Give me that domain name! The Uniform Dispute Resolution Policy
The rise of the Internet as electronic marketplace has greatly increased the importance of domain names. A good domain name can result in many visitors. For trademark holders it is thus important to register their marks as domain names. Unfortunately many trademark holders did not do this, or they were to slow in applying for a domain name. Others did see the opportunity, and registered the domain names in hopes of selling them for a nice profit to the trademark holder. There is nothing wrong with registering generic domain names like business.com or lawyer.com. Domain names are handed out on a first-come, first-served basis. However, a domain name that corresponds to somebody else's trademark may pose a problem.
The Uniform Dispute Resolution Policy (UDRP) is an international agreement for resolving disputes over .com, .org and .net domain names. In less than two years more than 3000 disputes over more than 6000 domain names have been solved using the UDRP. The procedure is cheap, produces results fast and applies worldwide. The UDRP has also attracted a lot of criticism. Trademark holders win a very large number of times, even if the domain name holder is not an obvious cybersquatter. Interpretation of the rules of the UDRP is not done in a consistent manner.
Trademark law gives the holder of a trademark the right to act against unauthorized use of his mark. Trademarks are restricted on the national level. This means that a Dutch trademark holder cannot act against a Frenchman who uses the same mark in France. Even if he could, for example because the Frenchman is offering products for sale from France in the Netherlands, enforcing the court's ruling in France is going to be next to impossible. The Dutchman will have to start a court case in France, and it is not at all evident that he will win. First of all, he will need to have a French trademark, and seconds to act needs to be trademark infringement under French law. For example, the Frenchman could have registered that same mark for completely different products or services, and then offered those products legitimately under the mark.
Even though this problem exists for several decades, it was only recently that the problem became extremely visible. The reason were Internet domain names. Most countries by now agree that use of a mark as part of a domain name on the Internet can be trademark infringement. However, the still means that the trademark holder has to start a court case in the country where the domain name holder resides, on the basis of a trademark registration in that particular country. If he happens to have no registered trademark in this country, his case will be dismissed. If the domain name holder uses the domain name for very different products or services, the case will be dismissed as well. The situation can get even more complex because it is possible for two persons to use the same mark simultaneously (for different products or services), but it is not possible for two persons to use the same domain name simultaneously.
Another problem is that legal proceedings often take a long time and can be very costly. In many countries even a simple court case against a clear trademark pirate can cost tens of thousands of euros. If you multiply this with the number of variance on a trademark which can be registered as a domain name, it will be clear that court cases cannot be the solution.
The increasing importance of Internet domain names resulted in pressure from the industry to find some way to enforce their trademarks. It was deemed unacceptable that somebody can "squat" a domain name with your trademark for the sole reason that the courts are too slow. A solution was found in the use of arbitration. Arbitration is an alternative to a court case, in which an independent third party makes a final decision that is binding for both parties. The parties have to agree in advance to be bound by the arbitration decision. This means that there is no appeal possible against a decision of the arbiter. Since this is much faster than the court proceedings, arbitration can be a good solution to the above problems.
The Internet Corporation for Assigned Names and Numbers (ICANN) is a non-profit organization which among other things is responsible for managing the Internet address space and the top-level domain names. These include the well-known .com, .org and .net extensions. If you want to register a .com-domain name, you must do so using a provider which is accredited by the ICANN. The ICANN sets the rules to which these domain names must adhere, and which the providers must follow. As of October 1999 one of these rules is that a provider must transfer a domain to a trademark holder if this is ordered by a decision from arbitration on the basis of the Uniform Dispute Resolution Policy (UDRP).
If a trademark holder thinks he has the right to somebody else's domain name, he can now start an arbitration procedure at one of the three arbitration institutions that apply the UDRP: the CPR Institute for Dispute Resolution, the National Arbitration Forum, and the World Intellectual Property Organization (WIPO). The last two a particular are very popular, not in the least because trademark holders win a lot of the time if they start a procedure there (in 82.9% en 82.2% of the cases respectively). If the trademark holders wins the case, the provider must transfer the domain name, even if the domain name holder refuses to cooperate. This can be very useful, especially if the domain name holder lives in an entirely different country..
The rules under which a domain name can be transferred are:
- The domain name is identical to or confusingly similar to a trademark held by the complainant; and
- The domain name holder has no rights or legitimate interests with respect to the domain name; and
- The domain name has been registered and is being used in bad faith.
The most important reasons for a finding of bad faith, are that the domain name holder is selling domain names on a large scale, that he systematically registers trademarks as domain names, that he wants to interfere with a competitor's business, or that he uses the domain name to pretend that he is associated with or sponsored by the trademark holder. The trademark holder must supply the proof.
After receiving a complaint to arbitration institution appoints one or three arbiters, as desired by the complainant and the domain name holder. The domain name holder then has twenty days(!) to respond to the complaint and to, for example, supply proof regarding his legitimate interests. After that, the arbiters make their final, binding decision.
The original purpose of the UDRP was to make life difficult for the many cybersquatters that had been registering trademarks as domain names in the years before. This can be seen clearly in the way in which the UDRP was written. However, the UDRP is now also used many times in very different conflicts regarding domain names, for example if two companies want to use the same trademark for different products, but also against private individuals who just happen to use the trademark as part of their domain and, or against private individuals who want to criticize a trademarked product or the company selling it.
Several studies show that it is very attractive for a trademark holder to start a procedure using the UDRP. The costs are low, you get a decision fast and that decision is usually in your favor. The arbitration institutions mention this fact in their advertisements, which creates an impression that they might be prejudiced towards trademark holders. This, together with the fact that some arbiters make inimitable or inconsistent rulings, has resulted in some very focal criticism of the procedure. ICANN is working on an improved procedure, but it will be quite some time before this is finished.