Cybersquatters often exploit brand owners by demanding a large payment for a domain name that is similar to the brand owner’s trademark. Cybersquatters may also seek to profit from rerouting internet traffic intended for the brand owner’s website—to compete with the brand owner, to attract attention to different offerings, or to disrupt their competitor’s business.
Brand owners have various options available for dealing with cybersquatters. One of the most effective options is to use the Unform Domain Name Resolution Policy (or “UDRP”) incorporated into every domain name registration agreement. The UDRP is an alternative dispute resolution mechanism that allows the parties to present arguments and evidence in a very brief proceeding, limiting costs and time to a small fraction of those incurred in a typical lawsuit. But the UDRP is only effective in specific circumstances. This article addresses when a brand owner might consider using the UDRP and outlines the basics of UDRP proceedings.
The scope of UDRP proceedings is limited. It is not a forum to resolve typical claims of trademark infringement. It is not even a forum to resolve legitimate disputes over a domain name. It is a fast-tracked method of combating clear instances of abusive cybersquatting.
TO PREVAIL IN A UDRP ACTION, A COMPLAINANT MUST PROVE THREE ELEMENTS:
First, the complainant must demonstrate the domain name is confusingly similar to a trademark or service mark in which the complainant has rights. A federally registered trademark is prima facie evidence of this element, which evidence can be difficult to overcome in a UDRP proceeding. A complainant may rely on common law trademark rights as well, but it takes a good amount of evidence to demonstrate such rights.
Second, the complainant must show the domain-name registrant has no rights or legitimate interests in the domain name. In other words, there can be no realistic dispute as to whether the registrant has a legal right to use the mark or domain name. If the domain name appears to have been registered for purposes of operating a legitimate business, the registrant is in the clear—at least for purposes of UDRP proceedings (in that case, a lawsuit would be the appropriate forum to address the registrant’s infringing use of the domain name).
Third, the complainant must show the domain name was registered and is being used in bad faith. It must be both. If the registrant obtains the domain name in good faith and only later begins using it in bad faith (once they see the value in exploiting the mark), this will not satisfy the requirements of the UDRP.
There are various scenarios that demonstrate bad faith under the UDRP. One such scenario includes when the registrant registered the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name to the complainant brand owner. Notably, this does not include those in the business of buying and selling domain names. Another includes when the registrant registered the domain name to prevent the complainant brand owner from reflecting the mark in a corresponding domain name, if the registrant has engaged in a pattern of such conduct. Another scenario includes when the registrant registered the domain name primarily for the purpose of disrupting the business of a competitor. Yet another includes when the registrant has used the domain name in attempt to attract, for commercial gain, internet users to the registrant’s website, by creating a likelihood of confusion with the complainant’s mark. This scenario is the closest to trademark infringement, but the evidence must show the domain name was registered for the purpose of trading off the complainant brand owner’s goodwill—which can be a challenge without discovery. An example of this scenario would be where a registrant uses a domain name clearly emulating a well-known mark while offering unrelated goods or services (e.g., a misspelling of “Goldman Sachs” that resolves to an adult website).
The most common UDRP providers are The Forum (previously known as The National Arbitration Forum) and the World Intellectual Property Organization (WIPO). The UDRP process starts with the filing of a complaint, detailing the relevant facts and presenting supporting evidence. The registrant then files an answer, attaching its evidence. There is no discovery, no hearing, and no argument. UDRP proceedings are typically resolved by a single arbitrator, but either party may demand that the case be heard by a three-member panel. Generally, the arbitrator/panelists will issue a decision within 14 days of their appointment. Absent exceptional circumstances, the entire UDRP proceeding should conclude in less than 60 days.
A successful complainant can elect to obtain the subject domain name or have the domain name cancelled. After a decision is issued, the domain name registrar will implement the decision ten business days after it receives notice of the decision. The losing party can prevent the transfer and challenge the decision by filing a lawsuit within those ten days in the federal district court either where the defendant is located or where the domain name registrar or registry is located. Because it may be unclear where the defendant is located or because the defendant is located outside of the United States, it is common to file such lawsuits where the domain name registrar or registry is located. Federal courts in Arizona (home of several popular registrars, like GoDaddy and Namecheap) and Virginia (home of Verisign, the registry for most .com domain names) are frequent venues for such lawsuits.
With this abbreviated procedure, the UDRP offers a quick, cost-effective tool for brand owners to take on cybersquatters.
