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Push to Adopt “Renewed in Bad Faith” Standard in UDRP puts Investment Domains at Risk

2013 November 7
by Nat

Many domains held for investment are at risk of loss due to a radical new approach to the UDRP championed by some UDRP panelists at WIPO’s Advanced Workshop on UDRP Practice and Precedent held in Geneva last week.

Respected WIPO Panelist and the Workshop co-leader, David Bernstein, is a leading advocate for this new approach that changes the criteria that the Complainant must prove to win a transfer of a disputed domain. The standard since the UDRP was introduced in 1999 has been that “Registration in Bad Faith” must be proven before a domain can be transferred. Bernstein, and other panelists who share his views, are using a “Renewed in Bad Faith” standard instead.

The “Renewed in Bad Faith” standard is an open invitation to covetous companies to employ the UDRP to try to steal your domains. As was made clear at the WIPO workshop, under the “renewed in bad faith” standard every renewal provides a panel the opportunity to look at the then current use for evidence of bad faith. Putting a domain to virtually any use other than running an established business on that domain can be viewed as bad faith. The following were all held out as examples of bad faith use at the workshop, and have been cited as bad faith use in many UDRP decisions-

● parking a domain name, whether there are infringing links or not;
● having a GoDaddy landing page on your domain, even if you make no money from it and are not aware of it;
● leaving the domain undeveloped;
● offering the domain for sale;
● having a criticism site on a domain;
● running a business on the domain, if the business is viewed as competitive with the Complainant’s.

Renewing your domain while it is being put to any of the above uses therefore could give a panel grounds to order a transfer under the “Renewed in Bad Faith” standard.

Bernstein used the “Renewed in Bad Faith” standard to order the transfer of Big5.com in a controversial recent decision. The decision is so controversial because Big5.com was clearly registered in good faith. The Taiwanese owner originally registered big5.com for a business in connection with the ‘big 5’ Asian languages, and had a trademark on the term ‘Big 5’ for that purpose, but then allegedly used the domain to target the trademark rights of Big 5 Sporting Goods.

The UDRP details the rules governing a domain dispute in Paragraph 4 of the policy where it states that in order for a transfer to be ordered the trademark holder bringing the dispute, the “Complainant”, must prove three elements, including as specified in section 4(a)(iii), that the “domain name has been registered and is being used in bad faith”. Since all parties acknowledged that Big5.com had been registered in good faith, it would seem impossible for the Complainant to have proven bad faith registration.

How can Bernstein, and the other panelists who take this approach, justify disregarding the clear language of the UDRP? They look outside of Paragraph 4 to the previously little noticed Paragraph 2. Paragraph 2 is a warranty between the domain registrant and the domain registrar. In Paragraph 2, the domain registrant warrants to the registrar that “By applying to register a domain name, or by asking us to maintain or renew a domain name registration, you hereby represent and warrant to us that …(b) to your knowledge, the registration of the domain name will not infringe upon or otherwise violate the rights of any third party.”

Those who look to Paragraph 2 see it as placing on the domain owner “a continuing duty to ensure that the domain name is not used in violation of another’s rights”. In their view, “The benefit of an original good faith registration should not be perpetual to the point where it can cloak successors in title and successors in “possession” long after the original registration would have expired.”

In other words, according to those panelists who are relying on the Paragraph 2 language, each time a domain owner renews a domain, he is warranting anew that the domain will be used in good faith. Since most domains are auto-renewed each year, this interpretation has the effect of rendering irrelevant the original registration date of the domain, regardless of whether the domain was registered a decade or more earlier.

The dual requirement under the UDRP that a domain must be proven to be BOTH REGISTERED in bad faith and USED in bad faith as a precondition to transfer, is replaced under this approach by condensing the Registration/Renewal date and the use date so that in most cases they are within one year of each other. For practical purposes the Paragraph 2 standard is simply a USED in bad faith standard, as the registration requirement is thrown out the window.

This is made clear in the majority decision in the Big5.com dispute: “the Panel deems Respondent’s 2012 renewal of the disputed domain name to be the date on which to measure whether the disputed domain name was registered and used in bad faith for purposes of paragraph 4(a)(iii).”

Bernstein and his fellow panelist in the majority decision focused on the recent use of the domain. They found that “the disputed domain name at the time of its last renewal was already a prototypical cyber squatting [site] unrelated to any of Respondent’s original business”. By pulling into the arbitration criteria the renewal warranty from Paragraph 2, they thought they had sufficient justification to order the transfer of the domain.

How one looks at the Paragraph 2 approach is likely a matter of perspective. Seen from the perspective of a trademark owner whose mark is being blatantly infringed by a domain name that was originally registered in good faith but then repurposed to abusive target your mark, the flexibility of the Paragraph 2 approach is attractive.

This new approach results from frustration among many panelists that the UDRP as traditionally interpreted is powerless to combat cybersquatting that happens when domains that are legitimately registered are then used to infringe on trademark rights that arise after the domain was registered.

