What do these Uniform Domain-Name Dispute-Resolution Policy (UDRP) filings have in common? —

• Dreamlines GmbH, a German cruise promoter, files a UDRP dispute on dreamlines.com, a domain registered 10 years before that company was formed. They do not allege any infringing use.
• Cognate Nutritionals, Inc., a Connecticut beverage company, which sells a coconut oil brain supplement under the brand “Fuel for Thought”, files a UDRP dispute on fuelforthought.com. It alleges that the domain registrant is a cybersquatter even though the domain was registered five years before the launch of the beverage and did not target the complainant.
• Chooze, a Texan manufacturer of vegan footwear, files a UDRP dispute on chooze.com, alleging that the domain was registered and used in bad faith despite the domain being registered more than ten years before the launch of the brand and inactive.

The Common Thread: Abusive UDRP Filings

Each of these complainants was found guilty of Reverse Domain Name Hijacking (RDNH) for abusing the UDRP process in an attempt to improperly seize a domain name without payment. RDNH is akin to attempted theft via abuse of legal process.

These disputes contributed to making 2016 a record-setting year for RDNH decisions, with 37 complainants found guilty of Reverse Domain Name Hijacking. This surpassed the previous record of 31 RDNH decisions issued in 2015. [1] While not every abusive complaint that is filed results in an RDNH finding, the record number of RDNH decisions is a strong indicator that abuse of the UDRP is at an all-time high.

What is causing this surge in abusive attempts to use the UDRP’s power to compel domain transfer?

The answer lies in reckless overreach by certain UDRP panelists. By replacing the core criterion of the Policy with repurposed language found elsewhere, these panelists inadvertently encouraged Complainant companies to attempt to misuse the UDRP to steal domains that were registered long before those companies and associated product trademarks came into existence.

The Theory of “Retroactive Bad Faith”

As described in a prior article, “The Rise and Fall of the UDRP Theory of ‘Retroactive Bad Faith’”, a small group of panelists have disregarded the clear language of the UDRP policy (the “Policy”) and settled precedent to promote a tortured interpretation [2] that has become commonly known as the theory of “Retroactive Bad Faith” (RBF). This interpretation held that when a long-registered domain was allegedly repurposed to target a more recent trademark, it was then permissible to ignore a key element of the Policy—that in order to succeed, a complainant must demonstrate that the disputed domain was originally registered in bad faith.

Despite the impossibility that the targeted domains had been registered in bad faith to target trademarks that were not then in existence, panels used the RBF theory to justify ordering the transfers of brandenhancement.com [ref.], adammilstein.com [ref.], big5.com [ref.], sporto.com [ref.], octogen.com [ref.], jappy.com [ref.], parvi.org [ref.], camilla.com [3] [ref.] and others, in violation of the Policy.

Once word spread that the UDRP could be used to seize domains that had been registered long before the Complainant’s trademark rights arose, the flood of abusive filings commenced. Companies that selected a brand name that matched an existing domain name could assert that the domain was rightfully “theirs”.

As most panelists are properly rejecting the RBF theory, RDNH findings are rising sharply

Most UDRP panelists are rejecting the RBF theory and properly resisting adoption of this dubious rationale for broadening the scope of the Policy. They may have been aided by arguments in UDRP responses strongly objecting to the legitimacy of the RBF approach. These panelists maintained the integrity of the Policy by preserving the long-standing consensus that a good-faith registration cannot be converted to a bad-faith registration due to subsequent domain renewals and the creation of a matching trademark.

The panelists who have rejected the RBF theory have consistently found that a dispute filed against a domain that was registered before the complainant had established trademark rights was baseless. Often, as in the three examples above, the disputes were found to be abuses of the Policy and RDNH was found against the complainants.

The majority of disputes that led to the record-breaking number of Reverse Domain Name Hijacking findings were cases in which the complainant claimed that the disputed domain was registered in bad faith despite the domain name being registered before the subject trademark rights arose. An analysis [4] of the complaints decided in 2015 and 2016 in which RDNH was found reveals that 62% relied either implicitly or explicitly on the Retroactive Bad Faith theory.

