Evaluating the Uniform Domain Name
Dispute Resolution Policy

<http://cyber.law.harvard.edu/icann/pressingissues2000/briefingbook/udrp-review.html>

Dori Kornfeld (dkornfel@law.harvard.edu), Harvard Law School

The document below is the work of Berkman Center student affiliates. Accordingly, it does not represent the views of the Berkman Center institutionally; rather, it presents the perspective of its authors.

The coveted dot-coms are becoming even more coveted as companies, entrepreneurs, and individuals vie for space on the Internet.[1]  The apparent assumption is that a catchy domain name is key to marketing the space and attracting Web surfers.[2]  Last year, eCompanies is said to have paid $7.5 billion for the domain name <business.com>.[3]  In 1998, the Compaq Computer Corporation paid more than $3.3 million to obtain rights to <Altavista.com>.[4]  A somewhat trickier question arises when a speculator tries to sell a domain name to the rightful trademark holder – or to a competitor of the trademark holder – or to any interested party without realizing the word is a trademark.  Perhaps even more confounding is the situation when two companies have trademark rights to the same word in different contexts – or only one company has the trademark but the domain name holder has been maintaining the Web site for unrelated purposes.  Suddenly, questions of rights, property, identity, and freedom become entangled in the Web – producing what might be called a web of confusion.

        Trademark Law in Cyberspace

The language of trademark law is shifting paradigms as traditional concepts are transposed to the new communications medium.  The terms “cybersquatting” and “reverse domain name hijacking” come to the fore.  Cybersquatting generally refers to the trafficking or registration of well-known trademark names with the intention of using the mark owner’s need for the name to extort a substantial profit.  Reverse domain name hijacking refers to the bad faith attempt of a trademark owner to deprive a registered domain name holder of a domain name.[5]  These definitions, however, remain vague as new cases arise to test the bounds of peremptory claims to a domain name.

Applying traditional trademark law to the cyberspace realm compels an expansion of prevailing standards.  While traditional trademark law generally limits protection to a specific geographic area and class of goods, domain names cut across all geographic bounds and can identify any type of goods to the exclusion of all others.  For example, while both United Vans and United Airlines have rights to the “United” trademark in the physical world, the Internet can reserve the domain name “united.com” for only one party.  Different countries administer contrasting trademark laws, but the conflicting legislation does little to accommodate a borderless cyberspace.  Trademarks in the physical world may legitimately be used by multiple different owners so long as the consumer is unlikely to be confused as to the source or origin of the goods or services being offered under the brand name.   Does the manner in which domain names are used make the consumer more or less confused?  Is the confusion standard a reasonable or appropriate one to apply to the World Wide Web?

Generally, registrars for the .com, .net, and .org domains grant names on a “first-come, first-served” basis – with a caveat: registrants must agree to submit to ICANN’s Uniform Domain Name Dispute Resolution Policy should another party bring a claim against the registrant under a trademark which is identical or confusingly similar to the domain name.  At this point an administrative panel would look to the application of ICANN’s new standard of “abusive domain name registration.”

          The Rise of the Uniform Domain Name Dispute Resolution Policy

Domain name conflicts have been a pressing issue since before the establishment of ICANN.  When the U.S. government drafted the White Paper, proposing the creation of a private, non-profit corporation to administer the Domain Name System, it specifically underscored the need for resolution of the “trademark dilemma.”[6]  In 1998, the U.S. government asked the World Intellectual Property Organization (WIPO) to conduct a study on the regulation of trademarks in domain names.  WIPO’s final report called for the institution of a uniform policy enforced by all registrars to regulate names in the .com, .net, and .org Top Level Domains.[7]  After numerous drafts, revisions, and public comment periods, the ICANN Board formally adopted a final policy in October 1999.[8]

The first proceeding under the policy (worldwrestlingfederation.com) commenced on December 9, 1999.[9]  To date, more than 2,000 UDRP proceedings have been initiated.  Over 1,300 cases have been decided, more than 75 percent of which have resulted in a transfer of the name to the trademark owner.[10]                        

