PREVAILING IN CONTESTED AND CLOSE CASES
by Mr. Gerald M. Levine
(The below article has been adapted from Mr. Levine’s presentation at the CIIDRC Conference on October 18, 2024 in Vancouver, Canada)
Some Reflections on the 5% of Complaints Dismissed in UDRP Proceedings
My task for the next 25 minutes is to define the parameters of prevailing in contested and close cases and to sketch out the expectations of proof necessary for mark owners to establish their rights to disputed domain names. To do this I have to distinguish clear cases of cybersquatting from contested and close cases. This must start with the proposition underscored by ICANN in its Second Staff Report of October 1999 that the Policy was “intended only for the relatively narrow class of cases of ‘abusive registrations’” which panelists across the spectrum of dispute resolution providers have interpreted to mean clear cases of cybersquatting.
Now we know from experience that there are never just two classes of anything but rather a spread along a continuum and that to prevail in depriving a domain name holder of its registration the mark owner must adduce sufficient evidence to cause the pan in the scales of justice to rise from equipoise in its favor. This happens in a great majority of cases, but as the circumstances of the dispute become fuzzier or on a shifted burden the respondent rebuts the allegation of cybersquatting, the complainant and fail because at all times it has the burden of proof.
At what point precisely along this continuum can it be said that the mark owner has failed of proof may be difficult to say, but it can be said that if at any point there is uncertainty of outcome that signals that scales of justice favors the domain name holder. And for this Doug Isenberg’s talk on statistics helps us out. [My talk was preceded by other presenters, Doug Isenberg, Steve Levy, Zak Muskovitch, Michael Erdle and Richard Levy].
We learn that approximately 95 disputes of every hundred complaints are granted, so we can take it as a given that these are the clear cases referred to in the Second Staff Report. Except for occasional errors that unfairly deprive respondents of their domain names (a discussion for another time) we would not call any of the 95 cases contested or close.
In fact, in the great majority of these 95 cases, respondents default in appearance for the very obvious and simple reason that they have no meritorious defense. So that if we’re looking for contested and close cases we will have to give close attention to the 5% of complaints that are dismissed. It comes down to proof. It is not sufficient that a domain name corresponds to a mark; the complainant must proof that the respondent acquired the domain name with the intention of taking advantage of the value of that mark and very often it comes down to the strength or weakness of the mark (its reputation in the market is a factor) and the linguistic composition of the domain name (the commonness of the name is a factor).
The five of every hundred respondents who prevail in UDRP proceedings include a mixed assortment of new businesses or old businesses either rebranding themselves or introducing new brands, critics exercising free speech rights, gripers, noncommercial users who have acquired disputed domain names as email addresses or ftp transfers, and (not to be left out of the roll call) investors operating in the vigorous secondary market that we learned about so convincingly from Zak Muscovitch.
Prevailing for this 5% comes down to two eventualities. The first is either the complainant’s ignorance as to the subject matter jurisdiction of the UDRP or the incompetence of the complainant, most likely represented by counsel filing a complaint that has no chance of success. These include the many ways in which mark owners can lose a case that Steve Levy brought to our attention in his discussion.
So that in talking about competence as Steve does, it comes down firstly to having a working familiarity with the established law of cybersquatting as it has developed through a vast accumulation of published and easily accessible decisions. In other words, it is not enough to have read the Policy as its provisions are written as guidance to emerging law that results from panelists engaging with its text. But the Policy is not the law in itself.
The second reason and by far the more interesting is the competence of respondents and very often their representatives in rebutting the claims of cybersquatting and demonstrating that their clients’ registrations are lawful. This is the very opposite of the incompetence that Steve discussed in the many ways to lose. In fact, it may even be suggested that the rise of the secondary market owes much to the professionalism of representatives in defining domain name holder’s rights.
