The Parking Page Dilemma: Frank Schilling loses chillibeans.com domain under UDRP

There has been some commentary about the recent Uniform Domain Name Dispute Resolution Policy (UDRP) decision against white hat domainer Frank Schilling's regarding the chillibeans.com domain. For those who have been paying attention, this decision is not so surprising. Rather than label the decision ridiculous domainers need to appreciate that this decision is not outside the norm or trend under the UDRP and make smart business decisions about parking their most valuable domainers. 

In a unanimous 3 member panel decision by William R. Towns, M. Scott Donahey & Sir Ian Barker, Schilling was found to have engaged in bad faith cybersquatting , under the UDRP by registering the domain chillibeans.com after Complainant had registered trademark rights for "chili beans" for the sale of sunglasses. Schilling was represented by John Berryhill.

Now, anyone who knows Frank also knows that he had no knowledge or notice of the prior trademark rights in the non-dictionary use of chili beans when he registered the domain. The problem is that Frank, like all other domainers, are stuck with a parking system that delivers advertisements for non-dictionary uses of otherwise generic domains (ie trademark uses).  In this case, Frank's parking page software served up some limited adds for 'eye glasses' in addition to food items. We have posted about the need for more sophisticated software (and support from Google as well) which allow PPC advertisers to exclude certain product offerings from the parked pages before:

• Excluding Keyword Categories From Your Parked Pages In Order To Avoid Cybersquatting Violations
• Parking Pages Can Create Risk Of A Finding Of Bad Faith Under the UDRP
• One of the Rarely discussed Benefits of Domain and Website Development
• The Three Views of Trademark Cybersquatting
• Hobbits v. Hobbitts: Generic Mark Argument Won't Prevent Panel From Seeing Pay Per Click Parking as Bad Faith
• "Low Value" Domain Parking Pages Results In Another Lawsuit Against Google By Advertisers

There are three lessons every domainer --  at least those who are willing to deal with the legal realities under the UDRP and ACPA  --  should take from this decision. (1) do a trademark search for every valuable domain within your portfolio, (2) exclude ads to the extent you can from being served up on your parked pages which include products in trademark protected areas and (3) consider excluding your most valuable domains from parking programs all together (they are worth more 'for sale' than from parked revenue).

There is plenty of bad news for parked page domainers in this decision.

Rights or Legitimate Interests:

In point of fact, the Panel considers that the Respondent’s automated advertising retrieval system is designed to generate pay-per-click advertising based on Internet traffic to the website and searches conducted by Internet users while visiting the website. This is a system inherently likely to result in the display of sponsored links in the field of commercial activity of a company whose mark corresponds to the domain name, including links to that company’s competitors.

The Respondent’s position appears to be that – without regard to any knowledge of the Complainant’s rights in the CHILLI BEANS mark – it enjoys an absolute right to operate a pay-per-click landing page keyed to the commonly understood or “primary” meaning of “chilli beans”. If that is the Respondent’s position, it is at variance with Panel decisions holding that those who register domain names in large numbers for targeted advertising, often using automated programs and processes, cannot simply turn a blind eye to the possibility that the names they are registering will infringe or violate third-party trademark rights. See, e.g., Grundfos A/S v. Texas International Property Associates, WIPO Case No. D2007-1448; mVisible Technologies Inc. v. Navigation Catalyst Systems, Inc., WIPO Case No. D2007-1141; Mobile Communication Service Inc., supra.

Nonetheless, the Respondent maintains that it has every right to use the disputed domain name in connection with food products. The Respondent argues that the Complainants’ reliance on screenshots of the Respondent’s website depicting a “glasses” link on the landing page and the presence of paid advertising links on a secondary web page targeting sunglasses and related products is misplaced. The Respondent states that the “glasses” term “apparently crept into an automated relevance-matching system for a web page that is clearly targeted toward food products”, and urges that the mere incidence of a “glasses” link is hardly representative of the overall impression presented by the Respondent’s website. The Respondent further asserts that “glasses” has two meanings as a beverage vessel, bean or chilli home canning supplies, or as a worn optical device....

According to the Respondent, the “recent and brief” appearance of a single “glasses” link among an overwhelming number of links relating to food and recipes has no probative value regarding the Respondent’s intent in registering and using the disputed domain name. The Respondent asserts that the advertising retrieval software used for keyword advertising is incapable of differentiating between the two meanings of “glasses”, and that the Respondent’s removal of the “glasses” link in view of the “heretofore unappreciated ambiguity of the meaning of that word” does not change the manifest intent of the Respondent respecting the registration and use of the domain name, in the overall context of the facts and circumstances present in the record....