As I understand it, Bernstein and others who are advocating this approach see it as appropriate when there has been a change in the original use of the domain where the domain owner intentionally and opportunistically uses his domain to target trademark rights that have arisen since the original domain registration. But this nuance is likely to be lost on other panelists who are either not as experienced, or who are more aggressive in their approach. If the Paragraph 2 approach takes hold, then I would expect to see a tidal wave of cases all making variations on the following argument-

“It doesn’t matter that XYZ domain was registered 10 years before my company came into existence, when it was last renewed it was being used as a [parked page/ blank page/ for sale page/ under construction page/ GoDaddy lander page/ criticism site] which is a bad faith use that violates the warranty under Paragraph 2 of the UDRP, therefore transfer the domain to me.”

Bernstein and his colleagues may feel a sense of pride that they have found a clever way to strengthen the UDRP to better fight cybersquatting.  If this approach takes hold, however, the true consequence is that they will have gutted the UDRP, putting at risk most domains held by domain investors, and even domains held by small businesses that are no longer actively being used.

As with other attempts to introduce novel interpretations into the UDRP, a well-intentioned effort to more effectively combat abusive cybersquatting can create serious side effects that cause harm that far outweighs any good that is achieved. We saw this most recently with the Octagen/Mummygold series of cases where panelists Andrew Christie and Scott Donahey led an effort to revise the paragraph 4(a)(iii) language cited above: “domain name has been registered and is being used in bad faith” by replacing the “and” with an “or” so that merely bad faith use, not bad faith registration, would need to be proven to satisfy this criterion for transfer.

The Octagen/Mummygold line of reasoning encouraged a slew of frivolous UDRP Complaints from companies that wanted to seize domains registered long before the Complainant companies came into existence. As described in the “John Berryhill’s UDRP University” post, Berryhill’s frustration with this line of reasoning led him to select Christie for the panel of these frivolous cases so that Christie could see first hand the consequences of his tampering with the UDRP.

According to Bernstein and Tony Willoughby, his Workshop co-leader, the consensus view of the community of UDRP panelists is now to reject the Octagen/Mummygold approach, in part because to adopt it would undermine 14 years of UDRP precedent. For panelists wishing to maintain the consensus view, Octagen/Mummygold is now foreclosed as an approach for dealing with “repurposed” cybersquatting, leaving panelists in search of a new approach.

What is attractive about the Paragraph 2 approach to its advocates is that it is a novel interpretation that, in their view, does not undermine established precedent as it hasn’t been fully considered before. Yet the Paragraph 2 approach strikes me as disingenuous, because it is simply the Octagen/Mummygold approach in new clothing. While the adoption of Paragraph 2 warranty language relies on a different provision and a slightly different line of reasoning, the practical effect is nearly identical to the Octagen/Mummygold approach, as both approaches permit a panel to disregard the requirement that bad faith registration must be proven. If this approach is illegitimate under Octagen/Mummygold because it undermines 14 years of precedent, it is similarly illegitimate under the Paragraph 2 approach. The Paragraph 2 approach is a new bite at the same apple, a similar violation of UDRP core principles that would also undermine 14 years of precedent. It is simply another way to change the “and” to an “or”.

I find it very concerning that David Bernstein is a leading advocate of the Paragraph 2 approach, as he is held up as an expert on the UDRP and entrusted by WIPO with instructing other UDRP panelists on how to implement the UDRP, so he is very influential. Also, unlike some other panelists, Bernstein is not considered to be hostile to domainers. On the contrary, he has been seen as a panelist who is willing to give a fair hearing to domain investors.  Ari Goldberger often selected Bernstein for the disputes he handled.  Earlier this year, I advised a domain owner who was handling his own response to consider selecting Bernstein to be on his 3-member panel.  Bernstein has shown a willingness to slap Complainants with a finding of Reverse Domain Name Hijacking.  He is associated with more RDNH decisions than all but two or three other panelists.

The paragraph 2 approach has also been adopted by Richard Lyon, another well respected and very experienced UDRP panelist who is considered to offer an even-handed treatment to domain investors.  Lyon decided the controversial Sporto.com  where he ordered the transfer of a 13-year-old domain that had been registered in good faith because of recent use that he found had been in bad faith.

The move to use Paragraph 2 language cannot be attributed to panelists who are “out to get” domain investors.  Rather I think these panelists are legitimately concerned that the UDRP as traditionally interpreted does not adequately address certain instances of blatant cybersquatting and, as described above, the panelists are looking to the paragraph 2 language to cover a perceived “gap” in the UDRP’s ability to address cybersquatting.  Unfortunately their proposed “fix” breaks the UDRP.

