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GUIDE TO UDRP PROCEDURE AND POLICY
By Zak Muscovitch
Publisher, Domain Name Law Reports


The Internet Corporation for Assigned Names and Numbers ("ICANN") arbitration procedure continues to be popular with Complainants. Since the implementation of the new dispute resolution policy on December 1, 1999, more than 1,000 proceedings have been commenced, involving moe than 1,500 disputed domain names.

The statistics also demonstrate that for Respondents, ICANN arbitration can be dangerous. Out of the proceedings completed thus far, less than 20% have resulted in a decision for the Respondent. The disparity between decisions for Complainants and Respondents is due to ICANN's dispute resolution policy, which expressly contemplates the eviction of so-called cybersquatters. Nevertheless, the ICANN Uniform Domain Name Dispute Resolution Policy ("UDRP") policy and procedure attempts to cross uncharted legal territory and can surprise both Complainants and Respondents who are unfamiliar with ICANN procedure and policy.

UDRP PROCEDURE

The UDRP is available for the adjudication of all disputes involving .com, .net, and .org domain names, as well as several other country-specific domain names, such as .nu, .tv, and .ws. Any party who wishes to assert a right to such a domain name as against the actual registrant of the domain name, may commence a Complaint.

Respondents are required to participate when a Complaint is made, unless they elect to take the matter to court either before the proceeding is commenced or after the proceeding is concluded. A Respondent has ten days after losing the arbitration to file a court proceeding and avoid the transfer of the name for the time-being. Complainants are free to select a court action instead of commencing the procedure to resolve a domain name dispute. The UDRP has certain benefits over court proceedings that may make it an appropriate venue for a party that believes a name has been wrongly registered. In particular, ICANN provides inexpensive and relatively swift justice.

In considering whether to initiate an UDRP Complaint, a Complainant should pay close attention to an important preliminary jurisdictional issue. In order to initiate a Complaint, the Complainant must agree to submit, with respect to any challenges to a decision in the administrative proceeding canceling or transferring the domain name, to the jurisdiction of the courts in at least one specified "Mutual Jurisdiction". Mutual Jurisdiction means a court jurisdiction at the location of either;

  1. the principal office of the Registrar (provided the domain-name holder has submitted in its Registration Agreement to that jurisdiction for court adjudication of disputes concerning or arising from the use of the domain name) or;
  2. the domain-name holder's address as shown for the registration of the domain name in Registrar's Whois database at the time the complaint is submitted to the Provider.

This means that by initiating a Complaint, the Complainant agrees to be bound by the laws of the jurisdiction of either the registrant's recorded address or the Registrar's principal office. Registrars include private domain name registration companies, such as Network Solutions (Virginia), and Yesnic (Korea). Network Solutions used to be the only Registrar, but now there are forty-four operational Registrars world-wide with another sixty-six accredited, but not yet operational. Accordingly, a Complainant ought to examine a registrant's registration agreement and location before embarking on the UDRP procedure since by doing so, a Complainant may be inadvertently submitting to the jurisdiction of a court of a foreign country.

Although trademark infringement and passing-off actions involving domain names have been relatively uncommon in Canada, a plaintiff can expect to spend tens of thousands of dollars in discoveries, cross-examinations, motions, and at trial, and wait at least a year for adjudication of a contested action in the Federal Court of Canada. In comparison, an UDRP
Complaint can cost as little as US $750 in administration fees, is much simpler than a court proceeding, and can take as little as a month from commencement to judgment.

An added attraction of the UDRP
process for a Complainant, is that quite often a Respondent will not respond to the complaint at all. Although the Complainant will still be required to prove its case on the merits, the process will be relatively simple, effective, efficient, and inexpensive for the Complainant, even when compared to a default judgment in a court proceeding. Accordingly, a Complainant's lawyer should always consider that it may be worth it to commence an UDRP complaint in the hope or expectation that it will not be defended by the Respondent. On the other hand, if a Complainant's lawyer anticipates that even if the Complainant wins the UDRP arbitration, the Respondent will take the matter to court for a new hearing, the ICANN procedure may be a wasted effort.

