Comparing and Contrasting Domain Name Statistics at the Forum and WIPO

The Forum (formerly known as the National Arbitration Forum) recently released some statistics on its 2014 caseload for domain name disputes, and the data provides some interesting insights.

The Forum's news release states that the domain name dispute provider handled 1,836 cases last year under the Uniform Domain Name Dispute Resolution Policy (UDRP), involving 3,174 domain names. That averages out to 1.73 domain names per complaint.

By contrast, the World Intellectual Property Organization (WIPO) -- which released its statistics six months earlier -- remained the most active provider of UDRP services, handling 2,634 cases with a total of 5,591 domain names (or, 1.76 domain names per complaint).

Without providing data on the previous year, the Forum's news release states that the number of domain name filings was "steady" in 2014. In its recent Report of the Director General to the WIPO Assemblies, WIPO said it saw an increase of 2% in "cybersquatting case filings" last year (although it is unclear whether that increase applies only to the UDRP or also to all of the domain name dispute policies administered by WIPO, which includes services for many country-code top-level domains, or ccTLDs).

The Forum reported that trademark owners prevailed in UDRP disputes "92% of the time," which presumably takes into account cancellations as well as transfers. The Forum notes that this number rose from 88% the previous year.

WIPO provides more detailed reporting on case outcomes, but looking only at those that resulted in a full transfer, cancellation or denial, it appears as if complainants prevailed in 90.16% of the reported domain name disputes at WIPO.

The bottom line appears to be that WIPO again handled the largest number of UDRP complaints in 2014 but that the average number of domain names per complaint and the outcome remains about the same at these two largest domain name dispute providers -- with a "steady" or slight increase over the previous year.

Of course, we are already nearing the end of 2015, so it will be quite interesting to study the current year's domain name data as well, which will include a significantly higher number of disputes involving new gTLDs, as well as more filings under the Uniform Rapid Suspension System (which generally applies only to the new gTLDs).

Related GigaLaw blog posts:

Stark Reminders of the Very High Bar for a URS Dispute

As the Uniform Rapid Suspension System (URS) makes clear, this new domain name dispute policy "is not intended for use in any proceedings with open questions of fact, but only [for] clear cases of trademark abuse." Indeed, unlike the well-established Uniform Domain Name Dispute Resolution Policy (UDRP), which has a lower burden of proof, the URS explicitly sets a very high bar for a trademark owner: "clear and convincing evidence."

A pair of URS determinations involving a very well-known trademark makes clear just how high this bar really is -- and the decisions should serve as a warning to trademark owners that might want to reconsider whether (or, at least, when) the URS is an appropriate legal path to pursue.

Both of the decisions relate to the trademark NETFLIX, in two URS cases filed by Netflix, Inc., against separate domain name registrants. The NETFLIX trademark is quite popular for its association with video rental and video-on-demand services. Indeed, one tech site reported in a headline, "Netflix is now more popular than eating and sex."

Yet, in both URS cases -- involving <netflix.website> and <netflix.news> -- the trademark owner lost, allowing the registrants to keep their domain names.

For those unfamiliar with the domain name dispute system, the Netflix losses might seem stunning. And for those familiar only with the UDRP, the decisions against a well-known trademark owner might seem perplexing. But, a basic understanding of the URS and a simple reading of the determinations is enlightening.

To be clear, in both cases the examiner found that the disputed domain names were identical or confusingly similar to the NETFLIX trademark. But that conclusion addresses only one of the URS's three legal tests.

Passive Holding

In the <netflix.website> case, Netflix admitted that the registrant was not using the domain name, and the registrant somewhat confusingly said that he was "not the registered owner" of the domain name (despite a verification from the registrar). While the UDRP contains a well-established doctrine of "passive holding" that nevertheless can give rise to bad faith even where a domain name is not being used (emanating from the oft-cited Telstra Corporation Limited v. Nuclear Marshmallows decision), the examiner in the <netflix.website> case concluded: "I find that the evidence is not clear and convincing that the domain name is being used in bad faith." As a result, Netflix failed to prove all three elements of the URS and lost the case.

Fan Site

In the <netflix.news> case, decided by the same examiner, the registrant insisted that he intended to create a fan site using the domain name, "with news and updates on the Complainant’s service." The URS examiner obviously had suspicions about the truth of this statement, noting that it was "self-serving" and that "Respondent has failed to put into the record any facts which support his claim." Despite this, however, the examiner observed that the URS requires an examiner to reject a complaint if "genuine issues of material fact remain in regards to any of the elements." As a result, the examiner concluded: "Because this record raises, but does not provide adequate information to conclude whether or not Respondent has a legitimate right or interest to the domain name, I must find for the Respondent on this element."

