ICANN Procedure and Policy

A Guide to ICANN Procedure and Policy

Zak Muscovitch

The Internet Corporation for Assigned Names and Numbers ("ICANN") arbitration procedure continues to be popular with complainants. Since the implementation of the new dispute resolution policy on December 1, 1999, to June 26, 2000, there have been a total of 1,016 proceedings commenced, involving a total of 1,510 disputed domain names. To June 26, 2000, 510 proceedings, involving 810 disputed domain names have already been adjudicated through the ICANN procedure. The statistics also demonstrate that for respondents, ICANN arbitration can be dangerous. Out of the 510 completed proceedings, only about 22 per cent have resulted in a decision for the respondent. The disparity between decisions for complainants and respondents is due to ICANN's dispute resolution policy, which expressly contemplates the eviction of so-called cybersquatters. Nevertheless, the ICANN policy and procedure crosses uncharted legal territory and can surprise both complainants and respondents who are unfamiliar with ICANN procedure and policy.

ICANN PROCEDURE

The ICANN process is available for the adjudication of bad faith disputes involving .com, .net, and .org domain names, as well as several other country-specific domain names, such as .nu, .tv, and .ws. Any party who wishes to assert a right to such a domain name as against the actual registrant of the domain name, may commence a complaint. Respondents are required to participate when a complaint is made, although they may elect to take the matter to court either before the proceeding is commenced or after the proceeding is concluded. A respondent has ten days after losing the arbitration to file a court proceeding and avoid the transfer of the name for the time being. Complainants are free to select a court action instead of commencing the procedure to resolve a domain name dispute. The ICANN process has certain benefits over court proceedings that may make it an appropriate venue for a party that believes a name has been wrongly registered. In particular, ICANN provides inexpensive and relatively swift justice.

In considering whether to initiate an ICANN complaint, a complainant should pay close attention to an important preliminary jurisdictional issue. In order to initiate a complaint, the complainant must agree to submit, with respect to any challenges to a decision in the administrative proceeding cancelling or transferring the domain name, to the jurisdiction of the courts in at least one specified "Mutual Jurisdiction." Mutual Jurisdiction means a court jurisdiction at the location of either:

1. The principal office of the Registrar (provided the domain-name holder has submitted in its Registration Agreement to that jurisdiction for court adjudication of disputes concerning or arising from the use of the domain name) or;

2. The domain-name holder's address as shown for the registration of the domain name in Registrar's Whois database at the time the complaint is submitted to the Provider.

This means that by initiating a complaint, the complainant agrees to be bound by the laws of the jurisdiction of either the registrant's recorded address or the Registrar's principal office. Registrars include private domain name registration companies, such as Network Solutions (Virginia), and Yesnic (Korea). Network Solutions used to be the only Registrar, but now there are 44 operational Registrars world-wide with another 66 accredited, but not yet operational. Accordingly, a complainant ought to examine a registrant's registration agreement and location before embarking on the ICANN procedure since by doing so, a complainant may be inadvertently submitting to the jurisdiction of a court of a foreign country.

Although trade-mark infringement and passing-off actions involving domain names have been relatively uncommon in Canada, a plaintiff can expect to spend tens of thousands of dollars in discoveries, cross-examinations, motions, and at trial, and wait at least a year for adjudication of a contested action in the Federal Court of Canada. In comparison, an ICANN complaint can cost as little as US$750 in administration fees, is much simpler than a court proceeding, and can take as "little as a month from commencement to judgment.

An added attraction of the ICANN process for a complainant is that quite often a respondent will not respond to the complaint at all. Although the complainant will still be required to prove its case on the merits, the process will be relatively simple, effective, efficient, and inexpensive for the complainant, even when compared to a default judgment in a court proceeding. ICANN is able to provide this relatively efficient system by employing private companies, called Dispute Resolution Providers, to provide the arbitration services. There are currently four different companies that are accredited by ICANN to provide dispute resolution services: the CPR Institute for Dispute Resolution, the National Arbitration Forum, the World Intellectual Property Forum, and Disputes.org/eResolution Consortium. Montreal, Canada is home to eResolution.

Remarkably, the entire arbitration proceeding, from the initial filing of the complaint to the release of the judgment, is accomplished online, via e-mail correspondence. When initiating a proceeding, the complainant must select either a one-member or three-member panel. Most complainants select a one-member panel because it is less expensive, even if it carries. With it more risk of an aberrant decision.

ICANN POLICY

The fact that most arbitrators have a background in intellectual property law does not necessarily ensure consistency of decisions. Because the ICANN procedure is new, parties to a dispute do not enjoy the same degree of comfort in the outcome that is inherent in a regular court proceeding. Court proceedings are bound by stricter rules of precedent and, in some cases, have the benefit of years of developing case law.

