Filing a complaint under the Uniform Domain Name Dispute Resolution Policy (UDRP) is not always an easy call, given the time and expense involved in the process. But often, a domain name registrant will quickly offer to “settle” a dispute and transfer the domain name to the trademark owner that filed the complaint. Whether to accept such an offer is not necessarily a simple decision.
Any settlement offer should be viewed with some degree of skepticism, as many cybersquatters will want to attach conditions to a settlement offer (such as payment) or fail to follow-through on their offers. Some domain name registrants simply use the offer as a delay tactic while continuing to exploit the domain name in dispute for as long as possible.
It’s important to remember that the UDRP Rules were amended in 2015 to require that the parties “provide a standard settlement form” to the UDRP service provider (such as WIPO) if they reach a settlement. As set forth in the Rules, the form “is not intended to be an agreement itself, but only to summarize the essential terms of the Parties' separate settlement agreement.” Without such a form, the disputed domain name cannot be transferred to the trademark owner.
Accepting a settlement and filing the required form may seem like a reasonable way to conclude a UDRP proceeding quickly and decisively, but doing so is not always the best option. Without a valid reason to settle, a trademark owner may be better off rejecting a settlement and simply letting the UDRP case proceed to a decision.
So, when is a UDRP settlement appropriate? Here are four scenarios:
1. Eliminate Risk
If a trademark owner lacks confidence in its case — or, at least, has sufficient concerns about getting a favorable decision from the UDRP panel — then settling the case can avoid an adverse outcome. Of course, no trademark owner should file a UDRP complaint unless it expects to win, but some cases are stronger than others, and sometimes facts arise or legal arguments are presented after filing that might prompt a trademark owner to doubt the strength of its case. In such a situation, accepting a settlement obviously avoids the risk of waiting for a decision from the UDRP panel.
2. Avoid Delays
Sometimes, time is of the essence. While a UDRP proceeding is a relatively quick process, it often takes about two months to receive a decision after a complaint has been filed. For some trademark owners, that’s just too long, perhaps because they have a business need to use the disputed domain name as soon as possible or because the damage caused by the cybersquatter’s ongoing use of the domain name is unbearable. Settling a UDRP case instead of waiting for a decision can allow a trademark owner to take control of the domain name more quickly.
3. Get a Refund
WIPO is unique among the UDRP service providers in that it will refund a portion of the filing fee if a proceeding is terminated (such as because of a settlement) before the panel has been appointed. In a typical UDRP proceeding where the filing fee is $1,500 for a single-member panel and up to five domain names, WIPO will refund $1,000. For some trademark owners, this refund is an important consideration, while for others it’s not significant. Many trademark owners that have gone through the time and effort of filing a UDRP complaint will value a decision (which can be cited as precedent in future disputes) more highly than the refund. And, of course, any legal fees paid to a lawyer handling the UDRP case (as opposed to filing fees paid to the UDRP service provider) are not refundable by the UDRP service provider.
4. Negotiate Additional Terms
The only remedy that a trademark owner can obtain from a winning UDRP decision is a transfer (or cancellation) of the disputed domain name. But a settlement agreement can accomplish much more — whatever a trademark owner and a domain name registrant agree upon. For example, a domain name registrant may agree to transfer additional domain names that are not a part of the UDRP proceeding; to refrain from registering certain domain names in the future; or even to pay for damages caused by its cybersquatting. Any such terms should be part of a formal, written settlement agreement between the parties, above and beyond the simple “settlement form” required by the UDRP Rules.