Cybersquatting Remains on the Rise with further Risk to Trademarks from New Registration Practices
March 12, 2007
The number of cybersquatting disputes filed with the World Intellectual Property Organization (WIPO) in 2006 increased by 25% as compared to 2005. In a related development, the evolution of the domain name registration system is causing growing concern for trademark owners, in particular some of the effects of the use of computer software to automatically register expired domain names and their 'parking' on pay-per-click portal sites, the option to register names free-of-charge for a five-day 'tasting' period, the proliferation of new registrars, and the establishment of new generic Top Level Domains (gTLDs). The combined result of these developments is to create greater opportunities for the mass, often anonymous, registration of domain names without specific consideration of third-party intellectual property rights.
"While electronic commerce has flourished with the expansion of the Internet, recent developments in the domain name registration system have fostered practices which threaten the interests of trademark owners and cause consumer confusion. Practices such as 'domain name tasting' risk turning the domain name system into a mostly speculative market. Domain names used to be primarily specific identifiers of businesses and other Internet users, but many names nowadays are mere commodities for speculative gain," noted Mr. Francis Gurry, WIPO Deputy Director General, who oversees WIPO's dispute resolution work. "The rate at which domain names change hands and the difficulty to track such mass automated registrations challenge trademark owners in their pursuit of cybersquatters," he said. "With domain names becoming moving targets for rights holders, due consideration should be given to concrete policy responses," he added.
In 2006, a total of 1,823 (gTLDs and country code Top Level Domains (ccTLDs)) complaints alleging cybersquatting - the abusive registration as domain names of trademarks - were filed with WIPO's Arbitration and Mediation Center (Center), representing the highest number of cybersquatting cases handled by WIPO since the year 2000.
Since commencement in December 1999 of the Uniform Domain Name Dispute Resolution Policy (UDRP) - a quick and cost effective dispute resolution procedure - through December 2006, 10,177 UDRP or UDRP-based cases (gTLD and ccTLD) have been filed with the Center, covering 18,760 separate domain names.
When .info Sunrise, .biz STOP, .name ERDRP and .mobi Sunrise and Premium Name cases are added to these UDRP figures, the total number of cases comes to 25,815 (Annex 1). Due to the temporary applicability of these policies, the non-UDRP cases are received on a one-off basis. All of the .info and .biz cases were completed in 2006; of the .mobi cases, five Sunrise cases have been completed and 74 Premium Name cases were completed in 2006.
A total of 9,389 (97% of total cases) UDRP cases received by the Center have so far been resolved. Of the gTLD cases resolved, decisions have been rendered in 7,328 cases with some 84% of those cases ending with the transfer of the domain name to the complainant and approximately 16% being denied. 2,061 cases have terminated on other grounds, primarily on the basis of settlement agreements between parties transferring the domain name to the complainant (Annex 2).
Another development in 2006 was the filing of the 10,000th WIPO UDRP complaint. An American party (Sam Ash Music Corporation) filed a complaint against an individual from China who had registered the domain name <samash.mobi>. The language of the proceeding was Chinese and a WIPO panel decision transferring the name was notified in early February of 2007. In addition, the 25,000th WIPO domain name case under all policies (UDRP and 'Sunrise') was filed on August 19, 2006. The WIPO panelist ordered the transfer of the domain name <redlionhotels.com> to the trademark owner, the Red Lion Hotels chain.
The WIPO dispute resolution procedure served a wide range of users, ranging from well-known brands, to smaller enterprises and organizations, as well as individuals. They covered categories including luxury items, famous persons, entertainment, hospitality, sports, gambling, and pharmaceuticals. In addition, charitable organizations and educational institutions were involved.
A number of disputes relating to newly merged or collaborating corporations were also filed. Such merger cases suggest that cybersquatters tend to follow newsworthy events. This is also evident from the spate of cases involving the Tamiflu trademark filed at the height of international concern about an avian flu pandemic in 2006 in relation to such domain names as <ordertamiflunow.com>, <tamiflu-vaccine.com>, and <tamiflu.net>. The complainants were Swiss company F. Hoffmann-La Roche AG and its American subsidiary, the manufacturers of Tamiflu, an antiviral pharmaceutical preparation for the treatment and prevention of influenza. A total of 34 cases covering 64 domain names were filed with WIPO in 2006 which were related in some form to the Tamiflu trademark.
Hoffmann-La Roche have also filed UDRP complaints based on other trademarked products, such as Valium. Other pharmaceutical companies that have filed WIPO cases in the past include Pharmacia & Upjohn (in relation to Rogaine), American Home Products, McNeil Consumer Brands (Tylenol), Pfizer (Viagra), Merck, Sanofi-Aventis (Ambien), CVS Pharmacy, Lilly ICOS, Valeant, and Bayer.