BAD FAITH:  At some point in time, as a result of the Respondent’s adoption of a business model that relies on the automated processes and programs described above to generate revenues from paid advertising, the Respondent’s website became populated with pay-per-click links related at least in part to a trademark. These advertising links were removed by the Respondent only after the Complaint had been filed....and processes cannot be willfully blind to the possibility that the names they are registering will infringe or violate third-party trademark rights. See, e.g., Grundfos A/S; mVisible Technologies Inc.; and, Mobile Communication Service Inc. v. WebReg, RN, supra....Further, for reasons already discussed, the Panel does not accept the proposition that the sheer numerical preponderance of other links seemingly keyed to the generic or descriptive meaning of the domain name renders the presence of these paid advertisements related to a trademark insignificant or inconsequential.

Here is some key language which rely ups the stakes for domainers, a de facto obligation to research trademark rights before registering a domain.

Bad Faith:  The Respondent claims not to have been aware of the Complainants’ rights in the mark, but there is no indication in the record that the Respondent explored the possibility of third-party rights in any way before registering the disputed domain name, notwithstanding the implicit requirement of paragraph 2 of the Policy.

And there is even more bad news for domainers who register generic domains using a process which does not include trademark clearance.

The Respondent’s business model, entailing registration of large swaths of domain names through the use of automated programs with no apparent attention paid in any particular case to whether the domain name being registered may be identical or confusingly similar to another’s trademark, also is consistent with a pattern of conduct that deprives trademark owners of the ability to register domain names reflecting their marks. See Mobile Communication Service Inc. v. WebReg, RN, supra.

Comments

[Troy White]

Surely the responsibility lies with the advertiser or the advertising service not with the domain owner.

If I buy an advertisement in a newspaper and use the paper ad in the same fashion, I don't think the publisher of the newspaper would be sued!

Surely there's some room for commonsense in the law? Perhaps it's just easier to beat up the small business owner than large companies?

[Enrico S]

Give em hell John.

[John Berryhill]

Actually, the asserted mark is not "Chilli Beans", but a figurative logo, the validity of which is currently being challenged by a third party entirely in Europe. The UDRP Panel, while looking at something as dubious as recent Alexa stats, failed to notice the cancellation petition filed against the mark during the pendency of the proceeding.

Secondly, what "due diligence" would counsel against using "chilli beans" for food and beverage purposes, even if you knew there was a mark for eyewear. The search term that briefly brought up eyewear was for "glasses", which by sheer coincidence refers to beverage containers and eyewear in English.

In any event, keep your eye on the whois. An appropriate suit challenging the outcome of this decision has been filed in the designated mutual jurisdiction.

[Helder]

I'm not aware of those laws, and i'm just a newbie trying to learn a few things, however some things don't seem to make much sense to me, and i'll try to explain the why, excuse my english since it's not my first language, i hope i can explain myself well, here goes.

Company A, buys publicity from google adwords, i expect that company A knows that google will display those ads not only on their search pages, but also in other related websites who have adsense ads.

Domainer B, who happens to own the domain A.com, and that domain is not related to company A business, domainer B has his own webpage or the domain parked, and he has adsense ads.

Well if those adsense ads are making publicity to company A, isn't it what company A wanted when they bought adwords ads? Don't they want the publicity? How is that cybersquating just because the domain owned by domainer B is like the name of company A.

I think this law is just a way of letting companies, in this case company A take the domain away from domainer B, all because domainer B was displaying adsense ads promoting company A, when in the first place that's what company A wanted, to get publicity around the internet, or else they wouldn't have bought adwords ads. Perhaps company A should have choosen that their ads could only be displayed in the google search pages, and never in websites or parked pages.

Just my logical, or my 2 cents on the subject. I would apreciate your comments on this.

Thank you

Kind regards

[Enrico S.]

Barry: More often than not, a google search and typo domain search will get you all the info you need for a level 1 due diligence. What significant trademark doesn't enjoy a sizable web presence?

For more valuable domains you can easily do trademark searches through the USPTO, Canada, Mexico and through Madrid systems.

[Barry Goggin]

Thanks for the interesting analysis. While I understand the trademark concern, this throws the burden back on the domainer to do the due diligence prior to purchase or at least prior to engaging in parking. My question is besides searching the USPTO, what else precisely is needed? Given the site is visible worldwide, i assume you need to do more than USPTO. Also how do you research common law trademark usage worldwide? Is documentation that the search was done needed?

[Trademark attorney; Trademark monitoring; Cybersquatting; UDRP attorney]

I agree that this decision is not all that surprising. Under the three prongs of the UDRP, this decision makes sense. While the outcome is incorrect based upon knowledge of Frank Schilling and his domain practices, domainers do need to take notice and understand what other trademark rights are out there that could create risk for their domain registration and/or domain portfolio. Simply put, domainers need to invest the kind of time and money into their domain name registration, including the necessary due diligence, that they would when choosing a trademark, company name, or other brand. This includes a trademark clearance or availability search that looks at both USPTO (and possibly Community Trade Mark or other relevant country) filings and common law trademark usage. This will allow domainers to quantify the risk of your registration, understand what products/services must be excluded from your site if you use parked pages, and mitigate the chances of being subjected to a UDRP or ACPA lawsuit.