[ncdnhc-discuss] Cybersquatting and Reverse Domain Hijacking

[James]

FYI - nice article encapsulating rights under UDRP and ACPA.



Copyright 2001 NLP IP Company, Inc.,
a Subsidiary of American Lawyer Media, Inc.
E-Commerce


June 2001

SECTION: Vol. 18; No. 2; Pg. 1

LENGTH: 2264 words

HEADLINE:  Practice Tips  How to Protect Trademarks in Domain Name Disputes
With Arbitration or Litigation

BYLINE: BY BARRY G. FELDER; Barry G. Felder is a partner at Brown Raysman
Millstein Felder & Steiner LLP in the firm's New York office. Kathleen Fay,
an associate in the firm, assisted in the preparation of this article.

BODY:
Lawyers interested in protecting their clients' trademarks against
infringing Internet domain name registrations should be aware of the
advantages and limitations of the two primary remedies available to
U.S.-registered trademark owners. This article compares arbitration
proceedings under the ICANN Domain Name Dispute Resolution Policy (UDRP)1
with litigation in U.S. courts under the Anticybersquatting Consumer
Protection Act (ACPA).2

Before proceeding to a discussion of the merits of these respective
proceedings, it should be noted that they are not mutually exclusive. The
UDRP contemplates that parties may institute parallel court proceedings
before, during or after the commencement of a UDRP proceeding. Whether a
trademark owner should pursue one, or the other, or both kinds of
proceedings depends on factors such as cost, the need for speed and the
strength of the trademark owner's claim.

 Arbitration Under the UDRP

The dispute resolution process established by the Internet Corporation for
Assigned Names and Numbers (ICANN) provides a remedy for a narrowly defined
group of particularly egregious cases of "deliberate, bad faith, abusive,
domain name registration," commonly referred to as "cybersquatting."3 The
exclusive remedies offered through this process are transfer of the domain
name to the complainant or cancellation of the domain name registration. The
UDRP requires that, in the event a complaint is filed against the registrant
of a domain name, the registrant must submit to an administrative proceeding
to determine whether (1) the domain name is identical or confusingly similar
to a trademark or service mark in which a complainant has rights; (2) the
registrant has no right or legitimate interest in the domain name; and (3)
the domain name has been registered and is being used in bad faith.

Under the UDRP, evidence of bad faith includes, but is not limited to,
registration of a domain name under the following circumstances:

* For the sole purpose of selling the domain name to the trademark owner
(e.g., cybersquatting);

* To prevent the trademark owner from using the mark in its own domain name;

* Primarily to disrupt a competitor's business; or

* To intentionally attract, for commercial gain, Internet users by creating
a likelihood of confusion.

A respondent's defenses under the UDRP may include the following
circumstances:

* Before notice of infringement, the domain name was used in connection with
a bona fide offering of goods or services.

* The respondent or respondent's business is commonly known by the domain
name.

* The respondent uses the domain name for legitimate non-commercial or fair
use, without intent for commercial gain or to misleadingly divert consumers
or tarnish the mark at issue.

Early last year, a WIPO administrative panel decided the first case of
cybersquatting under the UDRP. World Wrestling Federation Entertainment Inc.
v. Bosman, No. D1999-0001 (WIPO Jan. 14, 2000). Since then, there have been
thousands of proceedings under the UDRP, with domain name transfers far
outnumbering decisions in favor of the respondents.

 Litigation Under the ACPA

In 1999, Congress enacted federal anti-cybersquatting legislation
specifically designed to clarify the application of U.S. trademark law to
domain name registrations. The ACPA amends  §  43 of the Trademark Act of
1946, establishing that a person who registers, traffics in or uses a domain
name with the bad faith intent to profit from the name will be civilly
liable if:

* The domain name is identical or confusingly similar to a protected mark.

* The domain name dilutes a famous mark; or

* The domain name is a protected trademark, word or name.

The ACPA outlines several factors that may lead to a finding of bad faith.
In addition, the ACPA specifically affords protection to personal names. A
finding of liability can result in forfeiture or cancellation of the domain
name or transfer of the domain name to the owner of the mark. Moreover,
plaintiffs may be entitled to actual damages, or if they elect otherwise at
any time prior to a final judgment, statutory damages in the amount of not
less than $ 1,000 and not greater than $ 100,000 per domain name. The ACPA
also provides that a mark owner may file an in rem action against the domain
name itself in certain situations.