The Paragraph 2 approach is not universally accepted, and has its critics, even among other WIPO panelists. Bernstein’s co-leader, Tony Willoughby, indicated that he is not persuaded that the Paragraph 2 analysis is correct because it requires a panelist to go outside of the confines of Paragraph 4 where the criteria to be used in a UDRP dispute are specified.  One of the pleasures of attending the workshop was the opportunity to spend time with John Berryhill, his wife MJ Keukelaar, Paul Keating and Zak Muscovitch. They all view the Paragraph 2 approach as illegitimate.

Their reasoning as to why Paragraph 2 language is not relevant for UDRP disputes relies on how to properly read and interpret legal documents, an area in which I have no expertise. As best as I understand it, Berryhill, Keating and Muscovitch rely on several arguments. First, the UDRP exists as a function of contract (between the registrant and registrar). The UDRP dispute procedures are incorporated within that contract. Paragraph 2 was taken from the original registration agreement. It consists of a series of representations and warranties by the registrant to the registrar, the only parties to the agreement. This is obvious by the use of the pronouns “you” and “we”. A third-party trademark holder has standing only with respect to the UDRP dispute procedures outlined in Paragraph 4.

Second, the UDRP itself is limited to the terms of the Policy. Paragraph 4 of the Policy specifies the limits of the resolution mechanism and details the three criteria that must be proved for a complainant to prevail in a UDRP. Indeed, as Berryhill points out, paragraph 4 starts with “This Paragraph sets forth the type of disputes for which you are required to submit to a mandatory administrative proceeding. “ In other words, the dispute mechanism is limited to paragraph 4. Paragraph 4 does not incorporate Paragraph 2. Further, Paragraph 4 uses the term bad faith registration. It does not reference “renew or maintain.”

The history of the UDRP drafting process supports a conclusion that paragraph 2, itself a late addition to the document and a sloppy cut-and-paste from the registration agreement cannot be used to drastically expand the mechanism carefully set out in Paragraph 4 so as to render “renew and maintain” equal to “register”.

Berryhill also cites the First WIPO Report on the UDRP that makes clear that “the scope of the administrative procedure [is] limited to the abusive registration of domain names.” Berryhill’s analysis demonstrates that the push to rely on Paragraph 2 warranty language cannot be justified.

Both Keating and Berryhill also point out some of the problems in trying to incorporate a reference to “renew and maintain”. For example, domain names are now renewable for up to 10 years. How does a panel know when the last renewal took place for the purposes of applying this new standard? Even more problematic is the reference to “maintain”. As both point out, a registration is by definition maintained throughout its registration period. As such, incorporating “maintain” effectively renders both registration and renewal meaningless and results in “use” becoming the sole and continuing standard for measuring bad faith.

Keating takes it even one step further. He argues that even if one were to accept that Paragraph 2 creates a standard, the very language is limited to the actual knowledge of the registrant. Indeed the language is “to your knowledge, the registration of the domain name will not infringe upon or otherwise violate the rights of any third party.” The words measure actual knowledge without a duty to investigate. The problem, Keating notes, is that most panelists already tend to ignore this by favoring an obligation to investigate. According to Keating, the entire Paragraph 2 contingent are thus opening the door to a strict liability approach in which all trademarks are elevated to the level of being famous and you and I are obligated to dig them up to avoid the appearance of conflict.

It is still too early to see how this split view on Paragraph 2 will play out. Perhaps the Paragraph 2 approach will become the consensus view, where all panelists will feel an obligation to follow it. If so, domains held for investment will be at high risk of loss and it may be too risky to continue parking investment grade domains. It also would mean that domainers must undertake an investigation every time a domain is renewed so as to ensure no conflict exists with a trademark.

Perhaps like the Octagen/Mummygold approach, the attempt to rely on language from Paragraph 2 will eventually be decisively rejected. But in the meantime, with leading panelists including Bernstein and Lyon advocating for it, we can expect to see many decisions taking the Paragraph 2 approach, and many domains being lost despite having been registered in good faith.

In the succeeding months, as the Paragraph 2 approach becomes better known, we are almost certain to see trademark holders filing complaints in attempt to seize valuable domains that pre-date their existence. A juicy target for these complaints will be domains that are parked on landers that are auto-optimized, as the optimization algorithm can focus the links on the trademarked use.  A panel relying on the warranty language from Paragraph 2 could find a domain owner responsible for these advertising links that appear on a parked page even though the links are automatically supplied by Google and the domain owner has no knowledge of them.  The panel can determine that the latest renewal while the domain was being parked was in bad faith and order the transfer of the domain.  The domain owner will then find that a domain that she registered in good faith many years before the trademark owner came into existence has been lost in a UDRP dispute.

What is even worse is the ability of panelists to find bad faith based on Paragraph 4(b)(iv) (intentionally attracting for commercial gain ) which does not require actual conflicting links.  Any commercial use that is not purely descriptive can be considered a bad faith effort to trade on the goodwill belonging to the trademark holder under this standard.  This gives panels a rationale to find bad faith for a broad range of uses, and makes it even easier to separate a domain owner from her domain.