Since registration of domain names in non-Roman scripts such as Arabic, Chinese, Cyrillic or Korean ("internationalized" domain names) became available a few years ago, the Center has received a total of 60 cases involving such names, of which eight were received in 2006. With the spreading of Internet connections and online commerce, the proportion of domain name disputes of this type is expected to increase in coming years.
Geographical Distribution of Parties
Though the geographical spread of named parties to WIPO UDRP cases (gTLD and ccTLD) reached 137 countries at the end of December 2006, the most frequently named party country both for complainants and for respondents continued to be the United States of America (USA). The most frequently named complainant countries in gTLD cases after the USA were France, United Kingdom, Germany, Spain, Switzerland, Italy, Canada, Australia, and Netherlands. The most named respondent countries after the USA were the UK, China, Republic of Korea, Canada, Spain, France, Australia, Italy, and Russia. A full overview of all countries involved is available at http://www.wipo.int/amc/en/domains/statistics/cumulative/countries.html.
Country-Code Top Level Domain Cases
The number of ccTLD registries which have designated WIPO to provide domain name dispute resolution services is 47. The full list of these countries is available at http://www.wipo.int/amc/en/domains/cctld. A new addition in 2006 was the .es (Spain) domain. Under the applicable regulations, established in consultation with the WIPO Center, a claimant must prove to a WIPO-appointed Spanish panelist that the registration or use of a .es name constitutes an infringement of intellectual property rights protected in Spain.
By December 2006, the Center had received 496 cases involving domain names registered in ccTLDs. Of these, 446 have been resolved, with 273 decisions in favor of the complainant, 52 decisions in favor of the respondent, 121 settlements between the parties, and 39 cases pending on December 31. (These ccTLD case statistics are limited to administrative procedures and do not include ccTLD cases that are administered under arbitration and mediation rules, such as those for the .nl ccTLD (Netherlands) and the .pl ccTLD (Poland).)
On January 17, 2006, international investment bank Morgan Stanley filed the first complaint under the WIPO-administered dispute resolution policy for .ae (United Arab Emirates). This case involved the domain name <morganstanley.ae>, held by an individual residing in Australia, and was settled between the parties.
.MOBI and Other New gTLDs
The new 'sponsored' gTLD <.mobi> was launched in May 2006 by the registry, Mobile Top Level Domain Ltd. (mTLD), as a domain "dedicated to delivering the Internet to mobile devices." As with all gTLDs, the UDRP applies to .mobi. In addition, two separate domain-specific procedures were created and administered by the WIPO Center at the request of and in collaboration with the registry.
The first special procedure applicable to .mobi consisted of the unprecedented Premium Name Trademark Application Rules for .MOBI. This mechanism enabled trademark owners to reclaim so-called Premium Names, the generic value of which had led the registry to reserve these for auction or other commercial allocation. During the Premium Name application period, which lasted from September 15 to October 13, 2006, the Center received 105 applications. In 2006, the Center completed the processing of 74 of these applications which were decided by WIPO panelists under special conditions relating to the registration and use of corresponding trademarks.
The second special procedure applicable to .mobi consisted of the .mobi Sunrise Challenge Policy, which allowed interested parties to challenge .mobi names inappropriately registered during a special registration period that had been reserved for trademark owners under the .MOBI Sunrise Registration Policy. During the challenge period, which lasted from August 28 to December 15, 2006, the Center received 18 challenges, five of which were processed in 2006.
On October 10, 2006, WIPO received the first UDRP complaint involving a name in the .mobi gTLD. The parties, both from the UK, disputed the name <screwfix.mobi>. A WIPO panel issued a transfer decision on December 12 ( http://www.wipo.int/amc/en/domains/decisions/html/2006/d2006-1309.html).
WIPO received its first UDRP case involving a name registered in the .travel gTLD on March 17, 2006, in relation to the name <downunder.travel>. A WIPO Panel denied the complaint ( http://www.wipo.int/amc/en/domains/decisions/html/2006/d2006-0344.html).
Due to the opportunities for cybersquatting in new domains and the profusion of registration and dispute resolution processes that have been offered in respect of such domains so far, the 2005 WIPO report 'New Generic Top-Level Domains: Intellectual Property Considerations' (available at http://www.wipo.int/amc/en/domains/reports/newgtld-ip/index.html) has noted the need for a uniform preventive process in the introductory phase of gTLDs; a standard Sunrise process would reduce confusion and offer time and cost benefits.
