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More Cybersquatting on the Horizon with Launch of New gTLDs


Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course
Posted: March 12, 2012 @ 7:30 am

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On January 12, 2012, the Internet Corporation for Assigned Names and Numbers, more commonly known simply as ICANN, began accepting applications for new gTLDs.  Until March 29, 2011, entrepreneurs, businesses, governments and communities around the world can apply to introduce and operate a generic Top-Level Domain of their own choosing.

This is not the same as registering a domain name.  Applicants for a new gTLD is, in fact, applying to create and operate a registry business supporting the Internet’s domain name system.  gTLD stands for “generic top-level domain” and is an Internet extension such as .com, .net or .org.  Currently there are approximately two dozen gTLDs, but as the result of ICANN’s decision to expand the number of gTLDs there could be hundreds in the not too distant future.

What does that mean?  It means there will be an enormous increase in cybersquatting, which is the act of registering a popular Internet address, such as a company name or the name of a famous individual.  Thanks to the Trademark Cyberpiracy Prevention Act, which was passed as part of the Consolidated Appropriations Act of 2000, cybersquatting is specifically prohibited by statute in the United States. The TCPA is codified primarily at 15 USC 1125(d) and 15 USC 1129(b).

In addition to cybersquatting being actionable under U.S. trademark law, you can also bring an arbitration proceeding to strip the domain name from those who jumped in front of you to acquire it.  The mechanism to bring an arbitration proceeding is defined by the Uniform Domain Name Dispute Resolution Policy (UDRP), which was proposed by WIPO in 1999.  The UDRP has become accepted as an international standard for resolving domain name disputes outside the courts, with everyone who registers a domain required to agree to these mandatory resolution provisions..  Various providers can implement the UDRP to resolve disputes, but the WIPO Arbitration and Mediation Center (based in Geneva, Switzerland) is the leading provider of domain name dispute services. For what it is worth, I have represented clients in domain name disputes using the WIPO Center.

Background on the UDRP

The UDRP is designed specifically to discourage and resolve the abusive registration of trademarks as domain names, commonly known as cybersquatting. Under the UDRP, a complainant must demonstrate that the disputed domain name is identical or confusingly similar to its trademark, that the respondent does not have a right or legitimate interest in the domain name and that the respondent registered and uses the domain name in bad faith.

For matters submitted to the WIPO Center, disputes are decided by independent panelists drawn from a global list of trademark specialists. The domain name registration in question is frozen (suspended) during the proceedings. After reviewing a case, panelists submit their decision within a period of 14 days. If a panelist’s decision to transfer a domain name is not challenged in a competent court within a period of ten business days, the registrar is legally bound to implement the panelist’s decision. The entire case normally takes no more than about two months.

Since the UDRP’s launch in December 1999, the WIPO Center has received over 22,500 UDRP based cases, covering some 40,500 domain names in both gTLDs and “country code Top Level Domains,” called ccTLDs.

2011 WIPO Statistics

In 2011, trademark holders filed a record 2,764 cybersquatting cases covering 4,781 domain names with the WIPO Arbitration and Mediation Center (WIPO Center) under procedures based on the UDRP.  This is an increase of 2.5% and 9.4% over the previous highest levels in 2010 and 2009, respectively.  With plans underway by ICANN for an expansion in the number of new generic Top Level Domains (gTLDs) in 2012 it seems all but certain that the number of cybersquatting cases will increase as cybersquatters will be able to buy popular domain names for numerous gTLDs.  In anticipation of this increase the WIPO Center recently rolled out resources for pre-emptive measures to prevent the abusive use of trademarks as gTLDs.  WIPO maintains an excellent Domain Name Dispute Resources page full of information.

“These UDRP filing trends illustrate that even in today’s Domain Name System, brand owners already have to make difficult choices for their stretched online enforcement resources. With the domain name coordinating body, ICANN, allowing for a massive increase in the number of new domains, brand owners’ resources will likely be stretched further,” said WIPO Director General Francis Gurry.

Mr. Gurry noted that while ICANN’s program may offer the potential for new innovative online spaces – for example, facilitating new uses of languages for the next billion Internet users – ICANN must make sure that its newly-created enforcement mechanisms can be an effective alternative for brand owners wishing to avoid court litigation. “If properly designed, alternative dispute resolution will be an increasingly important tool for enhancing business and user confidence in Internet platforms,” he said.

