In a space of two days, two ICANN-related documents made their appearance: GAC’s response to the ICANN Board’s questions in relation to the scorecard and the new gTLD Applicant Guidebook responding to the GAC’s document. The issue of Rights Protection Mechanisms was apparently so significant that the GAC submitted its clarifications in a separate document from all other issues.
In relation to the RPMs, the latest version of the Guidebook seeks to strike an unsuccessful compromise in some issues and provides some significant changes to the previous version. However, for me two things stand out more than the others and I don’t suggest that the other issues are not of some concern: inclusion of all types of IP rights in the Trademark Clearinghouse and the ‘loser pays’ model of the Uniform Rapid Suspension System.
Inclusion of all types of intellectual property in the Trademark Clearinghouse!
The GAC’s responses in relation to the Clearinghouse provide some great insight regarding the vision the trademark holders in association with the various governments – most certainly those that have already indicated their wish for strict forms of IP protection – have for such a mechanism.
In particular, the GAC provided some clarification regarding its proposal for the inclusion of all types of intellectual property rights within the Clearinghouse. According to the answers submitted to the Board, the GAC explains that such an inclusion “would obviate the necessity to develop separate mechanisms for these types of intellectual property”. Exactly when did we discuss and further decide that copyrights and patents would require a similar mechanism? Where did ICANN acquire the legitimacy to authorize the creation of a mechanism for types of intellectual property other than trademarks? Well, we all know that ICANN does not have the legitimacy to even suggest policy for other types of IP rights (personally, I even contest its legitimacy to create policy for trademarks) and in any discussions we had about potential inclusion of other IP rights in the Clearinghouse even the trademark community failed to sell such a proposal. Simply, there are no valid arguments that would justify ICANN opening up the Clearinghouse to any forms of IP that can be valid or legitimate.
So, this begs the question: why does the GAC insist on it? I can think of one answer: by including all types of IP rights in the Clearinghouse, the IP community will have the opportunity to use the Clearinghouse for all kinds of purposes, e.g. for blacklisting domain names and registrants. This is not a Hollywood science fiction scenario (and, if it is, I certainly claim copyright before I get bullied into surrendering it). Both in the US (COICA) and UK (Policy dealing with domain names used in criminal activity), Congress and NOMINET respectively, are exploring ways concerning the take down of domain names that facilitate the infringement of copyright and the promotion/sale of rogue pharmaceuticals and counterfeit goods. We all know and have read the arguments with this kind of regulation – free speech, human rights and fair use are all at stake. We also know that certain governments do not pay attention to these concerns and continue to pretend that the only real victim here is the IP community. But, whereas such regulatory initiatives were limited to certain jurisdictions and national sovereignties, now they might become international policy. My point is this: if all types of IP rights were to be included, what would stop the Clearinghouse from using its database in a way far and beyond its original scope? What would prevent the Clearinghouse to start a separate ‘blacklist’ that lists those domain names that legislation like COICA addresses? How can we ensure that the database that will be created under COICA will not be fed into the Clearinghouse?
In all this, ICANN does not appear to take the GAC’s considerations on board, but does not appear to either categorically reject them. ICANN chooses to be vague on this issue. In section 3.2.4, ICANN’s final version of the Clearinghouse states: “The proposed standards for inclusion in the Clearinghouse are: other marks that constitute intellectual property”, which might simply be addressing what GAC refers to as ‘local rights’, although, even in this case, local rights are subject to cultural relativism and are highly contested because of their highly national nature; and, then in section 3.6 “Data supporting entry into the Clearinghouse of marks that constitute intellectual property of types other than those set forth in sections 3.2.1-3.2.3 above…”, which sort of gives the Clearinghouse carte blanche into accepting other forms of IP rights; and, finally, the way the term ‘ancillary services’ is used in the final version of the Guidebook is also alarming. The original vision of ‘ancillary services’ was to put to rest the debate as to whether common law marks should be included in the Clearinghouse; and, because the community could not decide, the idea was to allow the inclusion of common law marks through an ‘ancillary services’ mechanism. Now, ancillary services are divorced from their association with what types of trademarks should be included and could be interpreted as allowing the Clearinghouse to provide services – classed as ‘ancillary - for other types of intellectual property.
This provision in the Clearinghouse is vague and opaque – and we all know vague policies can mean one thing: wide, discretionary and potentially bias interpretations. At least, this is the case with ICANN’s policies and I hope I get to be wrong.
