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Surge in misuse of UDRP for attempted domain theft leads to record year for Reverse Domain Name Hijacking decisions

2013 December 18
by Nat

UDRP decisions finding Reverse Domain Name Hijacking hit a new record this year indicating a surge in attempts by companies to abuse the UDRP process to steal domains that they are not entitled to.  So far this year 24 complainants have been found guilty of Reverse Domain Name Hijacking (RDNH) compared to only 14  last year.  The prior record of 23 (or only 19 if .biz STOP disputes are excluded) was set over a decade ago in 2002 in the early days of the UDRP.

What has led to the surge of RDNH decisions this year?

A radical new approach to the UDRP by a few panelists is encouraging companies to file abusive complaints.  These are complaints that fail to meet the UDRP requirement that complainants demonstrate that the disputed domain was registered in bad faith.  Filing a complaint without any evidence of bad faith registration is an abuse of the UDRP process and grounds for a finding of Reverse Domain Name Hijacking.  When Panelists who reject the radical reinterpretation of the UDRP are assigned to decide disputes where complainants have failed to provide evidence of bad faith registration, they are frequently finding the complainants guilty of Reverse Domain Name Hijacking.

The radical new approach some panelists are now taking is to replace the “REGISTRATION in bad faith” standard with a “RENEWED in bad faith” standard.  This approach is illegitimate for the many reasons discussed in the  “Push to Adopt ‘Renewed in Bad Faith’ standard puts Investment Domains at Risk” post.  The primary flaw with the “renewed in bad faith” approach is that it is based on language from a part of the policy that has no bearing on how domain disputes are to be decided.   The relevant section of the policy where the dispute procedures are specified clearly states that “registration in bad faith” is one of the criteria that must be demonstrated for a complaint to be successful.

Those panelists who are championing the “renewed in bad faith” standard are ordering the transfer of domain names that everyone agrees were registered in good faith, including domains that were registered years before the complainant even existed.  Encouraged by the prospect of being able to use this new weaker standard to seize domains that they have long coveted, companies are now filing complaints targeting domains that were registered in good faith and where there is no evidence of bad faith registration.

The “renewed in bad faith” standard eliminates the heart of the UDRP – the requirement that the Complainant must demonstrate that the domain owner has registered and used the domain in bad faith.  What the “renewed in bad faith” standard boils down to is that a Complainant no longer needs to meet three rigorous tests to seize a domain through a UDRP.  Instead, for some panelists, under the “renewed in bad faith” standard, the Complainant merely needs to demonstrate some current bad faith use.

Some UDRP panels are taking this inappropriately weakened standard and then further weakening it by vastly expanding the definition of “bad faith”.  For example, UDRP panels have found that the following can be evidence of supposed bad faith: offering a domain for sale, renewing a domain name that is no longer “needed” that another company wants, parking a domain, one’s registrar parking a domain without one’s knowledge- as in the recent Ovation.com decision, and even passive holding- in other words doing nothing with the domain.  Some panelists apparently believe that investing in domain names is an inherently bad faith activity.  In their view, any domain held by a domainer to which another company could claim trademark rights is one that has likely been renewed in bad faith and therefore should be transferred away.

The “renewed in bad faith” standard is such a low hurdle that it can be trivially easy to pass.  Since some panelists are now implementing the UDRP using the “renewed in bad faith” standard, for companies who want to obtain a domain currently held by a domainer, or by another business that is no longer using it, the first choice now is often to file a complaint.

Companies are thus abusing the UDRP to obtain valuable domains.  UDRP panels recently ordered the transfer of the following domains-

  • Ovation.com
  • 8×8.net
  • Canary.com
  • Vanity.com
  • Big5.com
  • Fobus.com
  • WAFU.com
  • DriveUps.com

Although not all of these decisions relied primarily on the “renewed in bad faith” interpretation, Ovation.com and Big5.com are two that explicitly did.

The UDRP was established to combat “clear-cut cybersquatting”, such as the recent disputes against the “swarovskijewelrywholesale.com” and “ukjimmychooshoes.com” domains.  Now, however, the UDRP is increasingly being used not only to prevent clear-cut cybersquatting but as a means for companies to acquire valuable domains that they are unwilling to purchase in the marketplace.

Let’s be clear.  Just because a domain has substantial inherent value doesn’t mean it is, or should be, immune from loss through the UDRP.  It is possible that a domain owner registered and used a valuable non-distinctive domain to target a trademark owner.  Yet in each of these eight cases, it was either impossible for the domain to have been registered in bad faith because the trademark rights came after the domain registration (Big5.com, Ovation.com), or there was legitimate prior use (Vanity.com, Big5.com, Ovation.com), or there was substantial doubt about the domain owners’ intentions and a clear finding of bad faith couldn’t have been made based on the record.  In cases where there are substantial doubts about a domain owner’s intentions, UDRP panels often revert to the formula “on the balance of probabilities” in making its determination that the domain owner had bad-faith intentions.  In other words, the panel doesn’t have clear-cut evidence but it is nevertheless willing to deprive a domain owner of his or her domain based on speculation rather than convincing evidence.