          Fundamentals of the UDRP

The UDRP provides a quick and relatively inexpensive forum for parties to challenge domain name holders’ rights to a name.  First, the trademark owner files a complaint with an ICANN-accredited provider.  The complainant can opt for either a one-person panel or a three-person panel.  The provider selects the panelist in one-person panels.  Both the respondent and complainant have discretion in the choice of panelists for three-person panels, though the complainant still chooses the provider.  Once the provider verifies that the complaint complies with basic UDRP requirements, it sends the complaint to the domain name registrant, who must respond within twenty days.  The respondent has the discretion of opting for a three-person panel if the complainant has requested a one-person panel, but the respondent will be required to pay one-half of the applicable fee for the three-person panel.  (Otherwise the complainant is fully responsible for the fee.[11])  Upon receiving the registrant’s response, the provider has five days to appoint an arbitration panel of one or three members, which must issue a decision within two weeks.  The domain holder has ten days to appeal an adverse decision to a court of mutual jurisdiction (either the jurisdiction of the registrar or the jurisdiction of the domain holder, whichever is selected by the complainant).  The remedies available to a complainant are limited to the transfer or cancellation of the domain name; no monetary damages are awarded.[12] 

To prevail in an administrative proceeding, the complainant must prove all of the following three elements (§4.a):

1.               The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights. 

2.               The domain name holder has no rights or legitimate interests in respect of the domain name. 

3.               The domain name has been registered and is being used in bad faith.[13] 

Failure to prove any one of these would, by the language of the Policy, cause the complaint to fail.  However, many opinions have held that proof of one element may also establish proof of another.[14]  The UDRP provides several criteria to distinguish “rights or legitimate interests” and “bad faith.”  (See “Definitions” section below.)

Little statistical data is available to track the progress of the UDRP to date.  The numbers of wins and losses do not reveal the basis for panel decisions; therefore the actual text of the opinions, all of which must be published online, must be searched to properly analyze the efficacy of the procedure. Available search technology makes this an arduous task. 

Providers

ICANN delegates responsibility for the resolution of domain name disputes to independent, presumably impartial service providers, yet questions have been raised as to whether the system adequately prevents bias. 

To date, ICANN has accredited four service providers – CPR Institute for Dispute Resolution, eResolution, The National Arbitration Forum, and the World Intellectual Property Organization.[15]  ICANN particularly considers three attributes when evaluating an applicant: the applicant’s record of competently handling the administrative aspects of alternative dispute resolution proceedings, the applicant’s submission of a list of at least twenty highly qualified and neutral individuals to serve as panelists, and the consistency of the applicant’s supplemental rules and procedures with the UDRP rules and procedures.[16]

Some critics contend that by allowing complainants to choose the provider, the selection process is automatically skewed to the complainants’ favor.  Because the trademark owner is generally the complainant and usually pays the fee, the inference is that providers have an economic incentive to favor trademark holders.  Unlike most private arbitrations, the parties do not negotiate the designation of the specific provider in advance.  Although respondents are able to opt for a three-member panel when the complainant has requested arbitration by a one-member panel, the complainant may still retain an advantage.  The complainant and respondent may each nominate three candidates for a respective position on the panel and are free to suggest panelists that belong to any of the accredited providers, although the parties have no way of knowing whether these individuals will be available or eligible to serve. The host provider chooses the third panelist and, in the event that none of a party’s nominees are available, also gets to appoint a substitute panelist.  Therefore, it is entirely possible that all three panelists may be selected by the host provider, who was selected in the first instance by the complainant.

Definitions

The UDRP was created to establish a uniform means of administering domain name conflicts.  It is difficult to provide consistent standards, however, when its key terms are both vague and unfamiliar – and perhaps intentionally so, given the variety of extant trademark laws and concepts.  Several reported decisions have revealed that different panelists have seriously conflicting interpretations of these terms.  Consequently, after 1,300 decisions, domain name registrants are still somewhat unclear as to which types of uses would constitute “bad faith” as opposed to “rights or legitimate interests.”  Both parties have relied on the ambiguities of the guidelines to assert their respective contentions.

