One of the headaches of being a domain investor is that none of your domains, no matter how long you have owned them, is safe from being attacked through a UDRP complaint. As a result, domain owners can never be secure in the ownership of their domains. My last concluded UDRP was on SHA.com, a domain that I had registered 13 years prior to the filing of the Complaint. I am currently in a dispute over a domain I registered 15 years ago.
A recent move by some panelists to deny complaints because the Complainant delayed too long in asserting their rights may provide relief to domain owners from facing complaints on domains registered long ago. The principle that a party who ‘sits on their rights’ for too long loses the ability to assert those rights is known as ‘laches’. Laches is defined as an “unreasonable delay in pursuing a right or claim… in a way that prejudices the [opposing] party”. Laches is an equitable defense available in U.S. courts, but until recently it was uniformly rejected by panelists as a defense in UDRP cases.
The newly published upiphoto.com dispute (as written up by Mike Berkens) is a notable decision in support of the laches defense. The upiphoto.com case is notable for many reasons. The primary one is that it is the first case (to my knowledge) where laches was found when the respondent defaulted, meaning there was no response submitted to argue the respondent’s side of the dispute.
Also remarkable is that the panelist found that the Complainant’s case was barred by laches because the domain was registered FOUR years earlier.
Respondent has apparently been using the disputed domain name to sell/license photographs since 2008 without complaint…for more than four full years. During that time, Respondent has undoubtedly acquired rights to the disputed domain name. Complainant’s late claim is barred by laches.
If a four year delay in bringing a complaint is widely accepted by panelists as being barred by laches, then it would protect many domains that would otherwise be ordered to be transferred. But that is unlikely to happen for the reasons discussed below.
Also notable is the background of the sole panelist who issued the decision, Houston Putnam Lowry. Mr. Lowry has been a panelist since the early days of the UDRP, issuing over 300 decisions since 2000. Although he is a practicing attorney, according to UDRPsearch.com he has only ever appeared in the UDRP process as a panelist, never as a representative for either a Complainant or Respondent.
It is no accident that Mr. Lowry is not an advocate for Complainants, as I don’t believe that any active Complainant’s attorney would have found that laches barred any complaints on domains that were four years old. Any Complainant’s attorney that took that position as a panelist would be cutting his own throat. His clients might want him to file a Complaint against a domain that was registered several years earlier, and if he was on record stating that laches prevented complaints on four year old domains, he would lose his client.
The upiphoto.com case highlights an example of the conflict of interest that can arise when UDRP providers accredit active Complainant attorneys as “neutral” panelists – as they often do – because those attorneys cannot be neutral as to legal positions that disadvantage their clients. I view those attorneys who concurrently act as an advocate before the UDRP and act as a UDRP panelist as having an inherent conflict of interest, and I have devoted a blog post to this issue.
While it is not surprising that a decision invoking laches was issued by a panelist who is not an active Complainant’s attorney, it is quite surprising that Mr. Lowry issued this decision since many of his earlier cases indicated a hostile view towards domain investing and until recently he rejected laches as a valid defense in UDRP cases.
In the shoemart.com decision from June 2005, the majority of the panelists denied the complaint yet Mr. Lowry issued a dissent stating that he would have ordered the transfer of the shoemart.com domain in large part because he saw domain resellers as cybersquatters and domain reselling as violating the UDRP:
I believe the UDRP was designed to regulate a scarce resource (domain names) rather than to provide a mechanism to protect registered trademarks.
There is no doubt Respondent is in the business of being a reseller of domain names that consist of common English words. The fundamental question before the Panel is whether or not such a business should be allowed under the UDRP…
(i) circumstances indicating that Respondent registered or 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 Respondent’s documented out-of-pocket costs directly related to the domain name; or
Being in the business of reselling domain names seems to fit pretty clearly into this category.
(ii) Respondent 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 Respondent engaged in a pattern of such conduct; or
Being in the business of reselling domain names seems to fit pretty clearly into this category. While this Panel would not claim Respondent did this to specifically block Complainant, Respondent did this to block someone in Complainant’s position. In fact, Respondent’s entire business model assumes the existence of someone in Complainant’s position.
Mr. Lowry’s position here in shoemart.com is a clear articulation of the view of those panelists who believe that reselling domains is inherently bad faith because, in their view, any value in the resold domain must come from another company’s commercial use of a term similar to the domain. This view is quite dangerous and misguided both because it ignores that generic domains have substantial inherent value due to the widespread accepted meaning of the domain and because this attitude allows panelists who share similar views to order transfers of domains even in circumstances where there is no evidence that the domain owner targeted the Complainant.
Fortunately Mr. Lowry’s views as expressed in the shoemart.com case are both minority views, as most panelists require evidence that a domain owner specifically targeted the Complainant in order to find bad faith, and most panelists recognize that reselling domain names can be a legitimate business activity. Indeed, the majority in the shoemart.com case took the trouble to clearly express how they differed from Mr. Lowry:
For the sake of completeness, it should be noted that the Panel Majority also disagrees philosophically with our dissenting brother [Mr. Lowry] on what he deems to be the key issue here — whether it is illegal to register domain names for the purpose of selling them later, as he seems to suggest is the case.