A major practical problem with the divergent views on the Paragraph 2 approach is the uncertainty it introduces into administration of the policy.  As domain investors, we know all to well the lack of consistency among UDRP panelists in how they approach bad faith use.  Some panels have found that earning revenue from PPC links is a legitimate use for a domain, others have found that evidence of bad faith.  Some panels have found that the business of selling descriptive domains – whether or not there are trademarks on the descriptive word on which they are based – is a legitimate use for a domain,  some panels have found that to be bad faith.  Some panels have found that not developing a domain after owning it for many years no cause for concern, others find that evidence of bad faith.  As there is no consistent standard for what is consider use in bad faith, domain investors rely on the requirement that before a domain can be ordered to be transferred that registration in bad faith must be proven.  This is the pillar on which we rest our defense in a UDRP response in the absence of a consistent standard for bad faith use.  The paragraph 2 approach knocks this pillar out from under us.  When registration in good faith no longer is a sufficient defense, then the UDRP truly becomes a crapshoot.  The decisive issue of what constitutes bad faith varies from panelist to panelist.

While there is disagreement about whether the incorporation of “renew and maintain” language from Paragraph 2 belongs in the UDRP dispute mechanism laid out in Paragraph 4,  there can be no disagreement that introducing this radical approach into the UDRP destroys any consistency of application of the UDRP.  The disregard that Bernstein, Lyon and others show for the principle and the value of consistency in application of the UDRP is shocking to me.  They must be aware that adopting this approach is like throwing a bomb into the shaky edifice of UDRP precedent and the 14 year effort to develop a consensus approach to UDRP interpretation, as this approach blows that whole effort into smithereens.

What I have seen is that faced with perceived shortcomings in the Policy, it becomes very attractive to certain panelists to experiment with ways of expanding the Policy beyond the limited scope that was agreed to after extensive negotiations during the creation of the Policy. These panelists are no longer content with implementing the policy. They want to make policy. Because they are entrusted and empowered to implement the policy according to their own interpretation, without any oversight, they are free to creatively “interpret” the Policy in ways that result in profound changes to the Policy.

It is likely not a coincidence that many of these activist panelists are concurrently trademark lawyers. They have spent their careers aggressively advocating on behalf of trademark holders. When aggressive advocates are then placed in the role of neutrals, it is no surprise that they don’t exercise the restraint and the judicial temperament that is required for the role of panelist. They keep their advocate hats on.

These panelists will claim that they are honoring the spirit of the Policy and furthering its aim of combating cybersquatting. Instead, they are usurping the policy making function that should develop from deliberations within ICANN and among its many stakeholders.

As we in the domain investment industry are shut out from the process and from the power to make change, we are left with the art of persuasion. Having seen Berryhill, Keukelaar, Keating, and Muscovitch in action last week, they are very actively engaged in this uphill struggle.

 

I am grateful to John Berryhill, MJ Keukelaar, Paul Keating, and Zak Muscovitch for generously sharing their expertise and feedback, and for fighting for the rights of domain registrants even when we aren’t aware that they are watching our backs.

 

Revised November 8th

32 Responses leave one →
  1. Rob M permalink
    November 7, 2013

    Great article Nat, and a big thanks for the great amount of effort you’ve put into it, as well as to those that contributed.

    The reality is that the Big5 owner deserved to be penalized for trademark infringement if they indeed knowingly infringed thinking they were protected by the registration date. But the fact that panelists are trying to make precedent setting decisions in order to come to what they believed to be the right decision in this ONE case is a SEVERE problem. Just because its the decision they WANTED to make, it doesn’t mean they should have ever made it. Consequences need to be considered of such a decision and either the panelists didn’t consider them, or they did so selfishly because this will drum up a whole new slew of business for them. I bet Bernstein was looking like the cat that ate the canary when he signed the big5 decision.

    There are long established methods for dealing with trademark infringement. The fact that this case had a domain involved doesn’t mean that UDRP is the only solution. Its not UDRP responsibility to resolve every case just because it involves a domain name. It was designed to be a first line of attack, it has its limitations and is not the be-all end-all.

    Trying to change 14 years of precedent in one clever (but very wrong) swoop is a breach of the duty given to a panelist. IMO, Bernstein should be removed for having the arrogance to pull such a move as it shows a clear contempt for the well established UDRP rules he was granted the privilege to uphold.

    • Nat permalink*
      November 7, 2013

      Rob- thanks for your comment. You hit the main point. The UDRP wasn’t intended to be the solution to every domain related issue. It was intended only for abusive cybersquatting. The UDRP intentionally included the requirement that bad faith REGISTRATION must be proven before a transfer can be ordered, because the intention was to limit the kind of cybersquatting that the UDRP addresses to those where the original intention of the registration was to target a trademark.

      If ICANN wanted the UDRP to address all instances of bad faith use, they could have written the UDRP that way. But they didn’t. As a consequence some bad behavior is not adequately addressed by the UDRP.

