Goldstein Report

On May 29^th ICANN staff issued its Report of Public Comments on the “Draft Report: Rights Protection Mechanisms Review”.

Back in May ICA advised ICANN that, “ICA would vigorously oppose any attempt to amend the URS to provide a domain transfer option as such a rapid and circumscribed process could be readily abused to further the scourge of reverse domain name hijacking.”

The staff Report makes clear that our fears that the URS could be converted into a low-cost, fast-track version of the UDRP with more opportunities for domain hijackers and less due process for domain registrants were well founded.

The Report’s URS section (below) makes perfectly clear that elements of the trademark community as well as others would like Uniform Rapid Suspension converted into Uniform Rapid Transfer, with all sorts of other tweaks that would put domain registrants at a greater disadvantage.

Among the ideas suggested for the URS by various commenters were:

• Adding various forms of domain transfer options, either at the time of the decision or when the domain registration expires.
• Lengthening the term of the domain suspension beyond the initial registration period.
• Lowering the “clear and convincing evidence” burden of proof standard to the “preponderance of the evidence” burden used in UDRP actions – combined which changing what needs to be proved from ‘registration and use’ in bad faith to ‘registration or use’.
• Making the URS a “loser pays” procedure.
• Eliminating or shortening the current one-year post-decision time period in which a defaulting registrant can file for de novo appeal.
• Requiring the registrant to pay a response fee in all filings, rather than only in those cases involving 15 or more domains, as set in the current URS rules.

Adding up these comments, it’s pretty evident that the URS could be changed in the future to become an accelerated, lower-cost version of the UDRP, with the same burden of proof plus a domain transfer option. Those two changes alone would probably cause a mass shift from UDRP filings to URS by trademark owners – thereby converting the URS from its intended use as a narrow supplement to the UDRP to a complete substitute for it. Other potential changes could be adoption of a loser pays requirement, requiring registrants to pay a response fee in all cases, and changing what must be proved by complainant to bad faith registration or use.

It’s currently unclear what process will be followed to consider any of these suggestions. The URS and the other new gTLD rights protection mechanisms (RPMs) were adopted as implementation and not policy measures through a process less comprehensive and inclusive than the standard ICANN policy development process (PDP). Given the sweeping policy implications of these suggested modifications, there is a clear need to reengage in a debate about what process should be used to consider any of these proposals – especially if the URS is to be imposed on legacy gTLDs.

Finally, the prospect of fairly sweeping future changes in the very nature of the URS underlines what an outrageous and improper power grab is currently being attempted by ICANN contracting staff in trying to impose the URS on .Travel, .Cat, and .Pro – and all legacy gTLDs up for renewal in the future, including .Com – through private contract negotiations rather than a PDP. That not only violates ICANN’s Bylaws requiring consensus policy changes through a bottom-up process, not top down staff overstepping, but also puts the cart before the horse. Domain registrants need certainty about if and how the URS will change in fundamental ways before we and others can possibly engage in a PDP regarding whether it should be a Consensus Policy for all gTLDs.

ICA is not unsympathetic to the concerns of trademark owners, and in our comment letter we suggested a workable alterative that eliminated their need to incur endless defensive registration fees, while preserving due process for domain registrants and preventing the abuse of the URS by domain hijackers:

However, we are sympathetic to the concerns of trademark owners, and would suggest the alternative of permanently barring the re-registration of a URS losing domain where the domain name/trademark is not a generic term and its registration by anyone other than the rights holder would almost surely constitute infringement. This concept could also be explored in regard to generic terms registered at gTLDs whose names correspond to the goods and services for which the word is trademarked by the prevailing complainant. Such an approach would not invite URS abuse for domain hijacking purposes but would afford permanent protection to infringed rights holders – and without the unending costs associated with holding a domain defensively in a large and growing portfolio.  

That suggestion and others should be considered after receipt of a staff Issues Report on the RPMs that is now scheduled for delivery in September.

ICA will continue to defend the due process rights of domain registrants and to insist that proper procedures consistent with ICANN’s Bylaws be adhered to in any future consideration of URS changes and URS applicability to legacy gTLDs.

*****

Excerpt from “Draft Report: Rights Protection Mechanisms Review”

Comments relating to the Uniform Rapid Suspension system (URS).

Six comments were received in response to the effectiveness of the Uniform Rapid Suspension service in providing a quick and low-cost process for addressing infringement in domain name registrations. The majority of comments express that although the URS may have achieved some of what it was intended to do, the suspension remedy it provides is often not useful.

