Why domain consolidation and licensing are crucial for trademark protection

Aug 23, 2021, 16:01 PM

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This article was first published in the World Trademark Review magazine on 19 August 2021.

With domain monitoring, it can be hard for brand owners to recognise friend from foe. As Whois becomes more and more redundant, establishing who truly owns a domain name becomes increasingly difficult. This can lead to ‘friendly fire’ situations where brand owners send trademark enforcement notices to subsidiaries or, even more perplexingly, to themselves.

Ensuring that a brand is correctly represented on the Internet is a problem that brand owners will face for years to come. The brand owner that is aware of the importance of consolidating their brand-laden domain names will reduce risk and have less problems in the long run.

When we talk about consolidation, we include actual consolidating (ie, having as many brand-owned domains under one registrar as possible) and the safeguarding of domain names used by good-faith agents such as subsidiaries, distributors, affiliates and marketers.

In this regard, what steps can brand owners take to ensure their brand has a comprehensive yet consolidated domain name portfolio?

Domain consolidation

The more that a brand grows, the more extensive its domain name portfolio is likely to be. This is for numerous reasons. First, as brands launch new products, they will look to secure domain names correlating with their product’s name and sector.

Second, with international growth it becomes important to secure ccTLD domain names, some of which rival ‘.com’ domains for popularity in certain countries.

Last, as the brand gets more exposure, it is more likely to be the target of cybersquatting and phishing. This makes enforcement a necessity. Given that securing infringing domain names is the best way to fight misuse, the portfolio will continue to grow.

It is not always easy to ensure that this portfolio growth remains orderly. Brand-laden domain names could end up being registered by legitimate but unauthorised parties within or linked to the brand owner’s organisation.

This can present a real risk to their brand security. A subsidiary or employee who registers a domain name, albeit in good faith, could use a sub-standard service provider. Domain names can then drop and be re-registered by bad actors. It is also possible for the keys to go missing: when an employee leaves or a subsidiary relationship changes, access to the domain names can be lost in transition.

By consolidating control of their brand’s domain names to an authorised channel, brand owners minimise the risk of such problems occurring. In this regard, using a corporate domain registrar (as opposed to retail) gives brand owners greater control. Dedicated sub-accounts can be set up for subsidiaries or other similar parties. Further, marketers or affiliates can remain in control of website content, while the domain name used for such websites are still owned and maintained by the brand owner.

There are times where this is not possible, such as ccTLD domain names with specific requirements. Many ccTLDs require a local presence and may even limit accredited registrars to a few domestic organisations. In these cases, a brand owner’s agents abroad (eg, subsidiaries) can be of great help.

Licensing and agreements with other parties

In some instances, brand owners will allow parties such as subsidiaries, distributors, affiliates and marketers to use their intellectual property, particularly trademarks. Where licensing is involved, a brand owner’s strategy regarding domain names should go hand-in-hand with its trademark licensing policy.

If brand owners do not wish such parties to register domain names containing their brand, this should be made clear in the agreement. Should issues arise later, relying on a clear prohibition puts the brand owner in a stronger position than relying on a mere absence of authorisation. This is made clear in the UDRP cases discussed below.

Further, domain names should be considered in the plan for any type of exit from the agreement. Outlining a clear responsibility upon the agent to return registered domains to the brand owner will help with any possible future disputes. The more clarity given to these provisions, the better position the brand owner will be in.

Failure to account for domains in this manner can complicate the recovery of such domains should the commercial relationship deteriorate.

Difficulties with recovery

A recent UDRP case, Forum Claim 1950937, showcases the above issue. The owner of the mark STALL & DEAN attempted to recover the domain name ‘stallanddean.com’. However, the respondent was party to a licence agreement with the complainant, which permitted its registration and use of the domain. This agreement had lapsed, but the respondent held onto the domain.

Even if the respondent’s actions are questionable, the UDRP strictly applies a conjunctive bad-faith requirement (ie, the domain name must have been registered in bad faith).

In this case, the respondent had plainly been authorised to register the domain, and therefore did not register it in bad faith. Due to this, the complaint was denied. The panel suggested that such issues are better resolved through litigation. Subsequent bad-faith use cannot retroactively turn a good faith registration into a bad one under the UDRP.

By contrast, if the agreement with an agent includes a prohibition on registering domain names, or mandates their return, the complainant is in a better position under the UDRP.

In WIPO Case D2018-0834, the respondent had previously been a distributor for the complainant. The complainant’s distribution agreement contained clear provision for the return of brand-laden domains. The respondent’s refusal to do so was evidence of a lack of rights or legitimate interests, and was sufficient to show bad faith registration and use.

It could be argued that the respondent in this case was, at the time of the domain’s registration, acting in good faith. Although somewhat of a legal fiction, it is reasonable to infer that the respondent’s subsequent actions demonstrate that it never intended to abide by the relevant provision, and was therefore acting in bad faith.

Where an explicit prohibition is involved, the case is more clear-cut. In WIPO Case D2016-1331, the panel opined that a prohibition in an agreement leads to a finding of bad faith registration on part of a respondent who did not comply. It stated: “The distribution agreement makes it abundantly clear that [the distributor] was not to adopt or use the Complainant’s […] trademark in any manner whatsoever without prior consent.”

Comment

The primary goal for brand owners is to have their branded domain names consolidated into one authorised channel. Use of a corporate domain registrar can keep an extensive domain portfolio in order, ensuring complete brand coverage.

However, where domains are to be used by agents, brand owners should still mitigate against future risks. At some point, that domain name may need to be recovered. Setting clear provisions from the beginning will help this recovery be amicable, quick and inexpensive.