      I think there is wisdom in this approach, and the history of the UDRP bears this out. Bad faith use is often in the eye of the beholder. When panels find that non-use is a bad faith use, or that continuing to renew a domain after you no longer “need” it is bad faith (see DKB.com), or that responding to an offer to purchase a domain that you registered for your dental practice before the trademark holder was formed is bad faith (see OpenDental.com), or dozens of other similarly ridiculous reasons to find bad faith use, then I appreciate the wisdom of the drafters of the UDRP to include a requirement that bad faith registration must be proven.

      As these examples demonstrate, the bad faith use standard is so malleable as to be no standard at all.

      What Bernstein and other like minded panelists are doing by eliminating the ‘Registered in Bad Faith’ standard, is to leave the UDRP with essentially no standards at all.

      Unfortunately to combat isolated and relatively rare instances of infringement that can be adequately dealt with in the courts, the panelists who are pushing the Paragraph 2 approach are turning the UDRP into a mechanism that allows wholesale theft of domain names.

      • Rob M permalink
        November 7, 2013

        Agreed 100%. The giant leap perpetrated by Bernstein shows a clear contempt for the long established UDRP rules and precedents. And let me be very clear, I use the word contempt very meaningfully. By making this stretch, Bernstein is saying he has no respect for UDRP or its established rules or precedents. So I have to ask, how can person be trusted to uphold the rules and 14 years of UDRP precedent when said person has blatantly shown that they disrespect and disregard at will those very rules and precedents??? Unless panelists start losing their privileges for overstepping their authority with these bad decisions, how will this ever end? What is preventing them from further disrespect of the UDRP rules?

        This brings up a question – has any panelist ever been removed? Is there a system in place to review and remove panelists?

        • November 7, 2013

          You are 100% correct. Rules are rules and should be followed by everyone.

          I bet no one has ever been removed. Why would a provider remove a panelist that brings in money? When a big corporation wins a domain they don’t deserve to, guess what will happen. They will file 100 more complaints to get more domains. This pays WIPO, NAF and the panelists.

        • Nat permalink*
          November 7, 2013

          I saw Bernstein over two days as he co-led the WIPO session. He is very conscientious and takes the UDRP requirements seriously. He gave many examples of where the Complainant fell short and he ruled in favor of the respondent. He is one of the panelists who is most likely to make a RDNH finding (http://www.rdnh.com/rdnh-panels/). He takes a more liberal view of criticism sites that some other panelists- as he would not find bad faith in using the exact match of a trademark for a criticism site while some of his fellow panelists would.

          So while I disagree with Bernstein on his adoption of Paragraph 2 language, I don’t think that he shows contempt for the UDRP. The language that he is referring to is language found within the policy. The issue is whether the “renew and maintain” language in Paragraph 2 is relevant to the criteria laid out in Paragraph 4 for deciding a domain dispute. As I try to explain in the post, there is a strong argument that the “renew and maintain” language is not a part of the dispute resolution mechanism.

          In my view, the move to use Paragraph 2 language is a symptom of a problem with the way the UDRP is administered, in that the same people who spend their lives advocating for trademark owners, and who represent trademark owners in the UDRP, are then empowered to decide UDRP cases where they are in effect being asked to judge the same arguments that they make as advocates.

          The bias in this arrangement should be obvious, but WIPO and NAF and the other UDRP providers are either oblivious to it or refuse to acknowledge it.

          The issue is one of perspective and emphasis. Bernstein’s perspective is as an advocate for trademark interest and his emphasis is doing all he can to use the UDRP as a tool to prevent cybersquatting. He does not have a perspective of someone who spends his time trying to protect the rights of domain registrants, nor does he appear to recognize the collateral damage that would result from the adoption of paragraph 2 language.

          • November 7, 2013

            You can’t be both judge and lawyer.
            My view is very simple and is applied universally.
            UDRP is the only exception.

            I believe that panelists should only be judges and academics.
            No active lawyer allowed.

            At 99% of the cases anyone that is both a panelist and works for a law firm is a respondent enemy. It is in human nature. You can’t expect them to bite the hand that feeds them.

          • Rob M permalink
            November 11, 2013

            My use of the word contempt comes in the fact that he tossed all these years of precedent out the window with this new tactic. So although I’m glad to hear Bernstein often makes reasonable decisions, I just don’t feel good about him singlehandedly changing that precedent in order to come to a decision that may be right in this particular instance – but leaves a wake of collateral damage. I think at this point there’s no need to try and find new ways to stretch the power of UDRP – the courts exist for this. UDRP needs a big overhaul, but its primarily the process, oversight and implementation that needs to change. The rules are pretty good, maybe could use a tweak or two.

        • Nat permalink*
          November 7, 2013

          I asked the person at charge at WIPO whether they had ever removed anyone as a panelist. The answer is “no”. Nor do they appear to have any procedure for reviewing panelists for fidelity to the Policy.

