udrp

Uniform Dispute Resolution Policy
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In an effort to provide less costly and more streamlined resolutions to cybersquatting cases, ICANN - the entity that is now responsible for governing the domain name system - has adopted a new Uniform Dispute Resolution Policy (UDRP). Besides expediting the process and decreasing the costs of disputes, one of the goals of the policy is to address the gaps in trademark law that the courts have been stretching to fill. The Policy will now be a part of the contract between all registrars of domain names in the gTLDs and each domain name registrant. The policy requires domain name holders to submit to third-party arbitration if they are accused of registering a name in "bad faith." The UDRP went into effect on December 1, 1999 for domain names registered with most of the newly accredited registrars. The policy went into effect January 3, 2000 for domain names registered with Network Solutions and two other registrars. The policy that has been adopted combines suggestions from the World Intellectual Property Organization (WIPO) in their Final Report on Internet Domain Name Process, the gTLD registrars who adopt the policies into their contracts, and the public via comments.

The policy provides that all domain name registrants must submit to mandatory administrative proceedings if:

the domain name is identical or confusingly similar to a trademark in which the complainant has rights; and

the domain name holder has no rights or legitimate interests in the domain name; and

the domain name has been registered and is being used in bad faith.

There are four factors in the policy listed as evidence of bad faith registration and use:

circumstances indicating that the primary purpose is to sell or transfer the name to the trademark owner or competitor for consideration in excess of direct costs related to the domain name; or

history of registration in order to prevent the IP owner from reflecting their mark in a domain name; or

registration primarily for the purpose of disrupting the business of a competitor; or

intentional attempts to attract users to your site for commercial gain, by creating a likelihood of confusion as to source or endorsement.

If any of these apply, then the registration is in bad faith. However, if the domain name holder has a legitimate interest, then a trademark holder will not win under the UDRP. The policy lists 3 factors as evidence of legitimate interests:

use or demonstrable preparations to use the name in a bona fide offering of goods or services before notification of dispute; or
if the entity or person was commonly known by the name even if it has no trademark rights; or
legitimate, noncommercial or fair use of domain name without intent to misleadingly divert consumers or tarnish the mark at issue.

Remedies under the UDRP are limited to cancellation or transfer of the domain name.

The process: If a trademark holder believes that a domain name registrant has registered a domain name in bad faith, then the Trademark holder must choose a UDRP provider and submit a complaint with the appropriate allegations. The Provider has thee days to get a copy of the complaint to the domain name registrant. The domain name holder then has 20 days to respond - specifically addressing all of the allegations in the complaint and including any bases for the retention of the domain name. Within 5 days of the domain name holder's response, the provider will appoint a panelist. The panelist will render a decision within 14 days thereafter and will notify the parties within 3 days of the decision. In total, the maximum time that may elapse between the filing of the complaint and a decision should be 42 days. Either party may bring the dispute to court at any time.

Issues or concerns with the policy:

It is unclear what constitutes legitimate out-of-pocket costs for transferring domain names. A provision of the policy allows the domain name holder to sell the name for out-of-pocket costs directly associated with the domain name. Trademark holders are concerned that this could include all costs of web site development, significantly raising the potential costs of transfer. Domain name owners claim that they have a right to recoup the costs of reprinting business cards and letterhead, fixing links to a site that no longer works, and lost equity and value in the name. Given this backgound, it would seem that a wilingness to transfer the name for a low fee would be more likely to result in a finding that the domain name holder wasn't trying to make a profit. Two UDRP decisions, however, have found that a low price for the sale of a domain name evidences lack of a legitimate intent to use the name for bona fide purposes - thus this factor could cut against the domain name registrant whether the number is high or low. For additional information see the decisions in wheatthins.com and stelladoro.com.

The UDRP applies to all domain name registrants in the gTLDs. Thus domain name registrants throughout the world will be subject to this policy. This will enable trademark holders outside the United States to more easily access U.S. domain name registrants as well as provide U.S. trademark holders more ready access to non-U.S. domain name registrants.