Lessons Learned

To be clear, both of the issues in the Netflix cases -- passive holding of a domain name and a declared interest in creating a fan site -- are commonly raised in UDRP cases but (unlike the outcomes here) frequently result in decisions for trademark owners.

And, the passive holding fact pattern has arisen in multiple URS cases with determinations that favor trademark owners. Indeed, in another URS case also involving the NETFLIX trademark (and the domain name <netflix.video>), an earlier URS examiner issued a decision in favor of Netflix, writing: "Respondent’s current 'passive' use of the disputed domain name is another factor that supports a finding of the requisite bad faith."

So, how can the outcome in the <netflix.website> and <netflix.news> URS cases be justified? The answer lies in the "clear and convincing" burden of proof for URS proceedings as well as the significant limitations on trademark owners to argue their cases (including a minuscule 500-word limit).

As a result, the lesson is clear: Not all domain name disputes are appropriate for the URS, which creates a very high bar for trademark owners and important advantages for domain name registrants.

Differences Between the UDRP and the URS (Summarized)

 As new generic top-level domains (gTLDs) grow in popularity, the Uniform Rapid Suspension System (URS) is often an alternative and attractive option to the longstanding Uniform Domain Name Dispute Resolution Policy (UDRP).

The URS is certainly less expensive than the UDRP, and a decision is reached more quickly.

But, as I've written before, the URS has not gained much traction, in part because the remedy for a successful trademark owner is simply a temporary suspension of the disputed domain name. The UDRP, on the other hand, provides a more permanent (and sometimes more desirable) solution by allowing a transfer of the domain name.

The difference in remedies between the UDRP and the URS is not the only consideration for a trademark owner thinking about how to proceed. In many cases, for example, the URS is not even an option, give that it applies almost exclusively to the new gTLDs (and not to traditional TLDs such as the most popular .com).

So, in the interest of providing a quick overview of the important differences between the UDRP and the URS, I have prepared the following chart with brief summaries:

 

[table id=1 /]

 

The Most Embarrassing Way to Lose a UDRP Complaint

The Most Embarrassing Way to Lose a UDRP Complaint

Although the Rules for the Uniform Domain Name Dispute Resolution Policy (UDRP) address a "default," there is no such thing as a default judgment, as in court. A default in UDRP parlance simply refers to the situation in which a domain name registrant fails to submit a response; it doesn't indicate the outcome. In other words, the burden of proof is always on the complainant (trademark owner) who filed the case.

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.

 

The GigaLaw Guide to URS Resources

Here is a list of resources, with links, to important documents on ICANN's Uniform Rapid Suspension System (URS), the domain name dispute procedure that allows a trademark owner to seek suspension of a domain name in a new generic top-level domain (gTLD):

ICANN

The Forum

Asian Domain Name Dispute Resolution Centre

MFSD

GigaLaw Blog Posts on the URS (Partial List)

When and How to Include Multiple Complainants in a URS Proceeding

As a relatively new domain name dispute policy, the Uniform Rapid Suspension System (URS) is still raising questions. Among them: Can multiple parties jointly file a URS complaint? For proceedings under the longstanding Uniform Domain Name Dispute Resolution Policy (UDRP), the answer seems relatively clear: Yes, under certain circumstances.

Multiple Complainants in UDRP Proceedings

The WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Second Edition ("WIPO Overview 2.0"), says (for UDRP -- not URS -- proceedings) that multiple complainants may be appropriate under the following circumstances:

[S]ituations in which (i) the complainants either have a specific common grievance against the respondent, or the respondent has engaged in common conduct that has affected the complainants' individual rights in a similar fashion; (ii) it would be equitable and procedurally efficient to permit the consolidation; or in the case of complaints brought (whether or not filed by multiple complainants) against more than one respondent, where (i) the domain names or the websites to which they resolve are subject to common control, and (ii) the consolidation would be fair and equitable to all parties.

The WIPO Overview 2.0 also makes clear that, "[i]n most circumstances, a licensee of a trademark or a related company such as a subsidiary or parent to the registered holder of a trademark is considered to have rights in a trademark under the UDRP."

Indeed, it is not at all uncommon for a UDRP complaint to be brought by multiple complainants, such as where one is a licensee of the other or where they "are part of a group of companies under [a] parent company."

Multiple Complainants in URS Proceedings

The URS, however, is less developed, given the relatively few decisions that have been issued under it. Still, paragraph 1.1.3 of the URS makes clear that "[o]ne Complaint is acceptable for multiple related companies against one Registrant, but only if the companies complaining are related" (emphasis added).