Yet in the case of woodensoldier.com, Mr. Lowry found a like-minded panelist and together they ordered the transfer of the domain over the strong dissent of panelist David Sorkin. Mr. Sorkin argued that woodensoldier.com was a generic domain used in its generic meaning. Yet Mr. Lowry and his fellow panelist found that RareNames had a duty to search for other users:
This case turns on the question of bad faith. Respondent contends that it was not aware of Complainant’s trademark rights in THE WOODEN SOLDIER. This Panel finds it very improbable that Respondent, a savvy purchaser of “hundreds of thousands” of domain names, would not have done a search and quickly found Complainant on the Internet
They also argued that Mr. Sorkin’s reasoning was wrong:
We respectfully disagree with our brother Panelist’s dissent below. If it were adopted, any registered trademark which consisted of a misapplied description (such as Scotch® tape) would be without a remedy under the UDRP. Such a restrictive reading of the UDRP is unnecessary and unwise.
In my view, it is Mr. Lowry who gets it wrong here. Scotch® tape can be protected if evidence shows that the use of scotch.com was targeted towards the owner of the trademark, for instance if the domain was used to sell tape. But if the scotch.com domain is used to sell scotch whiskey, then the owner of Scotch® tape should not prevail.
In another questionable decision from 2000, Mr. Lowry ordered the transfer of host.com despite never specifically addressing whether the Complainant had trademark rights to the generic word ‘host’ used in its generic sense by the Complainant. In the host.com case, Mr. Lowry appears convinced that it was a stolen domain and in the absence of a response seemed willing to have the purpose of the UDRP bent to allow the recovery of a stolen domain.
Mr. Lowry also appears to be inconsistent in his views towards laches.
In the recent enterptise.com decision of June 14, 2012, he specifically rejects the laches defense on that nine-year-old domain. The same day he ordered the transfer of nationalcarleasing.com and rejected the laches defense on that 12 year-old domain using almost identical language as in the enterptise.com decision. And in the Enterprize.com decision from 2007, Mr. Lowry states unequivocally that “laches is not a defense under the Policy.”
Given these inconsistencies, it is unclear how much weight other panelists will give to Mr. Lowry’s reliance on the laches defense in the uniphoto.com decision. His application of laches seems sloppy to me, as his main argument is that the domain owner has a legitimate interest in the domain, and he simply tacks on a brief statement about laches at the end of that section without developing his argument or addressing the conflicting views held by panelists on the topic of laches.
In contrast to Mr. Lowry’s brief reference to laches in the uniphoto.com decision, panelist Richard Lyon in the alimakelevator.com decision of September 8, 2011 gives a lengthy and well-reasoned explanation as to why he does not view laches as an appropriate defense in UDRP cases and views those decisions that rely on laches as an aberration:
D. Delay. The only circumstance in this case that might alter the rather perfunctory resolution of the merits above is that Complainant commenced this proceeding more than ten years after Respondent’s registration of the disputed domain name, and seven years after Respondent’s first use of it. Under settled Policy precedent, however, this delay avails Respondent naught. The WIPO Overview 2.0, paragraph 4.10, makes clear:
“Panels have recognized that the doctrine or defense of laches as such does not generally apply under the UDRP, and that delay (by reference to the time of the relevant registration of the disputed domain name) in bringing a complaint does not of itself prevent a complainant from filing under the UDRP, or from being able to succeed under the UDRP, where a complainant can establish a case on the merits under the requisite three elements. Panels have noted that the remedies under the UDRP are injunctive rather than compensatory in nature, and that a principal concern is to avoid ongoing or future confusion as to the source of communications, goods, or services.
However: Panels have also noted that a delay in bringing a complaint under the UDRP may make it more difficult for a complainant to establish its case on the merits, particularly in relation to the second and third elements requiring the complainant to establish that the respondent lacks rights and legitimate interests and that the respondent registered and used the domain name in bad faith. A small number of panels have also begun to acknowledge the possible applicability, in appropriate and limited circumstances, of a defense of laches under the UDRP where the facts so warrant.”
This Panel is aware of only one decision that would allow a defense of laches without significant qualification: The New York Times Company v. Name Administration Inc. (BVI), NAF Claim Number 1349045 (2010), in which the three-member panel stated:
“The Panel believes that the doctrine of laches should be expressly recognized as a valid defense in any domain dispute where the facts so warrant. Prior decisions rejecting the applicability of the doctrine due to the failure of its express recognition in the UDRP Policies appear to be an unsound basis for ignoring the potential defense.”
Though perhaps not strictly necessary to resolution of this case, the Panel sets out his views on laches in UDRP proceedings in the hope of advancing uniformity of decision on this subject, which, in his view, is faithfully summarized in the WIPO Overview 2.0.
All panelists owe each other, and the entire UDRP process, deference to the consensus views that have developed over the twelve years since this process began. As the WIPO Overview 2.0, paragraph 4.1, recognizes, the Policy’s “operat[ion] in a fair, effective and predictable manner for all parties” promotes the Policy’s use in proper cases as an alternative to litigation and discourages its misuse merely in the hopes of drawing a panel whose members might sympathize with an argument that the consensus has declined to follow.