Rolling the Dice in the UDRP Casino

Only a minority of panelists have adopted the RBF theory. Complaints that relied on the theory, therefore, ran a high chance of being found abusive and the complainant guilty of RDNH. Yet since an RDNH finding is a mere reprimand, with no further consequences, it has proven an insufficient deterrent to abusive filings. For many companies, the chance to obtain a desirable domain through filing a UDRP dispute of dubious merit far outweighs the downside of a meaningless slap on the wrist of a possible RDNH finding.

The distorted sense of entitlement underlying these abusive complaints is revealed in an article published by a large law firm in 2015: Retroactive Bad Faith: Getting Your Domain Back When The Registrant Beat You To The Punch [5] (emphasis added). It is noteworthy that the title says nothing about cybersquatting but emphasizes that the domain registrant beat the Client “to the punch” in registering a domain that was later selected as a trademark. The article accurately advised the firm’s clients that “complainants take their chances with a retroactive bad faith argument” and “retroactive bad faith remains the minority view and success is entirely dependent on which panelist/s is/are assigned”. Yet the law firm evidently had no trouble encouraging its clients to take that risk.

The panelists who have pushed the RBF theory have succeeded in undermining uniform application of the Policy. By turning the UDRP into a casino-like venue, where success or failure depends on the “roulette wheel” [6] of panelist assignment, they created incentives for UDRP abuse.

The Role of WIPO’s Overview 2.0

The World Intellectual Property Organization (WIPO) publishes the WIPO Overview of WIPO Panel Views on Selected UDRP Questions (“WIPO Overview”). Panelists rely on the WIPO Overview for guidance as to the consensus views among panelists on questions in UDRP jurisprudence, despite the Overview having no binding authority.

Yet even this Overview, intended to bring order and uniformity to UDRP jurisprudence, has been undermined by the RBF theory. The original Overview published in 2005 gave clear guidance [7] that a complaint must fail if the trademark rights came into existence later than the domain registration [8].

When an updated Overview (”Overview 2.0”) was published in 2011, however, an advocate of the RBF theory was one of the lead authors and thereby able to characterize the newly-minted theory (one he had helped to originate) as a “developing area of jurisprudence”. Far from being a consensus view, the RBF theory was widely rejected, supported by only a handful of panelists, and marked a radical departure from the long-standing consensus understanding of the Policy. The inclusion of the RBF theory in the Overview alongside long-established consensus views bestowed an unearned legitimacy on this disruptive and contrarian viewpoint. The RBF interpretation has been stricken from the recently released third update of WIPO’s Overview (”Overview 3.0”).

From the publication of Overview 2.0 in 2011 until the release of Overview 3.0 last month, the six-year long inclusion of the RBF theory in the Overview guidance served to exacerbate divergent views among UDRP panelists and thus put at risk ownership rights to many aged domains.

With the Overview “Bible” of UDRP guidance having granted legitimacy to the RBF theory, panelists were empowered to broadly interpret the Policy while making subjective determinations of bad faith intent [9], creating fertile conditions for the RBF theory to spread further. Substantial damage was done until the rejection of the RBF theory by the majority of panelists caused it to be deleted from Overview 3.0.

The Harm Caused

The Retroactive Bad Faith theory resulted in domains being transferred from their owners contrary to the Policy. The demise of the theory in the new Overview will not return those domains to their rightful registrants.

Yet much of the harm resulting from the RBF theory arose from complaints that failed. Even when a complaint fails, the respondent still suffers substantial harm [10]. It is highly stressful for a domain owner to receive an unexpected UDRP complaint that the Complainant may have taken months to prepare, and that may arrive just prior to a scheduled trip, holiday, or medical procedure. The registrant’s domain is suddenly under attack and at risk of loss. She is forced to engage in an obscure proceeding with which she is likely not familiar. She is publicly accused, often by a high-powered law firm, of acting in bad faith and of being a cybersquatter. Within 20 days, she must scramble to educate herself about the process; identify, interview, and engage competent counsel; and then gather all the evidence needed to support the defense. Then she must decide if she can afford the cost of a competent defense [11], which usually runs into many thousands of dollars. Most domain attorneys recommend that a respondent pay a substantial additional fee to have the dispute heard by a 3-member panel, incurring an additional $2,000 fee at WIPO, with similar charges at other UDRP providers.