 Choosing Between Arbitration or Litigation

The following are issues a trademark owner might want to consider when
choosing whether to bring an action under the UDRP or the ACPA.

* Speed

In clear cases of cybersquatting that fall under the scope of both the UDRP
and the ACPA, trademark owners interested in fast transfer or cancellation
of a domain name from a cybersquatter may want to consider choosing
arbitration over litigation. A UDRP panel can resolve the domain name
dispute and implement a decision to transfer or cancel a domain name within
a matter of months after commencement of the proceeding. Evoking the UDRP to
rapidly retrieve a domain name prior to or concurrent with filing suit is
economically prudent, since a trademark owner may lose potential customers
every day that a domain name corresponding to its trademark is unavailable.

* Cost

An arbitration proceeding under the UDRP and the accompanying UDRP Rules4 is
generally much less expensive than traditional litigation. The fees payable
to dispute resolution service providers are relatively small.5 The UDRP
Rules limit the length of submissions to arbitration panels and the time
periods for submissions, and there is no provision for discovery
proceedings. These limitations tend to correspondingly limit the attorney
fees that are incurred in the course of a UDRP proceeding. The
cost-efficiency of the UDRP can benefit small businesses or individuals
without the financial resources to litigate.

However, low cost doesn't mean no cost, and a complainant must weigh the
relatively low cost of a UDRP proceeding against the possibility that a
respondent may file a court action in response to an unfavorable
administrative panel decision. If a losing respondent notifies the domain
name registrar of the filing of such a proceeding within ten days of the
adverse decision, UDRP 4(k) stays the implementation of the UDRP proceeding
pending the resolution of the litigation. This eventuality may leave the
trademark owner at the proverbial "square one," facing a second proceeding.
A trademark owner who believes the domain name holder is likely to file a
court proceeding if the UDRP decision is adverse may therefore find
litigation from the onset to be a more efficient approach.

* Finality

A UDRP proceeding may not result in a final decision on the right to a
domain name registration. UDRP 4(k) expressly permits a trademark owner to
seek judicial resolution of a domain name dispute before or after an
administrative proceeding. In Broadbridge Media LLC v. HyperCD.com, 106 F.
Supp. 2d 505 (S.D.N.Y. 2000), the court held that UDRP 4(k) does not
preclude a trademark owner from filing suit during the pendency of a UDRP
proceeding.

Not only is a UDRP proceeding not final (unless the losing party chooses not
to pursue further remedies), under NetLearning Inc. v. Parisi, 2001 W.L.
503004 (E.D. Va., May 10), a court in subsequent proceedings is not bound by
the decision of the UDRP panel and it need not accord any deference to the
decision. The court in NetLearning concluded that "the UDRP's contemplation
of parallel litigation and abbreviated proceedings does not
invite...deference" and the UDRP itself contemplates "comprehensive, de novo
adjudication" of the issues, including "the parties' overarching trademark,
contract, and other claims and defenses." Id.

Thus, although a UDRP proceeding may be relatively inexpensive and fast, it
may yield a useless result if the domain name registrant is a committed
adversary.

* Jurisdiction and Venue

The UDRP may be the best option for trademark owners concerned about
obtaining personal jurisdiction over a domain name registrant. Jurisdiction
is not an issue under the UDRP, as a domain name registrant has expressly
agreed to the jurisdiction of the administrative panel in its agreement with
the domain name registrar. See UDRP 1 and 4. Additionally, because disputes
under the UDRP are handled through paper and electronic communications and
filings, the need to travel to a forum is eliminated, and along with it
disagreements over the convenience of the venue.

* Availability of Remedies

A choice of litigation over arbitration affords the trademark owner the
opportunity to seek damages and remedies other than the cancellation and
transfer of the disputed name, the only two remedies available under the
UDRP. The range of remedies available under the ACPA and the Lanham Act
includes treble damages, defendant's profits, attorney fees and up to $
100,000 in statutory damages per domain name, in addition to forfeiture and
transfer of the domain name. See 15 U.S.C.  §  §  1116(a); 1117(d);
1125(d)(1)(C).