Fortunately, a party that is unsatisfied with an ICANN decision is not strictly bound by it, and may take the dispute to a court of competent jurisdiction. Because the ICANN process is so new, there are very few court cases which indicate the degree of deference that a court will show to an ICANN decision1. Instituting an online appellate division of the ICANN dispute resolution procedure would be a means of providing greater comfort and certainty in the ICANN dispute resolution process, and perhaps provide a means of avoiding subsequent court proceedings. Appeal procedures have, of course, traditionally served court systems well by weeding out aberrant or wrongly decided cases.

Pursuant to the ICANN Uniform Domain Name Dispute Resolution Policy ("UDRP"), which are the terms of reference for the panelists, a complainant must prove each of the following parts of a three-part test:

1. the respondent's domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

2. the respondent has no rights or legitimate interests in respect of the domain name; and

3. the respondent's domain name has been registered and is being used in bad faith.

Most ICANN decisions turn on whether the complainant has shown that the respondent ~ acted in bad faith. This particular concept of bad faith is unique to domain name disputes and has no real parallel in conventional trade-mark law. Pursuant to the UDRP, the following factors are considered demonstrative of bad faith:

1. circumstances indicating that you have registered or you have acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or

2. you have registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that you have engaged in a pattern of such conduct; or

3. you have registered the domain name primarily for the purpose of disrupting the business of a competitor; or

4. by using the domain name, you have intentionally attempted to attract, for commercial gain9 Internet Users to your website or other online, location by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation or endorsement of your website or location or of a product or service on your website or location.

This provision of the UDRP targets speculation in domain names in most cases where the domain name , or something similar to it, is already used as a complainant's trade-mark. The application of this provision to particular factual situations is often very simple. For example, Wal-Mart Stores, Inc., the huge and well-known U.S. retail department store chain, commenced a complaint against the registrant of walmartcanada.com. The complainant held trade-mark registrations for Wal-Mart for use in retail department stores in the United States and Canada. After registering the name, the respondent listed the name for sale on a website called Great Domains, for the sum of $5 million and e-mailed the complainant to advise of the sale. After receiving a "cease and desist" letter from the complainant, the respondent turned his mind to developing a site for, of course, ''wall products."

The first part of the three-part test is whether the disputed domain name is identical or confusingly similar to the complainant's trade-mark. The Panelist held that persons dealing with, or even perusing the website of, walmartcanada.com could easily conclude that the registrant of the domain name was associated with the Wal-Mart operation in Canada2. Accordingly, the complainant met the first part of the test.

The second part of the three-part test is whether the respondent has any rights or legitimate interest in the disputed domain name. Ostensibly, the respondent attempted to demonstrate his legitimate interest in the name by starting work on his, website for the sale of ''wall products." The panelist, however, found that there was no evidence that the respondent, before receiving notice of the dispute, used or demonstrably prepared to use the domain name in connection with a bona fide offering of services.

The third part of the three-part test is whether the respondent's domain name was registered and is being used in bad faith. The fact of soliciting the sale and placing the domain name on the Internet for sale has been regarded in a number of WIPO cases as being evidence of abuse and bad faith. The panelist held that by soliciting the sale and placing the domain name on the Internet for a sum greater than the respondent's out of- pocket expenses, the respondent had registered and used the name in bad faith. Accordingly, the complainant met the third part of the test and was awarded the transfer of the walmartcanada.com domain name.

The walmartcanada.com case is similar to many other decided cases that involve well-known or famous marks, such as Wal-Mart. As a practical matter, the respondent must demonstrate that it genuinely registered the disputed name for a good reason. Providing a flimsy rationale for registering the name will not be sufficient to demonstrate a legitimate interest.

Complainants should not rely on panelists to always impute bad faith, even where a trade-mark and domain name are remarkably similar. In a case involving' the domain name rbcinsurance.com, the respondent was successful in persuading the panelist that it had a legitimate interest in the domain name, even though RBC Insurance was a well-mown and registered trade-mark of the Royal Bank of Canada. The respondent, maintained that the domain name referred to Rahim Bismillab Crop Insurance3. In support of its legitimate use of the domain name, the respondent pointed to the fact that Rahim Bismillab Crop Insurance is registered to do business in the United Republic of Tanzania and has incorporated in the Republic of Zambia. The respondent used the name RBC Insurance in connection with a website that provides information about agriculture and crop protection and offers links to related information.

