With Attention Focused on New gTLDs, Another Record Year of Cybersquatting Goes (Almost) Unnoticed

By Doug Isenberg In March, as ICANN was in the midst of receiving applications for new global top-level domains (gTLDs), the World Intellectual Property Organization (WIPO) reported an important-but-nearly-overlooked statistic: The number of domain name disputes reached a record high -- again -- in 2011.

Specifically, as WIPO said:

In 2011, trademark holders filed a record 2,764 cybersquatting cases covering 4,781 domain names with the WIPO Arbitration and Mediation Center (WIPO Center) under procedures based on the Uniform Domain Name Dispute Resolution Policy (UDRP), an increase of 2.5% and 9.4% over the previous highest levels in 2010 and 2009, respectively.

The chart above (total number of domain name dispute cases per year, at WIPO) shows the dramatic trend.

Importantly, these stats don't represent all UDRP cases, given that complaints are also filed at the National Arbitration Forum (NAF), the Czech Arbitration Court (CAC) and the Asian Domain Name Dispute Resolution Centre (ADNDRC). But WIPO's figures are likely representative of overall trends and, in the past, WIPO filings have accounted for about 53% of all UDRP cases.

While the total number of domain name disputes actually filed is only a tiny fraction of all domain names registered, the trend is certainly clear: Cybersquatting is a growing problem.

Despite this important statistic, it appears as if the ailment is largely being ignored. A Reuters article on cybersquatting even buried this record-setting news of 2,764 cases in an article about a mere 10 disputes in the new .xxx top-level domain.

Why has this troubling trademark trend gone unnoticed? A few possibilities:

• Trademark owners, and everyone else in the domaining community, are distracted by so much attention on the new gTLDs -- a future problem, not a current problem.
• Cybersquatting has become merely a way of life, that is, a nuisance that is to be expected and treated in the ordinary course of business.
• As the Reuters article illustrates, writing about .xxx is a lot sexier than writing about a typical UDRP decision that involves confusion with a company outside the adult entertainment industry.
• The same news has been reported before. As the chart above shows, UDRP filings have increased for seven of the past eight years.

Whatever the reason for less attention on the cybersquatting problem -- and the reality is probably all of the above -- the trend appears to be continuing. In the first four months of 2012, UDRP filings at WIPO are already up nearly 15 percent from last year.

Why Brand Owners Will Continue to Rely on the UDRP -- Even After the New gTLDs

Amidst all the talk about potential trademark disputes related to the new global top-level domains (gTLDs), one important topic is often overlooked: whether the UDRP – the Uniform Domain Name Dispute Resolution Policy adopted by ICANN in 1999 – will even apply to the new gTLDs. The answer, fortunately, is yes. Here’s why. And why it’s important.

ICANN’s Applicant Guidebook contains a form registry agreement that successful gTLD applicants must enter into with ICANN prior to delegation of any new gTLD. Section 2.2 of that agreement states: “Registry Operator shall comply with and implement all Consensus Policies and Temporary Policies….” The UDRP is one of those consensus policies.

Therefore, any new gTLD registry operator must implement the UDRP, which means that all registrars for new gTLDs will be required to include the UDRP in their registration agreements, which means that all registrants of new gTLDs must agree to abide by the UDRP process if a complaint is filed against them.

Thus, while much debate has focused on the proposed Uniform Rapid Suspension System (“URS”) – including its numerous shortcomings as an alternative to the UDRP – the important news for trademark owners is that the UDRP will always be available to help resolve troublesome cybersquatting issues and some other domain name abuses.

Presumably, the applicability of the UDRP to the new gTLDs should be welcome by all, especially at a time of such great uncertainty in the domain name system. As a preliminary GNSO issue report on the UDRP (May 27, 2011) concluded: “The UDRP has won international respect as an expedient alternative to judicial options for resolving trademark disputes arising across multiple national jurisdictions.”  Following an ICANN webinar on May 10, 2011, which attracted participants and observers representing both trademark owners and domainers, among others, the GNSO report said that such international respect for the UDRP “was broadly shared during the UDRP Webinar by representatives of a broad cross-section of the Internet community.”

Indeed, as the World Intellectual Property Organization (“WIPO”) has observed, the UDRP is “the only proven mechanism in place to absorb the impact of gTLD expansion.”  This sentiment has been echoed by ICANN’s Intellectual Property Constituency (“IPC”), which cautioned against any alterations to the UDRP “at a time when stakeholders face major changes and uncertainty arising from the launch of the new gTLDs.”

Therefore, while much remains unknown about trademark protections even at the opening of the application period for the new gTLDs, the stable presence of the UDRP should provide at least some degree of comfort to brand owners.

Still, how important the UDRP will be in an expanded  world of top-level domains cannot yet be fully known. For example, despite the limited expansion of the number of top-level domains in the past, the UDRP is overwhelmingly used to resolve disputes relating to .com. WIPO’s statistics show that, in 2011, of the 4,222 domain names disputed in UDRP proceedings at WIPO, more than 77% were .com.  And more than 93% involved the original “big three” gTLDs—.com, .net and .org.  Indeed, five gTLDs (.aero, .cat, .coop, .edu and .museum) are entirely absent from WIPO’s UDRP proceedings this year. (While WIPO is not the only UDRP service provider, it is the largest, handling about 53% of all UDRP disputes, and its statistics – the only UDRP statistics published in detail – are likely applicable to the other UDRP service providers as well.)

Of course, the number of UDRP filings for any gTLD may be influenced by the total number of domains registered within the gTLDs themselves – and .com remains far and away the most popular gTLD. No one knows whether that will continue to be the case – although, with a head start of more than 26 years, .com is likely to remain king for quite some time.

Similarly, the UDRP is likely to remain king of the domain name dispute world for the foreseeable future. With a history of more than 36,000 cases and 28,000 published decisions since its implementation 12 years ago, the UDRP has turned into a popular and usually (though not always) predictable legal tool for resolving domain name disputes.

While so much else remains uncertain for brand owners as the domain name space starts to grow, the UDRP will remain a bedrock of the dispute process on which all parties can rely.

This article was originally published in the February 2012 issue of MarkMonitor's On The Mark newsletter.