Indeed, a number of URS decisions already have been published that involved more than one complainant, such as American Council on Education et al. v. BMS solutions, NAF Claim No. 1552755, in which one complainant held an exclusive trademark license from the other; and Carlson, Inc. and its subsidiaries et al. v. Wang Liqun et al., NAF Claim No. 1619076, which apparently involved a parent company and multiple subsidiaries (perhaps because three trademarks were at issue).

Thus, it appears clear that the URS allows multiple complainants to participate in a single proceeding. But, how to do so is not readily apparent.

Fortunately, the Forum's online URS filing system expressly contemplates multiple complainants, with an option to "enter information for each complainant." If so, the filing party is then given a form field to "describe the complainant relationship" -- a very useful step that avoids having to use the precious 500-word narrative reserved for the substance of the complaint.

Unfortunately, the URS filing system for the Asian Domain Name Dispute Resolution Centre (ADNDRC) does not appear to contain a similar option to identify and describe the relationship among multiple complainants.

What Happens to a Domain Name After the URS Suspension Expires?

One of the most obvious limitations of the new Uniform Rapid Suspension System (URS) is the remedy for a trademark owner: A disputed domain name can only be temporarily suspended, not transferred. (By contrast, the Uniform Domain Name Dispute Resolution Policy (UDRP) allows a winning complainant to get a domain name transferred to it.)

The trade-off has been seen as a compromise: Since URS proceedings are quicker and less expensive than the UDRP, the remedy should be more limited.

While the URS has not yet proven to be very popular, most trademark owners who have invoked it have found success. That is, the overwhelming majority of disputed domain names have been suspended.

But, because the suspension is only temporary -- until the disputed domain name is due to expire, or one year thereafter, if the complainant is willing to pay for a renewal -- one unknown question has been: What happens to a domain name after the URS suspension expires?

Now, as the first domain names suspended in URS proceedings are expiring, we are finally getting some answers.

I looked at the first 100 domain names suspended at the Forum (the most popular URS service provider) under the URS. While almost half (49) of the domain names are still suspended (or in the "pending delete" or "redemption period" status following a suspension), it's interesting to see what's happened (so far, at least) with the domain names that have become available post-URS suspension.

This chart summarizes what I found:

URS suspensions
URS suspensions

And here's what it means:

  • The bulk (27) of the previously suspended domain names are not currently registered to anyone. In other words, after the URS suspensions expired and the domain names became available for registration (to anyone) again, no one has chosen to pick them up. On the one hand, this should be encouraging to the trademark owners who filed the URS complaints in the first place, because it shows that a suspended domain name is not necessarily an obvious target to be picked up by anyone at the first available opportunity. On the other hand, any of these domain names could be registered by anyone at any time, so they still pose a future risk (again) to the trademark owners who once got them suspended.
  • Many (14) of the previously suspended domain names are now on the "Donuts Protected Marks List," a program offered by one of the largest new registry operators that allows trademark owners to pay a fee to prevent their trademarks from being registered in the Donuts-operated top-level domains. Presumably, the trademark owners who previously filed URS complaints for these domain names later learned about the DPML or decided that the process (and fee) was worthwhile.
  • Four of the previously suspended domain names are now registered or controlled by the relevant trademark owner, that is, the complainant who filed the URS complaint in the first place. This would seem to indicate that the trademark owner found some value in the disputed domain name or, at least, wanted to keep the domain name off the market to avoid potential future problems (necessitating another URS complaint, a UDRP complaint, or other action), and the trademark owner was able to register the domain name before anyone else.
  • Three of the previously suspended domain names have been registered by someone other than the trademark owner. Though small (at least as of now), this is perhaps the most interesting -- and troubling -- status. In other words, even after winning a URS proceeding and getting a domain name suspended, a trademark owner is now facing its original problem once again. The domain name is no longer suspended and instead is in the hands of a third party who may use it in a manner that causes headaches for the trademark owner. As a result, the trademark owner may encounter a sense of deja vu and be in the position of incurring the time and expense of filing yet another URS complaint (or taking other legal action) for the same domain name.

So, what are the lessons to be learned? While it's still very early, one thing is clear: The URS is truly a temporary or interim solution and is not a cure-all for cybersquatting in the new generic top-level domains (gTLDs). Unless a trademark owner takes some action post-suspension, a previously suspended domain name may rise again.

The GigaLaw Firm helps companies of all sizes protect their brands online, using domain name dispute policies – such as the Uniform Domain Name Dispute Resolution Policy (UDRP) – and other legal tools available to copyright and trademark owners on the Internet.