Nevertheless it can be wise from time to time to re-evaluate even settled rules of decision.3 Particularly is that so if circumstances change in the domain name world. For example, increased use of proxy registrations and privacy services, a circumstance not in existence when the Policy was adopted, has generated a number of rules of decision that have developed somewhat from the single respondent recognized in the Policy and Rules. See WIPO Overview 2.0, paragraph 4.9. Those consensus changes, as is true of most changes in precedent-based systems, were developed through case-by-case determinations made in appropriate factual settings, until they garnered general acceptance among UDRP panelists.
The proper approach to delay-based defenses, now reflected in paragraph 4.10 of the Overview, has come about in this way. Quite appropriately it is not a bright line rule; rather it turns on the circumstances of the particular case. Procedurally it is sound, rejecting a standalone equitable defense based only upon the passage of time in favor of considering delay in light of the Policy’s latter two express requirements. As aptly stated by the three-member panel in Mile, Inc. v. Michael Burg, WIPO Case No. D2010-2011: “the Panel observes that lengthy delays in seeking legal or administrative remedies can often have the effect of eroding or undermining the complainant’s arguments with respect to the respondent’s rights or legitimate interests in the disputed domain name, or the respondent’s alleged bad faith in registering and using the domain name. The Panel considers it more appropriate to address such issues squarely within the terms of paragraphs 4(a)(ii) and (iii) of the Policy, rather than analyzing them under the equitable doctrine of laches.”
This proceeding well illustrates the advantages of this approach. No facts in the record here indicate any basis for altering the Panel’s analysis simply because of the time that elapsed between registration of the disputed domain name and commencement of this proceeding. Respondent here never used the disputed domain on its own at all. Any business value or association with Respondent accrued not to the disputed domain name, which Internet users never saw, but to the Internet address of Respondent’s website to which Internet users were automatically redirected.4 All use of the disputed domain name was intended to mislead Internet users.
In this Panel’s opinion, the New York Times panel gives no sound reason for its holding quoted above; its only apparent rationale is its members’ contrary opinion. As reported in that proceeding there was no extraordinary factual setting justifying departure from the established rule of decision, and application of laches was unnecessary to that panel’s decision, as the complaint was denied on other grounds. This Panel will therefore treat the New York Times case as an aberration and continue to follow the Overview’s consensus approach on time-based defenses.
I think it is too soon to conclude that the upiphoto.com decision marks the beginning of the acceptance of laches as a valid defense in UDRP cases. The most that the majority of panelists seem willing to say is that a delay in bringing a complaint can weaken a Complainant’s case but is not necessarily fatal to it.
While I would like to see laches widely accepted as a defense, or a similar safe harbor requirement that a Complaint must be brought within a certain number of years of the domain owner acquiring the domain, it seems that domain owners will continue for the foreseeable future having all of their domains, even those registered a decade or more ago, still vulnerable to UDRP complaints.
Why Reverse Domain Name Hijacking needs to be a Real Penalty and the Most Comprehensive List of RDNH cases
The panel in Rick Schwartz’s well-publicized SaveMe.com case slapped the complainant with a deserved finding of Reverse Domain Name Hijacking (RNDH). Though Rick was vindicated by the finding, the outcome is still unsatisfying because there is no consequence to the Complainant for being found guilty of Reverse Domain Name Hijacking.
Reverse Domain Name Hijacking is the Rodney Dangerfield of the UDRP – it gets no respect.
What is the penalty to the Complainant for being found guilty of Reverse Domain Name Hijacking? There is no penalty.
Where can one find a list of other RDNH decisions? There is no comprehensive list of RDNH decisions.
A RDNH finding means that the Complaint was brought in bad faith as an abuse of the UDRP process in an attempt to seize without justification a commercially valuable domain name. If a large company wants to seize a valuable domain name, even if it has no rights to it, it can turn to its in-house counsel and for the trivial cost of the $1,500 filing fee take a shot at seizing the domain it covets by filing an abusive UDRP. Due to the unpredictability and lack of uniformity of the supposedly Uniform Dispute Resolution Procedures, the company has a chance at winning a domain that may be worth hundreds of thousands of dollars to it. If it loses, there is no downside. The odds are good that it will avoid a finding of RDNH even if such a finding is well-deserved, but even if the company is found guilty of RDNH there are no consequences.
Rick Schwartz, after his victory, is allowed to keep the saveme.com domain. That’s all he gets. He will receive no compensation for the dozens of hours that he devoted to the response, nor for his legal fees and filing costs.
As Rick can attest, and as I can as well, even more costly than the dollars spent in defending against an abusive complaint is the hours of effort that goes into preparing the response, and the stress and anxiety that comes from knowing that one’s legitimately registered, and often very valuable, domain has been put in jeopardy. The time and effort required is immense, as you have to respond to multiple allegations and it is not easy to prove a negative – namely that when you registered the domain name that you were not attempting to target the Complainant. Many domain owners are individuals or small-business owners who must personally devote hours to working on the response, time that would have been better spent on one’s business or with one’s family or friends.
Complainants may leisurely spend months preparing a Complaint, but a Respondent is required to file a response within 20 calendar days. Your attorney could be in a crunch time on a case, at a conference, or on vacation and unable to give immediate attention to the Response. Similarly you might be swamped with work or on vacation. From personal experience, I can say that each UDRP I have had to defend has greatly interfered with both my work and my family time. In almost every case, filing a response is a stressful, last-minute scramble to beat the response deadline.