The ‘Loser Pay’s model in the Uniform Rapid Suspension System (URS)
In light of news hitting the Internet that trademark bullying is not only a rumor but a current practice exercised by big and powerful trademark owners, ICANN has submitted in its recent version of the URS a provision for a ‘loser pays’ all model to domain name disputes. According to the provision: “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”.
Although the reality is indeed that if someone registers this amount of domain names corresponding to a certain mark, that someone is most probably a cybersquatter, ICANN does not explicitly state whether these 26 domain names should come from the same individual. ICANN only states that the Complaint should list 26 or more domain names, but it does not clarify whether the complaint should be against the same respondent. So, again here, this provision can be read as allowing the Complainant to bring one complaint for several domain names which concern the same mark but are registered by different registrants. Can this be the case? There is nothing to suggest otherwise and, if the discretion panels normally exercise in such policies is indicative, nothing stops the URS from being expanded to such a procedural allowance.
But, the ‘loser pays’ model, even if this limited, creates a much bigger problem. It feeds into trademark intimidation and bullying, sort of legitimizing it if you wish. The fact is that, so far, trademark bullying occurred through the fear of court litigation and its associated costs. The message to registrants was clear: we will sue you if you don’t comply and, if we do, you end up engaging and paying a lot of money, which we can afford and you can’t. So, its better to surrender your domain name now that you still have the time. All this was happening at a national level. Now, with this provision, the same practice will also happen at an international level with the blessings of ICANN.
Imagine, for instance, someone who has registered 26 variations of a trademark for free speech purposes. Will that someone be subject to a URS and, more importantly, to a potential ‘loser pays’ model?
This provision will certainly disincentivize legitimate registrants from responding, encouraging further the existing culture of defaults and creating an unbalanced and biased system. Needless to say that the URS is not equipped for such a provision. The URS lacks the checks and balances that exist in traditional adjudication as it promotes speed. You cannot have a system that wishes to award such costs and not have some checks that ensure this takes place according to due process. Systems, like the UDRP and this one, are prone to bias and abuse as they are conceived to protect certain rights – so why feed into this bias?
So, ICANN has entered again a very dangerous territory. The compromise solution that ICANN provided (remember that the GAC originally did not want to put a cap in the ‘loser pays’ model) is as problematic. The criterion that ICANN uses is not clear and the provision is certainly open to the widest interpretations possible. I hope I am mistaken here, but this system can easily backfire and it will certainly allow many mark holders to use also the URS as a tool for intimidation and bullying.
For adjudicators and decision makers default constitutes perhaps one of the major procedural hurdles during the adjudication process. A defaulting party is the one that fails to appear before a court of law or a tribunal within a timely manner, thus failing to exercise her right of defence. Unquestionably, this kind of procedural awkwardness imposes a shadow of doubt in the delivery of justice. The problems with default are many: defendants don’t get to respond to the plaintiff’s assertions; judges find it extremely hard to produce solid decisions; justice struggles. If we were to prioritize, we could easily argue that the greatest challenge of default focuses on how the adjudicator will be able to reach decisions in a fair and equitable manner without, however, capitulating its own obligation for independence and impartiality; the judge cannot possibly be asked to read the defaulting party’s mind, thus inevitably decisions need to be taken absent the defendant.
But somehow, even in the absence of the defendant, justice is still ensured. The existing checks and balances of traditional adjudication processes alongside axiomatic principles relating to the rights of the parties provide a sound basis for the delivery of justice. As part of their mandate to deliver justice, courts have to make sure that the defendant is served and, if that fails, at the very minimum the court must exhaust all the possibilities for service of process. At the same time, courts also have to abide by the idea of the presumption of innocence and the right of defence. Article 48 of the EU Charter of Fundamental Rights states: “1. Everyone who has been charged shall be presumed innocent until proven guilty according to law. And, 2. Respect for the rights of the defence of anyone who has been charged shall be guaranteed”.