Developments in the Domain Name Registration System
The combined effect of developments such as: the use of 'Whois' privacy services for registrations; the growth in the number of professional domain name dealers and the volume of their activity; the use of computer software to automatically register expired domain names and their 'parking' on pay-per-click portal sites; the option to register names for free for a five-day 'tasting' period; the growth in the number of accredited registrars; and the establishment of new gTLDs, is to create greater opportunities for mass registration of domain names. Such registrations are often anonymously undertaken on a serial basis without particular attention to third-party intellectual property rights. Traditionally, cybersquatting involved the registration of domain names by individuals seeking to sell the 'squatted'domain name. Nowadays, 'domainers' derive income from the large-scale automated registration of domain names. They acquire domain name portfolios, buy and sell domain names, and park domain names, claiming a significant share of the well over 100 million domain names that are now registered.
There is a rapid growth of domain parking sites, on which links to other sites are organized and indexed. These links usually operate on a 'pay-per-click' basis with registrants and parking services sharing revenue generated by web traffic. This is fueling rapid growth in 'domaining' and registrar activities.
Domain name tasting is a practice in which a person or entity (who may be affiliated with a registrar) registers a domain name for a five-day grace period without payment of the registration fee, and parks it on a pay-per-click website monitored for revenue, whereupon the name is dropped or re-registered by a new registrant, thereby starting a new grace period. Only those domain names generating significant traffic are permanently registered. As a result of computer applications, tens of millions of domain names are temporarily registered on this basis each month.
Increasingly, service providers are offering Whois privacy services allowing domain name registrations to be made through a proxy registrant, which is often a registrar-related entity. One reason for such identity-shield developments is to avoid registrants receiving 'spam' as a result of their contact details being made publicly available on the Whois database. WIPO panel decisions are beginning to explore the practical implications for the UDRP of these developments, for example in terms of whether or not the privacy service discloses the identity of its client once the service has been alerted to concerns of trademark infringement. The fundamental assumption of the UDRP is that the formal respondent for case purposes is to be found in the applicable Whois database.
WIPO panels have generally held that for a domain name to be transferred under the UDRP, there needs to be some indication that the registration was made with the intention of taking advantage of the complainant-trademark owner's rights in that name. With regard to bulk buyers of domain names using automated registration processes, a WIPO panel decision issued in February 2006 found that failure to conduct prior checks for third-party rights in certain circumstances would represent 'willful blindness,' representing bad faith under the UDRP (Mobile Communications Services Inc. v. WebReg RN, WIPO Case No. D2005-1304, http://www.wipo.int/amc/en/domains/decisions/html/2005/d2005-1304.html; see also, Media General Communications, Inc. v. Rarenames, WebReg, WIPO Case No. D2006-0964, http://www.wipo.int/amc/en/domains/decisions/html/2006/d2006-0964.html). This is an example of how the application of the UDRP decision criteria must accommodate changing circumstances and new developments.
Background on UDRP
The UDRP, which was proposed by WIPO in 1999 and has become accepted as an international standard for resolving domain name disputes, is designed specifically to discourage and resolve the abusive registration of trademarks as domain names. Under the UDRP, a complainant must demonstrate that the disputed domain name is identical or confusingly similar to its trademark, that the respondent does not have a right or legitimate interest in the domain name and that the respondent registered and used the domain name in bad faith.
Disputes are decided by independent panelists drawn from the Center's list of 400 trademark specialists from over 50 countries. The domain name registration in question is frozen (suspended) during the proceedings. After carefully reviewing each case, panelists submit their decisions within a period of 14 days. If a panelist's decision to transfer a domain name is not challenged in court within a period of ten days, the registrar is legally bound to implement the panelist's decision.
All panel decisions are posted on the Center's web site. To facilitate access to the decisions, the Center also offers a unique online legal Index, which is proving a popular resource for WIPO parties and panelists in undertaking detailed jurisprudential research. The Center also offers an overview of broad decision trends, via the WIPO Overview of WIPO Panel Views on Selected UDRP Questions which distils thousands of UDRP cases handled by the Center. The Overview is an important instrument to help maintain the consistency of WIPO UDRP jurisprudence. It identifies common and important substantive and procedural questions and the views expressed in WIPO panel decisions on those questions, with reference to decisions that are considered representative of those views. The Overview is available at http://www.wipo.int/amc/en/domains/search/overview/index.html.
In addition to processing domain name disputes, the Center administers the WIPO Arbitration and WIPO Mediation Rules, which contract parties can designate for disputes that may arise out of any type of intellectual property transaction which they conclude. The Center's growing caseload includes licensing disputes in the area of patents (e.g. in biotech or medical technology), disputes concerning information technology, research and development issues, and cases in the area of entertainment. More information about this area of the Center's work is available at http://www.wipo.int/amc/en/center/background.html and at http://www.wipo.int/amc/en/center/caseload.html.
[Annexes [ PDF]]
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