Trademark Clearinghouse Lets Profit Dictate Policy

 

Deloitte, the ICANN-appointed operator of the Trademark Clearinghouse (TMCH), has unilaterally decided that the complainant services side of the Trademark Claims Service will operate for an indefinite period, rather than the required 90-day period set by the consensus agreement of ICANN stakeholders regarding the implementation of new gTLD rights protection measures (RPMs).

This decision is strikingly wrong and extremely worrisome for multiple reasons:

1. It was made without community consultation or ICANN public approval and announced in a completely non-transparent manner (in fact, it wasn’t really announced at all, but leaked to a few domain industry publications).

2. It effectively encourages rights holders to file UDRP or URS actions against innocent and uninformed registrants who received no warning that their new gTLD domain name matched an entry in the TMCH database.

3. It sets a precedent that the CEO of the TMCH says may be the basis for offering a similar and possibly expanded service covering domain registrations at .Com and other incumbent gTLDs – possibly as early as Spring 2014!

 

 

The first big problem is that what we have learned about this sea change has not come in the form of an explanatory press release from the TMCH’s own News service[i] or from ICANN’s general[ii] or new gTLDs[iii] Announcements pages. Instead, the select facts we have learned about this extraordinary decision comes from recent stories at Domain Incite[iv] (DI) and Domain Name Wire[v] (DNW). While those are fine publications, selectively leaking a decision of this magnitude through back channels doesn’t even begin to meet ICANN’s self-proclaimed commitment to transparency.

Further, while implementation of the RPMs has generally been regarded within ICANN as a sensitive matter, the details of which required community consensus, Deloitte made this decision without any prior community consultation.

Their response to DNW on this point is hardly reassuring:

Domain Name Wire: Who made the decision to extend the service? Was any approval from ICANN required?

The Clearinghouse is committed to offering additional, value-added services to owners of recorded marks in the TMCH database.

This will be done in consultation the broader ICANN community wherever appropriate and, where necessary, with ICANN’s approval prior to launch. (Emphasis added)

So we can only presume that Deloitte consulted with itself and decided that it was inappropriate to engage in any broader consultation with the ICANN community, and that it was unnecessary to get pre-approval from ICANN. We’d suggest that Deloitte needs a better and more objective consultant.

The second big problem is that it tosses aside the balanced community consensus approach of the existing Trademark Claims Notice procedure and establishes a completely unbalanced regime starting on the 91^st day after launch of each new gTLD, whereby innocent registrants can be regarded as fish-in-a-barrel targets by trademark owners. According to ICANN’s own TMCH FAQ, “The verified data in the Trademark Clearinghouse will be used to support both Trademark Claims and Sunrise Services, required in all new gTLDs.”[vi] Well, the Sunrise service allows a trademark owner to register its marks in a new gTLD for a period of at least thirty days before domain registrations open to the general public, and the Claims period runs for the first 90 days of general registration – neither aspect was meant to be indefinite.

According to ICANN’s own explanation of the Trademark Claims procedure:

During the Trademark Claims period, anyone attempting to register a domain name matching a mark that is recorded in the Trademark Clearinghouse will receive a notification displaying the relevant mark information.

If the notified party goes ahead and registers the domain name, the Trademark Clearinghouse will send a notice to those trademark holders with matching records in the Clearinghouse, informing them that someone has registered the domain name.

What Deloitte has now decided to do is to indefinitely extend the second part – the notice to trademark holders – while terminating any notification to innocent registrants that they may unwittingly be infringing a mark registered in the TMCH and thereby be setting themselves up as the target of a subsequent UDRP, URS, or trademark litigation action.  That one-sided approach shreds the balance set in the current Claims procedure and, once widely known, may depress registrations at new gTLDs.

Lest anyone think that ICA is suggesting that the Claims procedure be made indefinite, that is not our position and should not even be considered until existing problems are fixed. As we pointed out to ICANN (in a thoughtful comment letter that staff ignored) the current Trademark Claims Notice received by potential registrants has multiple fundamental flaws[vii].

Further, as we recently stated at the Public Forum in Buenos Aires:

We will be wa
tching to see how receipt of that flawed Claims Notice bears on the question of whether a domain registration was made in bad faith, which will arise in both URS and UDRP actions filed against domains at new gTLDs. That will be up to the arbitration providers, who may well reach different conclusions.[viii]

On that critical point, we were hardly encouraged when this past week ICANN made clear that it intends to shirk any responsibility to provide guidance to UDRP and URS arbitration providers:

ICANN said [it]…has no opinion on the trademark notice question…On the trademark claim notice, ICANN said it’s “not a legal adjudication body and has no view on the weight that might be given to a registrant’s acknowledgement of a Claims notice in a UDRP or other proceeding.” Under the UDRP, the panel makes a determination based on the specific facts and circumstances, and, as these will vary, the consideration of the panel may differ accordingly, it said in a statement. (Emphasis added)[ix]

While it’s true that ICANN is not a “legal adjudication body” it did establish both the UDRP and URS policies, and it does accredit the UDRP and URS providers, so one would think that it might be willing to provide some view on the critical issue of the weight to be given to receipt of a Claims Notice in a subsequent arbitration. But given that it has so far been been unwilling to sort out the widespread confusion in and dissatisfaction with new gTLD top level objection procedures that have caused broad outcry among applicants who forked out $185,000 application fees, it is sadly unsurprising that it’s equally unwilling to provide clarity on an issue of critical import to the registrants on whom the entire future success of the new gTLD program depends.