With the prospects of seizing valuable domains never better, it is no surprise that companies are filing complaints for domains even where they have no evidence that those domains were registered in bad faith.

The fate of those complaints now more than ever depends on which panelist is assigned to the dispute.  A panelist favoring the “renewed in bad faith” approach will not be troubled by a lack of evidence of bad-faith registration.  But panelists who adhere to the UDRP  as it is written, on the other hand, reject complaints that are filed without evidence that the domain was registered in bad faith.

Tony Willoughby appears to be one of the panelists who is rejecting the attempt to change the way the UDRP is implemented.  Of the last five RDNH decisions, two of them were handed down by Tony Willoughby.  The primary basis for each of his RDNH findings was that the complainant produced no evidence of bad-faith registration.

Panelist Alan Limbury also had a hand in two RDNH decisions issued in recent months.  In the SquareGrouper.com decision, which he wrote, the primary reason he gave for making a finding of RDNH was that the complainant produced no evidence that the domain was registered in bad faith.

In my view Willoughby and Limbury are doing the correct thing by sticking to the clear language of the UDRP and upholding over a decade of precedent.  They are also being consistent with historical precedent by finding guilty of RDNH those complainants who fail to bring forth evidence of bad-faith registration.

It is irresponsible of panelists who support the “renewed in bad faith” approach to try to upend a decade’s worth of UDRP practice with a highly speculative and ultimately insupportable “re-interpretation” of the UDRP.  They may think they have found a clever way to make the UDRP more effective at fighting cybersquatting.  Instead, they have turned the UDRP into even more of a casino than it is already.  They have destroyed the uniformity that was supposed to have been the promise of a “UNIFORM Domain Name Dispute Resolution Procedure”.  They have encouraged a flood of frivolous complaints.

Even worse, they are facilitating the theft of domains that were not intended to be lost by those who drafted the UDRP as a limited tool to combat “clear-cut cybersquatting”.  The most glaring example of the way that the UDRP has been perverted by the “renewed in bad faith” approach is the  dispute over the Ovation.com domain that was ordered transferred.

The Ovation.com dispute and other complaints filed against similarly valuable domains, along with the record number of RDNH decisions, are not merely indications that companies are becoming more aggressive in using the UDRP to try to hijack domain names.  They are also a sign that the UDRP process itself is increasingly being hijacked by companies who see it as a way to acquire valuable domains on the cheap by using the UDRP to legitimize the theft of domains.

The risk of being found guilty of Reverse Domain Name Hijacking is far outweighed by the opportunity to obtain a domain worth tens of thousands or more.  The RDNH finding is a meaningless slap on the wrist that carries with it no monetary penalty, so is no deterrent at all.

Even the risk of being hit with an RDNH finding for filing a frivolous complaint is smaller than it should be.  UDRP panels are very creative in finding excuses for letting complainants off the hook. There is a clear double standard where abusive complaints are excused because the complainant was simply confused or ignorant:

The very obviousness of the gap in the Complainant’s case suggests more strongly that the Complainant seriously misunderstood what was required for a finding in paragraph 4(a)(iii) of the Policy, rather than that the Complaint was brought dishonestly.  (imagem.com)

Although Complainant’s case was seriously deficient, it nevertheless believed that it was justified in filing the Complaint.  (jwines.com)

Whether this was due to intentional bad faith or mere incompetence, the Panel is unable to judge.  (westcoastuniversity-edu.com)

I have yet to see a UDRP decline to order a transfer by offering similar excuses for a Respondent’s bad-faith conduct.

The extreme reluctance that many panels have in finding RDNH stands in sharp contrast with their eagerness and creativity in justifying the transfer of domains away from their owners.

Yet even in spite of this reluctance to find RDNH, the number of abusive complaints has grown so large that panels are finding RDNH in record numbers.

The number of RDNH findings by year tells the story.

Year       Number of RDNH findings

2000           6

2001          14

2002         23  (19 if .biz STOP decisions are excluded)

2003          5

2004          6

2005          8

2006         9

2007         7

2008       13

2009       13

2010        11

2011        14

2012       14

2013       24 to date

Source: RDNH.com

The number of RDNH cases in 2013 has surged far beyond the number of cases found in any of the prior ten years.

The UDRP is currently in turmoil, providing no clear guidance to either domain owners or complainants as to the standards under the UDRP.  This turmoil offers a tremendous opportunity for complainants at the expense of domain owners.   For complainants it offers the best odds yet to play in the UDRP casino to win valuable domains as prizes.  For domain owners it is their properly registered domains that are the prizes that are up for grabs.