Bad Faith

A complainant must prove that a domain name holder has both registered and used a domain name “in bad faith” in order to prevail in a UDRP proceeding, yet the concept itself is defined inconclusively.  The UDRP lists four circumstances that, in particular but without limitation, can serve as evidence that a domain name has been registered and used in bad faith (§4.b):

(i)                   circumstances indicating that you have registered or you have acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or

(ii)                 you have registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that you have engaged in a pattern of such conduct; or

(iii)                you have registered the domain name primarily for the purpose of disrupting the business of a competitor; or

(iv)                by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your web site or other on-line location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of your web site or location or of a product or service on your web site or location.[17]

One unresolved issue is how broadly the term “use” can be construed within the context of “bad faith.”  The panel in Telstra Corporation Limited v. Nuclear Marshmallows (telstra.org) determined that registration alone may be sufficient to establish bad faith in particular circumstances, despite the lack of any other overt action.[18]  The respondent’s domain name did not resolve to a Web site or other online presence, and the respondent could not be reached through its contact information.  In Loblaws, Inc. v. Yogeninternational (presidentschoicesocks.com), however, the panel found that inactive use was insufficient evidence of “bad faith” and allowed the respondent to retain the name.[19]  It noted that the domain name may have been registered in bad faith, but concluded that the requisite bad faith usage had not been established by the display of a standard “under construction” page.[20]   

Rights and Legitimate Interests

A respondent can defend its retention of a domain name by establishing rights or legitimate interests in the name.  The UDRP (§4.c) cites some examples:

(i)                   before any notice to you of the dispute, your use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or

(ii)                 you (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or

(iii)                you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.[21]

Despite what seems to be clear language, it should be noted that at least one panel failed to recognize such rights and legitimate interests as a complete defense against a registered mark owner.  In Fiber-Shield Industries, Inc v. Fiber Shield LTD (fibershield.net), the respondent had operated a legitimate, non-competing business under the name for more than ten years but nevertheless lost the domain registration.[22]

Fair Use

The defense of “fair use”[23] as a right or legitimate interest has been less-than-enthusiastically received in UDRP proceedings, perhaps because “free speech” is a concept not widely adopted outside the U.S.  Some panelists seem to give greater weight to the “free” part of “free speech” and will discount such claims where there is any indication of an attempt to obtain commercial gain. One such case is Wal-Mart Stores, Inc. v. Walsucks and Walmarket Puerto Rico (walmartcanadasucks.com, wal-martcanadasucks.com, walmartusucks.com, walmartpuertorico.com, and walmartpuertoricosucks.com).[24]   Although the Canadian respondent defended his sites as “freedom of expression forums of complaint against Wal-Mart,” the panel rejected his contention, noting that the respondent had offered his domain names to the corporation for purchase.  The panel found the domain names to be confusingly similar to the “Walmart” trademark, despite the “sucks” appendage, explaining that confusion could arise if a Web surfer were to type the company’s name into an Internet search engine.  Thus far, nine completed UDRP proceedings have concerned a registrant’s use of the phrase “sucks,” and all nine disputes have resulted in the transfer of the domain name.[25]

Generic Names

Generic words generally are not protected under trademark law due to the commonness of the word and the interest in preserving the word’s utility in multiple contexts.  Although the word may be incorporated into a trademark with another word or phrase, the generic word itself is normally considered to be public domain.  The panel iterated such reasoning in CRS Technology Corp. v. Condenet, Inc. (concierge.com), declaring that “the first person or entity to register the domain name should prevail in circumstances such as these where the domain name is a generic word.”[26]