“Although the URS is quicker and less expensive compared to the Uniform Domain Name Dispute Resolution Policy (UDRP), the only available remedy it provides to a successful complainant is the suspension of a domain name which means that the domain name would become available again once the registration expires and could be re-registered by a third party. Considering that the complainant must pay a minimum of $375 per complaint, the available remedy does not make it attractive for many trademark holders.” (M)

“The benefits of the URS are its quickness and relatively low cost. It may be useful for addressing domain name registrations that require immediate takedown as a result of infringing content. However, suspension of a domain is not the optimal remedy in the vast majority of domain name infringement cases. It is unsurprising, therefore, that the URS has been minimally used to date, and trademark owners continue to rely extensively on the UDRP because of its more effective remedy, namely transfer of the domain name to the trademark owner. We believe the URS can have a transfer remedy after expiration, subject to interim appeals processes, and remain a complement to the UDRP. The two RPMs would still be distinguished by price, time to resolution, evidence required, and standard of proof. Adding this remedy would cause the URS to be a more effective RPM in stemming cybersquatting and infringement.” (GOOG)

“The URS has generally been effective in providing a quick and low-cost process for addressing infringement, although there are some ongoing implementation issues.” (RySG)

“As initially proposed, the BC believed that suspension would be adequate, but the collective experience following delegation of the new gTLDs has shown that it is not an effective remedy after all. We propose evaluation by the community of alternate remedies for successful URS proceedings (short of compelled transfer) to make them more attractive. For example, this could include (1) an extended suspension of 3-5 years, (2) a right of first refusal to purchase the domain before the registration period expires and the domain falls back into the pool, and/or (3) an option to purchase the domain directly from the registrar within a certain time period following the decision.” (BC)

“ICA would vigorously oppose any attempt to amend the URS to provide a domain transfer option as such a rapid and circumscribed process could be readily abused to further the scourge of reverse domain name hijacking. However, we are sympathetic to the concerns of trademark owners, and would suggest the alternative of permanently barring the re-registration of a URS losing domain where the domain name/trademark is not a generic term and its registration by anyone other than the rights holder would almost surely constitute infringement.” (ICA)

“As the Report recognizes, the main limitation of the URS is that its remedy is limited to suspension of the domain name for the remainder of the registration period, which could be a matter of mere months or weeks. By and large, the URS is likely not viewed as an attractive option by rights holders because the cost does not justify the remedy: merely suspending the domain name for a relatively short period is not sufficiently valuable in the eyes of most brand owners. If the domain name is important enough to the rights holder to engage in a legal proceeding, then a temporary suspension of that domain name is insufficient to prevent its further misuse. Suspension also carries the risk that once the domain name is released, it will be registered again by another (or even the same) infringer, forcing the rights holder to restart the process for the same domain name. Thus, any efforts to improve the utility of the URS for rights holders must start with the remedies available.” (IPC)

“Neither its speed nor its low cost compensated for the limited nature of the remedy. In fact, the remedy entirely undermined the URS’ other intended benefits: many members ranked the URS as too expensive, too time consuming and too complicated for what it provided. With the extremely high burden of proof, the cost of involving an attorney — whether inside counsel or outside counsel — was viewed as too great to justify allocating such resources to obtain the mere remedy of a temporary suspension. In fact, even though most IPC Respondents viewed cost and speed as the downsides of the UDRP, they still chose to file UDRP over URS actions in order to obtain transfers of the infringing domain names–even where case complexity or the high evidentiary standard of the URS were not problematic.” (IPC)

“The high standard of proof is another reported factor that discourages rights holders from using the URS. The “clear and convincing” standard of the URS is viewed as problematic for some trademark owners because the scope and reach of their trademark rights cannot be easily proven in the space allowed, and most cases of infringement require more legal analysis than is possible to present in a URS action. In other words, rightly or wrongly, a higher standard of proof is believed to add to the amount of evidence and detail needed to be successful.” (IPC)

“INTA appreciates the URS as a quick, inexpensive alternative to the Uniform Domain Name Dispute Resolution Policy (UDRP). However INTA does not agree with the conclusion of the Draft Report that the URS “works fairly well in terms of what it is designed to accomplish.”7 Even the Draft Report concedes that “some rights holders have not opted to use this service . . . .” To illustrate, the Draft Report notes that approximately 200 URS complaints have been filed to date.9 But in that same timeframe (since the beginning of 2014), over 320 new gTLDs have been the subject of UDRP complaints filed at WIPO alone (not counting other UDRP providers such as NAF, which, according to its searchable case database, has handled 65 UDRP complaints involving new gTLDs).10 This comparison is not quite apples-to-apples: as the Draft Report notes, a URS or UDRP may involve more than one domain name. But the point still holds: the initial returns have been meager, to the point that some commenters have openly wondered whether trademark owners have “given up” on the URS in favor of the UDRP.11 While the reality may not be so dire, the sentiment is still relevant to ICANN’s assessment of the effectiveness of the URS. A tool is only effective if it is actually used. Because the statistics demonstrate that the URS has only been used sparingly, INTA submits that the answer to the first question posed by the Draft Report is that the URS has not been effective – at least not yet.” (INTA)

Two of the comments address some of the challenges in terms of using the URS, such as burdensome implementation steps required of the registries, and requirements not being met by providers. In addition, one comment expresses that it may be helpful to also provide the Registry Operator, and not just the registrar, with the translated notice in the relevant local language.