7 Responses leave one →
  1. December 19, 2013

    Great article and I think the single biggest threat to any domain owner. Its getting out of hand and needs to a bigger voice and reform. I mean, I have two such cases in WIPO right now and costing me $5,000 just to defend them, not including my time. No penalty for the complaint or chance of recouping when we win and this needs to change. The risk/reward factors are just not aligned. File a case, you lose you at least need to be prepared to lose 2x with legal bills on bs cases like my SocialPoint.com, etc.. Maybe a small lethal squad or service that will flood the complaints customer service or even better the CEO’s who run these bs shit head companies doing these types of filing.. I would pay a company $250 to flood there customer service departments and ceo’s with hundreds of daily email complaints for a month on how they run there business, etc. SOmething needs to happen otherwise EVERYONE in the domain space will lose value through this legal bombshell that is only going to get worse..

    • Nat permalink*
      December 19, 2013

      Chad,

      Thanks for the comment.

      You’re right.

      If domain owners don’t want to lose our domains then we need to fight for them. There are plenty of people and powerful companies who want what we have.

      They are successfully changing the rules to make it ever easier to separate domains from their owners.

      The future of our industry is being decided at ICANN, and also in legislatures and court rooms. If we don’t engage in this process, then we are letting those who oppose our interests decide our fate.

      One of the characteristics of domain investors is that we are usually very far-sighted. We can see the future, which is why we recognized the value in domain names before most others did.

      Yet as an industry we’ve been incredibly short-sighted when it comes to protecting our businesses.

      We need a voice in the discussions, we need to educate and we need to advocate. It’s why I support the efforts of the ICA and it’s why I think you should too.

      Nat

  2. December 19, 2013

    God, I am so tired of reading about this crap. These ppl are ruining our industry. The rich and powerful just seem to be taking whatever they
    want our domain names included.

    Icann has become very questionable and inconsistent with their rulings
    as well which in the long run will prove to promote even more of these
    phony UDRP cases.

    If someone would impose a heavy penalty/fine for abusive UDRP filings, then these unwarranted BS cases would stop.

    as well there should be NO DEFAULT JUDGEMENT.

    No matter who you are, or what domain you own- literally you are at risk of losing your domains to one of these phony UDRP cases. Anyone can file and
    then you are forced to defend and the process is costly. and in most cases sadly the complaintint wins because their is no legal representation on the other side and these corporations with their big legal teams are taking advantage of the system.

    People need to wake up, the domain industry is going down the toilet. domainer’s need to unite and stick together before it’s too late.

    If every single UDRP case was challenged, then there would likely be alot
    less abuse cases coming forth I think.

    Many times I think the complaintint is just counting on you NOT
    presenting an appropiate legal challenge, and the default judgement
    will just give them the domain. This gives the illusion that they can
    just take your domain thru the UDRP process by just simply filing.
    and the problem is– it is not an illusion. This is what is happening.

    The whole UDRP process has become just too corrupt. and if you live
    in the U.S. or have a U.S. based registrar, let me tell you NONE OF YOUR DOMAINS ARE SAFE!!! You are 500% more likely to lose your domain via
    a legal challenge of some sort UDRP or otherwise.

    The answer is someone forming a reasonable low cost legal defense organization – specifically for domainer’s. maybe paid for by monthly
    dues, so that each and every UDRP gets met with an adequate
    challenge . This would be a great start and would send a clear
    message that the UDRP process is no longer a cake walk for these
    big shot corporations to abuse.

    Jon

  3. December 19, 2013

    sorry, my post got all chopped up like that!
    not sure exactly what happened there.

  4. Gio permalink
    June 14, 2014

    Great article.

    I am currently in the middle of a legal storm right now. I have registered over 4500 new domain names, all in the .email space.

    A large proportion of the domain names my team have registered have been of large well known company’s. I have done nothing wrong in registering in these domains, but certain companies seem to think differently. Counsel helping me defend the onslaught of Complaints is one of the world’s leading scholars on domain name disputes. I can’t say who my counsel is right now. My case is almost certainly going to be the biggest single case the UDRP has seen since its start in 1999.

    There are currently 10 active Complaints against me with a further 70 companies threatening UDRP action if I don’t roll over shut up, put up and just hand back the domain names.

    Most of the companies involved have only been interested in bullying. I have an abundance of material that show well-known companies together with their big city lawyers being disproportionally aggressive because they are not getting what they want. Some are also clearly manipulating facts in an attempt to deprive me of what I paid for in good faith.

  5. Gio permalink
    June 14, 2014

    Footnote.

    I am not in the same position of those unfortunate domain name owners who have had their domain names illegally deprived from them and lack the financial resource to fight back. If I experience the same fate I do have the financial resource to fight for what is right.

    Gio

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