Just Selling Authentic Goods? Why You Can Still Lose Your Domain.

 

“I Only Sell Authentic Products. What’s the Problem?” A Reseller's Complete Guide to UDRP Domain Disputes

Even well-intentioned resellers can lose their domain overnight. Understand the core principles of UDRP and learn strategic ways to prevent legal disputes.

“I only sell authentic products, so why is my domain at risk?” This post breaks down the often-overlooked dangers of the UDRP (Uniform Domain Name Dispute Resolution Policy) for online resellers, using a case study to provide clear compliance guidelines for a secure business.

 

Hey there! If you're one of the many resellers selling authentic brand-name products online, this is for you. You take pride in connecting customers with great products and are working hard to build your business. But have you ever stopped to think that your store's domain name could put your entire business at risk overnight?

You might think, “Hey, I only sell genuine items, so what's the big deal?” But the reality is more complex. Today, we're going to dive deep into a hidden risk that even the most well-meaning resellers face: UDRP domain disputes.

 

What is the UDRP, and Why Does It Matter for Resellers?

First, let's quickly cover what the Uniform Domain Name Dispute Resolution Policy (UDRP) is. The UDRP isn't really about protecting trademark rights in general; it’s a policy designed to combat “cybersquatting”—the bad-faith registration of trademarks as domain names to profit from them. While it's not a law, it's a powerful dispute resolution policy that all domain registrants worldwide must follow.

When we register a domain name, the terms of service obligate us to resolve disputes according to the UDRP. In other words, the moment we own a domain, we've already agreed to this policy.

Heads Up!
The core of a UDRP case is not about whether the products you sell are genuine. The focus is on whether the registration and use of the domain name unfairly exploit someone else's trademark.

 

Case Study: The Two Critical Mistakes of 'dudestore.com'

To make this clearer, let's look at a fictional reseller, the owner of an online store. The owner runs `dudestore.com`, an online shop that exclusively sells genuine products from a popular brand called “dude.” He has built a beautiful site using the brand's official images and advertising materials, and business is booming.

Then, one day, he receives a notice that the “dude” brand has filed a UDRP complaint against him. He’s shocked, thinking, “But I only sell their authentic products, what’s the problem?” Ultimately, he's at risk of losing his domain. Why? Here are his two critical mistakes:

1. The Domain Name Itself: A name like `dudestore.com`, which combines the trademark “dude” with a generic term like “store,” is highly likely to make consumers think it's an official store. In UDRP proceedings, such a domain name is often found to have no “legitimate interest.”
2. How the Website Was Operated: By using the official “dude” website's images, ad copy, and overall design (“look and feel”), the owner created consumer confusion to gain a commercial advantage. This can be seen as “bad faith use.”

 

Principle 1: Do You Have "Rights or Legitimate Interests"?

In a UDRP dispute, the trademark holder must first demonstrate that the domain owner has no “rights or legitimate interests” in the domain name.

However, proving a negative is nearly impossible. So, UDRP panels have established a burden-shifting framework: if the complainant (the trademark holder) presents a prima facie case that the domain owner lacks rights, the burden of proof shifts to the domain owner to demonstrate that they do, in fact, have rights or legitimate interests.

Resellers often argue that they used the domain in good faith to sell genuine products. When this happens, the UDRP panel applies a strict set of criteria known as the “Oki Data Test.”

The Oki Data Test: Four Cumulative Requirements

To be considered a legitimate reseller, you must meet 'all four' of these requirements. Missing even one is a failure.

Requirement	Description
1. Actual Product Offering	The website must be actively selling the trademarked goods or services.
2. Exclusive Product Sales	The website must exclusively sell the trademarked goods and not those of competitors.
3. Clear Disclosure of Relationship	The website must clearly state that it has no official relationship with the trademark holder (i.e., a disclaimer).
4. No Attempt to Corner the Market	The domain owner must not attempt to monopolize all trademark-related domains (e.g., registering `dudekorea.com`, `dudesale.com`, etc.).

In the `dudestore.com` case, the owner might have met requirements 1, 2, and 4, but he failed to include a disclaimer anywhere on his site stating he was an independent seller unaffiliated with the “dude” brand. By failing to meet requirement #3, he would likely be unable to prove he had a “legitimate interest.”

Warning!
If you copy product images or marketing text directly from the official website without permission, this constitutes copyright infringement—an illegal act. In such cases, a panel may not even need to apply the Oki Data Test, as the “legitimate interest” claim could be denied from the outset.

 

Principle 2: Was There "Bad Faith" in Registration and Use?

In the UDRP, “bad faith” must be proven for both the 'registration' and the 'use' of the domain. It’s not one or the other; it has to be both.