          They take on the responsibility of accrediting panelists, but they shirk responsibility for the behavior of the panelists once they have accredited them.

          • Rob M permalink
            November 8, 2013

            Why does that not surprise me at all?

          • November 11, 2013

            IIRC the providers have no contract with ICANN, so there is no one watching the watchers, so to speak. An invitation for mismanagement.

          • John Berryhill permalink
            February 20, 2014

            The answer is not “no”, and WIPO has removed panelists (Milton Mueller, Michael Froomkin) perceived to be too lenient to domain name registrants. The statement that was made about the panelist roster being “closed” was also untrue, as WIPO admitted new panelists shortly after the workshop.

  2. November 7, 2013

    David Bernstein: His job is to take care of the corporations that pay him at the “International Trademark Association” and the Debevoise & Plimpton clients.

    And most panelists serve the people that pay them at UDRP. That is the trademark holders that file the complaints and fuel the udrp. Many times with complaints on worthless domains. Just to keep lawyers busy and paid. I bet he is not selected by any Respondents in 3-memeber panels so why should he care about respondents?

    He is in a group of UDRP panelists that are a disgrace to UDRP and law in a greater sense. We know who they are. They know who they are. They are the panelists that decide on complaints where the Complainant was or will be their client. I bet this Bernstein guy has a lot of people to satisfy at the “International Trademark Association”. Same on ICANN and especially NAF and WIPO that have selected him as panelist.

    They push and push the interests of their clients. I just hope he owns Bernstein.com and someone comes and takes it from him.

    As for the UDRP usage, I have said many times that the UDRP should not be used in other ways, other for the purpose it was built for. E.g. it should not be used in cases of domain name theft. Many people, including many domainers applauded cases that awarded stolen domains to complainants. I hate these decisions. I say that this opens the UDRP to any interpretation and panelists can make their own rules and make any decision they feel like just because they want to serve what is right. But what’s right is not the same for everyone.

  3. Ron permalink
    November 7, 2013

    This is powerful information, clearly conflict of interest with the above stated party exists.

  4. Geo permalink
    November 8, 2013

    If this decision stands, is it the end of the “domain industry” as far as domain investors or domain resellers are concerned?

    • Nat permalink*
      November 8, 2013

      I don’t think it is the end of the domain industry, but I think you need to be extremely cautious about the use you make of your domains as long as there is potential to be on the receiving end of a UDRP where a follower of the “renewed in bad faith” approach could be sitting on the panel.

      Of course you should always be careful about the use you make of your domain, but especially so under this new standard. With the tendency of some panelists to conjure up bad faith where no bad faith exists, it now appears to be very easy to lose your domain through a UDRP.

  5. Mark Fleming permalink
    November 8, 2013

    So this sounds like a new business opportunity for the unscrupulous: Just find a valuable domain name that you like on which there is no existing trademark, and has an upcoming renewal date. Then go out and get a trademark on that name, and wait until the person renews the domain bam.. When he does — BAM! Contact a lawyer. The name will be yours.

    This is serious stuff. Most names are now in jeopardy.

    I better go and renew all by valuable names for 10 years right now.

    • Nat permalink*
      November 8, 2013

      Mark,

      You point out one of the serious flaws with the “renewed in bad faith” approach.

      My view is that the UDRP currently serves two purposes. One is to combat cybersquatting. The other is a mechanism for corporations to seize inherently valuable descriptive domains that they want for business purposes.

      We saw the latter use in the Vanity.com and Canary.com cases among many others.

      The “Renewed in bad faith” approach helps panels tackle a few rare instances of cybersquatting while vastly expanding the opportunities for abuse of the UDRP, as you describe.

      My hope is that as panelists recognize the profound flaws with the “renewed in bad faith” approach that they will reject it.

      In the naturallyborn.com decision that was announced today – http://www.thedomains.com/2013/11/08/naturallyborn-com-saved-in-udrp/ – the Complainant cited both Mummygold.com and Sporto.com in their attempt to seize the naturallyborn.com domain that was registered before its business started. The 3-member panel rejected the reasoning in those two cases.

      So we are in for a period of uncertainty as we wait to see how a consensus view forms of the “renewed in bad faith” approach.

      Thanks for the comment.

      Nat

      • Rob M permalink
        November 8, 2013

        Actual infringement is still a factor that panelists should always take into consideration. However, relying only on that is still a bit flawed because businesses and their legal representatives have been known to manufacture evidence by simply using various methods to either search for or drill down to some advertising results that appear to be incriminating. I wouldn’t even be shocked to see a lawyer photoshop results. Panelists never seem to question whatever “evidence” is submitted.

        Regarding trademarks, I’ve always felt it extremely unfair that the onus is on domain owners to never infringe on any number of unknown trademarks worldwide. It as if there is a 1-strike and your out rule. Domain owners are essentially getting mugged and robbed. Nat knows this firsthand.