There is some question regarding the enforceability of the registrar agreements both inside and outside the United States. These agreements could be considered contracts of adhesion since registrants have no other options for registering a name in a gTLD.

The Trademark holder must agree to submit to the jurisdiction of the domain name holder or the registrar if the domain name holder challenges the outcome of the proceeding. Note that in a challenge to the outcome of a UDRP proceeding, the trademark holder can not require the domain name holder to go to court in its jurisdiction even if the domain name holder might be subject to personal jurisdiction there. Some critics indicate that Trademark holders will be reluctant to use the policy because of this provision. For additional information on jurisdiction issues, see the forthcoming Jurisdiction module in week 7.

Hundreds of disputes have been filed under the new UDRP. As of March 1, 2000 eight had been decided - all resulting in the transfer of the domain name to the trademark holder. Several of the UDRP decisions represent typical cybersquatting cases that one would easily expect to result in transfer to the trademark holder under the new policy. Some cases raise interesting issues regarding interpretation of the new policy. The first decision decided under the UDRP - a dispute over worldwrestlingfederation.com - points out that a trademark holder must show not only that the domain name was registered in bad faith, but also that the domain name is being used in bad faith. While this might seem to preclude a transfer to the trademark holder in many cases where the domain name does not lead to an active web site, that is not the case. Three of the four examples of bad faith registration and use listed in the policy, do not seem to require "use" as would be expected by a common interpretation of the word. Thus, evidence that the registrant acquired the name for the primary purpose of selling it to the trademark owner for more than out-of-pocket costs constitutes not only bad faith registration, but also bad faith use sufficient to satisfy the requirements of the policy. According to decisions over wheatthins.com and stelladoro.com, an offer to sell the name - even if the offer is made in response to a purchase inquiry by the trademark holder - may constitute sufficient evidence that the primary purpose for acquiring the name was to sell it for profit. The domain name holder in these cases, however, also had shown a pattern of registering trademarks as domain names, thus supporting the inference that the registrant's purpose was not legitimate.

At least one decision has found bad faith "use" through mere registration even when the registrant did not meet one of the four factors listed as evidence of bad faith in the policy. The policy lists these four factors, not as an exclusive list, but as examples of bad faith registration and use. Because three of these four factors did not require active use in order to meet the bad faith registration and use requirement, the panelist in the telstra.org decision determined that passive holding in certain circumstances could constitute bad faith use sufficient to justify transfer according to the policy. Although the registrant's behavior was not captured within the listed factors for bad faith, the panelist found that the following facts demonstrated bad faith registration and use: 1) the strong reputation of the trademark, 2) lack of evidence provided by the respondent as to actual or intended good faith use, 3) respondent took active steps to conceal its true identity, 4) respondent provided, and failed to correct, false contact information in breach of its registration agreement. All this led to an inability of the panelist to conceive of any plausible or actual contemplated active use that would not be illegitimate.

A key difference between this policy and the previous dispute resolution policy that NSI had adopted is that this one attempts to resolve the dispute rather than simply putting the domain name on hold until the parties settle the dispute by themselves or through litigation. Under this regime, domain names will no longer be put on hold. Trademark owners will no longer immediately be able to stop the domain name holder from any potentially objectionable practices. They will have to go to court if they want to enjoin the use of a name before a decision is rendered under the UDRP. Of course for domain name holders operating web sites, this policy means that their site will not be unfairly shut down absent their ability to sue to enjoin such action. NSI had indicated that it will release holds on the 1,300 domain names that were disputed under its previous policy unless an action over the disputed name is filed under the UDRP or in court. The names will be released over the next three months in order to prevent a flood of the new UDRP system.

A list of current proceedings and links to decisions can be accessed at the ICANN site. The full text of the UDRP and related documents is available on the ICANN web site. You can access a general page with links to all of the documents or you can access the UDRP Policy, the Rules for UDRP Policy, and the ICANN list of approved providers directly.