Ladas & Parry - Domain Names & E-Commerce

Domain Names & E-Commerce / Domain Names

Current Dispute Resolution Methods

ICANN Uniform Domain Name Dispute Resolution Policy
The Anticybersquatting Consumer Protection Act

While NSI was the only domain name Registrar, in order to prevent the increasing occurrence of disputes involving domain names, NSI implemented its now well-known, perhaps, infamous, “on hold” procedure. Under this procedure, a trademark owner, with a registered mark identical to the domain name in question could apply with NSI to place the domain name “on hold,” so that no one could use the domain name until the dispute was resolved, either amicably or via the judicial process.

Many perceived problems with the NSI policy, however, leading to an increasing demand for a domain name dispute resolution procedure that better addressed the rights of the respective parties. For example, under the NSI policy, the trademark had to be identical to the domain name to trigger the policy. This failed to account for the rights of trademark holders with marks which were confusingly similar to the domain name. Also, the NSI policy did not account for the common law rights in a given mark.

Furthermore, the NSI policy did not allow comparison of the goods and services covered by a trademark in relation to those associated with a given domain name. The NSI policy lead many trademark holders to engage in “reverse domain name hijacking,” by threatening to place domain names being used in good faith for goods/services unrelated to the trademark holder’s mark “on hold,” unless the domain name was transferred to the trademark owner.

The need for change to many was clear.

ICANN Uniform Domain Name Dispute Resolution Policy

Under the ICANN Registrar Accreditation Agreement, a Registrar must agree to abide by the Uniform Domain Name Dispute Resolution Policy (“UDRP”), which was adopted on August 26, 1999. The implementation documents for this policy were approved on October 24, 1999. Updates to these documents, if any, can be accessed on the Internet at Uniform Domain Name Dispute Resolution Policy; and Rules for Uniform Domain Name Dispute Resolution Policy. The first day in which complaints could be submitted to accredited Dispute Resolution Providers was on December 1, 1999, for disputes involving domain names registered with Registrars, for various reasons, other than America Online, the NameIT Corp. and NSI. The first day complaints could be submitted in respect of domain names registered by these other three Registrars was on January 3, 2000.

The Uniform Domain Name Dispute Resolution Policy is incorporated by reference into every Registrar’s Registration Agreement with domain name Registrants and sets forth the terms and conditions for resolving disputes between the Registrant and another party concerning the registration and use of a name.

The Policy provides that a domain name Registrant is required to submit to mandatory administrative (arbitration) proceedings if a third party complains with respect to a .COM, .NET or .ORG, and now a .BIZ, .INFO or .NAME domain name, to one of the ICANN accredited Dispute Resolution Providers. Current accredited Dispute Resolution Providers include are WIPO, Disputes.org/eResolution Consortium, the National Arbitration Forum, and the CPR Institute for Dispute Resolution. Each provider has its own supplemental rules of procedure. A Complainant must assert to the chosen Provider that:

(i) the domain name is identical or confusingly similar to a trademark or servicemark in which the complainant has rights;

(ii) the Registrant has no rights or legitimate interests in respect of the domain name; and

(iii) the domain name has been registered and is being used in bad faith.

Evidence of a bad faith registration, without limitation, includes:

(i) circumstances indicating that the domain name was registered primarily for the purpose of selling, renting, or otherwise transferring the domain name to the Complainant who is the owner of the trademark or service mark, or to a competitor of that Complainant, for valuable consideration in excess of the costs related to registering the domain name; or

(ii) the domain name was registered in order to prevent the Complainant from reflecting the mark in a corresponding domain name, provided that there is a pattern of such conduct; or

(iii) the domain name was registered primarily for the purpose of disrupting the business of the Complainant; or

(iv) the Registrant intentionally attempted to attract, for commercial gain, Internet users to his web site or other on-line location, by creating a likelihood of confusion with the Complainant’s mark.

As a defense to a complaint, any of the following circumstances, if found by the Panel, indicates the Registrant's legitimate interest in the domain name:

(i) the Registrant's use, or demonstrable preparations to use the domain name in connection with a bona fide offering of goods or services; or

(ii) the Registrant (as an individual, business, or other organization) has been commonly known by the domain name, even if he has acquired no trademark or service mark rights in the name; or

(iii) the Registrant is making a legitimate noncommercial or fair use of the domain name, without intent of commercial gain, to confuse consumers or to tarnish the trademark or service mark at issue.

