According to a recent decision by a WIPO arbitration panel, an original manufacturer may not have an infringement complaint when an unauthorized dealer’s domain name contains the manufacturer’s trademark.  Although there has been some criticism of the ruling, the decision appears to provide a balanced result.

This high-impact ruling was a result of a complaint brought by the pressure gauge manufacturer ITT against Douglas Nicoll and his company Differential Pressure Instruments.  Nicoll’s company had acquired surplus ITT pressure gauges and registered several domain names to sell the excess product without authorization from ITT.  The domain names included the ITT trademark by using web addresses such as ittbarton.com and itt-barton.com.

ITT argued that Nicoll had no right or legitimate interest in the domain names and asked WIPO to adopt a favourable interpretation of a 2001 case that dealt with a similar issue.  In that 2001 case the computer accessory maker, Oki Data Americas, had brought an unsuccessful claim against an authorized reseller who was using the domain name okidataparts.com. 

In order to distinguish its claim from the 2001 case, ITT argued that the reasoning from that case applied only where a reseller was authorized to sell a product by the manufacturer.  In dismissing ITT’s complaint, the panel looked for the satisfaction of four conditions laid out in the 2001 Oki Data case to determine whether Nicoll's company had a legitimate interest in the domain names:

• the respondent must actually be offering the goods or services at issue
• the respondent must use the website to sell only the trademarked goods (in order to prevent a possible bait-and-switch scenario where consumers are duped)
• the site must accurately disclose the relationship between itself and the trademark owner
• the respondent must not try to “corner the market” in all relevant domain names, depriving the trademark owner of reflecting its own mark in a domain name

The WIPO panel concluded that these conditions were met and that ITT’s complaint failed.  In addressing the argument that the Oki Data case was limited to situations where the reseller was authorized, the panel decided that the “issues of legitimate reseller interests in accurately describing a lawful business, on the one hand, and of potential abuses of trademark, on the other, are similar whether or not there is a contractual relationship between the parties.”

The WIPO decision has been criticized as being poorly decided on the facts.  One response states that the complainant’s original name was ITT Barton but was changed to ITT upon being acquired by another company.  Thus, that argument goes, since the original name of the company, ITT Barton, was being used as part of the domain name, consumers may have inferred that ITT had authorized the website.  But even if these facts are correct, this concern would arguably be addressed through the third point above – the requirement that the website disclose the exact nature of the relationship between ITT and the website reseller so that consumers recognize that the website was created independently of ITT. 

One of the often-cited policy reasons behind this area of IP law is that trademark protection puts the public in a better position since they can know what kind of quality to expect with any given product.  With this policy reason in mind, this WIPO decision does not appear to be a bad one: there is no question in this case that the respondent was selling legitimate ITT products.  It is not as though Nicoll’s company was free-riding on the good will and effort invested in the ITT name in order to sell an inferior product.  As such, the WIPO panel ruling appears to provide a balanced decision that one would hope will be followed where necessary.