        What seems most fair is that any trademark owners complaining of infringement should be required to contact the domain owner BEFORE being allowed to file a UDRP. The domain owner should be given the opportunity to either correct the situation or refute the infringement claims. If the situation isn’t corrected to the trademark holders liking, then and only then should a UDRP be able to be filed. I would assume that most domain owners would be more than happy to correct any potential trademark issues given some bit of warning. Only a tiny fraction of trademarks are truly world-wide known so its entirely unrealistic to expect a domain owner to be aware of every potential mark worldwide.

        So without really needing to change the current UDRP process, I think there could be pre-UDRP mediation step added. If a dispute proceeds after mediation, the mediator can submit their report into evidence that should be used by the panelists. If the mediator says the respondent cooperated and immediately corrected the situation, then the mediator should recommend to the complainant that no UDRP should be filed. The complainant should be allowed to either take or ignore that advice, but the mediator’s report should become part of the UDRP evidence regardless. The panelists should be able to get a clear idea of the facts and whether or not either party is being unreasonable or uncooperative and factor that into their decision.

        Nominet actually provides (or at least used to provide) a mediation step as a courtesy to both respondents and complainants in regards to .UK domains. I would imaging that the results of such mediation are very successful and avert a significant number of disputes. It would be interesting to hear from Nominet on the overall success of that somewhat informal pre-dispute mediation that they provided.

        I know this is a lot of wishful thinking, but I think the mediation idea makes good sense. However, I don’t expect anything reasonable like this to happen. Trademark holders like the option of mugging those unaware domain owners. Why would they want to be reasonable when the don’t have to? And panelists aren’t about to bite the hand that feeds them either.

        With no UDRP checks and balances in place, its clear that panelists have power to do as they please.

        Power tends to corrupt, and absolute power corrupts absolutely.

        • Nat permalink*
          November 12, 2013

          Rob,

          I agree with you, especially on a descriptive domain, that if a trademark holder objects to the way that the domain is used that the domain owner should be given a opportunity to fix the problem. Losing a 10-year old valuable domain because of some auto-generated advertising links that the domain owner knew nothing about is an overly harsh and unjust penalty.

          Even though there is no monetary penalty under the UDRP, the treatment of advertising links is much harsher under the UDRP than under trademark laws, as best as I understand it.

          Under the Digital Millennium Copyright Act (DMCA), publishers must be given the opportunity to correct a copyright infringement before any penalty is imposed. Google has been winning court cases allowing it to show advertising from competitors of the trademark holder when users search on a Trademark. But under the UDRP, if you have one link to a competitor of a trademark holder, it can result in the loss of a six-figure domain.

          As I wrote in a guest blog post from 2010 under the UDRP the punishment doesn’t fit the crime-

          ‘Punishment fit the crime’

          The only remedy available through the UDRP is draconian – the cancellation of all rights to the domain, usually combined with the order to transfer the domain to the complaining entity. There is no option available to allow the domain owner to cure any problem, no option to pay a monetary penalty, no temporary loss of use. The only penalty, no matter how minor the injury done, or even when there is no injury, is the utter loss of rights in the domain.

          A thought experiment using a brick and mortar example may help clarify the situation. Imagine a longtime lot owner whose landscaping company plants a sign on her property that might violate the Home Owner Association (HOA) rules of her community. Then imagine that when the neighbor living in the house adjacent to the lot complains, the HOA transfers ownership of the lot to the neighbor with no compensation due to the lot owner. Far fetched? Similar outcomes are occurring regularly under the UDRP.

          Admittedly this example is not that accurate. To make it more accurate the neighbor would choose the person deciding whether the sign violated the HOA rules from several people each of whom promotes himself as being more Complainant friendly than the previous one. Further, the HOA would make no effort to police the arbiters to ensure that they are actually deciding cases according to the HOA rules. Now you have a more accurate model of how the UDRP operates.

          Would you want to live and invest in this neighborhood? Of course not. This would be the last place you would want to put your money.

          http://directnavigation.com/2010/01/udrp-a-guest-post-every-domainer-must-read/

          • Rob M permalink
            November 12, 2013

            Nat,

            Imagine if there was a justice system that could only dole out one punishment, regardless of the crime or circumstances, and that punishment was the death sentence. It is a little hard to imagine that such a system could ever exist in our democratic society, where the reason and logic of the masses should easily outweigh and dispatch any draconian system that tries to emerge, right?

            Well there’s no need to imagine it, it exists. This is the UDRP.

            But imagine if UDRP had the ability to first mediate disputes and determine if a legitimate complaint and been properly addressed by a respondent? If that initial mediation step existed, then UDRP wouldn’t be the draconian fiasco that it is. I truly believe that the best way to truly fix UDRP is to add a mandatory mediation step.

            BTW, that was a great guest article you posted, I know I’ve read it before and unfortunately its been 4 years and nothing has changed. We can all make the greatest arguments for change, and the greatest suggestions on how to change it – but it seems all for naught. Nat, you’ve been fighting the inequities of UDRP for well over a decade now.