A minor category of unclear cases, of course, is certainly those dismissed with leave to replead that Richard Levy and Michael Erdle brought to our attention, although in this class even if the mark owner files a new complaint it is as likely to fail again as to prevail and those who do prevail must have new facts that only come to light after the first dismissal. Unclear cases also include those with dissenting views. In some cases, the dissents herald the future direction of the law, <crew.com> for example: “The majority, in an effort to stop a practice that it seems to take upon itself to believe is an unstated purpose of the ICANN Policy, has completely over-stepped its mandate as arbitrators.”
More generally, unclear cases are those in which the complainant has failed to prove its contentions either that the respondent lacks rights or legitimate interests in the disputed domain name or registered and is using it in bad faith. Except where a complaint is dismissed without prejudice, complainants have only one shot at proving cybersquatting which makes it imperative that they know what has been termed the “precedents of the Policy” and the jurisprudence that has developed in applying its principles.
Even though UDRP awards are not binding as awards are in commercial arbitration, and neither party is denied access to court litigation following an adverse award, nevertheless for 99.999% of disputants the proceeding might just as well be a court of last resort as it actually is under UK law and other national regimes despite the right embodied in Paragraph 4(k) of the Policy that grants respondent the right to challenge the award.
In fact, thinking of the UDRP as a court of last resort is precisely the right attitude because as I will detail unless parties and their representatives treat it as such, that it is their only chance, they are likely to misunderstand the applicable law and underestimate the evidentiary demands of the Policy.
I will go one step further. If one is going to arbitrate or litigate a dispute, it stands to reason that the complainant and certainly its legal counsel should know what the law is. But when it comes to the UDRP what was the law before it cohered into a jurisprudence?
In answering this question, I take a Panel’s eye view of the matter. \
When ICANN implemented the UDRP 25 years ago there was no established law anywhere for the suppression of cybersquatting, but very rapidly panelists appointed by dispute resolution providers in Canada, the United States, and foremost the World Intellectual Property Organization in Switzerland began developing a working jurisprudence which, as I will recount, dictates the elements of the burden necessary to prove or rebut a claim of cybersquatting. In contested and close cases, panelists’ decisions are based on the persuasiveness of arguments which includes citation to authoritative decisions.
You will recall that the World Wide Web was introduced in 1993 and cybersquatting as a new coinage began circulating shortly thereafter with numerous complaints of violation of trademark rights. This new coinage was elevated to an official status in court cases beginning in 1996. Except for a handful of cases between 1995 and 1999 when US courts began grappling with the new tort, there were no guiding principles to apply to claims of cybersquatting.
So when ICANN implemented the UDRP in 1999 the first panelists were essentially on their own to tackle the enormously difficult task of crafting new law. As at the beginning there were no agreed upon views, Panelists’ primary task was to set out their constructions of the Policy’s demand for proof and we have to ask: What were the sources of their inspiration?
First, of course, there was the aspirational dictates of a policy whose terms were yet to be construed. As I said, the bare language of the Policy itself is not the law. Even in advance of receiving a copy of the Policy which they were being tasked to apply, they would have been familiar with WIPO’s Final Report and the US panelists would certainly have been acquainted with the few pre-2000 court decisions.
Fundamentally, though, where there is a code which is what the UDRP is, panelists’ sometimes divergent constructions of the Policy’s text began coalescing into agreement and over rapid time which I’ll explain in a moment these agreements came to be seen as authoritative statements of the law. However, in January 2000 there was no law for panelists to draw on. It takes a good deal of resourcefulness to discover what the text of a code actually means in particular circumstances. I’ll pick out a few examples to illustrate how these first panelists managed their decisions.
The domain name in the first case submitted December 1999 and decided in January 2000 World Wrestling Foundation Entertainment (the only case for 1999) was identical to a highly distinctive trademark, and after acquiring it the Respondent offered to sell it to the complainant.
This is obviously a clear violation of subparagraphs 4(b)(i) and 4(b)(iv). And the Panel did not conclude otherwise, but he was also confronted with a conundrum having to with the meaning of the word “use.” It is generally accepted as a linguistic fact that use is an act in the process of performance, but if the domain name is being held passively does that also count as use?