“In their feedback, the majority of clients indicated that the URS is considered to have low usefulness in their brand protection strategies. The main reason stated for this assessment was that the available remedy, which is the suspension of the domain name rather than transfer, is perceived to be inadequate. Despite the relatively low cost of the URS, clients indicated that the cost to benefit ratio did not incentivise them to pursue the URS.” (CL&V)

“Burdensome implementation of an out-of- band process that only partially allows automation. URS providers are not consistently following the requirements.” (RySG)

“Notification to Registrars come in English and in relevant local language, while Registry receives only English language version (even though the URS provider already has the translation). It may be helpful to provide the translation to the registry provider as well.” (RySG)

“We repeat previous guidance suggesting EPP transformations instead of unreliable e-mail” (RySG)

Ten comments were received suggesting several factors that could be addressed to make the URS more effective. Many of the comments support adoption of a loser-pays model for the URS, and recommend incorporating transfer of the domain name as a possible remedy.

“To increase effectiveness, the URS should be provided at cost or alternatively on the basis of a loser-pays model. For the bad-actor registrant the existence of the URS does not offer any particular deterrent to registration. Even if they do not respond to the complaint there will still be a full assessment on the merits, and in most cases they pay no fee to file a response. If they lose the URS, their only loss is the cost of the domain registration. In addition, the URS should offer a perpetual block or transfer of the domain name to the successful complainant.” (M)

“As noted above, incorporating transfer as a possible remedy would make the URS more effective in protecting trademark rights. In addition, the ability for defaulting respondents in URS cases to reply for up to one year after notice of default, even after a determination is issued, and receive de novo review of the complaint (see URS Procedure6.4) is problematic, as it could lead to the unnecessary drawing out of an otherwise efficient process. This important peculiarity of the URS is not accounted for in chart contained in the Draft Report.” (GOOG)

“We would like to see the next and future reports reflect that the URS was a controversial mechanism — an ultra-fast, ultra-cheap takedown mechanism for New gTLDs – and many were worried about whether registrants would be able to respond. Clearly, registrants ARE responding, and in far greater numbers than we expected given that half the URS claims receive a response.” (NCSG)

“To improve the URS as a cost-effective mechanism, trade mark holders would like the following enhancements to be considered: (i) Transfer as a remedy: Currently, the only remedy available to successful complainants is the suspension of the infringing domain name for the duration of its registration period. The trade mark holder then has to monitor the domain name and ensure that it is not registered by another party when the suspension ends. For most trade mark holders the prospect of having to grab the domain name as soon as it is available and the risk of it being registered by a third party before they are able to do so, raising the prospect of the whole cycle starting again, means that the URS is not viewed as worthwhile. Introduction of domain name transfer as a remedy would significantly increase the effectiveness for trade mark holders of the URS as an RPM.

(ii) “Loser – pays” model: The URS is not viewed as involving any significant deterrents for infringers. Potentially infringing domain names can be registered by third parties, knowing that in case of a dispute resolution proceeding against them they will not incur any financial loss other than the cost of the domain name. For a fair and balanced RPM framework, the cost of the URS proceedings should be borne by the losing party. Although some have expressed doubt as to how a workable model could be developed for recovering costs from a losing registrant, there is precedent for such a model in some ccTLDs. Further work on this would be beneficial to establish whether a mechanism could be introduced for ICANN to pursue the losing registrant for payment.” (CL&V)

“It may be beneficial to consider adding a transfer option in the case of a successful URS, although allowing a change of registrant would require further policy development. The current URS policy makes renewals difficult. ICANN should clarify that either the original registrar (or a registrar of the complainant’s choosing that the name can be transferred to) collects payment from the complainant when they request a renewal, and send the renewal order to the registry. The registry cannot accept a request or payment for a renewal without the registrar’s involvement. ICANN may also want to consider adding definition of repeat URS offender and exploring its policy implications.” (RySG)