The only thing standing in the way of a company carelessly deciding to toss some pocket change at an abusive domain filing, with all the burden that filing places on a domain owner, is that the Complainant risks being found guilty of Reverse Domain Name Hijacking. Yet this is a toothless deterrent. A RDNH finding is a meaningless slap on the wrist, lacking in any consequence to the complainant.
Many people involved in the UDRP process have called for the Reverse Domain Name Hijacking finding to carry a significant penalty, among them Atty. Karen Bernstein, “I think it should be attorney’s fees and arbitration fees. There has to be some sort of deterrent to stop the filing of these frivolous cases”, Elliot Silver, “In my opinion, a company should have some sort of penalty for filing a UDRP that is determined to be RDNH. If a financial penalty can’t be given, perhaps a company found guilty of RDNH should be precluded from filing a UDRP for a year” and Andrew Allemann, “Put some teeth into Reverse Domain Name Hijacking. Reverse Domain Name Hijacking (RDNH) doesn’t have any financial penalties. Add some.”
The UDRP provides a remedy for trademark holders harmed by abusive domain registrations. But there is no remedy currently for domain registrants harmed by attempts at Reverse Domain Name Hijacking.
Rick has done more than anyone else to draw attention to an RDNH attempt. But he is not alone in having faced an attempted RDNH.
Many valuable domains have been targets of RDNH. These include a two-letter domain, DW.com, and country and city domains, including Mexico.com, NewZealand.com and StMoritz.com. Generic domains include Rain.com, Aroma.com, Decal.com, Hero.com, Mess.com, Ode.com, Prom.com and recently Elk.com. Many three-letter acronym domains have been targets of RDNH, but so have more obscure domains such as TheFetishFactory.com and domains in other gTLDs such as scubadiving.biz and downunder.travel.
It is difficult to find information on RDNH case because as far as I know, nowhere does there exist a complete list of RDNH cases. The time has come to remedy that.
WIPO’s own list of RDNH cases decided at WIPO is inaccurate and incomplete, listing only 32 decisions of which only two are since 2006. Perhaps they had an intern research RDNH cases back in 2006 and never bothered to update the list except for a couple of isolated cases when it was brought to their attention.
One reason why a complete list of RDNH cases does not exist is that it is very difficult to identify RDNH cases. Neither WIPO nor the NAF appear to track or identify RDNH decisions. WIPO’s and NAF’s summary reports on the outcome of UDRP cases do not even identify whether the panel made a RDNH finding. The summary information will only state “Complaint Denied” and will make no reference to whether a RDNH finding was also made. It is as if both WIPO and the NAF want to bury this information.
One has to review every denied complaint to determine whether a finding of RDNH was also made. Since panels do not use standard language in making a RDNH finding, one cannot perform a search on UDRP decisions for a certain phrase or group of phrases and be confident that one has found all the decisions.
I have spent many hours working off-and-on over the past couple of years trying to assemble a list of all RDNH cases. In honor of Rick’s victory, I am publishing the results now.
Below is a partial compilation of all Reverse Domain Name Hijacking decisions on gTLD domains to date. Because of all the difficulties in identifying RDNH decisions, the list below will necessarily be incomplete. My hope is to make this a crowd-sourced list. If any of you know of any RDNH decision that is not listed below, please submit it through the comments or email me directly.
The list contains over 100
RDNH decisions (thanks very much to Elliot Silver for sharing his research). These decisions collectively represent hundreds of thousands of dollars in legal fees and arbitration fees, and countless hours of effort, that domain owners had to spend to fight these abusive complaints.
One of the curious things about RDNH findings is that even though the penalty is meaningless, panels are typically very reluctant to make a RDNH finding. Many panels bend over backwards to give the Complainant the benefit of the doubt so as to avoid making a RDNH finding, which is quite frustrating when many panelists refuse to give domain owners any benefit of the doubt and are willing to order domain transfers on the flimsiest speculative evidence (for examples see the 2009 UDRP Wall of Shame.)
Even in cases that would seem clear-cut to the rest of us, panels don’t find RNDH. For examples, one can cite Cite.com (panelist too lazy) and Imagem.com (complainant’s attorney too confused) or LaFrance.com (complaint brought to harass but complainant didn’t use a lawyer), all written up by Andrew Allemann, or the UDRP case on the 18-year-old domain LMC.com, written up by attorney Bret Moore.
Many panels don’t even address the question of Reverse Domain Name Hijacking even if the facts clearly seem to warrant it. There are numerous UDRP complaints where the complainant did not begin using their trademark until many years after the disputed domain was registered which should always be a clear-cut case of Reverse Domain Name Hijacking. Yet often in these cases the panel will simply deny the complaint but won’t bother to make a finding about whether the complaint was an attempt at RDNH. The experienced panelist the Hon. Neil Brown QC states that a panel is required to make a finding of RDNH if the circumstances warrant it, whether or not the respondent requests such a finding and even if there is no response.
The list below therefore likely represents only a small fraction of the complaints that deserved to be identified as abusive RDNH attempts.
My goal is that one day the finding of Reverse Domain Name Hijacking will carry with it a penalty of sufficient size to be an adequate deterrent. If so, the domain industry will be subjected to fewer bad faith attempts by companies that use the UDRP as a casino where they roll the dice and the prize is your domain name.
