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Domain Ownership Disputes – Part 3 of 3

David W. Nance — Tue, 07 Apr 2009 03:46:00 GMT

It finally happened; your site is down and all your valuable traffic is going to a parking page or worse…the competition. Or maybe your loyal and new customers are reading the musings of your (now former) webmaster, partner, or some unidentified person listed in the Whois registry as residing in China, Russia, Idaho, or across town. Now what? Well if you’ve been reading this column since August 2007, you already know that you’re probably in a tight spot. If you have a few months or more to wait and several thousand dollars handy, then no troubles; your attorney will eventually get things under control. Otherwise, you’re going to need a resourceful law firm and luck to limit the long-term damage to your business.

Once your unprotected domain is snatched, your options fall into three general categories: slow administrative litigation, probably slow court litigation or any informal avenues allowed by your specific facts. Anyone with (or even without) a claim can file a lawsuit and any trademark holder can file a UDRP. But your particular, alternative options come down to utilizing domestic and foreign assets to apply direct and indirect pressure to every relevant party you can identify. Here is where experience, connections, reputation, creativity, resources and hard work make the difference.

UDRP litigation is the single most commonly used method for recovering domains. Everyone knows it will take several months, at a minimum, to get a decision from the arbitrator, but that may not be a problem if you’re dealing with noncritical domains. Critical domains are more appropriately recovered by recourse to the other two options: court litigation and alternative, legal means. I’ve seen some very creative lawyers utilize state and federal law in both court systems to recover a domain very in a matter of days or weeks instead of months. But, given the right facts, one phone call to the right person with the right message can get a website up the same day. Not many experienced business people make the mistake of representing themselves in litigation, but many still fail to recognize that they rarely further their cause and more often hinder it when they act on their own to recover a hijacked domain name. For example, few people realize that threatening criminal prosecution is a crime itself.

If you’ve been a domainer for any appreciable amount of time, you’ve certainly noticed the thriving UDRP legal market. Civil litigation over domains is much more limited, and I haven’t seen many ads vaunting the ability to recover hijacked domains quickly and cheaply. Obvious market forces are definitely at work here. Most attorneys prefer a simple administrative approach to a case, especially when the number of attorneys with high-tech litigation experience is still very limited and few of those have substantive trial experience. So clients expect that they will have to pay someone very well to litigate a domain dispute through the civil courts. But it is probably the tendency of clients to initially think they can eventually find their own resolution to a domain dispute that makes it so hard for attorneys to become involved early enough to take advantage of opportunities to force a fast resolution. We certainly know that clients would pay reasonably well to avoid each day of down time; the trick is to get the client to contact us early enough.

Of course, most litigation is brought to recover a domain or stop alleged mark infringement. But the flip side of all this is that a sharp lawyer can also help a domainer fight anyone trying to force the transfer of a domain. Instances of abuse are common and the natural tendency when dealing with intellectual property. As with real property, the law places primary responsibility for protecting intellectual property on the holder. Plenty of landowners build their fence on their neighbor’s land; so why expect different behavior for incorporeal property? Nevertheless, many domainers fall victim to improper threats from mark holders, particularly where the mark holder has a strong lobby. There is also a tendency for domainers to think that the ease of the Internet should carry over to other aspects of doing business; so they don’t take advantage of the legal assistance available to them, even after they start making a tidy profit.

The current prevalence of varied and often half-baked approaches to maintaining control of domains while avoiding liability stemming from a domain portfolio demonstrates that there still aren’t enough knowledgeable and experienced attorneys being used to protect domainers. Probably most attorneys with domain experience have some ideas for limiting portfolio liability. But short of involving a law firm, I don’t know of a single approach that addresses all of the current risks to domainers. However, there are several different tested and novel approaches that can be combined to address most risks. The main distinguishing factor among them is the significance of legitimacy. While the trend has been to go for the fast cash and not think about tomorrow, the good news is that this industry doesn’t stand still; so get your patents in now because innovation is inevitable.