Only if passive holding can be defined as use could a respondent be held liable for cybersquatting. The first Panel fell back on recent law in US courts that determined that the concept of use could be established by the domain registrant “trading on the value of the mark.” This was a good start and certainly good enough in the first case for holding that respondent was a cybersquatter, but it was not good enough as a guiding principle.
The “use” conundrum was then solved by the Panel appointed to the fourth dispute (0003 of 2000), the much cited case of Telstra v. Marshmallows. The Panel in that case reasoned first of all that “[o]ccupying an entry in the [Domain Name System] is ‘use’ [. . .] [because] it has a blocking function.” It followed this declaration by formulating what has become a core principle of the UDRP.
In a case of passive holding, where “it is not possible to conceive of any plausible actual or contemplated active use of the domain name by the Respondent that would not be illegitimate” Respondents will be liable for registering and using the disputed domain name in bad faith.
The Panel in the sixth decided case (0005 of 2000) , Telaxis v. William E. Winkle (pro se) dismissed the complaint because the mark postdated the registration of the domain name. And the seventeenth decided case involving the dictionary word “Allocation” Allocation Network v. Stephen Gregory (represented by counsel) was also dismissed as generic, even though at the same time it also functioned as a trademark.
The reasoning in these two cases began establishing parameters for the outer limits of protecting trademarks: their use in commence must precede the registration of the domain name and the linguistic composition of the mark must be distinctive (not simply because the complainant owns a registered mark) but distinctiveness in a marketplace sense. Also taken in consideration is the improbability given the linguistic composition that the respondent could have known of the complainant and acquired the domain name with the intention of targeting the complainant.
I mention these opening dramas of the UDRP (and they are not alone) to underscore the hard lifting of the first generation of panelists in formulating principles in determining cybersquatting disputes. Nominative use as fair (drawn from both US and EU law) was almost immediately accepted but there was controversy that still exists as to whether, for example, free speech is protected if the domain name is identical to the mark. The concept of impersonation as a basis for finding bad faith registration and use is not forever fixed but applies in appropriate circumstances. Not all panelists agree that impersonation by itself is a paramount factor in determining rights.
In addition to separating the wheat from the chaff in defining protected marks and distinguishing them from inherently valuable domain names the first generation of panelists also explained the reasons for denying contested and close disputes which in many instances included drawing negative inferences from the absence of evidence.
In Grove Broadcasting that Richard and Michael mentioned (as one of two foundation decisions for setting out the conditions for refiling a complaint), the Panel noted that “It is not surprising that Panelists are developing a jurisprudence on the Policy on a case-by-case basis by offering interpretations of the Policy as unusual situations occur.”
At the beginning there was necessarily a good deal of testing of different views and formulations. For example, A few months later, the Panel in Creo Products found the Grove formulation imperfect and offered its own view to account for different circumstances. Both views are relevant and authoritative given the different circumstances of the cases, and it is owing to these and other reasoned decisions that the corps of panelists could readily agree and adopt as consistent with the guidance of the Policy.
This development has much in common with the common law tradition. Ordinarily, new law develops slowly over a long period of time. This is because disputes that raise new juridical issues do not appear in great profusion. But in the case of the UDRP, the development of the law was accelerated owing to the vast number of disputes and the great variety of issues panelists were quickly called upon to decide. At this early point no one (and this includes panelists) was secure as to the meaning of the UDRP’s provisions as the panelists had yet to declare what they were.
And of great importance to us in understanding the proof demands of the UDRP, the first generation of panelists quickly produced a wide range of authoritative decisions which in turn stimulated the rise of a functioning jurisprudence.
At each of three stages in 2005, 2011 and 2017 WIPO published accounts of this development of WIPO Panel Views as it evolved into a jurisprudence. We may argue about these Overviews and whether the 2017 edition truly reflects the universe of panelists’ views appointed by other dispute resolution providers. But it is plain that close to 100% of panelist decisions from every provider adhere to the law as it is encapsulated in the 2017 edition of the Overview.