The Internet Commerce Association (ICA) is pushing for comprehensive UDRP reform. Putting teeth into a guilty finding for Reverse Domain Name Hijacking is one of our priorities. If you wish to better protect your domains, I invite you to learn more about the ICA by visiting InternetCommerce.org or by contacting me.
The RDNH table below is no longer being maintained. An updated list of RDNH decisions identified so far is available at RDNH.com.
|Domain||Venue||Case Number||Decision Date|
Verisign’s price increase on .Com and .Net domains effective January 15th is a reminder of one of ICANN’s major failings. What is so galling about the Verisign price increases permitted by ICANN is that they add further unjustified costs to the Internet on top of the large, and excessive, prices that Verisign is already charging.
Hundreds of millions of dollars each year in excess profits are flowing to Verisign because several years ago ICANN failed to protect the interests of the Internet community and instead caved to pressure from Verisign. Verisign and ICANN settled a dispute between themselves by agreeing to raid the wallets of consumers and businesses worldwide for their mutual benefit and self-enrichment.
The dispute began in 2003 when Verisign rolled out its SiteFinder service which gave Verisign control over all the typo traffic going to misspelled or non-existent domains. After a huge public outcry, ICANN requested that Verisign roll back the service. Verisign refused. ICANN then ordered Verisign to roll back the SiteFinder service. Verisign responded by filing a lawsuit claiming that ICANN had overstepped its bounds by not acting as merely a technical coordinating organization and instead acting as the “de facto regulator of the domain name system”.
At first I was surprised by how little support the ICA received from Domainers. But the more I talked to other domainers, and the more I thought about it, the less surprised I became. Instead I became pleasantly surprised that the ICA has as much domainer support as it does.
This isn’t because what the ICA does isn’t worthwhile and it’s not because the ICA isn’t effective.
I think it boils down to most domainers are not that affected by the issues that the ICA fights for.
The ICA is the Internet Commerce Association, a trade group advocating for domain registrant rights. It is supported by a small group of dedicated domainers, and domain industry companies including Sedo, Oversee, HitFarm, NameDrive, TrafficZ and Tucows. Phil Corwin, a veteran DC attorney, has for many years been the lobbyist for the ICA and is the only person who receives compensation from the organization.
Even though ICANN and Congress set the rules by which our businesses run, and even through every .com domain and other gTLD domain we own is subject to a Registration Agreement written by ICANN, and even though that Registration Agreement says that any domain we own can be taken from us through a cheap and flawed UDRP process, most of us can go about our business blissfully free from any thoughts of ICANN, or Congress, or the UDRP.
In 2006, Andy Booth, a 22-year old recent university graduate, had to borrow a thousand pounds from his Mum to make his first domain purchase. Two years later Andy was regularly buying and selling six-figure super-premium domains, had quit his job and was traveling around the world with his new Mexican girlfriend, and was locked in a battle with one of the world’s largest corporations over a super-premium domain that he had recently acquired and that it desperately wanted.
Andy is one of my good friends in the domain industry. I’ve done more deals with Andy over the past few years than with anyone else.
Andy has had a remarkable rise to success in the domain industry. This is his story in his own words.
My first success with domains came when I was 18. I had recently launched a WWF-related fan site when I heard a rumor that the WWF was changing its name to WWE. I did a few domain searches, including for WWE.com, finding out that several of these names had been registered by the same person. I was feeling more confident about the legitimacy of the news and so registered a few domains, just in case, including WWEWrestling.com. Around a week later, the WWE name change was confirmed and I had immediate email interest in the domain. Having paid $8 or so, I agreed to sell wwewrestling.com for $1000, a substantial sum at the time, which allowed me to embark on a tour of Europe with a friend.
That was the turning point for me. I then realized that domains were highly valuable commodities and would always have half an eye out for another preemptive registration to make me “rich”.
For several years, Chay, my personal trainer at our local gym here in Washington, DC, had the thankless task of trying to get my computer-softened body into some kind of shape. He is serious about fitness and wanted to publish a web site. In July, while brainstorming possible names, he came up with and registered SoFitDC.com. Last week he received a Cease and Desist (C&D) letter from Sofitel, the hotel chain, which happens to have a hotel in DC.
In the C&D letter, Sofitel claims that SoFitDC.com “imitates its trademark SOFITEL [and] refers to the name of the hotel located at Washington DC operated by Accor” (the parent company of Sofitel). The letter goes on to say that unless Sofitel receives a satisfactory reply, that “our client will take all necessary measures to put an end to this infringement including legal proceedings” [emphasis in letter].
Chay plans to respond that he registered SoFitDC.com for a fitness website, and so his use isn’t infringing.
The letter was written by Nathalie Dreyfus, a French attorney who founded her own IP law firm and represents many trademark holders in domain disputes. The Dreyfus website boasts of its success in winning UDRP complaints for trademark holders.
After more than 5 years in existence, [as of 2009] Dreyfus & associés has filed before the WIPO Arbitration and Mediation Center almost 200 UDRP complaints with a successful outcome in 99% of the cases. This high success rate is greatly above the average, as approximately 15% of the Complaints are denied by the WIPO Arbitration and Mediation Center.
But that is only part of her accomplishments.