Domain Ownership Disputes – Part 2 of 3

David W. Nance — Tue, 07 Apr 2009 03:45:00 GMT

Now that the shock has finally started to wear off, the first thing you do is run the numbers in your head and conclude that you will not simply forget about your threatened, stolen or hijacked domain. The recovery of expired or near expired domains is a contract law question, rather than a litigation matter, better reserved for a future article of its own. But whereas reaching that conclusion probably took a few seconds, your next task will take months, not to mention the hours billed by your attorney. In the next and final installment of this three-part series on domain name ownership, we’ll go over how to minimize the likelihood that you will ever have to face this question. But for now we’ll have to do without those pearls of wisdom. So you’re now squarely confronted with the dilemma of how to get full control of your domain back. Once you rule out the less noble options, at best you will have only two possibilities. So you want to now ask yourself: Should I litigate or arbitrate my domain dispute? But don’t because it is very likely that civil court litigation is your only option. In short you don’t get to chose the administrative option unless your dispute relates to a registered or famous trademark or you have a mandatory arbitration clause binding you and the opposing party or everyone agrees to arbitration. However, if you do get to choose then the answer is: It depends.

Any time litigation is forced upon you, there are multiple factors to consider before you can take even the first step. Assuming that your domain was, until a few hours ago, minding its own business as the primary URL for your multi-million dollar online enterprise, then your best option is to grab your attorney and run, not walk, to the courthouse. You know, and a judge can easily understand, that every hour your business’ website is down equates to money lost and another week spent trying to recover your prior ranking in the search engines. On the other hand, if your domain won’t earn in a week what your attorney will bill for an hour or the new registrant’s content is already stored on Archive.org, then don’t waste your time rushing to court because your time is better spent on the type of analysis we’re going to cover here.

There are of course more factors to consider than we could go over in the abstract without shortly seeing “blah, blah, blah, blah, blah…” without hope of ever finding the bacon. So we’ll touch on just a few of the main factors to consider. Some come immediately to mind—e.g., cost, likelihood of success, time lost. Others are probably only obvious to someone with experience in this area of the law—e.g., which forum will be more amenable to my fact scenario, should I choose state court or federal court. We’ll take these one at a time.

Unless you have a convenient fact pattern and a quick thinking attorney who can jump on the case immediately, cost is going to be substantial regardless of the route you choose. In the case of trademark infringement disputes, a standard UDRP[1] administrative case filing can easily cost you $4,000 or much more if there are numerous filings by the opposing party. Plus you know from the beginning that you do not have a chance to get your attorney fees, costs or any type of damages or penalties from the opposing party. All you can hope for from a UDRP proceeding is to get the domain name terminated or transferred to your registrar account. On the court litigation side, before even drafting a complaint, small specialty firms require a similar retainer and larger firms, with more overhead, easily require $10,000 or more to initiate litigation over ownership of a single domain name. When you add in the fact that there are very few attorneys with experience litigating domain ownership cases in court, even compared to the number of attorneys who exclusively use the UDRP administrative procedure, most attorneys you hire to go to court will require additional time merely to bone up on the relevant law before they could advise you on your chances of success.

To determine your chances of success, you have to adjust your analysis of the facts depending on which avenue you chose. There are currently numerous administrative forums authorized by ICANN to conduct UDRP proceedings. Some are statistically much more likely to result in an administrative order for a trademark holder than for a current registrant. But even a wide sampling is telling. Of 166 UDRP proceedings with decisions issued between January 29 – February 16, 2007, on 21 resulted in a favorable decision for the domain registrant. When you factor in that many registrants do not have competent counsel in these proceedings you can see that the UDRP route strongly favors mark holders but is by no means a slam dunk. On the other hand if your facts lead to you civil litigation through the courts, it can really get hard to quantify your chances. All manner of issues can and will arise—e.g., how quickly did you react to the loss; how complicated is your relationship with the current registrant; where is the new registrant and their registrar; how complicated is the chain of ownership of your intellectual property rights; does the domain have a tainted past, and if so did you take steps to lustrate it. These and many other questions will have to be answered simply to make sure you won’t be throwing away your money on a lost cause. Finally, in specialized areas of the law, you won’t always get your money’s worth from an expensive attorney, but at least you know they have insurance and a real office in the U.S.