A. Bad Faith Registration

• Intentional Targeting: Registering a name like `dudestore.com` by adding a word like “store” to a famous trademark can be seen as an intentional act to trade on the brand's reputation from the very beginning.
• Trademark Awareness: It would be illogical for someone selling “dude” products to claim they didn't know the “dude” trademark existed. The very fact that the registrant was aware of the trademark is strong evidence supporting bad faith registration.

B. Bad Faith Use

This is often the most problematic area for resellers. Actions that mislead consumers into thinking the site is official to gain a commercial advantage fall into this category.

• Unauthorized Use of Official Content: Using product images, ad videos, detailed descriptions, etc., taken directly from the official site.
• Imitating the “Look and Feel”: Designing the website, logo placement, fonts, etc., to be similar to the official site, thereby causing consumer confusion.

These actions not only serve as grounds for denying “legitimate interests” but also act as decisive evidence of “bad faith use.”

 

The Reseller's Playbook for Preventing UDRP Disputes

So, how can you avoid these dreaded UDRP disputes? Here's a 3-step playbook covering everything from domain selection to website operation.

A. The 'Domain Selection' Stage

You must avoid combinations like “[Trademark]+store,” “[Trademark]+shop,” or “[Trademark]+official.” These types of domains are just asking for a dispute. The safest approach is to use a neutral, brand-agnostic name.

Examples: `premium-fashion-deals.com`, `certified-goods-reseller.com`

B. The 'Content Creation' Stage

The moment you copy and paste images and text from the official website, you put yourself in a very weak position in a UDRP case. You must take your own product photos and write your own unique product descriptions. This not only helps you avoid copyright disputes but also serves as important evidence that your business operates independently.

C. The 'Website Operation' Stage (Most Important!)

Your website must clearly display a disclaimer stating that you are an independent reseller and not affiliated with the trademark owner. This is a key requirement of the Oki Data Test and your best defense against claims of bad faith. The disclaimer should be written in clear language and placed where consumers can easily find it.

 

Final Check: A UDRP Self-Audit Checklist

Finally, here's a checklist you can use to audit your own website for potential risks.

Audit Area	Check Item	Self-Audit (Yes/No)
Domain Name	Does the domain name NOT directly incorporate a specific trademark?
Legitimate Interests	Does the website NOT sell products from competing brands?
	Is there a clear disclaimer stating your non-affiliation with the trademark holder?
	Do you NOT own multiple domains that use similar trademarks?
Bad Faith Use	Are all images and text on the website original and created by you?
	Is the website's design clearly distinguishable from the official brand site?

If you answered ‘No’ to any of these items, it's time to review and update your website immediately.

Reseller UDRP Prevention: Key Takeaways

Domain Selection: A neutral, brand-agnostic name is the safest choice.

Content Creation: Never use images/text from the official site. Create your own.

Key Defense:

A disclaimer stating you are an independent seller is absolutely essential.

The UDRP Standard: It’s not about product authenticity, it’s about the likelihood of consumer confusion.

A secure business starts with respecting intellectual property rights.

Frequently Asked Questions (FAQ)

Q: Why is selling only authentic products not enough to protect me?

A: The UDRP's focus isn't on the authenticity of the goods. It's about whether your domain name and website operations are likely to mislead consumers into believing you are an official affiliate, thereby unfairly capitalizing on the trademark's reputation.

Q: How can I write an effective disclaimer for my website?

A: It must be written in clear language and placed where consumers can easily see it (e.g., header/footer, product pages). It should include language like: “This site is not an official [Brand Name] retailer. We are an independent reseller operated by [Your Company Name]. All trademarks are the property of their respective owners.”

Q: What should I do if I'm already using a domain that includes a trademark?

A: The safest long-term solution is to migrate to a new, brand-neutral domain. If you must continue using the current domain, you should strictly adhere to the playbook outlined here—especially regarding the disclaimer and original content—to build the strongest possible case for your legitimate interests and good faith if a dispute arises.

It's unfortunate when a well-meaning reseller gets caught in a legal dispute. Success requires more than just selling good products; it demands a proactive effort to respect the trademark owner's rights and avoid consumer confusion, from your domain name to your content. We hope these guidelines serve as a strong defense to protect your business from legal risks.

 

Legal Disclaimer
The content of this blog post is for general informational purposes only and does not constitute legal advice. You should not act upon the information provided without seeking advice from an attorney specializing in intellectual property. The author assumes no liability for any direct or indirect damages that may result from the use of this information.

De Facto Standard Patent Strategies and the Pitfalls of ‘Royalty-Free’: Lessons from Tesla, Qualcomm, and Google

 

That ‘Royalty-Free’ Gift… Can You Really Trust It? From Bluetooth to EV charging standards, we're diving into the complex world of patents and the calculated corporate strategies hidden behind the sweet promise of “free.” This article will give you a sharper eye for seeing what’s really going on in tech.