Administrative panels do not consistently apply trademark law to generic words, however.  In J. Crew Int’l v. crew.com (crew.com), the panel split in a decision over rights to the generic word “crew” in response to a complaint by J.Crew, a leading retailer of men’s and women’s apparel.[27]  The respondent had registered or acquired more than 50 domain names consisting of trademarks or other generic words primarily for the purpose of selling, renting, or otherwise transferring the names.  The majority of the panel determined that the domain name <crew.com> is identical to the trademark “crew.”  It concluded that, given the respondent’s speculative behavior and awareness of the trademark, the domain name should be transferred to the complainant.  The dissenting panelist contended that “the majority seems to assume that a trademark owner has some sort of God-given right to use the trademark to the exclusion of others” and warned that the majority’s decision “creates a dangerous and unauthorized situation whereby the registration and use of generic words as domains can be prevented by trademark owners wishing to own their generic trademarks in gross.”

Bulk registrations

The case that gave rise to the claim of cybersquatting turned on the fact that the defendant’s registration and sale of domain names identical to well-known trademarks in bulk established proof of commercial activity, which is a necessary element of infringement under U.S. trademark law.[28]  Bulk registrations, however, may also constitute a legitimate business in vanity e-mail or domain name resales, and panels have recognized the difference in many, but not all, cases.[29]

Procedure

Although efficiency is often lauded as one of the benefits of the UDRP, the proceeding’s truncated nature may not be suitable for relatively complex cases involving a variety of claims and factual assertions.  Administrative panels generally prohibit in-person hearings, including teleconferences, video conferences, and web conferences.  The process includes no testimony, cross-examination, briefing, or argument; moreover, the arbitration grants no power for discovery aside from the ability to request additional documents.  Rebuttals are limited to the discretion of the panelists.  The UDRP has no mechanism for evidentiary review; therefore facts, such as trademark rights, may be merely alleged.  Photocopies of trademark certificates, copies of advertisements, or letterhead are usually attached to a complaint as exhibits, but the documents need not be authenticated.  More difficulty arises when the complainant owns a common-law mark and cannot provide any registration at all.  Often the panelist must make a determination on the validity or existence of alleged trademark rights despite the fact that many panelists have no particular expertise in trademark law. 

The panel in Document Technologies, Inc. v. International Electronic Communications Inc. (htmlease.com) noted the limited capacity of UDRP proceedings.[30]  Responding to the complainant’s contention that cross-examination of the respondent’s evidence would prove bad faith registration and use, the panel said that such a matter should be resolved in “a forum, like a United States court, that permits for a more probing, searing search for the truth.  This proceeding is not conducive to such credibility determinations given the lack of discovery and, in the normal course, the lack of live testimony.”  The minimal evidentiary requirements of UDRP proceedings render the system difficult to evaluate. 

Choice of Law

The UDRP provides little guidance as to which laws should prevail when two parties belong to different jurisdictions with contradictory rules.  The only explicit reference in the Rules to choice of law questions can be found in provision 15(a): “A panel shall decide a complaint on the basis of the statements and documents submitted and in accordance with the Policy, these Rules and any rules and principles of law that it deems applicable.”[31]  As national trademark laws enforce different standards for such uses as parody or criticism, panelists may be left with the burden of trying to balance one nation’s laws and interests against another’s.

Several cases demonstrate the ambiguity of the choice of law question.  In Excelentisimo Ayuntamiento de Barcelona v. Barcelona.com Inc. (barcelona.com), a conflict existed between U.S. law’s limits on protection of geographical names and Spanish law’s provision for such protection.[32]  The panel ruled to transfer the domain name from the U.S. travel agent registrant to the City Government of Barcelona, declaring that the holder “is definitely taking advantage of the normal confusion of the public which by using a Barcelona route in Internet would normally expect to reach some official body or representative of the city of Barcelona itself.”  In Tourism and Corporate Automation Ltd. v. TSI Ltd. (tourplan.com) , the panelist dismissed both parties’ jurisdictional laws altogether.  A complainant from New Zealand with offices in London challenged a registration made in Australia by an Australian citizen.[33]  The panelist, who was from the United States, declared that the UDRP specifies “no mandatory body of law to follow in making a decision” and that he would therefore apply U.S. law: “I determine that it is not feasible for any given arbitrator or panel to be familiar with all bodies of trademark and unfair trade law in all countries reached by the Internet, and that it is therefore sufficient for this proceeding that I am reasonably familiar with U.S. trademark law.”