The expanding international reach of the Internet is reflected in the diversity of the domain name disputes filed with the WIPO Center in 2011. Cases filed with WIPO in 2011 included complainants and respondents from 110 countries.  These cases were decided by 323 WIPO panelists from 49 countries in 13 different languages, namely (in order of frequency) English, Spanish, French, Dutch, German, Chinese, Turkish, Korean, Portuguese, Romanian, Japanese, Italian and Slovak.

WIPO’s 2011 caseload featured many well-known names from business and public interest sectors. Here is a small sampling of some of the most well known to need to resort to arbitration in 2011:

  • Automobile Industry: Audi, Bentley, BMW, Chevrolet, General Motors, Honda, Lamborghini, Land Rover, Michelin, Pirelli, Porsche, Volvo, Volkswagen
  • Pharma/Biotech: Bayer, Eli Lilly, F. Hoffman-La Roche, Glaxo Group, Merck & Co, Novartis, Pfizer, Sanofi-Aventis, Walgreen Company
  • Electronics: Canon, Dyson, Electrolux, General Electric, IBM, Intel, Philips, Samsung, Sharp, Siemens
  • Food/Restaurants: Bacardi, Carlsberg, Coca-Cola, Krispy Kreme, Nestlé, PepsiCo, Red Bull
  • Retail: Costco, IKEA, LEGO, Mattel, Oakley, Wal-Mart, Woolworths
  • Sports: Cleveland Browns, FIFA, French Open, Harness Racing Australia, Mike Tyson, National Football League, Ryder Cup
  • Telecomm: BlackBerry, British Telecommunications, Deutsche Telekom, Verizon

As you can see, no industry is immune from cybersquatting.  Applying UDRP jurisprudence, WIPO panels in 2011 found evidence of cybersquatting in 88% of all cases.  Indeed, trademark owners must be vigilant to protect their brand from free-riders who seek to cash in on their hard work and branding.

WIPO’s 2011 caseload of gTLD cases most concerned registrations in the .com domain, with 77% of cases relating to .com domain names. Possibly foreshadowing what lies ahead with the addition of literally hundreds of new gTLDs, the WIPO Center in late 2011 received the first UDRP case concerning a domain name in the new .xxx domain.

New Generic Top Level Domains

Building on the UDRP experience, the WIPO Center continues to provide trademark-based domain name policy input to ICANN stakeholders. Additionally, the WIPO Center has been appointed by ICANN as exclusive provider of dispute resolution services for trademark based pre-delegation Legal Rights Objections.  Pre-delegation Legal Rights Objections relate to the filing of a formal objection by a third party. When such an objection is filed, an independent panel (comprised of one or three external, neutral experts) will determine whether the applicant’s potential use of the applied-for gTLD would be likely to infringe the objector’s existing trademark, or IGO name or acronym.

Stay tuned for more information about making a pre-delegation Legal Rights Objections and the eventual release of hundreds of new gTLDs by ICANN.

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Posted in: Brand Building, Gene Quinn, Internet, IP News, IPWatchdog.com Articles, Trademark, WIPO

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

2 comments
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  1. Hello. I have been following your blog for some time now and consider it required reading for any law student who wants to get the business and political side of IP Law that is often overlooked in the classroom. After doing some research and writing on ICANN and gTLDs, I have some comments.

    Do you think that cybersquatting will be an actual issue during the gTLD sunrise period? In reviewing the materials published by ICANN (primarily the Applicant Guidebook) I posit that generally a squatter would find the mere costs associated with a gTLD administration prohibitive. As you correctly note, gTLD “ownership” is essentially running a domain registry. ICANN requires an initial $185,000 application fee, and additionally requires the proposed registrant demonstrate both technical and financial resources to administer the domain. There are also significant fees based on the number of individual domain registrations.

    I am curious is you have discovered (or could come up with your own) business model that would make a cybersquatting (either direct or through typo-squatting) a gTLD worthwhile financially.

    Thanks, and I am interested to see your take on the Legal Rights Objection procedures.

  2. I agree with you that the new gtld’s are a recipe for disaster and that it consists of a Pandora’s Box which should be left unopened.

    Seems to me obvious that they will fail too. History has already shown that in the form of .mobi, .aero, .travel, .cat, .biz, .tel, .pro, .jobs, .museum and . pro. Soon we will be able to add .xxx to the list of those that tried but failed.

    Face it, the world simply doesn’t want alternative extensions.

    .Com is king and will stay that way for years to come.