A domain name is a virtual address. The domain name system is similar to a space made up of a limited number of territories (top-level domains or TLDs) in which the entities responsible for their administration (the registries) make available to all or part of the public (depending on whether or not there are eligibility criteria) an infinite number of parcels. The latter are as many free territories as anyone can occupy simply by creating or acquiring a domain name. There is, therefore, a domain name market with investors, buyers, and intermediaries. WhoIs databases, which identify the holders of domain names, are equivalent to land registers. In this context, everyone is free to invest part of their money in a parcel, that is to say, a domain name.
However, the freedom to create, sell, rent, or operate a domain name is governed by legal provisions (of contractual nature and, where applicable, legislative nature) which govern each TLD. There are three prominent families of limits: territorial boundaries, public order, and respect for the rights of third parties, including intellectual property rights.
In this context, the owners of trademarks, either in a short acronym or in a generic word, face a serious problem since it is not uncommon for domain names equivalent to said trademarks to be the property of third parties. The latter can make a legitimate possession of such domain names, either that third parties use them legally for their trade needs or that they hold them exactly as some makes investment in real estate or art works. As with any other investment, what drives the investor is the value of the concerned assets. The shorter a domain name, the more easily it is remembered and has commercial value. This is clearly the case when the domain name in question has the .com extension.
Therefore, the French company called Société Nationale des Chemins de Fer Français (SNCF) surely has a strong interest in a domain name such as ter.com. First, SNCF owns “TER” trademarks for Train Express Régional (which means “Regional Express Train”). The liberalization of the European rail market may encourage SNCF to acquire the domain name ter.com which transcends the areas covered by ccTLDs such as .fr, .es and .it. This argument seems all the more relevant since SNCF does not own the domain names ter.fr (for France), ter.it (for treno espresso regionale, in Italian) and ter.es (for tren expreso regional, in Spanish). In such circumstances, what, in the eyes of SNCF, can be the value of a domain name such as ter.com?
A Portuguese investor acquired this domain name and parked it while waiting to make a capital gain. The domain name was put up for auction with a starting price of 10,000 dollars. Some of the advertising links generated by the parking provider promoted competitors of the SNCF. Therefore, the latter seized the opportunity and initiated a UDRP procedure to obtain the transfer of ter.com. First, SNCF relied on registered trademarks whose reputation is undoubtedly well-established, at least on the French market. Second, some advertising links invited Internet users to visit competitor sites. And the existence of such links is often sufficient to characterize the bad faith of the holder of the domain name.
However, considering all the circumstances, the UDRP procedure should have been avoided. First, the composition of the domain name (only three characters) should have raised suspicions of failure. Indeed, unless it can be proven that the trademark is well-known internationally or in the defendant’s country, the chances of success of a UDRP complaint relating to a domain name of three characters are tiny (which I will demonstrate in a forthcoming study). In addition, as the Respondent indicated in its reply, “ter” can refer to the meaning of many acronyms, so that he did not necessarily have the SNCF trademark in mind when he acquired the domain name. Finally, in Portuguese, the word ter means “to have”. As for the advertising links promoting competitors, it should be remembered that they are not necessarily the result of unlawful intent and that the platform’s algorithm generates them. Of course, one could argue the negligence of the holder of the domain name who, in the end, remains responsible for its use. However, the UDRP principles exclude negligence and require an unlawful intention, characterized in the concept of bad faith.
SNCF’s transfer request was rejected. On closer examination, the chances of success were low. Also, one should bear in mind that the failure of a UDRP procedure places the holder of the domain name, cleared of all suspicion, in a stronger position. He is now free to set the price of the domain name unilaterally according to the information he was able to collect in the context of the procedure. In the end, we are tempted to think that $ 10,000 in an auction was very little. Alternatively, an anonymous purchase could have been a more secured option.
Finally, two brief observations on the procedural side. First, the response was allowed to be submitted out of time. There is no explanation for such leniency, a fortiori vis-à-vis a professional in the domain names sector. Second, the respondent replied that the complaint had been submitted in an abusive manner (reverse domain name hijacking or RDNH). This defense seems more frequent as the domain name is short (I will come back to this in a forthcoming study). In this case, the panelist rightly considered that SNCF could legitimately believe in its chances of success and, consequently, rejected the argument based on RDNH (WIPO, D2021-2718, SNCF Voyageurs v. Whois Agent, Domain Protection Services, Inc. / Antonio Vaz, December 15, 2021, <ter.com>, transfer; sole panelist: Adam Taylor).