If we examine the record carefully, which includes over 100,000 decisions, we will find that in only a minuscule percentage of cases do panelists go their own way and depart from prevailing law as it is now expressed in the 2017 Overview. At the same time that this evolution of disparate views was coalescing into a jurisprudence there arose corresponding expectations on the part of panelists as to the evidence necessary for the parties to submit in proof of parties’ claims and rebuttals.
It follows that where there are expectations the party who satisfies them must prevail. This expectation of parties delivering what they promise in their opening statements is illustrated in a large number of cases. In Pantaloon Retail a 2010 case the Panel reminds the parties, and by extension all future parties, that “Whether [a professional re-seller of domain names is ipso facto liable for registering a domain name corresponding to a mark] is justified may be a matter for debate, but in the opinion of the Panel there is a strong body of precedent which, though not binding, is strongly persuasive [that liability only attaches on proof of bad faith registration and use].”
At the same time, other Panelists were expressing exasperation of complainants’ submissions as did the Panel in Pick Enterprises, a 2012 decision, when it admonished the complainant for not being familiar with “clear Policy precedent” and sanctioned it for “the dearth of evidence supporting the Complaint.”
Exasperation is less expressed about respondents who register domain names and argue that they are inherently valuable and noninfringing and then fail the expectation of proof that they have a right of legitimate interest in the disputed domain name or that they registered and are using it lawfully.
An illustration of this is a 2021 case in which Doug Isenberg as a member of the Panel concluded that it was “bad faith use to rely on the pretext of criticism to inflate the commercial value of domain names.” Euromaster Services v. Privacy Hero involving the <euromaster.sucks>. “Sucks” and other negative qualifiers do not pass muster if in the totality of evidence the respondents fail to meet the shifted burdens of proof. [Cases cited in which fellow presenters were either members of the Panel or Solo or Representatives reflect the law as it is currently applied across all domain name providers].
The 5% of disputes that result in dismissal of complaints are either not clear cases of cybersquatting or clearly cases in which mark owners have overreached their statutory rights. In a small percentage of these cases in which the alleged mark postdates the registration of the disputed domain name, it should be clear that the UDRP lacks subject matter jurisdiction to resolve this category of dispute and these cases are summarily dismissed.
In the first few years of the UDRP we find that the number of dismissals was twice and sometimes three times what it is today. In the first full year of the UDRP the percentage of denials was 14.11%; and in 2001 it reached a high of 15.75%.
Following those two years the percentage slowly declined, sometimes to as low as 3 to 4% and although we are taking 5% as a benchmark, this year it may even be lower. It is presently standing at 2.47%. I am taking these numbers from <dndisputes.com> which tracks WIPO cases and assuming that the results are similar with the other providers.
There should be no mystery for the decline in the number of unclear cases and an increase in the number of clear cases. I think the reason is that it took a number of years for parties to adjust to the emerging law; but even more pertinently, the parties adjusted to the evidentiary demands that emerged from the constructions of the Policy. What I mean by this is that mark owners came to the realization that there were limits to trademark protection depending on their linguistic compositions.
This development resulted in a decline of such complaints and correspondingly domain name holders became more savvy of their rights to common words, descriptive phrases and strings of alphabetical letters. This more refined understanding by both parties had the result of reducing the number of unclear cases and corresponding increase in the number of RDNH awards.
What do panelists look for? First of all, they will take note of who the adversaries are and the strength of complainants’ marks measured by their documented reputation in the market. They also take note of the linguistic compositions of the marks and the domain names. Dictionary words, short strings of letters that may be acronyms to a complainant’s mark and only arbitrary assemblages of letters to domain name registrants, and descriptive phrases cannot be owned to the exclusion of others using the same terms in a noninfringing manner. If there is proof that the mark is composed of words that are in common use by others it stands to reason that it is not exclusively associated with the complainant and unless there is evidence establishing bad faith registration and use, the complaint must be dismissed.
