imgres-21-150x61The UDRP is focused on providing a remedy where a third party holds a domain name that infringes a trademark holders’ rights. It is not a remedy for all situations where parties have a dispute concerning the proper use of a domain name that is the subject of a contract or trademark license. But what happens when a party refuses to stop using a domain name that is the subject of an oral agreement? Can a trademark holder use the UDRP to recover the domain name?

This issue was considered in Archer Company USA, Inc. v. Tomas Breen Case where the Complainant filed a UDRP against the Respondent, an individual named Mr. Tomas Breen. Mr. Breen was apparently an “Internet Specialist” who worked for a company called CPI t/a Dexpan International (“CPI” or “Respondent”) that had entered into an agreement with the Complainant in 2004 to become a reseller of the Complainant’s product – Dexpan – which is a non-explosive demolition agent. Complainant began using the DEXPAN mark sometime in 2002 and applied to register the mark with the USPTO in 2004.

The panel explained that there was no written agreement between Complainant and CPI relating to the reseller arrangement, but that (according to the evidence) “CPI was obviously aware that Complainant was the owner of the trademark Dexpan used in association with non-explosive demolition agent before it agreed to become a reseller of Complainant’s Dexpan product.” As part of this agreement Complainant “… allowed CPI to use Complainant’s trademarks and Complainant gave CPI copyrighted materials such as photographs and marketing material in order to market and resell Dexpan products to others.” Mr. Breen registered the domain for CPI in 2005.  When Complainant terminated the agreement CPI ignored the request and kept on using the domain name.

The panel determined that the Complainant had proved that the domain was confusingly similar to its DEXPAN mark, and that CPI did not have rights in the domain name. The issue of rights in the domain name was interesting because the panel found that there was a basis, under the oral agreement, to find that Complainant had terminated the agreement and thereby any rights that had been granted to CPI, stating: “[t]he Panel finds that following termination of the resellers agreement Complainant has made a prima facie case that CPI t/a Dexpan International has no rights or legitimate interests in the disputed domain name.”

However, even after finding that the oral agreement was clear enough to show that CPI did not have rights in the DEXPAN mark after termination, it reasoned that the oral agreement was NOT sufficient to support finding that the use of the domain name by CPI (since the time that Complainant ended the reseller agreement) was evidence of bad faith. Instead, the panel explained that the oral agreement was insufficient as far as finding wrongful use of the domain name by CPI, because:

“[i]n the current case there is no evidence of any written agreement between Complainant and CPI t/a Dexpan International. Disputes about alleged breaches of oral agreements which may or may not have considered default, notice of default, remedies for default, termination for failure to remedy default, remedies after termination and the like are normally better suited for legal proceedings providing production of documents, discovery of documents and witnesses etc.”

Overall, the panel simply reasoned that the threshold for proving a Respondent does not have rights to a domain name was pretty low, particularly where the Respondent fails to respond to the complaint. Even so, it was not willing to infer that conduct by CPI breached the oral reseller agreement between the parties because there were no specific terms that it could look at and cite as the basis for bad faith use of the DEXPAN mark. The case should be instructive to trademark holders and act as a reminder that it is important to make sure any agreements authorizing a third party to use a mark or domain name should be in writing, otherwise it could preclude relief under the UDRP and thereby a much easier and less costly alternative to litigation or prolonged negotiations...