ICANN is able to provide this relatively efficient system by employing private companies, called Dispute Resolution Providers, to provide the arbitration services. There are currently four different companies that are accredited by ICANN to provide dispute resolution services; the CPR Institute for Dispute Resolution, the National Arbitration Forum, the World Intellectual Property Forum, and Disputes.org/eResolution Consortium.

Remarkably, the entire arbitration proceedings from the initial filing of the Complaint to the release of the judgment, is accomplished on-line, via email correspondence. When initiating a proceeding, the Complainant must select either a one-member or three-member panel. Most Complainants select a one-member panel because it is less expensive, even if it carries with it more risk of an aberrant decision. Panelists are selected by the Dispute Resolution Provider from a roster of candidates that they are affiliated with. eResolution, the Canadian Dispute Resolution Provider, has sixty arbitrators on its roster, including six Canadian lawyers. EResolution maintains an impressive list of law professors, judges, and lawyers, drawn from as far away as Peking, China and Bologna, Italy.

UDRP POLICY

The fact that most arbitrators have a background in intellectual property law does not necessarily ensure consistency of decisions. Because the UDRP procedure is brand new, parties to a dispute do not have the same degree of comfort in the outcome that is present with a regular court proceeding. Court proceedings are bound by stricter rules of precedent and in some cases, have the benefit of years of developing case law.

Fortunately, a party that is unsatisfied with an UDRP decision is not bound by it, and may take the dispute to a court of competent jurisdiction. Because the UDRP process is so new, here are very few court cases which indicate the degree of deference that a court will show to an UDRP decision. Instituting an on-line appellate division of the ICANN dispute resolution procedure would be a means of providing greater comfort and certainty in the ICANN dispute resolution process, and perhaps provide a means of avoiding subsequent court proceedings. Appeal procedures have of course, traditionally served court systems well, by weeding out aberrant or wrongly decided cases.

Pursuant to the UDRP Policy, which are the terms of reference for the panelists, a Complainant must prove each of the following parts of a three-part test:

  1. the Respondent's domain name is identical or confusingly similar to a trademark or service mark in which the Complainant has rights; and
  2. the Respondent has no rights or legitimate interests in respect of the domain name; and
  3. the Respondent's domain name has been registered and is being used in bad faith.

Most ICANN UDRP decisions turn on whether the Complainant has shown that the Respondent has acted in bad faith. This particular concept of 'bad faith' is unique to domain name disputes and has no real parallel in conventional trade-mark law. Pursuant to the UDRP, the following factors are considered demonstrative of bad faith:

  1. 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
  2. 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
  3. you have registered the domain name primarily for the purpose of disrupting the business of a competitor; or
  4. >
  5. 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.

Essentially, this provision of the UDRP, outlaws speculation in domain names in most cases where the domain name or something similar to it, is already used as a Complainant's trade-mark. The application of this provision to particular factual situations is often very simple. For example, WAL-MART STORES, INC., the huge and well known American retail department store chain, commenced a Complaint against the registrant of WALMARTCANADA.COM. The Complainant held trade-mark registrations for WAL-MART for use in retail department stores in the United States and Canada. After registering the name, the Respondent listed the name for sale on a web site called Great Domains, for the sum of $5,000,000, and emailed the Complainant to advise of the sale. After receiving a 'cease and desist' letter from the Complainant, the Respondent turned his mind to developing a site for, of course, 'wall products'.

The first part of the three-part test is whether the disputed domain name is identical or confusingly similar to the Complainant's trade-mark. The Panelist, the Honourable Sir Ian Barker, Q.C., an esteemed and experienced retired judge from New Zealand, held that persons dealing with, or even perusing the web site of, WALMARTCANADA.COM could easily conclude that the registrant of the domain name was associated with the Wal-Mart operation in Canada. Accordingly, the Complainant met the first part of the three-part test.

