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Lawyer tries to nuke Donuts and Demand Media’s gTLD bids

Kevin Murphy, August 1, 2012, Domain Registries

A lawyer has called for new gTLD uber-applicants Demand Media and Donuts to be banned from running gTLD registries due to Demand’s history of cybersquatting.

Jeffrey Stoler of Boston law firm McCarter & English has written to ICANN’s leadership, along with the chair of the Governmental Advisory Committee, to allege that Demand Media, Donuts and their key executives:

are, by ICANN’s established eligibility guidelines, unsuited and ineligible to participate in the new gTLD program.

It goes on to state that:

ICANN can and should reject the applications from Donuts and its subsidiaries, Demand Media and its subsidiaries, and their respective affiliated companies.

The two companies have, combined, applied for 333 new gTLDs. Donuts, which was founded by former Demand executives, also plans to use Demand as its back-end registry provider.

Demand Media subsidiaries, however, have a rotten record of losing cybersquatting cases filed under the UDRP, as Stoler’s generally well-researched 24-page letter spells out in some detail.

This, Stoler argues, should cause both companies to fail ICANN’s background checks, which are specified in the Applicant Guidebook.

Companies that have “been involved in a pattern of adverse, final decisions” under the UDRP, defined as more than three losses in the last four years, are supposed to fail the background check.

Demand Media seems to fit that definition, and then some, assuming you include UDRP losses incurred by its subsidiaries.

Donuts, as a brand new company, does not have the same track record, but Stoler reckons there is “strong evidence that Donuts is merely an alter ego of, and working in concert with, Demand Media”.

The letter states:

In June 2009, when ICANN’s rules went into effect and it was widely thought that implementation of the new gTLD program was imminent, the executives of Demand Media Group realized that Demand Media’s sordid history would clearly block its ability to successfully apply for the new gTLDs.

As an initial gambit, Demand Media petitioned ICANN to revise the rules.

When ICANN rejected those revisions, the undersigned believes Demand Media decided it would be necessary to create a new entity to participate in the new gTLD program. As a result, Donuts was formed by Messrs. Stahura and Tindal.

It would make a mockery of ICANN rules, however, if Demand Media Group and its executives could absolve themselves of their record of adverse UDRP decisions merely by forming a new entity.

Donuts founders Paul Stahura and Richard Tindal were both with Demand when it lost a bunch of UDRP cases.

Stoler alleges that they left to form Donuts mainly because they didn’t think Demand would pass ICANN’s background checks.

While Donuts has made no secret of the fact that it’s behind 307 applications — and ICANN’s leadership is certainly already aware of this — each application has been filed by a different shell company.

The trail to Donuts is at least two companies deep in many cases, and it’s not entirely clear how its applications with Demand Media are structured, from a corporate point of view.

Ironically, Stoler’s letter does not disclose his affiliations — which clients he’s working for — either.

The smart money is probably on big trademark interests, but it’s not beyond the bounds of possibility, I suppose, that he could be on the payroll of rival new gTLD applicants.

I’ve reached out to Stoler, Donuts and Demand Media for comment and will provide updates later as appropriate.

Here’s the Stoler letter (pdf)

Olympic domain watch list shows hundreds of squats, legit names too

Kevin Murphy, May 30, 2012, Domain Policy

Lawyers for the International Olympic Committee have released a list of hundreds of domain names allegedly cybersquatting the Olympic trademark, all registered in just a couple of weeks.

But as well as showing that there are hundreds of idiots out there, the list also sheds light on substantial numbers of apparently legitimate uses of the word “olympic” by small businesses.

The insight comes from two weekly zone file monitoring reports, compiled for the IOC by Thomson Compumark, which were circulated to an ICANN working group this week.

There are about 300 domains on the lists. At first glance, it looks like the IOC has a serious problem on its hands.

According to IOC outside counsel Jim Bikoff:

These unauthorized registrations–often for pornographic, phishing, gambling or parked sites–dilute and tarnish the Olympic trademarks, and attempt to exploit for commercial gain the good will created by the Olympic Movement. The unauthorized domains already oblige the IOC and its National Olympic Committees to expend significant amounts of time and money on monitoring and enforcement activities.

Based on a perusal of the lists and a non-exhaustive, non-scientific sampling of the sites the domains lead to, I’d say a comfortable majority are fairly straightforward cases of bad faith.

I couldn’t find any porn or phishing, but most of the domains I checked either do not resolve or resolve to placeholder or parking pages. If they resolved to a developed site, it was usually a splog.

However, a non-trivial minority of the domains are being used by apparently legitimate small businesses that have absolutely no connection to sports whatsoever.

Check out, for example, olympic-grill.com, olympicautorecycling.com, olympicbuildersgc.com, olympicco.com, olympiclandscapes.com, olympicrollingshutters.com, or olympicpromotions.info.

These are domains all apparently registered in the same week, and all appear to be kosher uses of domain names (though the logo choice at olympicpromotions.info is just begging for trouble).

A fair number of the domains on the list appear to be re-registrations of domains that have previously expired, judging by historical Whois records.

One would imagine that if there was value in cybersquatting a nice-looking domain such as 2012olympicstickets.com, for example, the former squatter probably wouldn’t have let it go.

Perhaps the “best” typo I found on the list, ollympics.com, is registered to a British guy called Olly. Assuming that’s his actual name, it seems like pretty good evidence of good faith.

The IOC, incidentally, has only ever filed 15 UDRP cases, on average fewer than two per year, so claims about spending “significant amounts” on enforcement are questionable.

NAF loses UDRP market share again

Kevin Murphy, April 4, 2012, Domain Policy

If UDRP forum shopping is a real phenomenon, the market share statistics don’t bear it out.

