Today at Namescon I had the pleasure of watching three of my esteemed colleagues, Nat Cohen of Telepathy, Inc., Jason Schaeffer of Esqwire.com, and Zak Muscovitch of DNAttorney.com, examine three of the most shocking UDRP decisions of 2016. These decisions involved overreaching trademark owners, extraterritorial trademark rights, and panelist conflict of interests. In listening to the panel’s explanation of these cases, however, it dawned on me that there is a simple way to fix the UDRP. These are my brief thoughts on how to provide a long-term solution to the problems that those within the domain industry see in the UDRP in advance of revisiting the Policy next year.

Most lawyers are, by their nature, pragmatists. That means that, if we can secure a win for our clients without subjecting them to additional legal or financial risk, we will. We aren’t paid to provide a coherent legal philosophy—we are paid to win. And, contrary to federal and state court, where fee-shifting statutes and sanctions protect against abuse, the UDRP provides no disincentive to overreaching, or even simply creative, attorneys.

Obviously, fee-shifting or sanctions under the UDRP would be ideal. If there was a financial risk to overreaching, those risks would be analyzed at the outset and both attorneys and their clients would be less likely to file suspect claims. And fee-shifting would provide attorneys with an incentive to represent clients who cannot typically pay for a UDRP defense. But fee shifting becomes more complex when it needs to be applied across the world.

The New York Convention

Enter the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Better known as the New York Convention, the Convention is a treaty that requires courts of signatory states to recognize and enforce arbitration awards made in other signatory states as if they were made in their own. This means that, if a UDRP panel were to find that a complainant located in the United States is responsible for reverse domain hijacking against an Indian registrant, and if that panel awarded fees in favor of the Indian registrant, the Indian registrant could take that award and enforce it in court in the United States by filing a petition for confirmation of the foreign arbitration award. This award can only be challenged on very limited grounds and can be enforced quickly and without substantial cost. If the amount of the award is high enough, the Indian registrant could either afford to pay an attorney in the United States to file the petition, or he or she could find one that would take the issue on a contingent fee basis.

If complainants were at risk of monetary damages for filing frivolous UDRP complaints, they would be less likely to file them. And where they do, the incentives line up and provide registrants’ attorneys with an incentive to do what is right. It is win-win, except for abusive complainants. That is a good thing.

Understanding the Current UDRP Framework

The Uniform Domain-Name Dispute-Resolution Policy was adopted by ICANN in 1999 as a faster, cheaper alternative to federal court litigation for resolving disputes between trademark owners and domain name registrants. A complainant can prevail and obtain a transfer or cancellation of a domain name by proving three elements: (1) the domain name is identical or confusingly similar to a trademark in which the complainant has rights; (2) the registrant has no rights or legitimate interests in the domain name; and (3) the domain name was registered and is being used in bad faith. All three elements must be proven; failure on any one defeats the complaint.

The UDRP has significant advantages over litigation: proceedings typically conclude within 60 days, filing fees range from approximately $1,500 to $5,000 depending on the number of panelists and disputed domains, and the process is conducted entirely in writing without oral argument. These efficiencies make the UDRP an attractive forum for legitimate trademark owners. But those same efficiencies also lower the barrier to filing meritless complaints — and the current lack of financial consequences for abusive filings is the root of the problem this post addresses.

The Reverse Domain Hijacking Problem

Reverse domain hijacking (RDNH) is the use of the UDRP process in bad faith to attempt to deprive a legitimate domain name registrant of a domain name. ICANN’s Rules for the UDRP authorize panels to make a finding of reverse domain hijacking if a complaint is brought primarily to harass the registrant, or if the complainant knew at the time of filing that it could not succeed on one or more of the three required elements. Panels have made RDNH findings in cases where complainants held trademark registrations obtained after the domain was registered and then attempted to claim bad faith registration predating their own rights, and in cases where complainants pursued generic domain names with obvious legitimate non-trademark uses.

The problem is that an RDNH finding carries no financial consequence. The panel can declare that the complainant engaged in reverse domain hijacking, but the registrant receives no fee award, no damages, and no mechanism to recover the costs of defending a meritless complaint. A trademark owner with aggressive in-house counsel or outside attorneys who are compensated on a flat-fee basis for UDRP filings has no financial disincentive against filing a complaint the lawyers privately assess as a long shot. The registrant, on the other hand, must spend real money to defend — or risk losing a valuable domain by default.

The New York Convention Solution: How It Would Work in Practice

As argued above, the most practical path to meaningful fee-shifting in the UDRP context runs through the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. ICANN would need to amend the UDRP to formally classify panel decisions as arbitral awards under the New York Convention — a characterization that requires UDRP proceedings to satisfy certain procedural due process requirements that they currently approximate but do not fully meet. With that amendment in place, a registrant who obtains an RDNH finding along with a fee award could enforce that award against the complainant in any of the 172 signatory states to the New York Convention, including the United States.

The objection that international fee-shifting is complex is real but manageable. Award amounts for UDRP defense costs are typically modest — a few thousand to tens of thousands of dollars — making contingency arrangements economically viable for attorneys in high-income jurisdictions. The deterrent effect does not require every RDNH award to be successfully enforced; it requires only that complainants and their attorneys believe enforcement is possible, which it would be under this framework.

Alternatives and Complementary Reforms

Fee-shifting through the New York Convention is the most efficient reform, but it is not the only option. ICANN’s Governmental Advisory Committee and the GNSO have both considered UDRP reforms over the years. Supplemental rules adopted by approved dispute resolution service providers (WIPO, NAF, Forum) could require complainants to certify under penalty of perjury that they believe their claims are meritorious — a measure that already exists in U.S. federal court filings under Rule 11 of the Federal Rules of Civil Procedure. Service providers could also require complainants who receive RDNH findings to post bonds before filing future complaints. None of these reforms requires ICANN to act unanimously or to amend the core UDRP policy, making them potentially faster to implement.

If you are a domain name registrant facing a UDRP complaint, or a trademark owner evaluating whether a UDRP proceeding is the right tool to recover a domain name that infringes your rights, the internet attorneys at Revision Legal can help. We represent both complainants and respondents in UDRP proceedings and advise clients on the full range of domain name dispute resolution options. Contact us using the form on this page or call us at 855-473-8474.