Time is a relatively simple factor to analyze. In almost every scenario, it will take months if not years to get resolution. Two to five months to get a UDRP decision is very common. Complicated litigation in many states will take nine months to get to court, even if you’re attorney is seeking a bench trial. The liability issue may be determined earlier on summary judgment, but you would still have to wait for the judge or jury to decide the damages issue in a trial. Yes, if you are very on the ball and have fast access to knowledgeable and conveniently located trial attorneys then you would be able to take advantage of the rare instance when you could get very fast relief from the courts but that scenario is by far the exception from what I’ve observed in this area of the law.

By now you know that your facts will heavily influence whether you opt for administrative or civil litigation. But knowing just how carefully you should weigh the different facts is really an art form. For example, your case may appear as the perfect candidate for civil litigation. You caught the problem early, damages are relatively easy to quantify and they’re growing at a phenomenal rate as your hugely popular website lies dormant. However, just the hint of a dubious past may cause a court to delay a grant of relief or even resolution of your case because the possibly distasteful nature of your content. In this case, the business background of the UDRP process may very well outweigh all other factors and prompt you to opt for faster resolution in lieu of damages from a registrant who may avoid paying you with the assistance of a bankruptcy court or plane ticket out of the country.

Finally we arrive at the state court versus federal court question. Trademark infringement cases can go through the UDRP process or straight to federal court in specific locations determined by your facts, once again. Because so few of these cases actually go to federal court, you’re left with the choice of educating the civil court or probably getting very experienced administrative judges. This isn’t a difficult decision, unless you want to fast relief or to try to be awarded and collect on your attorney fees and some very enticing statutory. However, you may not have a trademark case. If your disgruntled employee or webmaster got fed up with you and walked away with your not yet famous or registered domain name in tow, then you and your attorney will have to find the new registrant, review the relevant laws of that state, and think up the strongest claims you can. Because each state has different laws relating to domain names, if they have any at all, you have to fit your facts into the available law in a credible way, if you want to have any chance of getting relief from a state court. Some states—e.g., Louisiana and New York—have legislation prohibiting the registration of domain names that use the name or nickname of a living person without their permission. So if a person in one of these states registered your name you could go to that state’s courts (not the federal court) and probably take it from them, at least if they didn’t retain an experienced attorney to fight you. Time plays a role with this question also. With the right facts, an attorney can get their client immediate relief through the state courts in just a few days, whereas the federal courts simply take more time. On the other hand, the federal courts have traditionally offered out-of-state parties an opportunity to avoid local bias. Experience has also shown me that suing someone in federal court gets their attention in a way that state court litigation simply can’t match, unless of course you’re home towning the defendant with some very helpful and relevant statues.

Check back next edition for more on domain name ownership and how to ensure that you can get your website back up as soon as possible after your domain is stolen or hijacked.

[1] The Uniform Dispute Resolution Process was established by ICANN and is the only administrative remedy for ownership disputes regarding generic Top Level Domains like .com and is voluntary for many other TLD name disputes.

Domain Ownership Disputes – Part 1 of 3

David W. Nance — Tue, 07 Apr 2009 03:43:00 GMT

Domain name ownership disputes can be fascinating or even humorous for the casual observer and thoroughly aggravating, not to mention costly, for the victims involved. Despite what you might think (because you rarely hear or read about them) domain name ownership disputes are far more common than you might think. So the more you know, the better prepared you’ll be when it happens to you. There are several ways you can try to avoid getting caught up in a domain ownership dispute, and most of them work to some degree. But no matter what you do to avoid it, you will eventually find yourself rechecking your website asking, “When did I authorize the upload of that content?” Or you may find yourself rereading a legal letter on expensive paper from a lawyer explaining how you’re going to put their kids through college…starting with a good private prep school.

We’re going to cover this topic starting with the initial question “What is a domain name?” Then we’ll move to the more advanced “Should I litigate or arbitrate?” And well end with probably the most relevant question, “How do I get my website back up before I lose all of my customers!?” In fact, there are so many different ways for domain disputes to arise that it would take a book to do more than just scratch the surface. But we’ll definitely hit the high points over the next few editions, and hopefully some of you will find time to write me about your own experiences and possibly get recognized for your own creative thinking. After all, isn’t creative thinking is what got us into this industry in the first place? How many domainers do you know that are willing to stand in line?