Precedent

Despite the lack of reliable evidentiary mechanisms, some panels rely on precedent established by previous cases.  The legitimacy of such dependence, however, becomes somewhat dubious given that all pleadings viewed by a panel remain confidential.  Although all UDRP final decisions, absent exceptional circumstances, are posted on a publicly accessible Web site, viewers are at the mercy of the opinion writer for a full and complete explanation of the panel’s rationale.  While precedent may be useful in providing panelists with some degree of guidance, the ambiguities of both fact and law in many cases may provide a slippery slope for adjudication in any type of international forum.

New gTLDs

Currently ICANN is reviewing applications for new generic Top Level Domains (in addition to the .com, .org, and .net suffixes).[34]  Not all of the applicants propose to adopt the UDRP.  The process can become increasingly complex as one cybersquatter registers in multiple TLDs under multiple dispute procedures.  Providers should be consulted to see if the system is cost-effective from their perspective.

Conclusion

The UDRP serves an important function to resolve domain name disputes in an out-of-court proceeding that can be implemented on an international basis.  The question is whether the process is as fair and effective as it should be, and the answer is somewhat elusive.  The UDRP certainly has shortcomings, some more acute than others: inconsistent and sometimes uninformed decisions, vague terminology, a significant market gap among providers suggesting inequalities of service, and insufficient data to review the justice of decisions or process.

Suggestions to consider:

1.       Establish a commission consisting of UDRP panelists, UDRP provider management, trademark experts, arbitration experts, mark holders, domain holders, and eminent jurists to review the UDRP process.

2.       Design a set of objective criteria to analyze the fairness and efficacy of the UDRP and its implementation by the respective providers.  Require providers to collect and forward more objective data for review (e.g., number of defaults, number of pro se participants, amount of time spent per fee dollar, evaluation by users of procedure interface, number of unregistered marks).  Make recommendations based on analysis.  Review inconsistent decisions in particular and randomly sample others.  Perform this review periodically.

3.       Require more training for panelists in trademark principles.

4.       Consider more precise definitions and provide more examples for terms such as fair use and rights and legitimate interests (particularly where panel decisions have been inconsistent).

5.       Recommend a choice of law provision to guide disputes among complainants and respondents of diverse jurisdictions.

6.       Establish guidelines for evidentiary documentation, especially for pro se and common law mark owners and owners whose mark claim is premature.

7.       Establish guidelines for the refusal of cases.

8.       Extend time to appeal a decision by five days.

9.       Provide a fee-based option to domain name holders to file an internal appeal to a longer-tenured panel of experienced panelists (selected by the Providers).

10.   Provide a complaint forum whereby parties may contend an abuse of procedure by a panelist.  A pattern of complaints directed toward a particular panelist or provider may warrant investigation.

11.   Request providers to design a mechanism to indicate to users which panelists are currently available to serve on three-member panels.

12.   Study mechanisms for allowing the domain holder to have a greater role in the choice of provider, such as allowing the holder to remove the proceeding to the venue of a different provider upon payment of the full fee.

The UDRP provides a basis for domain dispute adjudication, but the methodology must be examined in light of the progress thus far.  If the UDRP is to successfully counter “cybersquatting,” and “reverse domain name hijacking,” it must establish relatively consistent standards to provide guidance to domain name registrants.  Within less than a year, thousands of parties have sought the UDRP to resolve their conflicts.  If the result is the emergence of a new area of international law, it is vital that principles of fairness, diligence, clarity, and equitability govern the application of the UDRP.

[2] See Mark P. Wine, Cynthia A. Lock, Val H. Steiglitz, John B. Lunseth II, and Michael J. McGuire, Protecting Your Corporate Client’s Most Valuable Intangible Asset: Its Name, 67 Def. Couns. J. 285 (July 2000).