* Reverse Domain Name Hijacking

A trademark owner filing a UDRP complaint must be prepared for the
respondent not only to defend against the transfer, but also to argue that
the proceeding itself was brought in bad faith. The arbitrators' decision in
Deutsche Welle v. DiamondWare Limited, No. D2000-1202 (WIPO Jan. 20), for
example, adds to the growing number of cases in which the arbitrators ruled
in favor of the respondent, and found that the trademark owner improperly
sought to use the UDRP in bad faith to "hijack" the domain name. There are
no consequences to such a finding in the UDRP proceeding itself. UDRP Rule
15(e) merely permits a panel that concludes a complaint was an attempt at
"reverse domain name hijacking" to declare that "the complaint was brought
in bad faith and constitutes an abuse of the administrative proceeding." No
remedy for such abuse is provided.

However, a finding of "reverse domain-name hijacking" in a UDRP proceeding
might have repercussions in a subsequent court proceeding brought by a
trademark owner with respect to the same domain name. A court faced with
such a proceeding may be influenced by the arbitration panel's finding of
bad faith, whether or not the court regards itself as either bound by such a
finding or required to afford it any deference. It has also been suggested
that a reverse domain name hijacking ruling against a complainant in a UDRP
proceeding may prompt a victorious registrant to file an action alleging
abuse of process. Thus far, there are no judicial decisions giving guidance
as to how courts will view a finding of reverse domain name hijacking,
suggesting that due caution is advised in considering a UDRP proceeding
which might be susceptible to such a finding.

 Combination of Both Measures

A combination of arbitration and litigation may be the best choice for the
trademark owner who wishes to recover a domain name as quickly as possible
to minimize lost profits and also wishes to recover damages. Consideration
should be given, however, to the effect that a prior UDRP proceeding may
have on subsequent court proceedings, as noted above. Not only may the
trademark owner fail to prevail in the UDRP proceeding, but under certain
circumstances a UDRP proceeding can also result in a finding that a
complainant has engaged in "reverse domain name hijacking."

 Conclusion

The UDRP and the ACPA provide different procedures, protect different
substantive rights, and offer different remedies. In doing so, they provide
two effective and complementary mechanisms for U.S. trademark owners seeking
to enforce their rights in domain names--a quick, relatively inexpensive
mechanism to rectify abusive registrations, while leaving intact the right
of trademark owners to pursue additional causes of action and remedies under
state and federal anti-cybersquatting laws. Attorneys advising clients
should give careful consideration to the relative merits of these
proceedings, and weigh the strength of client's claims in deciding which
proceedings to pursue.

(1) Uniform Domain Name Dispute Resolution Policy (adopted Aug. 26, 1999),
see http://www.icann.org/udrp/udrp-policy-24oct99.htm

(2) Anticybersquatting Consumer Protection Act of 1999, 15 U.S.C.  §
1125(d).

(3) See WIPO Final Report of the WIPO Internet Domain Name Process P.135i
(Apr. 30, 1999) at http://wipo2.wipo.int/process1/ report/finalreport.html.

(4) Rules for Uniform Domain Name Dispute Resolution Policy, see http://www.
icann.org/udrp./udrp-rules-24oct99.htm.

(5) See World Intellectual Property Organization Arbitration and Mediation
Center, Schedule of Fees under the ICANN policy, at
http://arbiter.wipo.int/domains/ fees/index.html; eResolution: Integrity
Online, Schedule of Fees, at http://www.eresolution.
ca/services/dnd/schedule.htm; National Arbitration Forum, Dispute Resolution
for Domain Names Schedule of Fees, at
http://www.arbforum.com/domains/domain-fees.html; CPR Institute for Dispute
Resolution, CPR's Supplemental Rules and Fee Schedule, P. 12, at
http://www.cpradr.org/ ICANN/RulesAndFees.htm.

 Where to Find Them On the Web

Arbitration proceedings under the ICANN UDRP are indexed and the decisions
archived on the ICANN web site at http://www. icann.org/udrp/udrp.htm.

The reports of the World Intellectual Property Organization (WIPO) on the
ICANN domain name dispute resolution process are available at
http://ecommerce. wipo.int/domains/

LOAD-DATE: July 13, 2001
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