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ICANN brings “loser pays” to domain disputes

Kevin Murphy, April 16, 2011, 18:13:38 (UTC), Domain Registries

ICANN has significantly strengthened brand-owner protections in new top-level domains by proposing, amongst other things, a new “loser pays” model for some cybersquatting disputes.
The Uniform Rapid Suspension process, which is designed to give trademark owners a quick, cheap way to take down obvious examples of cybersquatting, may now occasionally carry a response fee.
According to ICANN’s newly revised Applicant Guidebook, which was published early this morning:

A limited “loser pays” model has been adopted for the URS. Complaints listing twenty-six (26) or more disputed domain names will be subject to an Response Fee which will be refundable to the prevailing party. Under no circumstances shall the Response Fee exceed the fee charged to the Complainant.

In other words, if a somebody registers more than 25 domains that appear to infringe upon the trademarks of a single company, they will have to pay a few hundred dollars, refundable, if they want to defend their case. Judging from UDRP history, this will likely apply to very few people.
The number 25 comes from the May 2009 report of ICANN’s Implementation Recommendation Team, which devised many of the new gTLD program’s rights protection mechanisms.
This change is one of several made in the new Guidebook, addressing concerns raised by the Governmental Advisory Committee, which had consulted closely with the IP lobby.
The GAC didn’t get everything it wanted, however. It had asked for repeat cybersquatters to lose their right to respond under the URS, but ICANN declined, citing the need for due process.
But the Guidebook does now also require new TLD registry operators to offer two types of rights protection mechanism during their launch phase, as the GAC had requested.
Whereas earlier drafts mandated either a Trademark Claims service or a Sunrise period, now registries will have no choice: they have to offer both at a minimum.
The Trademark Claims services notifies registrants if they try to register a domain name that matches a trademark registered in a central Trademark Clearinghouse.
The registrant will have to certify that they’re not infringing any rights before they get the domain. If they do register it, the affected trademark holder will receive a notification that the domain has been registered and can choose to take action such as filing a URS claim.
The idea behind the service is to deter cybersquatters, possibly reducing brand owners’ costs from having to defensively register their names in all new TLDs.
The Sunrise period, which is now also mandatory, is not entirely dissimilar to the sunrise periods we’ve come to expect from new TLD launches over recent years.
The new Guidebook states that the Trademark Claims service must be offered for at least 60 days after a new TLD enters general availability and the Sunrise must be at least 30 days before.
The fact that both services are now mandatory has helped ICANN address the thorny question of what should constitute a valid trademark.
Earlier drafts of the Guidebook required trademarks to have been subject to “substantive review” – a check by a national authority that the trademark is for real and in use.
The worry was that speculators could game the system by picking up large numbers of trademarks in countries that give them away like candy. It’s happened before.
But the review requirement was criticized by the GAC and others as it excluded trademarks in much of the world outside of the US.
In response to these criticisms, ICANN has removed the reference to substantive review. Instead, the yet-to-be-decided manager of the Trademark Clearinghouse will be given the task of validating that each trademark submitted is legit.
Companies need only submit a declaration and a single piece of evidence of use in order to get into the Clearinghouse, thus enabling them to partake of the Sunrise.
No such validation will be required in order to participate in the Trademark Claims service, though brand owners will need to be listed in the Clearinghouse for both mechanisms.
Evidence of use will also be needed to file URS complaints, but that can be done separately at the time of filing, with no need for a Clearinghouse registration.
ICANN chairman Peter Dengate Thrush, himself an IP lawyer, once stated, possibly in jest, that no matter what you do, you can be certain that IP lawyers will demand more protections.
Whether the rights protections mechanisms included in the Guidebook are now sufficient to calm trademark interests’ nerves remains to be seen.

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Comments (5)

  1. Domain Dan says:
    April 17, 2011 at 4:26 am

    The entire gTLD thing will be a giant .FAIL
    If it aint broke, don’t fix!

    Reply
  2. theo says:
    April 17, 2011 at 7:53 pm

    off topic.
    This is what Eurid and DNS.BE doing with their ADR for a longtime now. And they have the simple rule the loser pays the 1800 Euro’s.
    Didn’t see many disputes there. Wich could have several other reasons beside the ADR procedure.

    Reply
  3. Avtal says:
    April 18, 2011 at 2:04 pm

    How will the mandatory sunrise affect .brand TLDs? For example, if Canon gets .canon, will they have to hold a sunrise period, where any trademark holder can claim second-level domains under .canon?
    Avtal

    Reply
  4. Bret Moore says:
    April 20, 2011 at 8:13 pm

    Yeah I was going to point out that some ccTLDs, including .be (and others; I think .it has one as well?) have fee-shifting provisions as part of their dispute resolution process. Makes for slightly higher stakes in the squatting game, I suppose.

    Reply
  5. ANA’s response to the Beckstrom letter in full | Domain Industry News says:
    August 11, 2011 at 5:24 pm

    […] ICANN brings “loser pays” to domain disputes […]

    Reply

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