The Challenge of Applying the Passive Holding Doctrine in the Absence of a Response, by Nat Cohen
While most disputes are undefended, that usually poses little problem for a Panel as the Disputed Domain Name is often put to an obvious bad faith use or it is often the typosquat of a famous, distinctive mark.
Yet when a Complainant asserts the passive holding doctrine and there is no response, as in the Terravita .shop dispute, a Panel is placed in a potentially difficult situation. The Disputed Domain Name is not put to any use that could guide the Panel and the asserted mark is not highly distinctive, such that in the absence of a response the Panel may not have enough information to make a well-informed decision. The Complainant is unlikely to include evidence that rebuts its allegations. The Panel’s own base of knowledge may be insufficient to assess the plausibility of the Complainant’s allegations. What is a Panel to do under these circumstances?
The passive holding doctrine, as set forth initially in the seminal and oft-cited Telstra decision from 2000, enumerates several factors to be assessed in determining whether “non-use” can be considered “bad faith use” for the purpose of the Policy. As noted by the Panel in the Terravita .shop dispute, section 3.3 of the WIPO Overview describes the factors as:
(i) the degree of distinctiveness or reputation of the complainant’s mark, (ii) the failure of the respondent to submit a response or to provide any evidence of actual or contemplated good-faith use, (iii) the respondent’s concealing its identity or use of false contact details (noted to be in breach of its registration agreement), and (iv) the implausibility of any good faith use to which the domain name may be put.
Factor (iv) is particularly challenging to evaluate in the absence of a response. Demonstrating the “implausibility of any good faith use to which the domain name may be put” requires proving a negative. A competent response would include evidence of widespread third-party use of the mark, if such evidence existed, to undercut both the Complainant’s allegations that its mark is distinctive and that there is no plausible good faith use to which the domain name may be put.
Yet when there is no response, how is a panel to know whether the mark is subject to extensive third-party use? And in the absence of knowledge of the prevalence of third-party use of the mark, how is a panel able to fulfill its responsibility under the passive holding doctrine to assess “the implausibility of any good faith use”?
As I argued in my comment on the fbsolution .info dispute, the correct approach cannot be that plausibility is determined by “a Panel searching its own mind”. In other words, when a complainant makes such an allegation but does not provide adequate evidentiary support regarding third-party use, or the lack thereof, and in the absence of a response, it is not sufficient for a panel to determine the matter by saying, in effect, since I personally am not aware of third-party usage of this term, my own lack of awareness is sufficient evidence to make a finding that there is no plausible good faith use for the disputed domain name.
I believe that there are four better alternatives available to a Panel when it seeks to assess the implausibility of a good faith use of the Disputed Domain Name.
First, if the Complainant provides sufficient evidence such that the Panel believes it can assess the implausibility of a good faith use based on the Complainant’s evidence alone, this would be the ideal option. The type of evidence that a Complainant could submit to support an “implausibility” allegation could include search results of the WIPO Global and USPTO trademark databases that reveal that it is the only mark holder, the first 100 Google search results obtained from locations far removed from the Complainant’s base (as Google search results are geo-targeted and which can be accomplished through the use of VPNs) showing that the Complainant dominates those search results, LinkedIn searches on the mark showing that the Complainant is the only company known by that name, DotDB.com searches on the mark which reveal all registered domain names based on that mark, with screenshots of the webpages of each domain name to demonstrate that there is no legitimate third-party use being made of the mark.
If a Complainant provided such thorough evidentiary support of its allegation that there is no plausible good faith use of the Disputed Domain Name, then the Panel could determine that it had sufficient evidence available to it to fulfill its responsibility to assess the implausibility of good faith use of the Disputed Domain Name.
Yet the likelihood that a Complainant will go to such lengths are “slim to none, and Slim has left town”. Complainants might start providing robust search results that demonstrate the frequency of third-party use of their marks if Panels start requiring Complainants to take seriously their responsibility to support their allegations of the implausibility of good faith use with adequate evidence. Yet as slap-dash, poorly supported complaints are more the norm than robust complaints, a Panel is unlikely to receive a complaint that includes adequate evidence that a Panel could rely upon to decide the implausibility of a good faith use.
In the absence of a Complainant including sufficient evidence to support the allegation of implausibility of a good faith use, the Panel has a Second option available to it – to conduct independent research to assess the validity of the allegation. This is a problematic approach, as it is not the Panel’s job to conduct research to make a case that either the Complainant or the Respondent should have made for themselves. This is especially problematic if a Panel conducts research that determines the outcome of the dispute and does not provide the parties the opportunity to respond. Disagreements about the extent of acceptable independent research notably surfaced in last year’s fordirect .com dispute.
It is impossible to know how frequently Panels engage in independent research since there is no tally of such decisions. Searching UDRP.tools for phrases that commonly appear in decisions when independent research is conducted yields the following results:
“limited factual research” – 625 instances
“independent research” – 337 instances
“Panel searched” – 36 instances
These results suggest that independent research undertaken by panelists is not an infrequent occurrence.
As I noted in my fbsolution .info comment, in less than five minutes, a Panel could conduct searches on the asserted mark on Google, LinkedIn, DotDB.com and in relevant trademark databases to determine the extent of third-party use and therefore the plausibility that the Disputed Domain Name could be put to a good faith use. This independent research would also enable the Panel to verify whether the Complainant is compliant with its certification that “Complainant certifies that the information contained in this Complaint is to the best of Complainant’s knowledge complete and accurate”, or whether the Complainant has cherry picked its evidence and is in violation of its certification.
