Domain-name registrants who sit on their rights rather than go after trademark infringers do so at their peril. In a case decided last July, an arbitrator for the World Intellectual Property Organization (WIPO) held that a foreign registrant’s bad-faith registration and continued use of an infringing domain name, at some point, transformed into legitimate use. As a result, the trademark holder, Victoria’s Secret, was denied any relief under Australia’s version of the Uniform Domain Name Dispute Resolution Policy (auDRP).
In May 2012, lingerie retailer Victoria’s Secret filed a complaint with WIPO seeking cancellation or transfer of the domain name “victoriassecrets.com.au,” which allegedly had been routing Victoria’s Secret customers to an escort service based in Sydney, Australia. As required under the auDRP, Victoria’s Secret alleged all three prongs required for relief: (i) a domain name that is identical or confusingly similar to a valid trademark; (ii) illegitimate use; and (iii) bad faith.
First, Victoria’s Secret alleged that the infringing domain name was confusingly similar to the company’s trademark, which had been registered in the United States since 1977 and in Australia since 1990. Indeed, the infringing domain name incorporated Victoria’s Secret’s entire trademark, simply adding an “s” at the end. The company further alleged that the Australian women who registered the domain name had intentionally used Victoria’s Secret’s brand and image to promote prostitution.
Second, Victoria’s Secret claimed that the Australian escort service had no rights or legitimate interests in the domain name: the escort service was not known by the name “Victoria’s Secret,” the service was not authorized to use the trademark, the registrants were not using the name in connection with a bona fide offering of services, and they were not putting the name to legitimate non-commercial or fair use.
With respect to the “bad faith” prong, Victoria’s Secret alleged that the respondents had registered and used the name to deceive Internet users into believing the lingerie company was a source, sponsor or affiliate of the escort service. Victoria’s Secret further alleged that given its previous registration and worldwide customer base, the registrants knew their domain name would cause confusion.
What’s more, the registrants intended to trade on the confusion and, in the process, tarnished the lingerie company’s reputation.
The WIPO arbitrator agreed — for the most part. With seemingly no hesitation, he found for the complainant on the first and third prongs. He stated that the disputed domain was “confusingly similar” to Victoria’s Secret’s trademark. Moreover, he found that the registrants “knew of the Victoria’s Secret trademark at the time they registered and began using the domain name” and that they “deliberately chose” the domain so that their escort business would benefit from the resulting confusion. Nonetheless, the arbitrator held that Victoria’s Secret was not entitled to relief.
In his view, Victoria’s Secret had failed to show that the escort service had no legitimate interest in the domain. According to the arbitrator, evidence submitted by the parties showed that the registrants had been using the disputed domain name for almost 10 years and, more importantly, that Victoria’s Secret had been aware of the infringing use for seven years prior to filing the complaint. Although Victoria’s Secret had issued a couple of cease-and-desist letters in 2005, the company ultimately decided not to pursue the matter. At some point after that, the escort service obtained a legitimate interest in using the domain. In the arbitrator’s words:
[Victoria’s Secret’s] failure to press the allegations of infringement led the Respondent to understand that the Complainant no longer objected to the Respondent’s behavior. The effect of this subsequent bona fide use of the disputed domain name was that, by the time the Complaint was filed, the Respondent had acquired a right or legitimate interest in the disputed domain name.
The arbitrator added that if the Australian registrants were to change their use of the domain name following the decision, their legitimate interest in the domain would very likely be lost.
It will be interesting to see if other arbitration panels follow suit. Whatever the case, Victoria’s Secret is probably keeping a close watch on the domain while considering potential alternatives for relief.
The intersection of domain names and the First Amendment is not new. Indeed, in the early days of the domain name system, courts considered the issue of whether a domain name registrar could prohibit the registration of domain names on the basis of content – for instance, domain names containing profanities. See Nat’l A-1 Advertising, Inc. v. Network Solutions, Inc., 121 F. Supp. 2d 156 (D.N.H. 2000); Seven Words LLC v. Network Solutions, Inc., 260 F.3d 1089 (9th Cir. 2001). However, the U.S. Court of Appeals for the Fifth Circuit recently was confronted, in Gibson v. Texas Dep’t of Insurance, with a new twist on the First Amendment as it applies to domain names: whether a particular domain name is pure “commercial speech” (entitled to only limited First Amendment protection) or “expressive speech” (entitled to more extensive protection).
The Texas Labor Code prohibits the use together of the words and phrases “Texas,” and “Workers Compensation,” or similar abbreviations. Nonetheless, Gibson, a workers compensation lawyer in Texas, registered the domain name texasworkerscomplaw.com. On the associated website, Gibson discusses matters relating to Texas workers compensation law and, of course, advertises his law practice. The Texas Department of Insurance took offense to Gibson’s domain name, and sent Gibson a cease and desist letter. Gibson, being a lawyer, sued in federal court, alleging that the Texas Labor Code restrictions violated his constitutional rights.
The Fifth Circuit, in an interesting opinion, addressed the commercial speech/pure speech dichotomy inherent in domain names used by commercial enterprises, but artfully dodged the question of whether the domain name was in fact commercial speech. Instead, the court first analyzed whether, if the domain name was in fact commercial speech (which can under some circumstances be restricted), it was the sort of commercial speech that the Texas Department of Insurance could restrict.
The court found, correctly, that commercial speech can be restricted only if it is “inherently likely to deceive.” The state argued that Gibson’s domain name implied a connection with or approval of the state. The Fifth Circuit dispensed with the state’s argument, noting that since there was nothing to suggest that texasworkerscomplaw.com could not be viewed in a non-deceptive fashion (a truism), the state could not restrict the use of the domain name as commercial speech.
There is a second exception allowing a restriction on commercial speech: A state may regulate non-deceptive commercial speech if the restriction “advances a substantial state interest” and is narrowly tailored to serve that interest. On this issue, the Fifth Circuit sent the case back to the federal district court to develop a factual record. It seems unlikely that the Texas Department of Insurance will prevail in the end, as the statute on which its objection is based is vastly overreaching, and would prohibit anyone providing services relating to workers compensation in Texas from registering domain names that accurately describe what they do. For instance, a physician who performs workers compensation examinations could not register texasworkerscompdoc.com (as of this writing, this domain name is available for the taking).
Obviously, such a domain name is not misleading, and there is no legitimate basis upon which the state can restrict it. Domain names are often a form of speech. Just because they are a relatively new format of expression does not change this fact and give the government a basis to attempt to restrict their use.