The second part of the three-part test is whether the Respondent has any rights or legitimate interest in the disputed domain name. Ostensibly, the Respondent attempted to demonstrate his legitimate interest in the name by starting work on his web site for the sale of 'wall products'. The Panelist however, found that there was no evidence that the Respondent, before receiving notice of the dispute, used or demonstrably prepared to use the domain name in connection with a bona fide offering of services. In fact, the Respondent admitted that it was only after receiving the "cease and desist" letter that he turned his mind to developing the site for the sale of wall products etc. Apparently, the Panelist simply did not believe that the Respondent was genuinely interested in selling wall products. Accordingly, the Complainant met the second-part of the test.

The third part of the three-part test is whether the Respondent's domain name was registered and is being used in bad faith. The fact of soliciting the sale and placing the domain name on the Internet for sale has been regarded in a number of WIPO cases as being evidence of abuse and bad faith. The Panelist held that by soliciting the sale and placing the domain name on the Internet for a sum greater than the Respondent's out-of-pocket expenses, the Respondent had registered and used the name in bad faith. Accordingly, the Complainant met the third part of the three-part test and was awarded the transfer of the WALMARTCANADA.COM domain name.

The WALMARTCANADA.COM case is similar to many other decided cases that involve well-known or famous marks, such as WAL-MART. A Respondent must meet the onus of demonstrating that they genuinely registered the disputed name for a good reason. Coming up with a flimsy rationale for registering the name will not be enough to demonstrate a legitimate interest.

If something smells funny, the Panelist may impute bad faith, but not always. In a case involving the domain name, RBCINSURANCE.COM, the Respondent was successful in persuading the Panelist that it had a legitimate interest in the domain name, even though RBC INSURANCE was a well-known and registered trade-mark of the Royal Bank of Canada. The Respondent, maintained that the domain name referred to Rahim Bismillah Crop Insurance. In support of its legitimate use of the domain name, the Respondent pointed to the fact that Rahim Bismillah Crop Insurance is registered to do business in the United Republic of Tanzania and has incorporated in the Republic of Zambia. The Respondent used the name RBC Insurance in connection with a web site that provides information about agriculture and crop protection and offers links to related information.

The Panelist held that although the Respondent's web site did not have much depth, it did provide information about agricultural development, crop insurance, and crop protection. Furthermore, the Panelist held that the Respondent appeared to be "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." It is the Complainant's burden to prove that the Respondent has acted in bad faith and the Panelist found no evidence to support the Complainant's allegations. The Panelist was Sandra Sellers, former Software Publishers Association, Vice President of Intellectual Property Education and Enforcement.

Bad faith can be difficult to prove. In a decision that surprised many observers and made headlines, the Rockport Boat Line lost its Complaint against its passenger boat competitor, the Gananoque Boat Line, who operated its business two miles west of the Complainant, near Rockport, Ontario. The disputed domain name was ROCKPORTBOATLINE.COM. In brief written reasons, Retired Kentucky Circuit Court judge, the Honourable Edmund P. Karem, held that the Respondent's acquisition of the domain name , ROCKPORTBOATLINE.COM, was in accordance with its expansion plans which include utilizing a federally owned wharf in the city of Rockport should such a wharf become available.

The application of the UDRP becomes difficult when a disputed domain name is similar, even identical to a Complainant's trade-mark, but the domain name is generic. Such was the case involving ESQUIRE.COM. Esquire Magazine was the registrant of several U.S. trade-marks dating back to 1922, and had a web site called ESQUIREMAG.COM. The Respondent was in the business of buying and selling domain names. The Respondent owned numerous domain names that incorporated famous trade-marks, such as porschesource.com, buicksource.com, and chryslersource.com. The Respondent maintained that ESQUIRE.COM was a generic name, and therefore he had every right to deal with it as he pleased. Two of the three presiding panelists disagreed with the Respondent, and ordered the transfer of the name to the Complainant magazine publisher. The majority of the Panel, led by former Charleston, South Carolina Municipal Court Judge, the Honourable Louis E. Condon, held that by rejecting out of hand bids of $500.00, the Respondent was clearly seeking much more than the cost of registering the domain name, and this amounted to bad faith.