The remedies available under the UDRP are limited to requiring cancellation of the domain name or the transfer of the domain name to the Complainant. Either party can file an action in a court of competent jurisdiction at any time during a pending UDRP action. Also importantly, the Complainant has the choice of either a one-person or a three-person panel. If the Complainant chooses a one-person panel, the domain name Registrant is given the opportunity to choose a three-person panel, in which case the domain name Registrant will be required to pay half of the costs associated with the procedure. A Complainant or Respondent will usually choose a three person panel when they believe that they can secure at least one panelist who has ruled favorably in similar cases because a three person panel is comprised of a panelist nominated by each side, with the third panelist selected, if possible, from ranked lists submitted by the parties, but ultimately chosen by the dispute resolution provider. [19]

The UDRP has been used by aggrieved parties around the world, including Indian companies in respect of Indian trademarks registered as .COM, .NET, or .ORG domain names in "bad faith" by third parties, such as, for example, the domain names PHILIPSINDIA.COM, THETIMESOFINDIA.COM, MARUTI.COM, MYMARUTI.COM and THEECONOMICTIMS.COM. [20]

The Anticybersquatting Consumer Protection Act

Another important change that has benefitted trademark practitioners, particularly in the United States, was a United States law, which amended the Lanham Act by adding new Section 43(d), known as "The Anticybersquatting Consumer Protection Act (“ACPA"). The ACPA was enacted into law on November 29, 1999 and, except for the damages section, applied retroactively.

Section 43 (d)(1)(A) states that:

"A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person--

(i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section

(ii) registers, traffics in, or uses a domain name that -

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark.”

Liability under this section depends on whether the person registered or used the domain name in “bad faith”, and includes a provision whereby the complainant may elect at any time before final judgment to recover either actual damages and profits, or an award of statutory damages in an amount of not less than $1,000 and not more than $100,000 per domain name in the discretion of the court. Thus, unlike the stated policy of ICANN’s UDRP, a domain name Registrant can be liable for merely registering a domain name in bad faith, without the necessity of use. It should be noted, however, that under the UDRP, certain panelists have found bad faith in cases of mere “passive holding” of a domain name. [21]

Another important section in the ACPA is Section 43(d)(2) under which the owner of a mark may file an in rem civil action against the domain name itself in the judicial district in which the domain name Registrar, domain name Registry, or other domain name authority that registered or assigned the domain name is located, if the court finds that the trademark owner is not able through due diligence to obtain in personam jurisdiction over the person who would have been the defendant. The remedies available under this action are limited to a court order for the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark.

In determining whether a registration was in bad faith, a court may consider the following nine non-exclusive factors:

(I) the trademark or other intellectual property rights of the person, if any, in the domain name, which takes into account the fact that various persons or entities can have the coexisting right to use a particular name. For example, an Apple Computer and an Apple shipping company would both have the theoretical right to register and use the APPLE.COM domain name. Since there can only be one APPLE.COM in use at a given time, it certainly pays to register your domain name early.

(II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person.

(III) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services.

(IV) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name which recognizes that under certain circumstances a person can use another’s trademark in a domain name in a lawful way. Examples of such uses would be parody and comparative advertising.

(V) the person's intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site.

(VI) the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct. [22]

(VII) the person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure to maintain accurate contact information, or the person's prior conduct indicating a pattern of such conduct. [23]

(VIII) the person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties.

(IX) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous.

Bad faith intent will not be found where the court determines that the person believed or had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.

In any civil action involving registration, trafficking, or use of a domain name, a court may order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the trademark.

[19] Of interest, stare decisis, the principle of following precedents set in previous cases, does not apply in UDRP proceedings. However, the biographical information about and writings of panelists, as well as, to some degree, the previously decided cases by panelists, are available for review by the Complainant and Respondent.

[20] The total number of TLDs ICANN proceedings done via WIPO was 3,262 from the beginning of the process in late 1999 through November 2001. Approximately 30 ICANN disputes involved those complainants or respondents domiciled in India in 2001. See http://arbiter.wipo.int/domains/statistics/results.html.

[21] See Peter Gey, “Bad Faith Under ICANN”S Uniform Dispute Resolution Policy,” E.I.P.R. No. 11 (2001).

[22] Conversely, under the language of the URDP, an offer to sell the domain name to a non-competing third party would presumably not indicate bad faith.

[23] It is often the case that cybersquatters will register domain names using false names and contact information making it difficult for trademark owners to locate them, which also implicates the importance of properly functioning WHOIS databases.

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