Cybersquatting and the UDRP

Recently, I was a guest lecturer at the trademark law class at the University of Maine School of Law, invited by my colleague, Rita Heimes, director of the Maine Center for Law and Innovation.  I always enjoy an opportunity to discuss trademark law in an academic setting, and it is invigorating to meet aspiring young trademark lawyers.

The topic for my talk was the Uniform Dispute Resolution Policy (“UDRP”). For those unfamiliar with this policy, it helps protect businesses against “cybersquatting.”  For instance, if the owner of the Acme brand discovers that the domain name "acme.com" is registered by someone else, and is being used in bad faith, the UDRP is the most effective tool available for Acme to recover that domain name.  Prior to the creation of the UDRP, the prospects for success in a domain name dispute were uncertain, and the costs were potentially exorbitant.  In the mid to late 1990's, when widespread use of the Internet was first becoming prevalent, it was unclear whether existing trademark doctrine enabled the recovery of a domain name in this manner, and in any event, the only way to find out was to launch an expensive and time consuming lawsuit.  This time period was typified by a “gold rush” for ownership of domain names and many famous brand owners discovered to their dismay that their best option for securing the all-important “.com” domain name was to pay millions of dollars to the prescient person who had beaten them to the punch.

The UDRP was introduced at the insistence of brand owners by the Internet Corporation for Assigned Names and Numbers (“ICANN”), the entity that governs the allocation of Internet "real estate," in order to address the gap left by preexisting law.  Any person registering a domain name must consent to participation in the UDRP’s form of alternative dispute resolution, and agree to abide by the dispute resolution’s results. Typical costs to recover a domain name using this process are between $1500 and $3000, the success rate is very high (around 85%), and the process can be completed in a month or less.  The UDRP has been around for more than 10 years and has been used very effectively by brand owners to recover millions of improperly registered or used domain names.  Accordingly, it no longer qualifies for "cutting edge" status, although it is surprising how many brand owners remain unfamiliar with it.

In the course of preparing my remarks, however, I also had occasion to delve into some of the remaining challenges in this area, and to explore recent noteworthy developments. 

For example, the increasingly widespread use of privacy or proxy shields in connection with domain name ownership threatens a number of important policy interests, and complicates the ability to police those who are habitual cybersquatters.  Many persons who register domain names now do so through third parties who hold the domain names essentially in trust, but have no real control over content or other substantive behavior that occurs on the website to which the domain name resolves.  Not surprisingly, this makes it difficult for those who are injured by the content appearing on the website to get access to the real party in interest.  In the cybersquatting area, it can also complicate the ability to prove bad faith, since one accepted method of doing so is to provide evidence of a pattern of cybersquatting behavior by the individual respondent.

Another interesting development in the UDRP decisions also relates to the concept of bad faith.  In an increasing number of cases, UDRP panels are imposing upon cybersquatters an obligation to perform some due diligence in order to determine whether registration of a particular domain name infringes the rights of a third party.  If this trend gets traction in the UDRP world, it has the potential to expand significantly the scope of registrations that might be subject to a bad faith argument.

Finally, in an interesting U.S. District Court case arising out of an Anticybersquatting Consumer Protection Act (15 U.S.C. § 1125(d)) case, a judge has reaffirmed the rule that so-called "gripe sites" are protected under the First Amendment guarantee of free speech, and in most circumstances will not be subject to a claim of bad faith.  Although not a UDRP case, the reasoning is likely to be followed by UDRP panels, at least in the United States. In Career Agents Network v. careeragentsnetwork.biz, the court held that a site which has no commercial purpose, but merely contains commentary and criticism, is protected.  The essence of the court's holding is that there needs to be some profit motive on the part of the owner of the gripe site in order for the trademark owner to prevail.   This will no doubt be disappointing to brand owners,  as gripe sites can be at best an annoyance, and at worst a significant threat to brand loyalty.