Any distribution agreement must include clear and precise conditions on the use of trademarks, including in the form of domain names. It is not uncommon for the execution of a distribution contract to give rise to a dispute relating, in whole or in part, to the use of a domain name. Many of these conflicts are settled following the Oki Data case, after WIPO decision D2001-0903 rendered in 2001 (WIPO, D2001-0903, Oki Data Americas, Inc. v. ASD, Inc., November 6, 2001). For the use of the domain name by the respondent to be considered legitimate, the four conditions must be met:
- the defendant must actually offer the goods or services in question;
- the respondent must use the site to sell exclusively the products or services designated by the trademark concerned;
- the site must indicate in a precise and visible manner the relationship between the holder of the domain name and the owner of the trademark; and
- the respondent must not try to “monopolize the market” for domain names reflecting the trademark.
In fact, for the avoidance of doubt, these conditions should be clearly expressed in the contract.
The Oki Data rule was recently applied in WIPO case D2021-2368 (WIPO, D2021-2368, Vorwerk International AG v. Esther Gunawan, Elektrik Serbaguna, September 24, 2021). Everything suggests that the supplier had authorized the distributor to register the domain name. Conditions 1, 2, and 4 were met. However, concerning the third condition, the site did not clearly and visibly disclose the relationship between the domain name holder and the trademark owner. The function of this condition is to guarantee, with all the clarity and transparency required, that the primary source is the owner of the trademark. In this case, only the following statement appeared: “TM31 has been discontinued, so our offer is very limited“, “TM31” referring to the supplier’s product. The sole panelist deemed this mere mention sufficient to allow the consumer to infer the existence of a contractual relationship between the trademark owner and the domain name holder. In this regard, the panelist used the verb “to suggest“: “This would suggest to the average consumer that the Respondent is supplying another’s product“. However, a suggestion is not an affirmation, so that by saying so, the panelist slackens the third condition. According to the panelist, it is sufficient that the disputed site does not mislead Internet users as to the relationship between the owner of the trademark and the operator of the concerned site (citing the WIPO case, D2011-1134, Karen Millen Fashions Limited v. Danny Cullen, September 24, 2011). This solution seems to involve not the mere search for a precise and visible notice but a comprehensive analysis of the circumstances of the case.
If the supplier (and licensor) authorizes the distributor (and licensee) to use a domain name reproducing the trademark, it may be preferable for the supplier to create this domain name and keep control of it. Also, the scope of the license should cover the trademark and the domain name, both being inseparable from the other. In such a case, the conditions of suspension or withdrawal of the domain name must be clearly specified, as well as the penalties in the event of unjustified interruption of the service. In the absence of such contractual provisions, the fate of the licensee would depend on the goodwill of the licensor. Arbitrary decisions would be made easier, which would unbalance the contract and make it unfair.
The substantive principles and procedural rules of the UDRP result from an erga omnes dispute settlement offer incorporated, by reference, into the domain name registration contract. The UDRP is, therefore, contractual in nature. Thus, in the presence of parties bound by an agreement (for example, a distribution contract), contractual provisions may conflict with the Oki Data rule. In such a case, the panelist is required to assess the rights and legitimate interests claimed by the respondent and the good or bad faith of the latter regarding the stipulations of the distribution contract and not only the UDRP principles. It is also permissible to consider that the distribution contract, as the main contract, prevails over the UDRP contract, which is secondary.
