Weak cybersquatting claim puts pharmacy in bad negotiating position: Bad strategy
This firm gambled with a weak cybersquatting case and now has an uphill battle to fight.
I’m often confused by the decisions lawyers make.
Consider the case of McMahon Distributeur Pharmaceutique Inc., a Canadian firm that runs a chain of pharmacies named Brunet.
By all accounts, the pharmacy chain in Quebec is successful. It has grown significantly this century and now has 139 stores.
Brunet uses the domain name brunet.ca, and it has a problem: if someone types in brunet .com, they land on a page with a scantily clad woman and links to adult ads.
This shouldn’t come as a big surprise. Brunet is an alternative spelling of brunette, and some people have a thing for brunettes.
That’s why Contrast Technologies stated it registered the domain name in the 90s, along with the domains blonde .org, brunette .net, and redhead .com. Makes sense.
The pharmacy chain inquired regarding buying the domain name. Via an agent, it anonymously offered $2,500. Contrast Technologies countered at $115,000. The pharmacy chain then made a final offer of $5,000.
That didn’t work, so it filed a cybersquatting dispute under the Uniform Domain Name Dispute Resolution Policy and also stated it was preparing a lawsuit.
A three-member World Intellectual Property Organization panel resoundingly rejected the argument that the domain was registered in bad faith.
It noted that it’s doubtful the domain registrant was aware of the pharmacy chain. Following all, the domain was registered by a Florida man ahead of the Canadian pharmacy chain had an online presence. And there’s the obvious reason why he registered the domain given the other names in his portfolio.
It also stated the counteroffer for $115,000 didn’t show bad faith:
The Panel takes note that, when the Complainant’s agent made an unsolicited offer to purchase the disputed domain name in 2023, the Respondent made a counter-offer of USD 115,000. Still, the price negotiation was conducted anonymously, and no circumstances have been drawn to the Panel’s attention from which the inference could be drawn that the offer indicated any awareness and targeting of the Complainant, let alone at the time of registration of the disputed domain name 25 years prior. Moreover, generally speaking, prior UDRP panels have found that the practice as such of registering a domain name for subsequent resale (counting for a profit) would not by itself support a claim that the respondent registered the domain name in bad faith with the primary purpose of selling to a trademark owner (or its competitor).
Let’s get back to McMahon Distributeur’s strategy here.
It has a great reason to want to acquire the matching .com. It has a flimsy cybersquatting argument, though.
It made a modest offer for the domain, which the domain owner countered at $115,000. Given the pharmacy’s actions since then, it must have been surprised by this number.
I have no idea how much the domain owner would have negotiated, but if one party makes a $2,500 offer and the other counters at $115,000, I would assume there’s room to negotiate.
Even if not, we’re talking less than $1,000 per store to own this domain that is problematic for the chain.
Instead, it seems to have calculated that spending thousands on legal fees was the way to go. A UDRP isn’t too expensive, but the firm ought to have known the case would fail under UDRP. If it truly is going to sue, we’re talking regarding five figures of legal spending, probably with the same result.
It might be challenging to go back to the negotiating table now. Generally speaking, people don’t take well to legal blustering. But it would seem that’s the firm’s best hope for getting this domain, and it ought to hope the domain owner isn’t too peeved.
(Norton Rose Fulbright Canada LLP represented McMahon Distributeur Pharmaceutique in the dispute. John Berryhill represented Contrast Technologies.)