In a strongly worded dissenting opinion, decrying the "insupportable" decision of the majority, retired Judge Milton L. Mueller, who is an Associate Professor and Director, of the Graduate Program in Telecommunications and Network Management at Syracuse University, as well as the author of a study on the relationship between trade-marks and domain names, held that while recognizing that Esquire Magazine is well-known, the word "esquire" by itself is too generic and widely used to be exclusively associated with the magazine. Judge Mueller went on to say:

the term [ESQUIRE] has common meaning as a descriptor for lawyers, or more broadly for gentlemen. The unadorned term "esquire" is also a registered trademark for well-known shoe care products and for a variety of other products and services. The character string "esquire" appears in over 280 domain names in the .com space. It follows inexorably, then, that the domain name "esquire.com" can be used legitimately as a domain name by a large number of people and in a variety of ways, without infringing the rights of the Complainant. The UDRP is intended to prevent trademark owners from being extorted by cybersquatters, but it is also intended to protect legitimate registrations from being threatened by overreaching trademark owners.

This dissenting opinion demonstrates that a strong argument exists which differentiates between cybersquatters and mere domain name speculators. It is not bad faith to make money on a domain name in all cases. Speculating on a generic domain name such as BUSINESS.COM or SHOES.COM is not necessarily bad faith. In a case involving the domain name CONCIERGE.COM, the panel agreed that the first person or entity to register the domain name should prevail in circumstances where the domain name is a generic word and where that word is widely used as a trade or service mark. The Panel therefore refused to transfer the domain name, even though the Complainant had a registered Canadian trade-mark for Concierge.

Sometimes even genericism will not save a Respondent who acts in 'bad faith' by trying to sell the name. In a case involving the domain name 1800ROCKPORT.COM, the Complainant alleged that the disputed domain name was identical or confusingly similar to its registered trade-mark for ROCKPORT in connection with shoes, clothing, and bags, as well as its 1-800 telephone number. The Complainant alleged that the Respondent demonstrated bad faith by registering such a similar name and then trying to sell it to the Complainant.

The Respondent claimed that he registered the Domain Name either for his own use or in order to sell it to a city with the name "Rockport". The Respondent pointed out that Rockport is the name of three U.S. cities, in Texas, Indiana, and Massachusetts, respectively, and as such was a descriptive or generic name that he had as good a right to as anybody. The Panelist disagreed. The Panel found it hard to understand why a city with the name Rockport would be interested in a domain name with, what would be for that city, an irrelevant number. Also, the Respondent himself offered no explanation for his choice of the number "1800" as part of the Domain Name. This case demonstrates once again, that underlying the UDRP, is a sense among panelists that they know bad faith when they see it.

This case also shows how the result of an ICANN arbitration is in many ways, subject to the discretion of the presiding panelist rather than a rigorous application of rules and precedent. This however, is not such a great departure from traditional jurisprudence, where a particular judge may figure prominently in the outcome of a particular case. A significant difference between ICANN arbitration and traditional court systems then, is the degree of legitimacy, acceptance, and consistency that the two respective institutions impart to litigants. By ensuring the consistent quality of panelists and providing for an appeal system, the ICANN procedure can continue to provide an important answer to the problem of voluminous domain name disputes. As the body of ICANN UDRP case law grows, panelists and litigants will also enjoy a greater degree of consistency and certainty in the ICANN process.

Zak Muscovitch is the publisher of Domain Name Law Reports. This stuff is his opinion. It ain't legal advice;just a some info for academic purposes. Go ahead. Learn.

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