Considerations for Innocent Domain Name Owners
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by Lee Hodgson
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The ICANN Uniform Dispute Resolution Policy ("UDRP") and the Anticybersquatting Consumer Protection Act ("ACPA") present grave risks to innocent domain name owners. This page offers some general comments for domain name owners to assist them in avoiding loss of their domain names.
Who is this page for? This page is for innocent domain name owners. If you own numerous domain names matching coined or unique trademarks of other companies, then this page is not for you; don't bother to read further.
Get a trademark registration. To minimize the risk of loss of your domain name, your first step should be to obtain a trademark registration matching your domain name. In most countries you may do this yourself and are not required by law to employ a trademark firm. If loss of your domain name would cause you great harm, however, then I recommend you consult competent trademark counsel in your country and obtain a trademark registration. There have been many, many sad cases where innocent domain name owners lost their domain names to covetous parties through UDRP actions and court actions, and in every such case of which we are aware, the domain name owner had failed to obtain a trademark registration. Conversely, we are unaware of even a single case in which a domain name owner who has obtained a trademark registration has subsequently lost the domain name through UDRP or court action.
In the United States, the law does not require you to use a trademark firm. You can do it yourself if you wish. See "Can I register a trademark myself?"
Keep your Whois information current. There are cases where a court or UDRP tribunal ruling against a domain name owner based its decision in part on incomplete or out-of-date Whois information. It is thus clear that you should keep your Whois information up to date.
Check your Whois and DNS information frequently. There are well-publicized cases where covetous parties have obtained domain names simply by submitting forged papers or emails to the domain name registrar. Often the theft is accomplished in a stepwise fashion, first changing your nameserver information with the registrar, waiting a while to see if you don't notice that, and changing the rest of the Whois record later. You should check your Whois and DNS information frequently. Commercial services are available which will check these things for you, but even if you use such a service you should check the information yourself from time to time.
Make sure to pay your registration fees. It is commonplace to read of cases where domain name owners (even large, well-known companies) fail to pay their registration fees and then lose their domain names. If your Whois information is out of date, your registration fee invoice may never reach you. You should check the due dates for your annual fees and mark those dates on a calendar so that if the invoice doesn't reach you, you can pay the fee anyway.
What to do if you receive a cease-and-desist letter from a law firm representing a coverous party. If you receive a cease-and-desist letter, do not respond yourself. In nearly all of the sad cases where an innocent domain name owner lost his or her domain name, the domain name owner responded himself or herself, and said things which later worked to the advantage of the covetous party. Particular blunders include:
- Offering to sell the domain name, or stating that it is for sale. There are dozens of cases where a UDRP tribunal or court based its decision to take away a domain name and give it to the covetous party, because the domain name owner offered to sell the domain name or said it was for sale. Under the ACPA, the mere act of offering to sell the domain name supposedly counts as proof that the domain name owner is breaking the law. Do not offer to sell your domain name except upon advice of experienced trademark counsel.
- Responding to an offer to purchase the domain name. The covetous party, well aware of the ACPA language that offering to sell a domain name owner supposedly proves the domain name owner is breaking the law, will quite often offer to by the domain name, and then if the domain name owner responds in any way, the response is urged to the Court as proving that the domain name owner is a lawbreaker. Do not respond to an offer to purchase your domain name except upon advice of experienced trademark counsel.
- Responding other than through counsel. If you are an innocent domain name owner and if you respond through competent counsel who are experienced with domain name cases, the odds are that the covetous party will leave you alone thereafter. In our firm's experience, in the majority of cases where we respond to the covetous party (rather than the domain name owner responding pro se) on behalf of an innocent domain name owner, the covetous party is never heard from again. In contrast, if a domain name owner responds pro se, this often seems to embolden the covetous party who then attempts to use court action or a UDRP complaint to try to panic the domain name owner into handing over the domain name.
- Appealing to the law firm's innate sense of fairness to innocent parties. You can figure out for yourself why this is unlikely to work.
- Presenting to the lawyer a list of other parties who use the same mark or similar domain names. This is somewhat like the previous point. What's really going on is that the covetous party wants your domain name, not someone else's domain name. As such, you will probably not get anywhere asking the other side to be reasonable and look at your long list of domain names that also contain the trademark of interest. (In contrast, if competent trademark counsel presents a list of others who hold identical trademark registrations, it may well be one of several factors prompting the covetous party to back down in its demands.)
There is yet another, quite important, reason why you should respond through counsel and not pro se, and that is that if you respond yourself, and if you mishandle the case, it will be difficult or impossible to get competent counsel to handle the case thereafter (e.g. during the UDRP proceeding or court case).
What to do if someone contacts you about your domain name. The answers here are basically the same as the answers stated above in connection with cease-and-desist letters. The reason is simple -- most seemingly harmless contacts from covetous parties are in fact drafted by lawyers, even though the inquiry is not on the letterhead of a law firm. No matter how friendly or folksy a letter may be from someone asking about your domain name, any response by you that makes any of the blunders mentioned above (offering to sell your domain name, stating that it is for sale, responding to an offer to purchase your domain name, etc.) is likely to be swiftly followed by a lawsuit or UDRP complaint taking advantage of your blunder.
