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

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.