Domain Dispute Arbitration Panel Finds Authorize.net Waived Rights to Complain of Trademark Infringment After Over 10 Years of Use

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Our friends over at domainnamewire.com recently picked up on an interesting case out of the World Intellectual Property Organization (WIPO).  This case involves the waiver doctrine and the effect of permission on a domain name dispute.  Authorize.net, credit card payment service provider and owner of the AUTHORIZE.NET trademark, filed a proceeding with WIPO against Cardservice High Sierra for the use of the AUTHORIZE.NET trademark in their registered domain name at authorized.net.

Cardservice was an authorized reseller of Authorize.net’s payment services since 1999.  Authorize.net’s primary Internet presence is housed at the authorize.net domain name, and the Respondent, Cardservice, registered the authorized.net domain name in 1999.  Cardservice used the domain name without protest, but in 2005 Authorize.net asked Cardservice to put a disclaimer on the page stating that they, Authorize.net, owned the AUTHORIZE.NET mark.  Cardservice complied. 

In February 2008, Authorize.net sent a threat letter to Cardservice stating that they infringing on the AUTHORIZE.NET trademark.  In examining whether Cardservice had rights and legitimate interests in the domain name, the panel stated that Authorize.net’s burden in this case was higher than in most because they had acquiesced to the use for almost a decade.  Further, the panel noted that Authorize.net profited from every referral that Cardservice solicited at authorized.net.  In denying the complaint, the court said:

The Person case identified changed circumstances that generated the complaint; here, the only apparent change in circumstances is Complainant’s change of mind more than nine years after Respondent’s first use. In this proceeding neither Respondent’s conduct generally nor the specific use of Complainant’s mark on Respondent’s website appears to have changed significantly over the years, beyond Respondent’s addition of the requested trademark acknowledgment at Complainant’s request. Complainant points to no new conduct in 2008, when it sent its cease-and-desist letter, which it claimed rendered illegitimate an earlier or otherwise permitted use.

The court finally noted that the dispute between the parties was something that would have to be worked out in litigation, and that an arbitration panel was not the appropriate forum.  There was no indication of why the relationship fell apart in the pleadings, nor was there any evidence of why Authorize.net waited for almost a decade before filing the complaint.  The panel found that authorized.net was not registered in bad faith, and the transfer of the domain was denied.

Comments

[cease and desist letter - cybersquatting]

Cybersquatting help: If I receive a cease and desist letter from a lawyer saying i am infringing a trademark, what should I do? What shouldn't I do?

[Good Faith Domain Registration]

By requesting this disclaimer be added to the page it shows that Authorize.net essentially blessed the use of Authorized.net by the reseller. The panel found that Authorize.net was aware of the use of Authorized.net much earlier and didn’t do anything about it. The sole panelist, Richard G. Lyon, even quoted part of a Sherlock Holmes novel to question why Authorize.net dodged the question as to why it took a decade after the the domain was registered to file the complaint:

“There is…no explanation for Complainant’s six years of silence before the 2005 email requesting a trademark acknowledgment,” Lyon wrote. “The Reply’s omission of this issue is either inexplicable or the eloquent dog that did nothing in the night.”

[Acquiescence Of Domain Use]

The most closely analogous factual pattern the Panel could find is National Futures Association v. John L. Person, WIPO Case No. D2005-0690. Respondent in that case had been affiliated with complainant for many years. In 1999 he obtained the disputed domain name and began sending out advertisements displaying it. Respondent submitted proofs of his advertisements to complainant for approval, they were reviewed by complainant’s staff and given references numbers confirming review, and they were apparently approved. In 2004 complainant sent respondent a notice of non-compliance with association rules regarding the documentation required for customer testimonials displayed on respondent’s website, but did not then address respondent’s use of the disputed domain name. The complaint was filed a year later. In denying the complaint the panel stated: “Based on the circumstances presented here, the Panel concludes that Respondent has a legitimate interest in the Domain Name because it used the Domain Name for a bona fide offering of goods and services with Complainant’s knowledge and acquiescence for several years before any notice of an objection by Complainant.”