A Third option is for the Panel to issue a Procedural Order requesting more evidence about the implausibility of good faith use. This solicitation of evidence raises similar concerns of Panel activism as are raised by independent Panel research. Especially in the absence of a response, it could be viewed as a Panel assisting the Complainant in fixing defects in its complaint. It can also create complications as in the hclsoftware .com dispute, where the Respondent defaulted but then filed a full response after the response deadline when the Panel issued a Procedural Order and then invited the parties to respond.
For many of the reasons offered by Zak Muscovitch in his comment above, rather than issue a Procedural Order, it may be preferable for the Panel to choose a Fourth option of denying the complaint, either with prejudice or without prejudice. If the denial is without prejudice, it offers the Complainant an opportunity to refile the complaint with more robust evidentiary support for its allegations.
Another important consideration is what inference a Panel should draw from the Respondent’s failure to respond. This raises a recurring, fundamental, and vexing problem of whether, if the Complainant makes a plausible allegation supported by at least some evidence, the evidentiary burden shifts to the non-appearing Respondent such that the Complainant then prevails by default.
I would attempt to frame the question rather simply as “Does the Complainant have a lower burden of proof when the Respondent fails to appear?” If a Panel is inclined to answer “yes”, then the Panel could take a view that, for instance, once the evidence supports a 25% probability that the Complainant’s allegations are correct, this creates a rebuttable presumption in favor of the Complainant such that the burden then shifts to the Respondent to rebut that presumption.
When a Panel makes a rebuttable presumption based on evidence that is insufficient to meet the balance of probabilities standard, and there is no response, the consequence is that the Panel then orders a transfer based on woefully inadequate evidence. This is what led to the recent unfortunate decision to transfer the aku .com domain name. Indeed, as succinctly stated by Zak Muscovitch in his comment on the aku .com dispute:
The lesson to be learned from this case is that Panelists must maintain the onus on the Complainant to make its case via evidence and not rely on the absence of a Response to “rebut” an insufficient case.
The perils of a Panel issuing a decision as to the plausibility of good faith use without requiring the Complainant to support such an allegation with sufficient evidence is again seen in the centerfolds.com dispute from 2018 brought by Playboy Enterprises. The Panel relied on Telstra to justify the transfer of the domain name. Yet even though the term “centerfolds” was coined by Playboy, it has since entered mainstream use with numerous nightclubs across the United States that are not affiliated with Playboy incorporating “centerfolds” in their names, and numerous magazines offering centerfolds. It is a dictionary word, and appears in multiple Wikipedia entries.
If Playboy Enterprises had been required to provide a page of Google results to support its allegation of the implausibility of a good faith use of the term “centerfold”, if the search looks anything like the search I just conducted, the results demonstrate just the opposite, with dozens of results unrelated to Playboy Enterprises, and, surprisingly, Playboy Enterprises not appearing anywhere in the top results. Alternatively, if the Panel had conducted its own quick limited factual research, it would presumably have encountered similar search results. Yet the Panel in the centerfolds.com dispute chose to issue a transfer order without the sufficient evidence required to make an accurate determination as to the plausibility of a good faith use for the domain name. Indeed, a five second search on Google would have been sufficient to demonstrate the falsity of the Panel’s finding.
In the Terravita .shop dispute, the French Complainant relied upon the doctrine of passive holding and the Swiss Respondent did not appear. The Panel could have found that there was sufficient evidence to support a rebuttable presumption that the Respondent, despite the lack of use of the Disputed Domain Name, could make no legitimate use of the domain name and had targeted the Complainant in bad faith, given their geographic proximity, that the Complainant’s marks predated the registration of the Disputed Domain Name, and that “TERRAVITA” is not a dictionary word, but a coined term. Perhaps, as well, the Panel was aware of the Complainant but of no other third-party use.
Yet the Panel in this dispute, instead, chose to make its decision based not on rebuttable presumptions or speculative inferences, but based on evidence. He had a hint as to the plausibility of a third-party use since the location reported for the Respondent is Terra Vita, Switzerland. The Panel chose to conduct limited independent research. He quickly found numerous instances of third-party use, including an Arizona development named Terra Vita which uses the terravita.com domain name. As stated on that website:
The name “Terravita” is a combination of two Latin words: “terra”, meaning earth or land, and “vita” meaning life. Living in harmony with the land is what Terravita is all about.
The Panel avoided making an unjust transfer by ensuring that its decision was based on evidence, not speculation. As stated by the Panel, the evidentiary burden remains on the Complainant:
Given that the onus is on the Complainant to prove its case on balance of probabilities regardless of the Respondent’s default,
The quality of UDRP decisions would be improved, and the frequency of unjust transfers would be reduced, if fewer Panels adopted the practice of treating a default as an excuse to disregard the requirement that a Complainant provide sufficient evidence to prove its case to a balance of probabilities standard. As here, when a Respondent defaults, the burden remains squarely on the Complainant to produce sufficient evidence to adequately support its allegations.
I’m indebted to Steven Levy, Paul Keating, Richard Hill, Zak Muscovitch, Igor Motsnyi and Gerald Levine, among others, for sharing their views on the passive holding doctrine.