain name; or
2. The domain name was registered in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the respondent has engaged in a pattern of such conduct; or
3. The domain name was registered primarily for the purpose of disrupting the business of a competitor; or
4. By using the domain name, the respondent has intentionally attempted to attract, for commercial gain, internet users to its web site or other on-line location, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of the respondent’s web site or location or of a product or service on the respondent’s web site or location.

Bad Faith in UDRP Proceedings: A Practical Analysis

The third element of the UDRP—bad faith registration and use—is often the most vigorously contested in domain disputes. The four examples in paragraph 4(b) are not exhaustive; panels have found bad faith in many circumstances not explicitly listed in the policy. Understanding how panels analyze bad faith, what evidence they consider, and where the doctrine’s limits lie is essential for both complainants and respondents.

Cybersquatting: The Paradigm Case

The clearest case of bad faith is cybersquatting: registering a domain that exactly reproduces a well-known trademark with the intent to sell it to the trademark owner for a profit. This maps directly to paragraph 4(b)(i). Evidence of cybersquatting typically includes:

• A direct offer to sell the domain to the trademark owner for a price exceeding registration costs;
• A history of registering domain names corresponding to well-known trademarks without legitimate purpose (a pattern of conduct);
• Passive holding of a domain that corresponds to a famous mark with no active use;
• Registration shortly after a trademark’s public announcement or commercial launch.

Typosquatting

Typosquatting—the registration of common misspellings or typographical variants of famous trademarks—is a well-established form of bad faith. Panels consistently find that registering domains like “googel.com” or “amazzon.com” constitutes bad faith, even if the respondent argues it was unaware of the trademark. The deliberate targeting of users who mistype a familiar address and diverting their traffic to a competing or monetized site is exactly the kind of confusion-creating conduct UDRP paragraph 4(b)(iv) addresses.

Passive Holding as Bad Faith

One of the most significant doctrinal developments in UDRP jurisprudence is the recognition that passively holding a domain name that corresponds to a famous trademark can constitute bad faith, even when the domain is not being actively used. The leading case is Telstra Corporation Limited v. Nuclear Marshmallows, WIPO Case No. D2000-0003, which established that passive holding is bad faith when:

• The complainant’s trademark has a strong reputation and is widely known;
• The respondent has provided no evidence of any actual or contemplated good faith use;
• The respondent has concealed its identity or provided false contact information;
• It is impossible to conceive of any plausible actual or contemplated active use of the domain that would not be illegitimate.

The passive holding doctrine prevents respondents from avoiding a bad faith finding simply by not using a domain they registered opportunistically. A domain parked with a parking service generating pay-per-click revenue from trademark-related search traffic is an obvious case; but even a completely inactive domain pointing to a default registrar page can support a bad faith finding when the mark is famous and there is no conceivable legitimate use.

The “Knew or Should Have Known” Standard

UDRP panels generally assess bad faith based on what the respondent knew or should have known at the time of registration. A respondent who can demonstrate that it registered a domain without any knowledge of the complainant’s trademark, for a purpose entirely unrelated to the trademark, is in a much stronger position than one who registered a domain containing a well-known brand name without any credible explanation of legitimate purpose.

For famous trademarks, constructive knowledge is particularly important. A respondent who registers APPLE.COM or NIKE.COM cannot credibly claim ignorance of those marks—the fame of the mark is itself evidence that the respondent must have known about it. For less famous marks, actual knowledge at the time of registration must typically be demonstrated through direct evidence or compelling circumstantial evidence.

Bad Faith at Registration vs. Bad Faith in Use

The UDRP requires bad faith both in registration and in use. Some panels have held that a domain registered in good faith cannot later be subject to transfer simply because the respondent subsequently uses it in bad faith. Others have found that ongoing bad faith use can satisfy the element even if the original registration was in good faith. The prevailing majority view, reflected in WIPO Overview 3.0, is that bad faith must exist at the time of registration and continue through the proceeding; a good faith registration that is later abused does not satisfy the third element, though a change of ownership can restart the bad faith analysis.

Common Defenses Against Bad Faith Findings

Respondents can rebut a bad faith allegation through several categories of evidence:

• Pre-registration use or demonstrable preparations for use in connection with a legitimate business prior to notice of the dispute;
• A legitimate reason for choosing the domain unrelated to the complainant’s trademark, such as a personal name, a geographic term, or a descriptive term that the respondent independently developed;
• Registration predating the complainant’s trademark rights—a registrant cannot have targeted a trademark that did not exist at the time of registration;
• The complainant’s trademark is not famous and the respondent plausibly had no knowledge of it at registration; and
• Laches, where the complainant unreasonably delayed in asserting its rights and the respondent has been prejudiced by that delay.

If you have questions about UDRP bad faith, defending a domain dispute, or filing a UDRP complaint, contact Revision Legal’s Internet attorneys at 855-473-8474.