The World Intellectual Property Organization (WIPO) recently issued a detailed press release regarding Uniform Dispute Resolution Policy (UDRP) cases for which it provided arbitration services in 2011 and, once again, the number of WIPO filings was up. According to WIPO: "In 2011, trademark holders filed a record 2,764 cybersquatting cases covering 4,781 domain names with the WIPO Arbitration and Mediation Center (WIPO Center) under procedures based on the Uniform Domain Name Dispute Resolution Policy (UDRP), an increase of 2.5% and 9.4% over the previous highest levels in 2010 and 2009, respectively."
Yet that's an incomplete picture. At the other major UDRP arbitration provider, the National Arbitration Forum (NAF), 2011 case filings were down 4% in 2011, declining from 2,177 cases in 2010 to 2,082 in 2011. The vast majority of these cases (96.2%) involved gTLDs like .com and .net; cases were concluded an average of 35 days after filing, but some were resolved in as few as 20 days — and 17%, a full one-sixth of filed complaints, were resolved directly by the parties with no need for panel arbitration. (That noteworthy record again raises the question of why a supplemental Uniform Rapid Suspension (URS) process is even needed for new gTLDs, but that's a separate subject.)
So, overall, the WIPO 2.5% increase was balanced out by the NAF 4% decrease and total UDRP filings at the two principal ICANN-accredited arbitration providers were essentially flat in 2011.
The Internet Commerce Association's (ICA's) Code of Conduct condemns intentional cybersquatting, so we are happy to see filings stabilize and would be delighted to see them decline further in the future. But we do think these filing figures need to be calmly placed in the broader context of total domain registrations. And, according to VeriSign's December 2011 Domain Name Industry Brief, domain registrations increased by 8.9 percent in the preceding year.
So, we think it's quite significant that total 2011 UDRP case filings did not increase notwithstanding a near-9% increase in total domain registrations. This marks yet another year in which UDRP filings declined as a percentage of all domain registrations.
While the NAF press release does not include the total number of domains involved in the cases filed with them we can guesstimate that, when we also include the additional second tier UDRP arbitration providers, approximately 9,000 domains were at issue in all 2011 cybersquatting cases filed with all UDRP providers.
That's 9,000 out of a total of about 220 million registered domain names. In other words, for each million domain registrations there are about 41 domains alleged to be cybersquatting in UDRP cases.
We expect that trademark interests will counter that the number of UDRP filings represents just "the tip of the iceberg" of abusive domain registrations, and will also point out that some but not all ccTLDs are subject to UDRP. And we'll concede those points — while also noting that .com and .net registrations totaled 112 million, just over half of all domains, and that these are the gTLDs that attract the most Internet traffic and are therefore most likely to be abused by intentional cybersquatters. So, while UDRP filings are not an exact proxy for the full extent of cybersquatting, they are the best measure we have of instances in which the resulting harm or domain value were judged sufficient by a trademark owner to invest the relatively modest sums of a $1300 filing fee plus associated attorney fees.
We are also well aware of studies — like this from Sophos — indicating that major brand names are subject to significant typosquatting. Despite finding that malware was virtually nonexistent on such websites, that study nonetheless observed that "typosquats are by no means harmless". Yet, other than the 2.7% of typosquatted domains that "fell into the loose category of cybercrime", a significant portion of the remainder of typosquatted websites appear to fall outside the scope of the "bad faith registration and use" standard required for a successful UDRP filing. So it's not just that rights holders have concluded that a particular typosquatted domain isn't worth the monetary cost of filing and pursuing a UDRP — they may have also concluded that they would not prevail. That is, those domains may fall more into the category of annoying nuisance rather than bad faith infringement, and are not generally associated with criminal activities such as phishing or with bad acts such as malware distribution.
Notwithstanding this contextual decline of 2011 UDRP filings, we are quite sympathetic to the costs imposed on brand owners of maintaining portfolios of defensively registered domain names that could be easily cybersquatted if released back for public sale. Reducing this cost is a subject that could certainly be addressed by an open and inclusive UDRP reform process within ICANN — if trademark interests will ever stop working to defer the initiation of such a process.
We'd also point out that if even one-one-hundredth of one percent of all domains registered today were cybersquatting in a manner sufficient to justify a UDRP filing that would currently total about 22,000 domains, and the actual number of UDRP filings last year involved less than half as many domains. In other words, based just on UDRP filings, more than 99.995 percent of all domains are not cybersquatting. That's right, 2011 UDRP filings involved less than one-two-hundredth of one percent of all registered domains. Even if the filed cases understate the incidence of UDRP-violating cybersquatting by a factor of one hundred, the problem would rise to just under one-half of one percent of all domains, with the remaining 99.5 percent being non-infringing.
