Domain name disputes: does arbitration work?
Internet domain name disputes are still a relatively new area for companies in Hong Kong. Zoe Chan FCIS FCS, Solicitor, gives some advice on the hazards of getting arbitration awards in this area enforced.
One of the reasons businesses prefer arbitration proceedings over litigation in international contracts is the relative ease of the decision enforcement process. Yet, in reality, the situation is quite different when it comes to internet domain name disputes. This is because, over the years, the dispute resolution mechanism adopted by the Internet Corporation for Assigned Names and Numbers (ICANN) has become a rather ambiguous process, particularly regarding the enforcement of decisions based on the Uniform Domain Name Dispute Resolution Policy (UDRP).
This dispute resolution mechanism has been the target of criticism for some time, concerning biases in favour of trademark-holding complainants, inconsistent decisions in different cases with similar underlying findings and calls for revamping the very sluggish UDRP system with the quicker Uniform Rapid Suspension (URS) system. These criticisms, however, have failed to address the practical issue as to when decisions are actually enforced, in particular how fast the abused domain names can actually be transferred over to the winning party. Domain name disputes are still a relatively novel concept for the court systems of most countries and many arbitration cases have been left pending and not enforced long after a decision has been reached.
This article highlights a statistical study of over 1,491 UDRP decisions extracted from the Asian Domain Name Dispute Resolution Centre (ADNDRC), ICANN and other online resources. The ADNDRC is one of four leading institutes conducting UDRP dispute resolution in Asia. The research examined the parties’ relationships, the attributes of the enforcement agencies (that is, the domain registrars) and the status of the UDRP decisions – in particular whether they have been properly enforced in Asia.
The study aims to help:
• compliance professionals and brand agents prioritising their e-enforcement agendas
• lawyers submitting UDRP filings for their intellectual property case strategies
• investigators building risk and threat assessments for online assets, and
• corporations managing domain portfolios with in-house tools.
UDRP case backgrounds
UDRP arbitration is a mandatory and administrative process to combat cybersquatting. In addition to the parties’ right to litigate in local courts, the trademark domain name owners choose the ADNDRC to file a complaint based on the following UDRP grounds that:
1. the trademark owner owns a trademark (either registered or unregistered) that is the same or similar to the registered domain name
2. the respondent that registered the domain name has no legitimate right or interest in the domain name, and
3. the domain name was registered and used in bad faith.
Unless a losing respondent commences a lawsuit in the courts within 10 days of the decision, ICANN’s accredited registrars are supposed to cancel or transfer the disputed domain name according to the arbitral decision. The research reviewed all the 1,491 UDRP cases filed between 1990 and 2015 in the ADNDRC. The results show a high success rate for these cases – a total of 1,250 (83.8%) claims were found in favour of the complainants. The respondents did defend the claims and 0.3% of decisions were split. Eighty-nine decisions (6% of the total) were ruled in favour of the respondents. Due to court action or use of ADR to avoid the duplication of claims, 22 proceedings (1.5% of the total) were cancelled, while 117 cases were withdrawn before reaching a decision. Some 0.6% of claims are still pending a decision.
This study shows that the problem lies with the implementation of decisions by the enforcement agency. Despite a strict time frame imposed on the registrars to transfer the domain names to complainants, over 80% of the concerned registrars did not follow the UDRP policy to effect the transfer.
The inaction or undue delay of the registrars in enforcing ICANN decisions, shows that UDRP is not an effective means for resolving new Internet domain name disputes as an alternative to the Uniform Rapid Suspension (URS) system.
Unlike other overseas findings, the nationalities of the parties was not a main issue influencing the outcome of the UDRP decisions. There is no evidence to suggest a territorial favouritism or bias over the parties from a particular jurisdiction. Indeed, the difficulties of the registrars to effect a ‘legal lock’ and/ or ‘administrative lock’ on the disputed domain names was the key issue.
Problems faced by the domain name registrars
• Only 25% of domain registrations in Mainland China display the owners’ correct names and correspondence addresses. Often registrars do not have a direct communication link with registrants since proxy services hide their identity. Due to privacy and security concerns, registrars often do not receive a copy of proceedings’ documentation. As a result, registrars often take years to contact the parties to make the proper implementation of the lock or transfer of domain names.
• There are no mandated standards for registrars to verify the accuracy of domain information records. The inconsistent practices of different registrars has resulted in incomplete information. The domain names should be put into ‘registrar hold’ status by the registrar prior to the denial of transfer. The UDRP policy does not contain any provision addressing the necessity of paying renewal fees while a complaint is being adjudicated.
• There is a lack of legal sanction or penalty upon defaults in transfer. The registrars can only transfer domain names once the winning party has completed all means to secure the outcome of the UDRP decision. The registrars often have to wait for the prevailing party to get back to them before they can proceed with the transfer.
It is high time to introduce amendments to the current rules to ensure that registrars fulfil their contractual duties and statutory obligations. These include the duty to avoid all forms of delay. Further, the Registrar Accreditation Agreement, together with ICANN, should oblige registrars to ensure accuracy for registered domain names. Ranking of registrars’ standing is also recommended so that customers can make informed choices based on the service quality of the domain registrars. Sadly, registrars are often not acting upon the instructions of ICANN to update registrant contact data and effect domain name transfer.
Zoe Chan FCIS FCS, MCI Arab
SIDEBAR: Domain name disputes: quick facts
Domain name dispute decisions by the ADNDRC show that:
• UDRP (Uniform Domain Name Dispute Resolution Policy) decisions are ‘appealable’ in the appropriate courts. The UDRP is not a final binding decision.
• 18% of UDRP claims are based upon unregistered trademarks. The UDRP protects personal names as strongly as registered marks.
• Most UDRP registrars are domiciled in the US. The second largest population of registrars comes from Mainland China. The seniority of registrars affects the pace of UDRP enforcement actions. Careful choice of the registrars with good standing and reputation does quicken domain name transfer.
• Internet domain names have become a key factor affecting people’s lifestyles and economic development in Asia. Mainland China has emerged as one of the largest e-commerce giants – over 70% of claims are Chineseorientated.
• Internet domain name disputes commonly occur with similar multi-domain registrations in the following business fields:
• e-banking and finance
• e-commerce and customer protection
• online shopping for consumer goods and services
• social networking and information exchange via mobile/ electronic devices, and
• personal name and image rights.