Settlement Privilege and Domain Name Arbitrations -- The Case of www.potterybarnbaby.ca
October 19, 2018
By Tamara Céline Winegust
Settlement privilege was found to apply to certain documents filed with a Complaint in a recent CDRP proceeding and, therefore, not considered when assessing the alleged bad faith of the domain name registrant. In Williams-Sonoma Inc v Bensabath, (October 12, 2018), (CDRP, BCICAC) (<potterybarnbaby.ca>), the sole Panellist found that other admissible facts did show that the Registrant, Gad Bensabath, who owns and operates a Montreal-area business selling baby products, Boutique Pinkiblue, registered the contested domain name in bad faith, that he had no legitimate interest in the domain name, and that it was confusingly similar to the Complainant’s (Williams-Sonoma) registered trademarks, including for POTTERY BARN. The Panellist ordered that the domain name be transferred to the Complainant.
The Panellist’s decision to “disregard” correspondence between parties marked “without prejudice” or that was argued to be settlement privileged, but that was submitted by the Complainant as evidence, is consistent with the finding of a 2014 CDRP panel in Tucows.com Co v Interex Corporate Registration Services Inc (2014) 118 CPR (4th) 472 (CIRA, Resolution Canada). In that case, the Panel held:
The correspondence is marked "without prejudice" and is directed to resolving the issues between the parties by agreement. Accordingly the correspondence is privileged and its contents are inadmissible in evidence in Courts. The goal of this privilege is to encourage parties to resolve their differences by permitting candour and compromise without the risk of having their concessions held against them if no settlement can be reached. This Panel respects that policy and has not considered the contents of the correspondence.
Of note in Williams-Sonoma, despite finding that certain email correspondence between the parties was settlement privileged and could not be considered, the Panellist nonetheless proceeded to summarize the substance of those emails in the context of his findings. This would seem to be contrary to the purpose of affording such correspondence protection under settlement privilege, as stated in the Tucows.com decision, where the content of the settlement-privileged documents was not discussed.
Further, the Panellist in Williams-Sonoma went on to find that because he could not consider the privileged correspondence, the Complainant was unable to show the Registrant acquired the domain name for the purpose of transferring it to the Complainant or a competitor for a value in excess of the actual costs in registering the domain name, which is one way to demonstrate a registrant’s bad faith. In particular, even though the remaining (admissible) evidence indicated that the Registrant attempted to sell the domain name to Williams-Sonoma, because it did not indicate whether the amount offered was in excess of what it cost to register the domain name, it was not enough to make out that particular ground of bad faith.
Also of interest, despite the failure of Williams-Sonoma to show this particular kind of bad faith registration, the Panellist found the evidence filed showed there was bad faith registration for other reasons. Namely, the Registrant engaged in a pattern of domain name registrations that showed bad faith, in particular because they were similar to other third party domain names and brands connected with the baby and children’s products industry, including <babyjoggerstrollers.ca>, <babybjornbouncers.ca>, <ergobabycarries.ca>, <buybuybaby.ca>, and <westcoastkid.ca>. This pattern of registering domain names that are confusingly similar to third party competitor websites offering children’s products also contributed to the Panellist’s finding that the Registrant registered the <potterybarnbaby.ca> domain name to capitalize on confusion between this domain name and Williams-Sonoma’s POTTERY BARN business and brand, and drive internet users to the Registrant’s website at the domain name:
“[the Registrant] developed a bad faith strategy of appropriating well-known product retailers … by registering domain names which are identical to, or confusingly similar to, the well-known marks and brands in order to divert Internet users away from the Registrant’s well-known competitors”.
The decision is a reminder that settlement privilege may be critical to discussions with respect to a domain name transfer, even outside the context of formal litigation, and careful consideration should be given to how such correspondence is marked. In the absence of other facts outside of the settlement privileged correspondence that can support a finding of bad faith, deeming correspondence “without prejudice” may impact a complainant’s ability to prove the registrant’s bad faith and could ultimately decide the outcome of the dispute.
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