A domain owner must submit his case, and business reputation, to judgment by a panel made up of either one or three accredited panelists. Many panelists are practicing attorneys who earn their living primarily by asserting their client’s trademark rights, and who regularly appear in UDRP disputes representing a Complainant. The panelist weighing the merits may benefit professionally if the Complainant wins, as this improves the panelist’s chances of succeeding with a similar argument when filing UDRP disputes on behalf of trademark-owning clients. For the domain owner, not only his domain but the public judgment of his character will be at the mercy of the UDRP panel, and he faces the uncertainty of not knowing whether the luck of the draw will assign an advocate of the RBF theory to his panel. Like Mickey Mouse as the Sorcerer’s Apprentice in Disney’s Fantasia, the panelists who pushed the Retroactive Bad Faith theory unleashed powerful forces that unintentionally created havoc. Companies were incentivized to file frivolous complaints, and many domain owners suffered needless harm.

The Unchecked Power of UDRP Panelists

By adopting the now “universally discredited” [12] RBF theory, a handful of panelists unilaterally revised the contractual rights to critical assets that are at the foundation of the Internet economy. How was it possible that a few panelists were able to adopt such a radically different interpretation of an essential UDRP element in a Policy whose very name—“Uniform Domain-Name Dispute-Resolution Policy”—promises uniformity in administration and result given similar fact situations? How could panelists charged with implementing the Policy that was developed after extensive deliberations among ICANN stakeholders, take actions that led to this split and that undermined a decade’s worth of ICANN jurisprudence that had developed a clear consensus?

The answer in part is that ICANN and the UDRP providers abdicate any effective oversight role over panelists. As a result, panelists are empowered to interpret the Policy in virtually any manner they choose. There is no apparent internal review of panelist decisions for fidelity to the Policy, and no acknowledged procedures for de-accrediting panelists who demonstrate a tendency to “go rogue”.

Areas for improvement

Significant reforms are needed to address the breakdown in UDRP practice that led to the surge of abusive filings. The interpretation of the Policy should not be left to individual panelists. “Rather than letting Panelists settle these thorny issues, these inconsistencies should be a matter for those seeking to amend the language of the UDRP itself after a full and open debate” [13]. Clear guidance should be developed and offered through the ICANN community.

To achieve this goal, reforms in the following areas are needed:

• ICANN must fulfill its duty to oversee the proper implementation of its own UDRP Policy;
• UDRP providers must be held to standards that are consistent across all providers. Failure to do this has led (and will continue to lead) to divergent UDRP interpretations and attendant forum shopping;
• Guidance clarifying questions of UDRP interpretation must be developed within the ICANN community, and not delegated to the panelists at multiple UDRP providers;
• Panelists should be discouraged from straying from the overarching guidance, with procedures adopted to de-accredit panelists who do not implement the Policy. [14]
• Policies should be developed to address the inherent conflict of interest that arises when panelists and their law firms serve as both advocates before, and panelists administering, the UDRP. If such a conflict is unavoidable, then a more diverse pool of panelists should be pursued to counterbalance the apparent tendency to “group think” among like-minded panelists that leads to overreach. Currently, attorneys who primarily represent domain registrant respondents have faced significant barriers to becoming accredited panelists.

What’s Next?

An ICANN Working Group (WG) is currently reviewing all Rights Protection Mechanisms (RPMs) in all gTLDs. It is scheduled to begin the first comprehensive review of the UDRP next year. The unfortunate saga of the ad hoc creation of the RBF theory and the damage caused during the years of its rise, fall, and ultimate rejection require that the WG seriously consider the need for tighter guidelines for, and more effective oversight of, the UDRP to prevent a recurrence in another area of UDRP interpretation.

