Domain Investors “Have a Duty to Research” Trademarks

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Performing due diligence before buying a domain name is an essential task for domain investors. This due diligence is not limited to the ownership history and provenance of a domain name. Domain investors must also do trademark research to avoid running afoul of anti-cybersquatting laws and regulations.

According to a recent UDRP decision at the National Arbitration Forum (NAF), domain investors are expected to perform trademark research before acquiring domain names. In fact, people who buy domain names as investments “have a duty” to do trademark research.

Here’s an excerpt from the Actionship.com UDRP that was won by the complainant:

Respondent says he is in the business of acquiring and selling generic domain names to sell or rent to prospective start-up or operating businesses; the two-word domain name fits into the pattern of domain names in which Respondent’s company invests; and that Respondent registered the domain name without knowledge of Complainant’s mark. He contends that the phrase “action ship” is generic and as such has a right or legitimate interest in it.

This raises a fundamental question: did Respondent, a professional domain name reseller, have a duty to research any trademark database? The consensus of Panel views is that it does. See WIPO Overview section 3.2.3: “Noting registrant obligations under UDRP paragraph 2, panels have however found that respondents who (deliberately) fail to search and/or screen registrations against available online databases would be responsible for any resulting abusive registrations under the concept of willful blindness; depending on the facts and circumstances of a case, this concept has been applied irrespective of whether the registrant is a professional domainer.”

In these circumstances the Panel considers the following passage from Fundación EOI v. Kamil Gaede, D2021-3934 (WIPO December 21, 2021) to be applicable:

“…as a person who is in the business of buying and selling domain names, the Respondent has a heightened obligation to comply with Paragraph 2 of the Policy, which requires the Respondent to “represent and warrant to us that . . . (b) to your knowledge, the registration of the domain name will not infringe upon or otherwise violate the rights of any third party.” Further, the Policy makes clear that “It is [the Respondent’s] responsibility to determine whether your domain name registration infringes or violates someone else’s rights.” The Respondent does not appear to have done anything to comply with its obligations under the Policy. Even if the Respondent was not actually aware of the Complainant and its trademark rights, the Respondent is charged with knowledge if it was wilfully blind to the Complainant’s rights. See generally WIPO Overview, Sections 3.2.2 and 3.2.3.”

To what extent a registrant is expected to perform a search to ensure that it is not infringing on the rights of others depends on the linguistic elements of the mark. If a mark is generic without doubt, that is one set of facts, but as a phrase moves to the other end of the continuum, that is another set of facts. Here, Respondent labels “ACTIONSHIP” as a generic phrase, but offers no evidence that the phrase has any widespread usage in any linguistic community. A search by the Panel of the United States trademark database, where both parties are located, would have revealed Complainant as the sole user of the term. This is evidence that although the words “action” and “ship”, taken separately, are generic, the combined phrase “ACTIONSHIP” is not generic but rather one-of-a-kind. Panels have generally found “willful blindness” in cases of famous or well-known marks. It cannot be said that ACTIONSHIP is in either category. Does this make a difference? In the Panel’s view, marks that are neither famous nor well-known but are one-of-a-kind cannot be ignored by professional domain resellers even if their failure to conduct research is less than willful.

The response to Respondent’s “generic” argument is that a professional domain name reseller has a duty, greater or lesser depending on the distinctiveness of the mark, to assure itself that it is not infringing the rights of others. See Fragrance Foundation, Inc. v. Texas International Property Associates, D2008-0982 (WIPO August 28, 2008). (“[i]t seems to this Panel and others that people who make a living from registering vast numbers of domain names must make a reasonable effort…to ensure that they are not infringing on the rights of others.”). See also Citigroup Inc. v. Andrew Robert Wilson, Andrew Robert Wilson, D2021-1058 (WIPO June 1, 2021). “Nor indeed will mere ignorance of the existence of the trade mark be sufficient to bring the adoption and use of the name within the fold of honest practice. Honest practice in the choice of a name to be used in trade must imply reasonable diligence in ascertaining that the name chosen does not conflict with, inter alia, an existing trade mark, and thus in verifying the existence of any such mark.”).

About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has closed eight figures in deals. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest. Reach out to Elliot: Twitter | Facebook | LinkedIn | Email

5 COMMENTS

  1. In fact, people who buy domain names as investments “have a duty” to do trademark research and PAY for the domains !!

    lmao…how many fake bidders ?

  2. I don’t know if domain investors have a duty (to who?) to research trademarks before acquiring a domain name but it certainly is a well-understood best practice to do so simply to mitigate the legal risks of domain investing.

  3. I’m not going to read the whole post because of time now, but just regarding the headline itself that is sheer nonsense invented out of someone’s delusional mind if that is what has been asserted.

    People have no such “duty.”

    Is it a good idea? Of course. A duty? Of course not.

    That’s the problem with entities like this and the people who run them, including the judicial system itself, especially here in the USA.

    Take the notion of judicial “precedent” itself for instance. Long story short, it goes like this: “We don’t really know what ultimate truth and knowledge is, so we will meander about the topic in a highly intelligent way, sometimes incorporating problematic human biases or worse, and then also point to this human decision some other court made elsewhere before for good measure.”

    Complainants, however, do have a duty to not misuse and defraud any complaining process. An “ultimate” non-invented moral duty as well any derivative duty recognized and implemented through human institutions.

    And for the real truth behind it all – ultimately the basis for all morality and “duty” derives from the very person, character and will of God, not from any inventions or opinions strictly from the mind and imagination of man. Without God, there is no true objective basis for morality at all.

    Whether you “researched” trademarks or not has nothing to do with whether you acted in good faith. The question of whether a domain itself and its use is truly infringing or not is another matter to be determined.

  4. There is too much dirt with trademark domain names.
    I start with the Godaddy Patented tool locates trademark is obsolete or is interested in making them trademarks when they are not, she wasted time looking here: https://tmsearch.uspto.gov/bin/gate.exe?f=login&p_lang=english&p_d = trmk
    And many were not registered, many were present and after they withdrew, many are dead and so is Godaddy.

    Also investors, and domain brokers sell (Com) trademark domains maximum $ 500,000 to the same companies of the trademarks, I have seen it published this past year in a respectable domain news blog.

    I was not surprised years ago with Godaddy’s patent for trademark domains. I used it by an exclusive domain parking lot for premium domain investors. I could not access it. I did not have a sufficient portfolio of premium domains. very true if you check them.

  5. The problem is Trademark accepted for too many generic keywords. How keywords like Hotel, Aviation, Queen can be trademarked and people easily sue domains owner by doing RDNH. There are bad people using Trademark wrongly, to monopoly generic keywords so others can’t easily doing the same business in certain fields, and others using Trademark to acquire domain names with cheap budget applying Trademark. Trademark has been using to create unfair business environment by bad people.

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