What to do if you receive a UDRP complaint. If you receive a UDRP complaint, then time is of the essence. You will have only a few days to prepare a response. The worst thing to do is to fail to respond (or to fail to respond timely); the majority of UDRP decisions against domain name owners are "default" decisions where the domain name owner failed to respond.
You should probably respond through counsel. The statistics are rather stark -- most of the cases where a domain name owner responded to a UDRP complaint but lost were cases where the domain name owner responded pro se rather than through counsel. Similarly, nearly all of the cases where a domain name owner responded to a UDRP complaint and prevailed were cases where the domain name owner responded through counsel.
There is yet another important reason why you should probably respond through counsel, a reason which may be appreciated by reading the section that follows. As described there, if you lose the UDRP case, you will probably be unable to find competent counsel who are experienced with domain name cases to represent you in the subsequent court challenge. On the other hand, if you are represented by competent counsel who are experienced with domain name cases in the UDRP case, then in the (hopefully unlikely) event that the UDRP panel rules against you, you will already have counsel retained and familiar with your case who can promptly get the court case going to block the UDRP result.
You (that is, your counsel) should probably ask for a three-person panel. The UDRP rules provide for one-person panels and three-person panels. Most of the "howler" UDRP decisions, where the decision was completely erroneous and showed ignorance of the law of trademarks, were from one-person panels. Your best chance of avoiding a "howler" result is to ask for (and pay for) a three-person panel.
Finding competent counsel who are experienced with domain name cases. Whenever a new area of law develops, such as domain name dispute law, lawyers who previously did not have enough work to do tend to trip over each other in efforts to attract work in the new area. In contrast, the lawyers and law firms with meaningful experience in domain name disputes tend to be busy and have no need to try to attract more work. It is thus rather a challenge for an innocent domain name owner to select competent counsel among the candidates who present themselves.
One approach, probably the best approach, is to get referrals from happy clients. Find some innocent domain name owners who have been in disputes and get their advice about counsel.
Asking to have settlement discussions excluded from evidence. The innocent domain name owner who is the target of a UDRP action, and who previously engaged in settlement discussions with the covetous party, will probably want to consider asking the UDRP panel to exclude such discussions from evidence. Such exclusion happened, for example, in the lifeplan.com case.
Asking for a finding of reverse domain name hijacking. The innocent domain name owner who is the target of a UDRP action should consider asking the UDRP panel to make a finding of reverse domain name hijacking. There are several cases in which UDRP panels have made such findings, among them the qtrade.com case, the k2r.com case, the smartdesign.com case, and the safaricasino.com case.
What to do if you lose a UDRP case. If you lose a UDRP case in which you appeared pro se, that is, without benefit of counsel, then you face an uphill struggle. You have only ten days in which to do all the steps required to challenge the UDRP result in court. These steps include identifying candidates for litigation counsel, contacting them, asking them to do conflict checks, selecting litigation counsel, paying a substantial advance of funds to litigation counsel; selecting a court in which to file the complaint, identifying candidates for local counsel in that court, contacting them, asking them to do conflict checks, selecting local counsel, and paying a substantial advance of funds to local counsel. During these ten days you must also draft your court papers, get them filed, and get court-stamped copies of the papers into the hands of ICANN.
Most competent counsel who are experienced with domain name cases will decline to get involved in such a case. The reasons are simple: (a) the UDRP case may have been mishandled, making it nearly impossible to win a later court case; and (b) ten days is really too short a time to get everything done that must be done. There is not enough time to do a good job.
What to do if you are sued. Some covetous parties who seek domain names owned by innocent domain name owners will choose to use court litigation rather than a UDRP proceeding. The reason is simple -- if the domain name owner is innocent, then the UDRP panel may well rule in favor of the domain name owner, and it won't cost the domain name owner much money to prevail. In such a case, then, the covetous party may sell choose to go to court in the hopes that the cost of litigation (much higher than the cost of a UDRP proceeding) will induce the innocent domain name owner to give up and hand over the domain name.
The worst thing to do in such a case is to do nothing. If you fail to answer timely, the court will enter a default judgment against you.
If you are sued, you should consult competent counsel who are experienced with domain name cases. Competent counsel may be able to find steps which may be taken in your case to improve your bargaining power and your prospects of getting the case decided in your favor or thrown out. Such counsel may, for example, use Federal Rule of Evidence 408 to try to have settlement discussions excluded from the case.
As mentioned above, finding competent counsel who are experienced in domain name matters to represent you in a UDRP case is quite difficult. It is even more difficult in a court case, because the lawyer needs to know that he or she will be paid from now until the end of the case. Once a lawyer appears on behalf of a client in court, it is often very difficult to get excused from a continued obligation to represent the client to the end of the case. For this reason, experienced counsel will typically ask for a substantial advance of funds before taking on the case.
There are the previously mentioned difficulties, for example that a lawyer who is experienced in this area is probably quite busy and cannot readily take on more cases, due to prior obligations to existing clients.
One of the biggest problems comes if (as is usually the case) there were some sort of communications in the time before you were sued. There may have been a cease-and-desist letter or emails or other communications. If you responded to those communications yourself (without benefit of counsel) then there is a substantial risk you will have done things to weaken your case. Competent counsel, who are probably already fully booked with other work, will not want to take on a case where earlier mistakes were made and perhaps cannot be overcome or undone.
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