            So I have a couple of questions and concerns:

            1. As I understand it, ICANN commissioned WIPO to create a guideline for trademark disputes. ICANN used those recommendations to create UDRP. Are there any ICANN or WIPO commitees that currently oversee UDRP in any way? Who should be be complaining to?

            2. Would we really even want WIPO, who represents trademark holders worldwide, to monkey with UDRP? A legitimate concern is that they would make it even EASIER for TM holders to take away domains.

            3. If any changes to UDRP were to be made, we’d want both sides to be represented and ICANN should require that both WIPO and a domain association to work together to agree on any new changes to UDRP. Are there any active domain associations that might be influential enough for ICANN to take seriously?

    • Nat permalink*
      November 19, 2013

      Mark,

      Here’s an example of someone seriously asking about registering a trademark to try to seize a pre-existing domain-

      http://www.quora.com/Can-a-squatted-domain-be-acquired-by-registering-the-name-as-a-trademark

      Frank Michlick tweeted about this, and responded to the question.

      Nat

  6. Chris permalink
    November 10, 2013

    Here is food for thought:

    Federal trademark courts completely ignore UDRP decisions.

    Why? Because those judges (yes, they are REAL judges) very well know that the UDPR panels and the whole UDRP process don’t even meet the most basic requirements of due process (which always includes the right to appeal a decision).

    Even if the URDP was well intended (which I sincerely doubt), it has been ursurped by lawyers who show clear conflicts of interest and by the omission of a regulatory oversight process that reviews uniform application of standards, allows for correction of blatant errors and enforces sanctioning and dismissal of incompetent panelists.

    Another element of monitoring the effectiveness of the UDRP would be to see how many times their decisions are subsequently overturned by regular trademark court proceedings – to my knowledge that figure is rather high which further discredits the whole process.

    One may even question the whole purpose of the UDRP process altogether, as there already is an established venue in the federal trademark courts to address allegations of trademark infringement.

    Oversight and regulation are cornerstones of any organization serving the public interest. The lack of such features in the UDRP shows the insincerity with which it was conceived.

    Fortunately, the fall-back is the established legal system (which will also likely reverse the Big5.com decision). But unfortunately, it’s expensive… (however, you may be able to recoup damages and legal expenses if you prevail)

    • Nat permalink*
      November 12, 2013

      Chris,

      Thanks for the comment.

      Some companies that have lost faith in the UDRP to provide a fair result go directly to court when they receive a UDRP complaint. Tucows has done this, as my sense is that they believe that their rights are better secured under the laws of Canada than they are under the UDRP.

      I take a different perspective on a few of your points.

      Federal Courts are supposed to ignore UDRP decisions. When you file in court, you are appealing to the local laws of that jurisdiction, not to the UDRP. The UDRP Policy understands this, as the UDRP has a provision that stops a transfer if domain owner files in court within 10 days of the UDRP decision being issued.

      There have been tens of thousands of UDRP cases. Only a handful of decisions are challenged in court. Even if the cases that are challenged in court tend to overturn the UDRP decision, supporters of the UDRP will say that only a few overturned cases out of tens of thousands of decisions shows how well the UDRP is working.

      I agree that it is very important to have the legal system as a fall back. That also makes it very important to pay attention to where your registrar is located – as Karen Bernstein spoke about at a panel at the most recent TRAFFIC show in Las Vegas. Some jurisdictions – I’ve heard that Australia is one – don’t have local laws that give a domain owner a cause of action to overturn a UDRP decision so if you lose a UDRP and the only jurisdiction you can turn to is in Australia then you may be stuck.

  7. Rob M permalink
    November 11, 2013

    “Oversight and regulation are cornerstones of any organization serving the public interest. The lack of such features in the UDRP shows the insincerity with which it was conceived.”

    Bingo.

    • Nat permalink*
      November 12, 2013

      ICANN has oversight responsibility for the UDRP. They just don’t choose to exercise it.

      ICANN is so consumed with the endless challenges of adding hundreds of new gTLDs, that they are neglecting their core responsibility of ensuring a consistent set of rules for the hundreds of millions of domains already in existence. The internet economy is built primarily on dot-com domains. The UDRP determines the appropriate use and the ownership rights for those domains. Yet ICANN treats the fair and uniform implementation of the UDRP as a priority that is unworthy of attention.

  8. November 11, 2013

    Great to see you advocating for domain registrants who are being attacked by those who covet their assets. Very refreshing, Nat.

    • Nat permalink*
      November 12, 2013

      Thanks for the comment Drewbert.

      There are many people raising concerns about these issues and advocating on behalf of domain registrants, but as an industry as a whole we are sticking our heads in the sand and not taking the necessary action to protect our businesses or our future.

      I’ll put in a plug for the ICA here – as I believe that supporting that organization is the most effective way to advocate on behalf of the domain industry. InternetCommerce.org/donate

      -Nat

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