How would you like the opportunity to have Nathalie Dreyfus serve as a UDRP panelist for a dispute involving one of your domains, and have her decide whether you get to keep the domain or whether it will be transferred to the company that is claiming trademark rights to the domain?
Well, you’re in luck. You can!
In addition to being a trademark attorney, she is also a WIPO panelist and an NAF panelist. According to her website, as of 2009 she had appeared on 70 UDRP panels. She sends threatening C&D letters by day, and decides UDRP cases by night.
John Berryhill has already called out Ms. Dreyfus for the inherent conflicts of this double-duty, in comments on Domain Name Wire. It is a fascinating thread. Berryhill points out that in 2001, Dreyfus was on the UDRP panel that ruled in favor of Pernod Ricard and ordered the transfer of the domain pernod.com. Fast forward several years to 2008, when Pernod Ricard decides to go after Ricard.com, owned by Tucows as a personal name through their MailBank acquisition. Whom does Pernod Ricard choose to represent them? The panelist that helped decide the Pernod.com case in their favor – Ms. Nathalie Dreyfus.
The panelists deciding the Ricard.com UDRP case are now in the awkward position of ruling on a case in which one of their colleagues is representing the Complainant. Further, as a Panelist in the earlier case involving Pernot Ricard, Dreyfus helped draft the Pernod.com UDRP decision, which the Ricard.com panel will likely rely on for guidance on how to decide the dispute involving Ricard.com.
Tucows has a nearly unbroken string of success in defending its surname domains, which it uses as part of its Hover personal email service. But not in this case. The panel ordered Ricard.com, which was registered by MailBank back in 1996, transferred to Pernod Ricard.
Bill Sweetman is the General Manager in charge of the Domain Portfolio at Tucows. “Because of unhappiness with the UDRP process,” Sweetman says, “Tucows now responds very aggressively and in certain cases has filed preemptive lawsuits to avoid what feels like a flawed UDRP process. We used to have some faith in the UDRP process, but it has become so flawed. I’ve become so much more cynical and I’m not a cynical person.”
The flaws in the UDRP process are largely the responsibility of ICANN, which has neglected its oversight role over the UDRP process it put in place. ICANN authorized WIPO and NAF to decide UDRP cases without requiring them to be bound by a contract that spells out their obligations and permitted behavior. WIPO and NAF can, and do, create their own supplemental rules. They can accredit whomever they see fit as panelists. They operate without any observable oversight from ICANN.
The rot at the root of the system is that the Complainant chooses the UDRP forum. The various forums who handle UDRP cases compete against each other to be chosen by the Complainant, in effect screaming “Pick Me!”, “Pick Me!” All their incentives rest with pleasing and making themselves attractive to the Complainant. The domain owner, who is the Respondent, is just along for the ride. In this environment is it a big surprise that active trademark lawyers also serve as panelists? Do you think that active trademark lawyers would be picked as panelists if the Respondent, rather than the Complainant, was empowered to choose the forum that will decide a UDRP complaint?
Who is more qualified, and more expert, in UDRP disputes than domain attorneys such as Ari Goldberger, John Berryhill, and Zak Muscovitch? But don’t hold your breath waiting for any of them to be qualified as WIPO or NAF panelists. None of them are. It is possible that they would even refuse the appointment, recognizing the inherent conflicts that would present.
But WIPO and NAF pick attorneys, such as Nathalie Dreyfus, who make their livelihood enforcing trademark interests and appoint them as “impartial” panelists to decide disputes between these same trademark interests and domain owners. Is an attorney serving as a panelist likely to make a decision that would adversely affect her ability to make a pro-Complainant argument when she is serving as a lawyer in front of a panelist? Would an active trademark attorney who is constantly seeking new clients, make a ruling that would be viewed unfavorably by a prospective client?
The conflicts of interest are inherent in trying to fulfill both roles. Even if the attorney/panelist has no relationship with the parties in a dispute, she cannot claim to be impartial as to the outcome. The decisions reached by the panel on which she serves may be used as guidance by those panels before which she appears.
I am not suggesting that Ms. Dreyfus has fulfilled her duties as a UDRP panelist with anything less than the utmost professionalism and integrity. I am questioning a process that permits, and even encourages, the potential for the conflicts of interest that arise when the same person serves as an advocate and a panelist in the same forum.
As John Berryhill eloquently says in the same comment thread mentioned above,
[P]ermitting panelists to also represent parties in proceedings is structurally unethical, because it is a needless opportunity for mischief. There are plenty of qualified attorneys, and accredited panelists, who do not represent claimants in UDRP proceedings. There is no need to have panelists which also represent UDRP claimants. None.
The UDRP was intended to be a quick, inexpensive, and efficient alternative to Federal court as a means to resolve domain disputes. Due to the persistent, uncorrected flaws in the UDRP process, however, some participants have lost confidence in the UDRP process and are choosing to opt out of the UDRP entirely to go straight to court. ICANN can address this problem and help fulfill the original intent of the UDRP process as a fair and efficient domain dispute mechanism by fixing some of the well-known inequities in the UDRP process.
Ten years have passed since the UDRP came into existence. UDRP reform is overdue. ICANN recently considered whether the time had come at last to review the UDRP procedures for possible corrections. Their decision: “Not Yet“.