So what is a domain name anyway? This continues to be a hot topic in the state and federal courts because there still isn’t a federal statute or universal, binding policy classifying domain names. Technology is a sprinter and the law is a marathoner. Anyone not convinced should do a little research on how states collect sales tax on Internet sales. Lacking any guidance from Congress or the state legislatures, the federal courts have had a little fun with this question and, depending on what state you live in, your domain names are equivalent to stock certificates, trademarks, telephone numbers or possibly even a service with no corresponding ownership rights. This last one may be the reason some domain registrars claim, in their terms of service agreement, to own all domains registered through them. But despite the fact that people have “owned” domain names since the last century and some of them routinely sell for millions of dollars, the legal status of a domain name is still not definitively resolve, in fact we aren’t even close to an answer. The reason is simple. Ever since ICANN came out with the Uniform Dispute Resolution Process in December 1999, the courts stopped getting most of these cases.

Today, instead of having the courts busy fully developing and deciding the various nagging questions of domain ownership, most of these disputes go to arbitration. Arbitration is almost as novel a concept as the Internet itself, which leads to another new development—i.e., the blind leading the biased. And by this I mean that arbitrators have traditionally (and I use that term lightly) been retired judges and experts in their filed. But today we have respected and other personages deciding issues and answering questions relating to an industry that is so new that the arbitrator can’t refer to their past trials or case law. So instead they do just about whatever they want, which usually means what makes the most money. This free hand has led to disgruntled accusations such as the claim that the UDRP process was only set up to help trademark holders get domains more easily and cheaply. I haven’t done a study, but complainants do get to pick the forum and they may be more likely to file their expensive case with an organization they believe favors trademark holders. But despite being paranoid by profession, I am convinced that the UDRP process was created by people with good intentions. They simply lacked the trial and administrative law experience needed to realize that arbitrators don’t make legal precedent and, without a solid body past case law to refer to, the market forces in the arbitration industry are naturally going to result in forum shopping by factions willing to pay more for better odds.

This all means that for almost a decade the law regarding domain names has developed at a snail’s pace while international arbitration bodies (and to be fair law firms, too) have come up with ever more creative ways to draw in as much of the domain dispute resolution business as their dockets and schedules can hold. As anyone could predict, market competition controls or at least influences everything from prices and speed of service to the statistical likelihood that one faction will prevail over the other. This last tendency gives rise to what is commonly referred to as “forum shopping,” which is very much frowned upon by the courts but a driving force in the for-profit arbitration industry. Of course, anyone about to pay $1,000 or more to register a domain dispute with an arbitration organization and another $2,000 or more for their attorney to handle the case would be foolish not to calculate which of the various arbitration organization authorized by ICANN are going to give them the best odds. In fact, trademark holders have become so brazen that we now have the term reverse domain hijacking. But any business person would make the same calculations before they invest their money, whether they’re simply fending off a challenge for a domain or trying to recover one. To be fair, administrative forums do lend themselves to the same gamesmanship found in the courts. And more than one claim has been brought as an attempt to entice the other party to bring a claim in the same forum, instead of in a forum that would give them better odds.

Finally, there is a bright side. Both the oldest and the newest major players in the industry are working diligently to make the industry predictable (knowledge = power = money, or in other words predicting industry developments = more control over the industry = happy shareholders). And in order to have predictability you eventually do have to get some questions answer. So there are some things that we do know about domain names. For example, we know that ICANN requires domain registries and registrars to treat a domain’s WHOIS registrant as the domain’s owner. This means that ICANN considers the registrant to have civil liability for use of the domain, but you can not trust that a domain’s registrant really owns that domain. You can also find out how the courts of your or your registrar’s state classify a domain name, and you only have to read your registrar’s Terms of Service (once you find them) to know if they are protecting your property rights or consider your domain to be a service provided by their system, which they solely own. We know that it only costs one year’s registration to move your domain to a registrar that believes your domain is something you own, regardless of what it is. We also know that there are numerous, varied services available online to make almost every aspect of domain ownership safer, whether you’re buying, selling, licensing, developing, safeguarding, recording, lustrating or recovering a domain name.

In short, by finding out what the issues and options are, by identifying who is looking out for our interests and spending accordingly, you can proactively avoid most causes of domain ownership disputes.