We note all this not to excuse cybersquatting but to indicate that the problem appears to be small, manageable, and diminishing as a percentage of registered domains year after year based on UDRP filings — and that the UDRP provides a relatively fast and inexpensive alternative to litigation in court. So any trademark interest advocacy for 'rights protections' that are more numerous and stringent than what's already available is not strongly supported by the available evidence.
We'd also note that many ICA member providers of "parking" or other domain monetization services, as well as of secondary domain marketplaces, have established either formal or informal means by which trademark owners can bring alleged infringement claims to their attention and block clearly infringing domains. These services are available at no cost to trademark owners, and should often be their first recourse in advance of filing a UDRP claim.
As for the WIPO press release declaration that, "With the domain name coordinating body, ICANN, allowing for a massive increase in the number of new domains, brand owners' resources will likely be stretched further.", that seems entirely speculative for now — especially since brand owner resources were not stretched further in 2011 with total UDRP filings being flat, and actually declining in the context of an expanding DNS environment. WIPO's statement also ignores the fact that the Trademark Clearinghouse will let trademark owners secure, block, and issue warnings in regard to new gTLD domains in an unprecedented manner to reduce cybersquatting.
So let's wait and see what applications are actually filed for new gTLDs, and then wait to see what registrants they attract and what visitor traffic they generate, and then make a judgment on the impact of new gTLDs on trademark owners that is informed by facts rather than speculation. (We note in passing that NAF's statement makes no similar gloomy predictions regarding cybersquatting at new gTLDs.)
One final thing to remember is that arbitration providers like WIPO can affect the number of UDRP filings by allowing its panelists to alter long-established practices and thereby change UDRP policy in a one-sided manner. For example, recently a WIPO panel ruled that ceat.com must be transferred to CEAT Ltd., an Indian tire company, even though there was scant evidence that the domain had been registered, much less used, in bad faith (See: CEAT Limited, CEAT Mahal, v. Vertical Axis Inc. / Whois Privacy Services Pty Ltd). Another WIPO panel recently ruled in FACI Industries v. BuyDomains.com, Inventory Management that faci.com be transferred to the non-famous metal casting firm of FACI Industries of Bolingbrook, Illinois even though there was ample evidence that the registrant exercised due diligence to avoid infringing the complainant's trademark rights (See: FACI Industries v. BuyDomains.com, Inventory Management). As the dissenting panelist in CEAT stated, "To hold that such a valuable word cannot be used as a domain name simply because "the domain name is a trademark and has no descriptive meaning" is not supported by the Policy and is a very severe restriction on the right to register a domain name that is not contemplated by ICANN in its policies or practices… That is simply a rewriting of the Policy that is entirely unsupported. Clearly, registering a word that both parties say is an acronym and using it for purposes unconnected with the Complainant or its activities does not violate the Complainant's trademark rights or the Policy.”
These rulings open the door to any short domain name that can constitute an acronym for one or multiple organizations being subject to "first to file" UDRP actions encouraged by trademark attorneys. We are already seeing an uptick of new UDRPs related to acronym domains, and if this becomes a flood in the remainder of 2012 — encouraged by the ceat.com and faci.com rulings, which deviate from years of UDRP practice related to acronym domains — does that mean that cybersquatting is up, or that cybersquatting has been unilaterally redefined down by WIPO panelists and that as a result the trademark bar sees a new UDRP opportunity to bring to clients' attention?
These disturbing and controversial acronym domain rulings again illustrate why WIPO and other UDRP providers should reconsider allowing panelists deemed "neutrals' to also serve as advocates for complainants or registrants, given the clear potential for conflicts of interest, and the certain appearance of potential conflicts. It also illustrates that prior decisions should have a more binding precedential effect that they are accorded under the current WIPO Overview. The UDRP process should remain an available remedy for squelching a declining pool of infringing domains, but not permitted to be a mercurial full employment program for creative trademark attorneys.
ICA will continue to press for meaningful UDRP reform, including changes to assure that arbitration "neutrals" do not have inherent conflicts. But for now we are happy to note that total UDRP filings continue to decline as a percentage of all domains and remain a tiny fraction of the overall DNS infrastructure. That's something worth remembering the next time you see allegations that cybersquatting is out of control.
Mr. Corwin serves as Counsel to the Internet Commerce Association
By Philip S. Corwin, Founding Principal of Virtualaw LLC, a Washington, DC Law and Public Policy Firm. He also serves as Of Counsel to the IP-centric law firm of Greenberg & Lieberman. Views expressed in this article are solely his own.
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