Chay has not yet responded to Ms. Dreyfus. I hope she is satisfied with his answer. Otherwise, he may find himself facing Ms. Dreyfus as the attorney for Sofitel in front of a UDRP panel composed of her former and future colleagues.
The TRAFFIC auction fell victim to the recurring curse of live auctions – lack of quality inventory at reasonable prices leading to poor results.
There were some high quality domains, Power.com, Dubai.com, Prague.com, Avatars.com, Cheese.com, Tie.com, and Movies.xxx etc, but the reserves were too high. UPDATE. Per Mike Berkens the movie theater domains did not sell.
The highest selling lot was the pair of MovieTheater.com and MovieTheatre.com for $45,000, pending seller approval of a bid that was well below the published reserve. That leaves two number domains as the top lot, with 002.com and 689.com selling as a pair for $38,000.
The auctioneer was entertaining and kept things moving fairly well.
Rick’s innovation to start low and bid up until the market price was reached provided useful market information even when domains failed to meet reserve. But the bids on passed domains were likely suppressed and lower than they would have been in a No Reserve auction as there was little reason to bid if the reserve was out of reach, so it wasn’t that useful a gauge of market values.
A Live Auction works best when there are multiple competing bidders going for high value domains. The dynamics of a live auction can add interest and excitement. The visceral experience of going head-to-head with a competing bidder in the same room leads to bidding wars and higher prices.
A live auction has a high hurdle to justify the investment in time and effort to put it together, and the investment in time for those attending. An online auction can handle multiple auctions efficiently. A live auction has to go through each domain in the auction list sequentially over the course of several hours.
Did the Live Auction provide value over an online auction? In this case, the answer is ‘No’.
Just once I would love to see a live auction of high quality domains all at No Reserve. That would be exciting.
It would require the domain owners to sell their domains at the prevailing market price. If they aren’t willing to do that, then why even hold an auction?
.CO domains didn’t have a great showing. The values were approximately 1% or less of what the corresponding .com would fetch. Sex.co had a high bid of $60k, less than 1% of the $10m+ valuation of sex.com. GoldJewelry.co went for $750. GoldJewelry.com would likely fetch at least $75k. Duchang.co (casino in Chinese) sold for $500. I don’t know what the .com would be worth, but $50k sounds reasonable. Touchdown.co had a high bid of $1,000 (didn’t sell). Touchdown.com would be a six-figure domain. Her.co had a high bid of $500. Her.com would be at $50k or close.
It is deflating to have the premium domains such as Power.com, Optical.com, Dubai.com fetching high bids so far below the reserves. It is also disorienting to have the auctioneer beat up bidders for an extra hundred dollars for iPerformer.com (sold for $200) and then move on to ask for million dollars bids for Power.com and the other premium domains. Low quality domains like iPerformer.com and iCabin.com shouldn’t be in a live auction wasting a combined live and online audience of hundreds of people. You don’t see auction houses hawking motel-quality landscapes at a Picasso auction. You wouldn’t expect a serious bidder for super premium domains such as Power.com and Dubai.com to sit through auctions for iConsumers.com and FreePreviews.tv.
What is the total value of the .XXX name space? Orgy.xxx sold for $25k, Movies.xxx received a high bid (without selling) of $80,000, Personals.xxx sold for $25,000, Chatroom.xxx sold for $10,000. How many domains in the .XXX extension would sell for $10k or more? 3,000? 5,000? I have no idea. Let’s say it is only 1,000 domains, that would set the floor for the .XXX name space at $10,000,000, and of course some domains would fetch much higher prices such as Gay.XXX for $500k.
It’s incredible that so much value can be created out of thin air, just by rolling out a new domain extension. It’s understandable why there is so much interest in the new gTLDs from marketers hoping to recreate .XXX’s success.
Unofficial results provided by DNN.com’s auction coverage
.CO has carved out a niche for itself as the preferred extension for URL shorteners. Google (g.co), Twitter (t.co), GoDaddy (x.co), are now using .co domains as URL shorteners.
Using .co as a URL shorteners has taken one of .co’s defects – that it doesn’t have a separate identity from .com – and turned it into an advantage. By being a ‘nickname’ for .Com, the .Co extension works as a natural URL shortener for longer .Com domains.
t.co is the 22nd most visited site in the US according to Alexa. t.co isn’t a website, however. It isn’t a destination. It is a redirect to a real website, one that probably has a .Com extension.
Because of .co domains’ adoption as URL shorteners, likely 99.99% of the public’s interaction with .Co domains is as a URL shortener.
.Co risks being permanently branded as a redirect, rather than a destination. Someone seeing a .Co domain will think it is a redirect, not a brand in itself.
This will be reinforced as longer domains are being used as redirects. such as the Denver Broncos using dbron.co as a redirect to DenverBroncos.com.
The .CO registry is promoting the use of .co domains as branded shorteners on its Opportunity.co site. I agree that this seems like a good use of the .Co extension, as the brand is retained in a shorter domain. The .Co registry could carve out a nice, profitable niche for itself if .co domains are widely adopted as shorteners.
