April 2000

Cybersquatting and the Domain Name Dispute Wars: If I Can Only Remember My Name . . .

I am growing weary of hearing three words: millennium, dot and com. There is even a domain called millennium.com. And if that isn't enough, someone registered millenniumdot.com just to make sure all the bases were covered. Now add to the mix new-millennium.com and newmillennium.com, along with millennium.org, new-millennium.net, millennium.net, millennium.edu, new-millennium.org, newmillennium.net and newmillennium.org, and you quickly realize that domain names are hot properties. In fact, you can hardly think of a word in the dictionary, or even common combinations of words, that hasn't already been claimed as a domain name for use on the Internet. And, as the little example above shows, lots of folks are registering names that are similar to names that have been registered by other folks. Understandably, this has led to a few squabbles, particularly when one of the parties has registered a trademark for the word or phrase in contention.

Domain name disputes aren't new. In fact, several of note have been fought in federal courts. Typically they consist of a trademark holder's allegations that a domain name holder has infringed upon the trademark and is diluting that trademark .1 Historically in such actions, the trademark holder discovered that another party registered a domain that the mark holder felt infringed on the trademark, and sought to have the domain either revoked or turned over to the mark holder in reliance upon Network Solutions, Inc.'s (NSI) evolutionary Domain Name Dispute Policy (DNDP). The legitimate domain holder then sued to enjoin the action and NSI. NSI then interpleaded the mark holder, and changed its DNDP to disclaim any liability for whatever it was that the domain holder used successfully to get the claim against NSI into court in the first place (hence "evolutionary"). Federal cases being expensive little beasts, many legitimate claims of infringement never saw their way to a complaint pleading. Nevertheless, legitimate claims remained and new ones continued to arise.

Not being particularly enamoured of NSI's policies and conduct, Internet stakeholders took matters into their own hands and formed what became the Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit corporation that was formed to assume responsibility for the IP address space allocation, protocol parameter assignment, domain name system management, and root server system management functions performed under U.S. Government contract.2  ICANN promptly developed a Uniform Domain Name Dispute Resolution Policy (UDRP), accompanied by a fairly workable set of rules. Understandably tired of having a bull's-eye painted on its back, NSI quickly adopted the model policy and dodged the increasingly frequent bullets. NSI's former policy permitted mark holders to put domain names that were identical to a federally registered trademark "on hold" pending the outcome of the dispute between the mark holder and the domain name holder. NSI's adoption of the model policy resulted in NSI releasing these domain names from "hold" absent a showing of the claimant's filing for resolution under the UDRP or a filing in a court of competent jurisdiction.

The UDRP sets forth a fairly straightforward arbitration procedure to which registrants of domain names must submit to in the event that their domain name registrations are challenged. The basis for a challenge is enumerated in the UDRP: (1) the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; (2) the domain name owner has no rights or legitimate interests in respect of the domain name; and (3) the domain name has been registered in bad faith. Although the model policy doesn't provide a clear definition for "bad faith," it does provide a non-comprehensive list of evidence of bad faith that reads something akin to "we'll know it when we see it." The list is, however, fairly clear that bad faith may be evidenced by willful infringement, willful dilution, and activities similar to those proscribed by the new Anti-cybersquatter Consumer Protection Act of 1999.3  Notably, the new policy expands the scope of what constitutes a legitimate claim to a domain name in its provisions for "confusingly similar" names and, it would appear, state and common-law trademarks.

To start a dispute proceeding, the complainant must submit a written complaint to an ICANN-authorized Dispute Resolution Service Provider (Provider). In a form analogous to the old code form pleadings, the complainant gets one good bite at the apple to set forth all factual and legal grounds on which the complainant bases his claim, along with any and all evidence that the complainant wishes the arbitrator to consider in deciding the claim. Once the claim has been reviewed for compliance with the rules, a copy is forwarded to the domain name registrant (respondent), who is then given 20 days in which to file a response containing all its factual and legal arguments and evidence. While one or both parties may be given the opportunity to answer questions and provide additional information that may be requested by the arbitrator, the core information needs to be included in these pleadings.

The policy provides for either a single-member or a three-member panel, at the option of either the claimant or the respondent. In all cases, the cost of a single-member panel shall be borne by the complainant. Depending on which party requests a three-member panel, the fees will be borne entirely by the complainant or shared equally by the complainant and respondent. The sole remedy available to a complainant is either the cancellation of the infringing domain name, or the transfer of the domain name to the complainant. The policy and rules do not provide for the awarding of damages.

The policy specifically excludes from its jurisdiction any and all other disputes and litigation between the parties that are not subject to its mandatory provisions. While the policy departs from the practice of its NSI predecessor by promising not to cancel, transfer, activate, deactivate, or otherwise change the status of a domain name registration, it does contain a fairly broad escape clause in its recognition of "multi-jurisdiction" effects on disputes by acknowledging that no prohibition exists against either or both of the parties from commencing action in a court of competent jurisdiction either before or after action by a panel.4  The policy also allows that no action will be taken for 10 days following a decision by the panel, in order to accommodate a court filing by either party. Considering that the policy makes no provision for appeal, such a filing may well be the only recourse for the losing party.

Trademark owners who need immediate injunctive relief will still probably have to proceed with their claims in court. If the mark owner does not need such immediate relief, however, the UDRP provides a very cost-effective and timely forum for resolving these disputes. A claim of infringement for a single domain name can be arbitrated for as little as $750. Even adding a reasonable amount for attorney's fees if necessary, the total is nothing compared to the possibility of $100,000 in defense costs estimated by some in the Clue case. Moreover, less-than-well-heeled claimants are provided an affordable forum in which to seek relief. Likewise, respondents who have legitimate claims to their domain names are able to assert their defenses in an affordable manner and not fall prey to reverse domain name hijackers simply because they cannot finance the battle. In the all-too-common situation where a domain name registrant cannot be found (e.g., ambiguous name and/or a commercial mailbox address or overseas registrant), the new policy allows a legitimate claimant to assert its rights and protect its interests.

While the dust has far from settled in the efficacy of the new policy, it appears that Internet stakeholders are embracing the concept. Numerous new claims appear on the ICANN website daily, and we can only anticipate that the number will grow exponentially as parties become aware of the existence of the new policy.

NOTES

1 Arguably the most notable of these battles is the Hasbro, Inc. v. Clue Computing, Inc., No. 97-10065DPW (D. Mass. Sept. 2, 1999); http://www.clue.com/legal/hasbro/d2.html. Hasbro sought to have NSI, then the sole administrator of domain name registrations, revoke Clue Computing's ownership of the domain. Clue told NSI to take a hike, and sued them to retain ownership. Hasbro (astutely noting that NSI had never won such a fight) sued CCI directly, the net effect being that the CCI v. NSI suit was stayed pending the outcome. A full description can be found at http://www.clue.com/legal/index.html.

2 They can be found at http://www.icann.org/.

3 Pub. L. No. 106-113 (codified as amended at 15 U.S.C. 1125(d)).

4 The policy, however, narrowly defines "competent jurisdiction" as either the jurisdiction of the general office of the Registrar or of the address of the respondent as it appears in the "Who is" database of the Registrar.

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