CIRA Panel issues its first clear finding of “reverse domain name hijacking”

The April 15, 2009 decision by a CIRA (Canadian Internet Registration Authority) domain name dispute resolution Panel (the Panel) marks the first clear finding of “reverse domain name hijacking.” This phrase refers to the practice of acquiring domain names from owners by accusing them of violating trade-marks with the domain name and demanding that the domain be transferred. The flip side involves the practice of registering domain names consisting of a trade-mark or another well-known name solely with the intent of selling it to the trade-mark owner later on, the phenomenon referred to as “domain name hijacking.”  

The aforementioned case involves a complaint filed by the Complainant (Globe Media International Corporation) with Resolution Canada (the Domain Name Dispute Resolution Provider) seeking to wrest the disputed domain name, “FORSALE.CA,” purchased by the Registrant (Bonfire Development Inc.) on January 12, 2009. The Complainant’s trade-mark application for “WWW.FOR-SALE.CA” matured to registration on January 21, 2005. In turn, the Respondent asked the Panel to make a finding of “reverse domain hijacking” pursuant to paragraph 4.6 of the CIRA Policy.

Paragraph 4.1 of the CIRA Policy delineates that the Complainant ought to prove the following on a balance of probability in order to succeed:

a)      The Registrant’s domain name is confusingly similar to a mark in which the Complainant had rights prior to the date of registration of the domain name and continues to have such rights; and

b)      The Registrant has registered the domain name in bad faith;

and the Complainant must provide some evidence that:

c)       The Registrant has no legitimate interest in the domain name

In paragraph 18 of the decision, the Panel stated that even if the Complainant proves a) and b) and provides some evidence of c), the Registrant will succeed if the Registrant proves, on a balance of probability that the Registrant has a legitimate interest in the domain name.

The part a) of the test requires the Complainant to establish that the trade-mark rights precede the domain name registration date. Since the Complainant’s trade-mark application matured in 2005, way before the domain name registration by the Registrant in 2009, this condition is met. For a domain name to be considered “confusingly similar,” paragraph 3.4 of the Policy states that if the domain name so nearly resembles in appearance, sound or the ideas suggested by the mark as likely to be mistaken for the mark, this condition is met. Since the only difference between the trade-mark and the domain name is the hyphen, “www,” and “.ca,” the domain name is considered confusingly similar.

However despite the part a) of the test, the Panel concluded that the Complainant failed to establish that the Registrant registered the domain name in bad faith. This test is basically an inquiry into the subjective behaviour of the Registrant subject to some restrictions, such as the registration of the domain name for the purpose of selling, renting, licensing or otherwise transferring the Registration to the Complainant or its associates for a valuable consideration in excess of the Registrant’s actual costs in registering the domain name.  The Panel concluded that the second part of the test was not satisfied by the Complainant; and while this was sufficient to dispose of the current case in favour of the Respondent, the Panel proceeded to conclude that the Respondent had a legitimate interest in the domain name since the Complainant could not introduce sufficient evidence to the contrary. 

In response to the Respondent’s claim, the Panel makes a finding of “reverse domain hijacking,” pursuant to paragraph 4.6 of the Policy. At this stage, the Registrant is required to prove on the balance of probability that the complaint was commenced by the Complainant for the purpose of attempting, unfairly and without colour of right, to cancel or to obtain a transfer of any Registration which is the subject of the proceeding. While the term “without colour of right” is not defined under the Policy, the Panel indicated that the party alleging the claim should forward some evidence that the Complainant acted in “bad faith” in commencing the proceedings. The Panel also concluded that while the existence of a trade-mark registration is a relevant consideration in deciding whether the complaint was filed in good faith, a Panel must also consider other factors, including the conduct of the complainant and the nature of the domain name.

The key pieces of evidence supporting the Respondent’s claim in this case included: 1) the generic nature of the domain name; 2) the evidence that the Complainant had previously tried to wrest the domain name “FORSALE.CA” from its prior owner, even before the maturation of the trade-mark application; and c) the Complainant’s history of not only registering domain names such as VERSACE.CA, MENTOS.CA, ZANTAC.CA and SMIRNOFF.CA, all of which reflect famous trade-marks, but also filing the corresponding trade-mark applications for the marks WWW.VERSACE.CA, WWW.MENTOS.CA, WWW.ZANTAC.CA and SMIRNOFF, a few years after the domain name registrations. The Panel reasoned that the Complainant sought to register those trade-marks in order to legitimize the corresponding and previously registered domain name registrations, constituting a profound abuse of the trade-mark regime. Consequently, the Complainant was held to have engaged in reverse domain name hijacking.

What makes the finding of “reverse domain name hijacking” extraordinary is the potential for an award of costs of up to $5000. Judging from the fact that to date there have been no awards of costs under the Policy, the behaviour of the Complainant in this case must be an example of extreme behaviour. The practice of “reverse domain name hijacking” is too common in the industry and usually involves a big company filing a complaint against a small legitimate domain name holder, in an attempt to intimidate the latter.  Therefore, the decision in this case is extremely significant as it not only protects those businesses that have acted in good faith to legitimately obtain domain names, but also rightly punishes those that have brought forward a “bad faith” complaint.