Hey there! In the world of tech, the term ‘Royalty-Free’ sounds pretty appealing, right? It feels like a free gift, and since it’s used in everyday things like Bluetooth, USB, and WebRTC, you might think you can use it without a second thought.

But is that really the case? Today, we’re going to dig into the complex issues lurking behind that attractive ‘royalty-free’ sign—namely, intellectual property (IP) problems and, sometimes, intentional strategic traps. The goal of this article is to help you see beyond the “Oh, it’s free!” mindset and understand the true nature of these technologies. So, where does the misunderstanding about ‘royalty-free’ begin?

 

🤔 “A Prefab House with a Free Frame?” The Real Face of Royalty-Free

The belief that ‘free means safe’ is actually the starting point for the biggest misconception. Royalty-free never means ‘zero risk.’ In reality, it’s just ‘a promise of a license with a very limited scope,’ not a complete hall pass from all patent issues.

To put it simply, it’s like a ‘prefab house where only the frame is free.’ The frame might not cost you anything, but you still have to pay for or figure out the crucial parts like walls, the roof, and plumbing on your own.

Bluetooth: ‘Enabling Technologies’ Are Not Covered

This becomes clear if you take a close look at Bluetooth’s Patent/Copyright License Agreement (PCLA). The royalty-free benefit is strictly limited to the ‘Compliant Portion’ of a certified product and only for ‘Necessary Claims’—patents that are technically essential to implement the standard and cannot be avoided.

More importantly, so-called ‘Enabling Technologies’ like semiconductor processes or operating systems are explicitly excluded from the license scope. The Bluetooth communication module itself might be covered, but the peripheral technologies needed to run it, like power management chips and audio codecs, can still be subject to separate patent disputes. In fact, more than 20 lawsuits were recently filed over Bluetooth’s frequency-hopping technology patents.

WebRTC: Google’s Umbrella Only Covers Google’s Code

The situation is similar with Google-led WebRTC. The royalty-free license Google provides generally applies only to ‘patents owned by Google’ and only when using the ‘original source code distributed by Google’ as-is. If a company modifies this code or adds new features to suit its service, the added parts are no longer under Google’s protective umbrella. This means they could be exposed to unexpected patent infringement lawsuits from third parties.

 

📊 Stories from the Players in the Game

So, what have actual companies experienced in this complex game? Let’s look at a few key examples to see the risks firsthand.

Case 1: The AV1 Codec – “Attacked by Wolves from Outside the Fence”

In response to the expensive royalties of the HEVC codec, tech giants like Google and Netflix formed the Alliance for Open Media (AOMedia) and created a royalty-free codec called ‘AV1.’ They even included a strong defensive clause preventing member companies from suing each other over patents, creating a solid “patent-safe zone.”

However, this fence only protected them from the patents of member companies. A patent pool operator named Sisvel appeared from outside the fence, claiming that AV1 was a “Copycat Codec” that infringed on their patents. They began demanding license fees from users (€0.24 per device). This case showed the limits of a consortium’s “permeable shield”—it couldn’t block attacks from the outside.

Case 2: Tesla’s NACS – “‘Our Friends’ Get In Free”

In 2014, Tesla pledged to let others use its patents, as long as they were “acting in Good Faith.” However, the term ‘Good Faith’ was essentially a promise “not to attack us in any way.” When a capacitor manufacturer sued a company that Tesla had acquired, Tesla countersued, claiming the lawsuit itself was a violation of good faith.

This strategy proved brilliant when the U.S. government’s 2021 Infrastructure Act offered subsidies only for the competing CCS1 standard. Facing a crisis, Tesla declared NACS an open standard, not only qualifying for government subsidies but also pulling competitors into its ecosystem under the condition that they wouldn’t attack Tesla. It was a smart move to solidify market dominance through ‘free and open’ access.

Case 3: Qualcomm – The Two Sides of Geopolitical Risk

Qualcomm’s “No License, No Chips” policy illustrates another dimension of the problem. Qualcomm tied its patent licensing agreements to the total price of a smartphone to maximize profits, a practice that led to a fine of over 1 trillion won from the Korea Fair Trade Commission, a decision upheld by the Supreme Court. Interestingly, however, a U.S. court ruled that the same business model did not violate antitrust laws. This case starkly shows the ‘geopolitical risk’—how the same action can lead to completely different legal outcomes depending on a country’s industrial policy and national interests.

 

💡 “The Razor and the Blade”: The Real Goal Behind Opening Up Tech

When companies open up their technology for free, there’s almost always a calculated reason behind it. Their goals can be summarized into three main categories.