The risk is that the use of .Co as URL shorteners will drown out the other possible uses promoted by the .Co registry at Opportunity.co, such as using .Co for a company’s web site. There are five companies highlighted on Opportunity.co “company” page. Only one is an established company, the venture capital firm Draper, Fisher, Jurvetson. The promo text is:
DFJ knows what it takes to build a successful company. One of the most important things of all? A solid domain name, like DFJ.CO
Type in DFJ.CO, however, and you are redirected to the corporate web site at DFJ.COM.
Will that increasingly by the fate of .Co domains – to not be sites under their own name but merely redirects to .Com sites?
Blockbuster, Borders, Circuit City, the Tribune, Musicland – all killed by the Internet. Will Barnes & Noble, YellowPages, Comcast, and radio stations be next?
The Internet offers global reach and low-cost distribution. It is a winner-take-all environment without the traditional barriers to entry.
Google, Apple, Amazon, Facebook, and Verizon are becoming the dominant players in the Internet age, and destroying many traditional businesses along the way.
What other long-established companies will next fall victim to competition from the Internet?
It isn’t a good time to be a bookseller selling books in big, expensive retail spaces, especially not against Amazon and the rise of the Kindle and downloadable books. Borders failed. Barnes & Noble is hanging tough, due in part to the success of their color e-reader, the Nook. But Amazon’s new Kindle Fire threatens to make the Nook obsolete. What will keep Barnes & Noble from the downward spiral now?
Comcast/Xfinity is a dominant company with steadily growing revenues. But will they be able to keep their price structure intact in the face of Verizon’s Fios service, and more television shows being delivered and viewed through the Internet? Will the day come that HBO doesn’t need Comcast to deliver its shows, since enough people will have fast Internet connections and Internet-enabled TVs to be able to watch high quality TV over their Internet connections, obsoleting Comcast cable. Comcast’s huge investment in infrastructure leaves it with a $40 billion pile of debt. It can’t afford to lose customers or reduce its pricing.
We’ve heard for a while that the YellowPages is on its way out, as people no longer use the books to locate businesses. What about Radio? Will advertisers continue to pay for radio spots if radio’s listeners have migrated to Pandora, Spotify or are to listening to iTunes through the Bluetooth enables speakers in their cars?
Sprint and BlackBerry are vulnerable to the rise of smartphones and next generation wireless. Sprint, with its smaller customer base, may have a hard time keeping up with the nationwide rollout of new infrastructure that Verizon and AT&T can better afford. BlackBerry (RIM) has strong cash-flow from business users, but those business users are migrating over to iPhone and Droid phones as these are adding the features and security that business users need.
Could we one day read about the bankruptcy of one of these formidable businesses?
What other businesses do you think are vulnerable to the rise of the Internet?
The downturn in domain parking has hit a lot of domainers hard. When the economy is doing poorly, end-user sales often dry up.
Domaining is not immune to risks from the larger economy, but a diversified domain business can cushion some of the blow.
A diversified domain business can rely on income from three main business models. These are domain parking, flipping domains or volume sales of low priced domains, and higher dollar negotiated end-user sales.
Domain parking is nice to have for its steady cash flow. If your parking revenues cover your basic living expenses, then you don’t have to worry about where your next sale is coming from in order to pay the bills, and it can save you from having to liquidate some of your better names at fire-sale prices to come up with needed cash.
The downside to domain parking, as we’ve seen, is if parking revenues drop. The portfolio that was purchased for 5 times revenues, can turn into a portfolio that will take 10 years or longer to recoup the original investment. That purchase went from being a reasonable investment to digging a huge hole in the domainer’s cash reserves that will take a long time to be refilled.
Flipping domains is another good source of revenue. It requires hustle, and a lot of effort, to find domains in private hands that can be obtained for less than reseller pricing. But these domains are out there, and the return on investment is usually great, as even if you flip for a small profit the holding period is very short, and by reinvesting your profits in new domains and then flipping them, you can see your pile of cash grow quickly. Domain flippers can start with, let’s say, $10,000 at the beginning of the year and end the year with $50,000 or $100,000 in profits, if not more. The other great thing about domain flipping is that it isn’t capital-intensive. You don’t have to tie up a lot of cash for a long period of time in domain name inventory. Some domain flippers, if they have good relationships and can trust buyers who are longer-term domain investors, can even pre-sell the domains so there is no risk because they can purchase the name knowing ahead of time that they’ll be able to resell it immediately for a profit.
The downside to domain flipping is that it is time-consuming, and that it can require a lot of effort for not a lot of profit from each individual domain sale. Hours of sending out domain inquiries, many more hours of negotiating, can result in acquiring one domain that can then be flipped for a $500 or $1000 profit perhaps. Domain flipping is more like a job, where you are paid by the hour, even though you may get lucky and find some highly profitable domains to resell. One of the challenges with domain flipping is that often you use your profits to cover your living expenses, so you don’t end the year any richer than when you started. In addition you also have to pay income tax, at least in many countries, on the profits that you make from flipping the domains. So it is a little bit like running on a treadmill, where you’re going two steps forward, but then one step back after the effect of taxes is taken into account.
As you build a war chest and start buying and flipping higher value names, then the potential for profit is much higher as well, as one domain sale could bring in a $5000 or $10,000 profit when resold. But the risks are much higher as well. One mistake in overpaying for high-value name where you misjudged the resale value, and you may have to take a quick $10,000 or $20,000 hit that could wipe out much of your profits from the previous few months.