“It is a similar story with the Uniform Rapid Suspension (URS). The URS also failed to operate as a cost-effective brand protection mechanism for trade mark holders. We believe that there is a number of different way in which the URS could be developed, improved and simplified. However, if the URS is intended to provide a rapid relief in clear cut cases, then at the very least trade mark owners should be able to call for a transfer of the domain name (either in addition to, or in place, of the current remedy of suspension). We would also suggest that successful trade mark owners should not have to bear the cost of the URS process and that at least their URS fees should be repaid. There should be further consideration of how that repayment would be funded but there are a number of possibilities here ranging from the adoption of a “loser pays” regime in all cases or cross subsidies from those who have benefited from the introduction of the new gTLDs.” (ITMA)

“The use of Clearinghouse Signed Mark Data (SMD) files in Uniform Rapid Suspension (URS) proceedings would help make URS more efficient by leveraging the data already present in the Clearinghouse, thus making better use of the investment of time and resources that Clearinghouse recordations represent for TM owners.” (BC)

“According to section 4.2 of the URS document this notification is sent to the registrant only (and Registrar). However, it may be useful to send to Admin contact as well.” (GD)

“The IPC offers the following as additional topics that ICANN should explore relating to the URS:

1) Should there be a transfer remedy? Given that the losing party loses the domain name either way, there is no reason such a remedy would unfairly prejudice the losing party. Moreover, instituting a transfer remedy would not disrupt the speed or cost-efficiency of the URS, because its adoption would not necessitate modification of other URS requirements, such as the word and time constraints.

2) Should there be an extended suspension? Another possible alternative would be to extend the length of the suspension. This option would be further enhanced if losing respondents were also allowed to transfer the domain(s) at issue to the prevailing complainant voluntarily during that extended suspension.

3) Should there be a right of first refusal? Yet another option would be to give the winning complainant the right of first refusal when, at the end of the suspension period, the domain name is eligible for re-registration.

4) Should the standard of proof be modified? Changing the standard from “clear and convincing” to the more common “preponderance of the evidence” would make the URS more cost-effective.

5) Should the URS cover domain names that were either registered OR used in bad faith? Broadening the URS to cover cases in which domain names are clearly being used in bad faith, but where proof of registration in bad faith is less compelling, would make the URS more effective.

6) Should there be a financial penalty to the losing registrant? The infringing party loses nothing but the registration, and even has the ability to pick it back up on the drop. The ICANN community should explore options such as loser-pays, response fees, etc. to disincentivize infringing registrations.” (IPC)

“As the Draft Report notes, the main limitation of the URS is that its remedy is limited to suspension of the domain name for the remainder of the registration period.12 By its nature, this is not a long-term solution; rather, it is at best a temporary fix that carries with it the risk that the domain name will simply be registered again by another infringer once it is released. Any steps to improve the utility of the URS must begin there. Most preferable would be a mandatory transfer remedy akin to that offered under the UDRP. Given that the URS is designed to address only clear-cut cases of infringement, we see no due process concerns that would make such a remedy inequitable to the losing party, and see no reason why such a change would disrupt the speed or cost-efficiency that distinguishes the URS from the UDRP. Short of that, another possible alternative could include extending the length of the suspension to something like 5 years (as opposed to the current duration – remainder of the registration period – which, depending on the facts, could be only a few weeks or months) and then allowing losing respondents to voluntarily transfer the domain(s) at issue to the prevailing complainant during that time (as of now, such a transfer is not allowed during the suspension). Either of these possibilities would be an improvement over the status quo, and would offer a more meaningful remedy for trademark owners while still maintaining the quick, low-cost structure of the URS.” (INTA)

“INTA sees no reason why the requirement that a respondent pay a response fee – which is ultimately refundable to the prevailing party – should be limited to those URS complaints listing 15 or more domain names registered by the same registrant. Rather, one surefire way to increase trademark owner usage of the URS would be to apply that same response-fee requirement to all URS complaints, without regard to the number of domain names at issue. Feedback suggests that more trademark owners would use the URS if there was a possibility that their costs to do so would be refunded – especially given that the Draft Report shows that trademark owners have prevailed in 87% of URS proceedings thus far (albeit in a small sample size).13 Of course, eliminating the current 15-domain minimum may increase the number of defaults from the current 52% rate14 – potential respondents who view their case as weak may rationally choose to default rather than to pay the response fee. But that is not a bad thing. Although all determinations – including defaults – are evaluated by a URS panel on the merits, making this change would, over time, allow providers to focus more of their resources on those URS disputes for which the respondent thinks enough of its arguments to risk the response fee. In other words, elimination of the 15-domain minimum would benefit trademark owners, providers, and “legitimate” respondents alike. The only group it would harm would be cybersquatters.” (INTA)

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/urs-expansion-danger/