The third and perhaps biggest problem is that even though the TMCH is an RPM created for use exclusively at new gTLDs, Deloitte apparently believes it has carte blanche authority to unilaterally revise the scope of the registrations that generate alerts – and to use the TMCH database to generate alerts for new registrations in .Com and other incumbent gTLDs!

According to a December 11^th DI story:

There are a few initial limitations with the new TMCH service such that its registrar agents may not find it particularly labor-saving.

First, only domains that exactly match labels in the Clearinghouse will generate alerts.

By contrast, brand-monitoring registrars typically generate alerts when the trademark is a substring of the domain. To carry on doing this they’ll need to carry on monitoring zone files anyway.

Second, the TMCH service only currently covers new gTLDs applied for in the 2012 round. It doesn’t cover .com, for example, or any other legacy gTLD.

[World Wide Project Partner Jan] Corstens said both of these limitations may be addressed in future releases. The first Trademark Claims period isn’t due to end until March, so there’s time to make changes, he said. (Emphasis added)

Let’s be very clear about this. The decision that only exact matches of marks registered in the TMCH database would generate a Claims Notice to a registrant, and a follow-up alert to a rights holder if a registration was completed, was a critical and long-debated aspect of this RPM and reflects the ICANN community consensus. Given the adoption of the controversial Trademark-Plus-Fifty proposal, those actions will be also triggered by exact matches of previously abused trademark variations. In our view, Deloitte has no legitimate latitude to discard those decisions and start generating Notices or alerts based upon domain registrations that fall outside those specific categories.

Second, the GNSO Council is on record in a December 2011 Resolution that any consideration of UDRP reforms would commence no sooner than eighteen months after the launch of new gTLDs, and that consideration of the effectiveness of the new RPMs – and the question of whether they should be adopted for incumbent gTLDs – would be addressed in that process. Again, in our view, any attempt by Deloitte to make TMCH-based services available for domain registrations at incumbent gTLDs in advance of GNSO consideration – in a consensus process which cannot even commence until Spring 2015 — would be a gross intrusion upon the GNSO’s policymaking authority and an absolutely unacceptable undermining of the multistakeholder process. The entire notion is as ridiculous and offensive as suggesting that NAF or the ADNDRC could suddenly decide on their own to start offering URS arbitrations for .Com domain registrations.         

The motivating factor for Deloitte’s decision seems to be that only a paltry 20,000 trademarks out of the 24 million in force marks that WIPO says existed in 2012[x] have been entered into the TMCH database. This squares with what we have heard from our trademark attorney and brand protection colleagues; namely, that most big brand companies are taking a skeptical and judicious approach to TMCH registrations, primarily entering unique and not generic brands, and generally avoiding the registration of “previously abused” variations that is allowed under the “Trademark-Plus-Fifty” decision.

Indeed, Deloitte concedes that generating additional registrations is a prime motivator for their decision. As reported in DI, “He [Corstens] added that he hopes the extension of Claims will lead to an uptick in the number of trademarks being registered in the TMCH.” And, as DNW speculated, “Why is the TMCH doing this? It may be to get more people to pay to register their marks with the service. But it could also be to get them to pay for longer Clearinghouse registrations.”  TMCH registrations are currently available for 1, 3, or 5 year terms, and we suspect that right now the majority fall on the short end of the scale.

Deloitte, which was appointed by ICANN to operate the Clearinghouse Verification Services, may be justifiably concerned that this low level of TMCH utilization will cut into anticipated profits (or even result in losses), but this hardly gives them the right to do what they have done, much less in the non-transparent and non-consultative manner they have chosen to take.

Third-party vendor profit considerations should never trump ICANN consensus policy an
d implementation decisions. Given ICANN’s verbal commitment to transparency, multi-stakeholderism, and registrant rights, it should immediately commence an investigation into this unilateral decision and determine whether it is proper from both a procedural and substantive perspective. That inquiry should be transparent and its conclusion should be published with adequate explanation.

We know that other parties involved in the development of the RPMs share similar concerns and will be communicating them to ICANN. We’ll be watching to see if ICANN steps up to the plate or keeps its head in the sand.