The panelist held that although the respondent's website did not have much depth, it did provide information about agricultural development, Crop insurance and crop protection. Furthermore, the panelist held that the respondent appeared to be "making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consum.ers or to tarnish the trademark or service mark at issue." It is the complainant's burden to prove that the respondent has acted. in bad faith and the panelist found no evidence to support the complainant's allegations. Bad faith can be difficult to prove. In a decision that surprised many observers and made headlines, the Rockport Boat Line lost its complaint against its passenger boat competitor, the Gananoque Boat Line, who operated its business two miles west of the complainant, near Rockport, Ontario. The disputed domain name was rockportboatline.com. In brief written reasons, the Honourable Edmund P. Karem, held that the respondent's acquisition of the domain name rockportboatline.com was in accordance with its expansion plans which include utilizing a federally owned wharf in the city of Rockport should such a wharf become available4.

The application of the UDRP becomes difficult when a disputed domain name is similar even identical, to a complainant's trade-mark, but the domain name is generic. Such was the case involving esquire. com. Esquire Magazine was the registrant of several U.S. trade-marks dating back to 1922, and had a website called esquiremag.com. The respondent was in the business of buying and selling domain names. The respondent owned numerous domain names that incorporated famous trade-marks, such as porschesource.com, buicksource.com, and cbryslersource.com. The respondent maintained that esquire.com was a generic name, and therefore, he had every right to deal with it as he pleased. Two of the three presiding Panelists disagreed with the respondent, and ordered the transfer of the name to the complainant magazine publisher5. The majority of the panel held that by rejecting out-of-hand bids of $500, the respondent was clearly seeking much more than the cost of registering the domain name, and this amounted to bad faith.

In a strongly worded dissenting opinion, decrying the "insupportable" decision of the majority, retired Judge Milton L. Mueller, held that while recognizing that Esquire Magazine is well-known, the word "esquire" by itself is too generic and widely used to be exclusively associated with the magazine. Judge Mueller went on to say:

[T]he term [ESQUIRE] has common meaning as a descriptor for lawyers, or more broadly for gentlemen. The unadorned term "esquire is also a registered trademark for well-known shoe care products and services for a variety of other products and services. The character string "esquire" appears in over 280 domain names in the .com space. It follows inexorably, then, that the domain name "esquire.com can be used legitimately as a domain name by a large number of people and in a variety of , ways, without infringing the rights of the Complainant. The UDRP is intended to prevent trademark owners from being extorted by cybersquatters, but it is also intended to protect legitimate registrations from being threatened by overreaching trademark owners.

This dissenting opinion demonstrates that a strong argument exists which differentiates between cybersquatters and mere domain name speculators. It is not bad faith to make money on a domain name in all cases. Speculating on a generic domain name such as business.com or shoes.com is not necessarily bad faith. in a case involving the domain name concierge.com, the panel agreed that the first person or entity to register the domain name should prevail in circumstances where the domain name is a generic word and where that word is widely used as a trade or service mark. The panel, therefore, refused to transfer -the domain name, even though the complainant had a registered Canadian trade-mark for Concierge6.

The decisions rendered thus far illustrate how the result of an ICANN arbitration is, in many ways, subject to the discretion of the presiding panelist rather than a rigorous application of rules and precedent. This, however, is not such a great departure from traditional jurisprudence, where a particular judge may figure prominently in the outcome of a particular case. A significant difference between ICANN arbitration' and traditional court systems then, is the degree of legitimacy, acceptance and consistency that the two respective institutions impart to litigants. By ensuring the consistent quality of panelists and providing for an appeal system, the ICANN procedure can continue to provide an important answer to the problem of voluminous domain name disputes. As the body of ICANN case law grows, panelists and litigants will also enjoy a greater degree of consistency and certainty in the ICANN process.

1. In one U.S. case, Armitage Hardware v. Weber-Stephen Products, 2000 U.S. Dist. LEXIS 6335 (N.D. Ill, 2000), the court ruled that it is not bound by an ICANN deci- . sion but it declined to state what degree of deference, if any, it would give to an ICANN decision.

2. Wal-Mart Stores, Inc. v. Walmarket Canada, WIPO Case No. 02000-0150.

3. Royal Bank of Canada v. Xross, eResolution Case Number AF-0133.

4. Rockport Boat Line (J 994) Ltd. v. Gananoque Boat Line Ltd., NAF File No. FAOOO4000094653. s Hearst Communications. Inc. and Hearst Magazines Property, Inc . v. David Spencer d/b/a Spencer Associates. and Mail. com. Inc., NAF File No. FA0093763

6.CRS Technology Corp. v. Condenet, Inc., NAB File No. F~02000093547.

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