At the most elemental level, complainants must be trademark owners whose rights accrued before the registrations of the disputed domain names. While complainants whose marks postdate the registrations of the disputed domain names have standing to maintain a UDRP proceeding, they have no actionable claim.
Thus, Steve Levy writing in his capacity as a panelist tells us in Vacation Pig, a 2022 case, that it “is not relevant [that the domain name predated the complainant’s first use of its mark] as this element considers only whether Complainant has rights in the asserted mark and whether the disputed domain name is identical or confusingly similar to the mark.” This first element, then, is only good for establishing standing but in the case of a mark that postdates the domain name it is self-evident that it could not have been registered in bad faith.
Even if the disputed domain name corresponds with the mark, complainants must also have a claim for cybersquatting. Doug Isenberg again writing in his capacity as a Panelist explains the demand for proof in Parcelhub Limited v. Scott Dylan that the
Complainant has provided no evidence that Respondent lacks rights or legitimate interests . . . .
Dismissing a complaint involving a business dispute is yet another factor. Steve and Doug were panelists in a 3-member Panel with Charles Kuechenmeister as Chair that dismissed a complaint because the case arose “out of the dissolution of a previous business relationship.” The Panel held that “As such it is outside the scope of the UDRP.” [Kostel, LLC and Constantin Calugher v. mohamad atef, Claim Number: FA2405002100428 (Forum July 12, 2024)].
In another very recent case involving parties located respectively in Canada and the United Arab Emirates in which Zak represented the respondent, the 3-member Panel dismissed the case precisely because the claim did not belong in a UDRP proceeding. 1141931 Ontario Inc. dba Inkas Group v. Mr. Ulugbekon. And it also sanctioned the complainant because it should have known that it could not succeed on evidence that simply established a decade long dispute over the use of domain names for businesses operating under the same name and in the same industry. The complainant was represented by counsel which is also a factor in determining the appropriateness of an RDNH sanction.
Certain conduct is condemned as quintessential cybersquatting when the respondent’s evident intention in acquiring the disputed domain name is to take advantage of the mark. This contrasts with acquisitions by businesses and investors acquiring domain names that have no particular association with the complainant and may be lawfully used by others.
So, for example, as we earlier saw with “Allocation”, trademark owners cannot generally protect common words such as “Integrity” (decided by a 3 member Panel including Doug) or “Revued” in the French spelling of the word (Steve appointed as a solo panelist in a 2023 case). This also applies to family names and descriptive phrases. Examples include the family name “Alimonti” in which a 3-member Panel that Doug had a hand in, dismissed the complaint. Zak incidentally represented the investor respondent in that case, Alimonti v. Domain Manager.
And in another recent case Doug this time acting as representative for the Respondent successfully defended <tobias.com> not because it is a common name which of course it is but because the Respondent acquired the domain name together with an operating business by that name. And because it is a common name it was irrelevant that the mark predated the acquisition of the business and domain name.
An illustration of a descriptive phrase is “paragon security” in which Zak Muskovitch was a member of the Panel with Michael Erdle and Peter Müller as Chair. The phrase is simply too common for anyone to have exclusive rights to it. This applies also to another common phrase <cronosgroup.com> in which Doug and I were on a Panel with Alan Limbury that dismissed the complaint for a number of reasons. First, the domain name was originally created before the Complainant’s first use of its mark in commerce; and second, the name is also used by other merchants to market their own noninfringing goods and services. Both of these cases were filed with our host, CIIDRC.
There are simply too many issues to give you a full accounting of contested and close cases so my takeaway in bringing my talk to conclusion is this: as the strength of a mark that predates the registration of the domain name ascends in reputation and marketplace presence, the likelier it is that the mark owner will have an actionable claim. And oppositely, the more common the mark and the less distinctive it is in the market measured by its timing and reputation, the likelier the respondent will have a meritorious defense.
Thank you