Strategic Goal	Explanation (Analogy)	Key Example
Ecosystem Dominance & Customer Lock-in	“The razor is free, the blades are not.” Attract users with a free tool to lock them into your platform or service.	Microsoft (.NET → Azure)
Cost Avoidance & Reshaping Competition	“Group buying to avoid a pricey toll road.” Form a consortium to evade expensive royalties from a competitor’s tech and weaken its influence.	AOMedia (AV1 → HEVC)
Profit Maximization & Business Model Design	“Charging the buffet based on the customer’s weight, not the food’s.” Designing royalty calculations to maximize revenue.	Qualcomm (Chipset → Total Phone Price)

 

🛡️ Avoiding the “Patent Minefield”: The Importance of FTO Analysis

So, how can companies protect themselves amidst these potential risks? The most fundamental and crucial tool is Freedom to Operate (FTO) analysis.

Many people mistakenly believe, ‘I patented this technology, so I can use it freely.’ But that’s not how it works. For example, let’s say a competitor holds a patent for technology ‘A.’ Even if you patent an improvement, ‘A+B,’ by adding feature ‘B,’ you could still be infringing on their ‘A’ patent the moment you manufacture your product. Your patent gives you rights to ‘B,’ but it doesn’t grant you the right to use ‘A.’

FTO analysis is the process of drawing a map to see if your product might step on someone else’s ‘patent mine.’ It’s an essential step to identify loopholes in royalty-free licenses and uncover unexpected risks in advance. When you consider that a lawsuit can cost millions, the expense of an FTO analysis is a very affordable ‘insurance policy.’

 

📜 5 Key Strategic Principles for Your Company

Based on the cases we’ve examined, here are five principles to remember when dealing with royalty-free technology.

1. Principle 1: Always Get the Legal Basis in Writing. You need a formal agreement that specifies the license’s scope, terms, limitations, and termination clauses, not vague promises like “good faith.” The freer the tech, the more carefully you need to read the contract.
2. Principle 2: Understand the Provider’s Real Revenue Model. You need to map out how they ultimately monetize their value. Evaluate it from a long-term Total Cost of Ownership (TCO) perspective, considering platform lock-in, data usage, and more.
3. Principle 3: Analyze Beyond the Consortium’s “Defensive Shield.” It is essential to conduct an FTO analysis for patents held by non-members, especially Non-Practicing Entities (NPEs), and budget for potential royalty payments.
4. Principle 4: Assess the “Geopolitical Risk” of IP Enforcement. Review IP regulations and legal precedents in key markets and be flexible enough to adapt your strategy to local conditions.
5. Principle 5: If You Open Your Tech, Define Your Company’s “Azure.” When you open up a technology, you must set a clear ‘backend revenue model’ and Key Performance Indicators (KPIs) for the high-profit business you ultimately want to drive users toward.

💡

Must-Read! 5 Strategic Principles for Using “Free” Tech

1. Get It in Writing: Secure a formal contract, not vague promises like ‘good faith.’

2. Find the Real Revenue Model: Analyze the provider’s hidden motives, such as platform lock-in.

3. Look Beyond the Fence:

Always check for patent risks (FTO) from non-consortium members, especially NPEs.

4. Assess Geopolitical Risk: The same business model can face different legal judgments by country.

5. Define Your ‘Azure’: If you open your tech, have a clear backend revenue model to link it to.

Royalty-free isn’t risk-free. Thorough due diligence is not optional, it’s essential.

Frequently Asked Questions ❓

Q: Are ‘royalty-free’ and ‘open source’ the same thing?

A: They’re different. ‘Open source’ mainly refers to a ‘copyright’ license for using, modifying, and distributing source code. In contrast, ‘royalty-free’ is closer in meaning to being free from ‘patent’ usage fees. Even open-source software can require separate patents to implement its technology, so it isn’t free from the risk of patent infringement.

Q: Isn’t FTO analysis too expensive and difficult?

A: The cost varies depending on the technology’s scope, but compared to patent litigation costs that can run into the millions, an FTO analysis is a very economical ‘insurance policy.’ It’s much smarter to find ‘patent mines’ in advance to alter a design or secure necessary licenses.

Q: What exactly is the FRAND principle?

A: FRAND stands for ‘Fair, Reasonable, and Non-Discriminatory.’ For patents essential to implementing a ‘standard technology’ used by multiple companies (like in telecommunications), the patent holder is obligated to offer licenses to anyone under these FRAND terms. This was a key issue in the Qualcomm case.

Q: We’re a small startup. Where should we start?

A: The very first step is to list which royalty-free or open-source technologies are core to your business. Then, carefully read their license agreements. If anything is unclear, seeking advice from an external IP expert is the best way to protect your company in the long run.

After today’s discussion, I hope you have a better sense of the weight behind the term ‘royalty-free.’ It reminds me of the old saying, “There’s no such thing as a free lunch.” When you encounter a new technology, the right question isn’t, “What can I save?” but rather, “What are the hidden costs? Who is the player gaining the most from this ecosystem?” Now is the time for that kind of wisdom. If you have any more questions, feel free to ask in the comments! 😉