In a decision released by the National Arbitration Forum (“NAF”) earlier today a UDRP panel denied the Complainant, Max Mara Fashion Group’s, bid to transfer the domain Max Mara owns the mark PERSONA for clothing (U.S. Trademark Reg. No. 1,207,303). Overall, the case is instructive on the issues of laches, claim preclusion and how generic terms may legitimately be used in association with certain types of advertising websites. The panel thoroughly and thoughtfully dealt with these complicated and controversial UDRP legal issues which are often applied without proper analysis or explanation.

These issues were raised by the Respondent has part of its defense where it argued that:

(i) waited too long to bring the action (i.e., was barred by the doctrine of laches);

(ii) Respondent has been using the domain for 9+ years;

(iii) the issue had already been decided in an earlier case brought by another party that sought transfer of the domain (equivalent in civil litigation terms to the concept of res judicata); and

(iv) that it is acceptable to put up an advertising page (or pay per click site) related to a generic term like PERSONA and that this qualifies as a “bona fide” use under the UDRP.

Before looking at the three (3) basic required elements under UDRP law the Panel discussed the Respondent’s laches defense and determined that it would not bar the filing on the basis that Complainant had waited too long because the Respondent could not prove that it had been prejudiced by the delay (a requirement of the defense). In a creative explanation, the Panel explained that in its view if a Respondent simply uses a domain to post a pay-per-click ad site it is not prejudiced by Respondent’s delay in bringing a UDRP action, stating:

“Respondent’s domain name has been hosted by two companies which provide pay-per-click advertisements on the resolving website. The practice of companies that provide these services is not to charge the domain name owner for the hosting service, but to share revenues with the owner of the domain name. Although Respondent will presumably lose revenue from the loss of the domain name, it is most likely that other than the cost of acquiring the domain name, Respondent has incurred no other expenses in connection with its ownership of the domain name. Thus, […] Respondent has not suffered any material prejudice from the Complainant’s delay in bringing this proceeding.”

With respect to the required elements (similarity, legitimate rights, and bad faith) the Panel found that the Complainant had failed to prove the Respondent did not have a right to the domain name, and that it had acted in bad faith, largely for the same reasons – namely, when a common or generic term is used as a domain name a registrant is entitled to use the domain name as a pay-per click or advertising site so long as the site is used in a manner consistent with the generic meaning of the term, and that common terms can be registered by anyone on a “first-come first-serve basis”:

“[t]he Panel agrees with Respondent and finds that Respondent can establish rights or legitimate interests in the disputed domain name pursuant to Policy ¶ 4(a)(ii) as it is making use of the disputed domain name in connection to its generic meaning. See Kaleidoscope Imaging, Inc. v. V Entm’t, FA 203207 (Nat. Arb. Forum Jan. 5, 2004) (finding that the respondent was using the <> domain name for a bona fide offering of goods or services because the term was “generic” and respondent was using the disputed domain name as a search tool for Internet users interested in kaleidoscopes)(citation omitted).

Although the facts in the case would appear to point toward finding the Complainant was attempting to reverse hijack, the Panel rejected this notion mostly because it would not broadly apply a rule that bringing a UDRP for a domain name that was already the subject of a UDRP complaint by another party is not the equivalent of res judicata (i.e., claim preclusion).

In sum, the Panel did a good job tackling the issues raised by the Respondent, and practitioners and brand owners would be wise to consider this case when dealing with situations that concern domain names that are also generic terms.