The National Arbitration Forum today announced a sequential decrease in the number of cybersquatting cases it handled in 2011, widening the gap between itself and the World Intellectual Property Organization for at least the second year in a row.

NAF said it handled 2,082 complaints last year, down 4% from 2010. That’s over the same period WIPO saw a 2.5% increase to 2,764 cases.

NAF is occasionally accused of being the more complainant-friendly of the two major UDRP dispute resolution providers, which some say encourages “forum shopping”.

While that may or may not be true in certain fringe cases, it’s certainly not helping NAF win a flood of business. WIPO is still handling more cases, and growing its share while NAF’s shrinks.

As Mike Berkens observed over on The Domains, NAF’s press release attempted a bit of lame spinning, comparing 2011 to 2009 in order to lead with an 18% increase stat.

The release also includes the following quote from director of internet and IP services Kristine Dorrain, which seems to be designed to subtly address the “complainant-friendly” allegations.

Our experience tells us parties, particularly domain name registrants, prefer the National Arbitration Forum because documents are easily accessible in our online portal. Complaint or Response filing is accomplished in just a couple of minutes.

It’s a somewhat irrelevant statement, given that it’s the complainant who gets to choose the venue.

One of NAF’s 2011 highlights was being picked as exclusive provider of Rapid Evaluation Service cases by .xxx manager ICM Registry. It processed 10 RES complaints in 2011.

RES cases, as well as 73 .us cases, were counted in its headline statistics.

WIPO releases 2011 cybersquatting stats

Kevin Murphy, March 6, 2012, Domain Policy

WIPO handled more UDRP cases covering more domain names in 2011 than in any other year, but its numbers do not paint a very convincing picture of the cybersquatting landscape.

The organization today announced that it handled 2,764 UDRP cases covering 4,781 domain names last year. The number of cases was up 2.5% over 2010.

The number of domain names covered by these cases was up by 9.4% – an additional 414 domains.

It’s basically meaningless data if you’re looking to make a case that cybersquatting is on the increase.

Obviously, while WIPO is the market-share leader, it is not the only UDRP provider. It sees a representative but non-exhaustive sample of cases.

While UDRP is the standard dispute mechanism for all ICANN-contracted gTLDs, WIPO also has side deals with ccTLD registries to look after cybersquatting cases in their zones.

As WIPO has added more ccTLD deals, it has become harder to make apples-to-apples comparisons year over year.

Based on WIPO’s own records, it received 2,323 UDRP complaints about domains in gTLDs last year, up by 28 cases from 2010, a 1.2% increase.

Given that the number of domains registered in gTLDs increased by at least 8% between January 1 and November 30 2011, cybersquatting seems to be actually on the decrease in relative terms.

And given that the number of UDRP cases filed is so piddlingly small, a single obsessive-compulsive complainant (ie, Lego) can skew the results.

Lego spammed WIPO with more than 160 complaints in 2011. As a result, Denmark is the last year’s fourth-biggest filer after the US, France and UK, according to WIPO, with 202 complaints.

So, if you see any company using these WIPO numbers to rage about cybersquatting in press releases, ICANN comments or Congressional hearings, give them a slap from me. Thanks.

Here’s a table of WIPO’s caseload from 2000 to 2011.

YEARCASESDOMAINS
200018573760
200115572465
200212072042
200311001774
200411762599
200514563312
200618242806
200721563545
200823293958
200921074685
201026964367
201127644781

Sadly, the number of UDRP complaints will never reflect the actual amount of cybersquatting going on, particularly when cybersquatters only need to price their domains more cheaply than the cost of a UDRP complaint in order to stay off the radar.

WIPO’s data does raise some interesting questions about the geographic distribution of complainants and respondents, however.

Unsurprisingly, cybersquatting was found to be big business in China, the second most-common home nation, after the US, for respondents. No UDRPs filed with WIPO originated there, however.

Surprisingly, Australia is ranked fourth on the list of countries most likely to harbor alleged squatters, with 171 respondents. But Australia was 13th in terms of complainant location, with just 39 cases.

Read more WIPO data here.

ICA demands probe of “shoddy” UDRP decisions

Kevin Murphy, February 24, 2012, Domain Policy

The Internet Commerce Association has called for an ICANN investigation into the National Arbitration Forum’s “seriously flawed” record of UDRP decisions.

The demands follow two recent NAF cybersquatting cases thought to be particularly egregious.

In the first, Hardware Resources, Inc. v. Yaseen Rehman, the domain hardwareresources.org was transferred based on a trademark that explicitly denounced rights to the term “hardware resources”.

In the second, Auto-Owners Insurance Company v. Nokta Internet Technologies, NAF allegedly broke from standard UDRP procedure when it handed autoownersinsurance.com to the complainant.

Both were cases of potentially valuable generic domains being lost, and both were recently singled out by IP attorney Paul Keating as being particularly dubious decisions.

The ICA represents some big domainers and some of the big domaining registrars. Its counsel, Phil Corwin, wrote to ICANN yesterday to demand a review of NAF’s practices:

NAF’s administration of the UDRP in the cases cited above appears to be seriously flawed and creates the appearance of substantial bias and ineptitude. ICANN has a responsibility to make serious inquiry into this matter and to take remedial action based upon its findings.

According to Corwin, there’s circumstantial evidence that NAF encourages “forum shopping” due to its habit of appointing a small number of adjudicators known to be friendly to complainants.

Regular readers of DomainIncite and other domain industry news blogs may have noticed that when we report incredulously about UDRP decisions, it’s usually with reference to NAF cases.

Corwin’s letter comes as part of a larger ongoing campaign by the ICA to get ICANN to sign formal contracts with its approved UDRP resolution providers, which it lacks today.