[1] UDRP providers do not track RDNH decisions and provide no statistics on them. The source for the annual number of RDNH decisions is RDNH.com which tracks all identified RDNH decisions.

[2] The theory was proposed to address what a few panelists viewed as a deficiency in the Policy since the Policy does not provide a remedy for those rare instances where a domain that was registered in good faith is later renewed and allegedly repurposed to target a trademark right that arose after the domain’s registration. To justify unilaterally rewriting the Policy to reach such instances of changed use, the panelists advocating a “Retroactive Bad Faith” approach referenced warranty language found in Paragraph 2 of the Policy and linked it to domain renewals. Paragraph 2 is a section of the Policy that does not relate to how disputes are to be judged or administered, and is instead a warranty provision established between the registrant and its registrar.

It is not applicable to reaching a decision in a UDRP dispute, as those criteria are specifically detailed in Paragraph 4 of the Policy. Paragraph 4(a)(iii) is the heart of the Policy as it sets forth the key required criterion that must be proven in a successful complaint: “your domain name has been registered and is being used in bad faith” (emphasis added). This bad faith intent is the essence of cybersquatting, and must be demonstrated for a complaint to succeed. The RBF theory constituted a panelist-created a loophole that wrongly equated renewal with registration and thereby enabled likeminded panelists to disregard this essential element of the UDRP. This opened the floodgates to disputes filed by complainants whose trademark rights arose after the domain name’s registration.

[3] Analyses of the Camilla.com decision can be found here.

[4] A review of RDNH decisions reported at RDNH.com indicates that in 42 of the 68 RDNH findings issued in 2015 and 2016 the respondents’ registration of the disputed domains predated the complainants’ trademark rights. Several of these complaints explicitly relied on the RBF theory.

[5] https://www.hollandhart.com/retroactive-bad-faith, Nadya Davis, 6/24/2015

[6] “Predictability Depends on the Panel You Draw”, Gerald M. Levine, October 30, 2013

[7] “Normally speaking, when a domain name is registered before a trademark right is established, the registration of the domain name was not in bad faith because the registrant could not have contemplated the complainant’s non-existent right.”

[8] The first version of the Overview allowed for certain very limited exceptions, primarily when the prospective trademark was publicly announced prior to the domain registration, as in the case of an upcoming rebranding or merger. These exceptions are not relevant to the abusive cases discussed in this article.

[9] The essence of the Policy is the determination of bad faith intent. The Policy is based on the assumption that a panel can accurately determine bad faith intent on the part of the domain owner, going back perhaps a decade or more to when the domain was first registered, generally based upon a few pages of written argument and evidence that usually in the form of a WHOIS record and a couple of screenshots. In reality, such intent is generally divined from subsequent use of the domain.

[10] Joel Runyon, the owner of an IMPOSSIBLE family of businesses and trademarks, and hundreds of “impossible” domain names including the impossibleproject.com domain name, made a video testimonial sharing his experience of dealing with an unexpected UDRP complaint. One of the three members of the panel is his dispute found the complaint to be an abuse of the Policy and deserving of an RDNH finding. In the video, Joel speaks of “the massive headache” of dealing with a frivolous UDRP dispute complaint and how “very wasteful” of his time and money it was.

[11] A domain owner who ignores a complaint still has a chance to prevail, but it is extremely risky and not recommended to leave the complainant’s allegations unrebutted. Failure to respond can also weigh against the domain owner, as some panelists hold that a failure to respond to a complaint is itself evidence supporting a decision to transfer the disputed domain.

[12] “It knew or should have known that its renewal/re-registration argument was universally discredited and would not be accepted by any Panel.”; Technologies Sensopia Inc. v. BLUE NOVA INC.; FA1704001725217) June 9, 2017

[13] “Decision Opens Time Portal to UDRP Success”, Steve Levy, November 11, 2013. The author of this article does not agree with Mr. Levy’s suggestion that when the UDRP is reviewed through the ICANN policy development process that the “and” in “registered and used in bad faith” should be changed to “or”.

[14] An attorney who was unanimously found by a three-member panel to have brought a RDNH complaint remains an accredited panelist.