The Rising Popularity of Canceling a Domain Name Registration in a UDRP Case

While the overwhelming majority of all decisions in Uniform Domain Name Dispute Resolution Policy (UDRP) cases result in an order to transfer the disputed domain name, the policy always has allowed trademark owners to request cancellation -- instead of transfer -- of the domain name. It's never been a popular remedy, but it seems to be occurring more frequently lately.

Indeed, statistics from the World Intellectual Property Organization (WIPO) -- the largest and only UDRP service provider that publishes real-time data on its cases -- show that 2.32% of all domain name disputes so far this year (as of September 22, 2015) have resulted in cancellation. This compares with only 1.69% last year, and an all-time cancellation rate of 1.64%. So, 2015 currently ranks among the top three years for domain name cancellations and far exceeds the all-time low rate of 0.47% in 2000 (the first full year of the UDRP).

As the accompanying chart shows, the trend has not been steady, with cancellation rates rising and falling in recent years. But the trend over the past 15 years seems clear: Domain name cancellations in UDRP cases are rising.

The UDRP's Choice of Remedies

Given the overall low rate of domain name cancellations, many people may be surprised to know that this is even a remedy. But the UDRP is very clear, stating in paragraph 4(i) ("Remedies"), as follows:

The remedies available to a complainant pursuant to any proceeding before an Administrative Panel shall be limited to requiring the cancellation of [the disputed] domain name or the transfer of [the] domain name registration to the complainant.

If cancellation has always been a remedy, why is it so unpopular (by comparison, 85.94% of all decisions result in a transfer)? And, why has the cancellation rate been rising?

The Disadvantages of Cancellation

For most trademark owners, the line of thinking about whether to request transfer or cancellation traditionally has gone like this: If a complainant is willing to spend $1,500 on the typical UDRP filing fee, plus legal fees, and also incur the time and effort involved in a UDRP proceeding, then it's worth the relatively minor annual registration fee (as little as $10 or so at a retail registrar) to keep the domain name off the market.

Cancellation of a domain name simply takes the registration away from the losing registrant -- but, once cancelled, the domain name becomes available again for general registration on a first-come-first-served basis. So, the losing registrant could re-register it, another cybersquatter could get it, or an innocent user could take it and start using it in a problematic manner.

Indeed, in the days of domain name "tasting" -- a loophole that allowed registrants effectively to test-drive a domain name -- it seemed as if 100% of all lapsed domain names (whether through UDRP cancellation or intentional or mistaken failure to renew) were promptly registered by somebody. After all, the tasters reasoned, if a domain name was once valuable to somebody else, perhaps it might be valuable to them, too.

Reasons to Request Cancellation

Domain name tasting all but stopped in 2009, resolving one significant source of problems. And with it, one reason to avoid requesting domain name cancellation in a dispute proceeding disappeared.

In addition, as trademark owners acquire ever larger portfolios of domain names, even a relatively small annual registration fee can, in volume, add up to a not-insignificant expense. Large companies with multiple popular brands worldwide often have thousands of domain names -- and, many of them use corporate registrars (for good reasons), whose fees are much greater than the GoDaddys and Network Solutions of the world.

Finally, it's unclear what impact the arrival of the new generic top-level domains (gTLDs) is having on the UDRP's cancellation remedy. A review of recent UDRP cancellation decisions shows that all of them were ".com" domain names (or, in one case, a country-code top-level domain name, or ccTLD), not gTLDs. Why? Perhaps because ".com" remains the most-disputed TLD or, probably, because there's a much less-expensive process to take a new gTLD offline, through the suspension remedy in the Uniform Rapid Suspension System (URS), which does not apply to ".com".

So, When is Cancellation a Good Idea?

Despite the uptick in domain name cancellations in UDRP cases, I still subscribe to the traditional school of thought. If a domain name is worth pursuing in a dispute proceeding, it's probably worthwhile to ensure that it stays out of anyone else's hands. Yes, there will be an ongoing expense to maintain the registration, but it will be only a fraction of the cost incurred in the UDRP proceeding itself.

As a result, I would be surprised if the recent increase in domain name cancellations continues, or if it reaches the all-time high of 2.76% (in 2009). And, even if it gets to that point, the tiny rate obviously indicates that cancellations are still an uncommon remedy.