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Renew a domain, lose a UDRP?

Kevin Murphy, February 2, 2011, Domain Policy

Renewing a domain name could land you in hot water if you’re hit with a UDRP complaint, if some current thinking at the National Arbitration Forum gains traction.
In the recent NAF decision over FreeGeek.com, panelists argued that if a domain was not originally registered in bad faith (because no trademark existed at the time) renewing the domain after a trademark had been obtained could nevertheless be used to demonstrate bad faith.
Showing that a disputed domain was registered and used in bad faith is of course one of the three pillars of UDRP.
Free Geek Inc runs its web site at freegeek.org. It wanted the .com equivalent, which was registered in 2001, six years before the company acquired a US trademark on its brand.
FreeGeek.com is owned by by Kevin Ham’s company, Vertical Axis. The registration has been renewed every year since 2001.
The three NAF panelists were split on whether renewals post-2007 should be considered evidence of bad faith.

Two of the panelists agree that Respondent should be charged with exercising some diligence at renewal to determine if there are outstanding marks which conflict; one does not.

That’s a disturbing statement, if you’re interested in registrant rights – two panelists basically want domain investors to relinquish their domains if somebody else subsequently acquires a trademark.
What’s more, the panelists’ position appears to be based on a dodgy interpretation of recent UDRP precedent. The decision goes on to say:

The Chair of the Panel is concerned that the Respondent renewed its registration after the trademark was applied for and the USPTO registered the mark. In RapidShare AG and Christian Schmid v. Fantastic Investment Limited… a panel in which the Chair participated, found that “bad faith” could include renewal of a domain name after the issuance of the mark.

It’s a dodgy interpretation because the referenced case, rapidshare.net, does not in fact discuss renewals at all.
In that case, bad faith was actually shown to have arisen due to the domain (which had survived a UDRP just a few months earlier) being bought by a new registrant, not due to a renewal.
What we seem to have here is a case of a couple of NAF panelists thinking about trying to expand the scope of the UDRP. There’s a ton of precedent concluding that renewals are not relevant when establishing whether a domain was registered in bad faith.
With that in mind, you’d think the case would have been a slam-dunk win for the complainant. Not so.
In fact, Ham prevailed on the basis that he had acquired rights to the domain by simply parking it, which constituted a legitimate commercial use.

This panel, in contrast to other panels, finds that the use of this model and evidence of the use is enough to justify a factual finding that Respondent has used the name for commercial purposes
…
Respondent has clearly demonstrated that it acquired rights in the name by usage even if the usage has been limited to a “pay-per-click” links page. Such usage does not itself signal a lack of rights and legitimate interests and can constitute a bona fide offering of goods or services according to Policy

If there are any recent UDRP cases that show just how random a process it is, this is the one.