With this in mind, nothing in ICANN’s dispute resolution mechanisms remotely resembles this thinking. The truth is that ICANN’s processes have historically suffered from the issue of default. When the Uniform Domain Name Dispute Resolution (UDRP) was created back in 1999, default was not identified as part of its procedural rules. It was an issue that the drafters of the UDRP had either not considered or they intentionally omitted. But, default was inevitable, especially in a mechanism designed for online disputes like the UDRP, which concerns parties located anywhere in the world and everything is done electronically, from the submission of the necessary forms until the delivery of justice. So, when default started creeping into the UDRP system, the panels opted for the easiest, fastest and most unfair option – they associated it with bad faith, generating this way a vicious circle of decisions that made all defaults indiscriminately tied to bad faith. And to make matters much worse, no one within the adjudication process (ICANN or WIPO or any other accredited dispute resolution provider) stopped to question or even investigate some of the possibilities of default. Because bad faith aside, default may occur for various reasons: the domain name holder (respondent) did not receive the complaint because the email went into her spam folder; the respondent did not have time to respond to the complaint (the UDRP gives the respondent 14 days to respond); the respondent resides in a developing country or a somewhere with limited Internet access; the respondent does not speak English (and most of the complaints are submitted in English); the respondent does not understand what the UDRP is or how it works; the respondent does not have the time or money to hire an attorney to assist with the response – and the list of reasons goes on.
Fast forward now to ICANN’s new gTLD program and the idea of a Uniform Rapid Suspension System (URS). After years of debate, multiple versions of the same policy and controversial meetings, the issue of default still appears not to be settled correctly and to constitute one of the worst attributes of ICANN’s dispute resolution mechanisms. The Governmental Advisory Committee’s (GAC) recommendation, which in relation to default has been accepted by the ICANN Board, basically disseminates one simple message: default means bad faith. The GAC scorecard says: “If, as is expected in the majority of cases, there is no response from the registrant, the default should be in favour of the complainant and the website locked”. All this sentence is wrong: ‘as expected’ means that default constitutes some sort of a bizarre normative account in domain name disputes; ‘in the majority of cases’ means that without having implemented the URS, we should expect more than half of the URS cases to be in default; ‘the default should be in favour of the complainant’ means default equates to some form of malicious conduct.
On top of all this, the Examiner is stripped of any right to attempt to identify good faith, even in the case of default. Using what I consider a very bad choice of words to refer to the party defaulting as ‘non-cooperative’ both ICANN and the GAC agree, “In addition, the examination of possible defences in default cases according to para 8.4(2) means an unjustified privilege of the non-cooperating defendant.” Here is the paradox with this approach. On the one hand, the UDRP (and the current language of the URS) give wide discretionary powers to the panels to find bad faith and interpret it any way they see fit. On the other hand, however, it doesn’t allow the panels to find good faith and apply it. The argument goes that adjudicators cannot be expected to be ‘mind readers’. Sure and I am sure that none of us wants them or expects them to be although some UDRP panels have already done so to prove the impossible (for example, in Educational Testing Services v. TOEFL, the panel seeking to establish bad faith said exercised its discretion by stating the following: “[…] because Respondent is contributing no value-added to the Internet – it is merely attempting to exploit a general rule of registration – the broad community of Internet users will be better served by transferring the domain name to a party with a legitimate use for it.”). But, some domain names are, on their face, registered for fair use. Take, for instance, <ihatebrand.com> - wouldn’t you consider use of such a domain name to fall under fair use?
So, we find ourselves in a very bad conundrum – if the new gTLD program is meant to build bridges and invite applicants from across the world – developing countries included – then this approach will make it impossible. We need to understand and appreciate that not all registrants are bad actors who wish to take advantage of trademarks and we need to find ways to differentiate between those in good faith and those in bad faith. A good way would be to allow the Examiner, should she wishes to, to make determinations of good faith.
The long-awaited GAC ‘scorecard’ on the protection of trademarks was released yesterday and, unfortunately, it did not come as much of a surprise. Following the direction that the USG ‘scorecard’ set in the beginning of the month, the recommendations of the GAC focus primarily on three rights protection mechanisms: the Trademark Clearinghouse (TMC), the Uniform Rapid Suspension System (URS) and the Post-Delegation Dispute Resolution Process (PDDRP). Although the recommendations for the TMC can objectively be negotiated as long as the official line remains that the creation of such a database will not confer any additional rights to right owners, it is the attempt of the GAC to change the substantive and procedural aspects of the URS that is of more concern.
The GAC’s advice in relation to the URS consists of the following elements:
· The complaint should be simplified by replacing the 5000 word free text limit + unlimited attachments with a simple pro forma standardised wording with the opportunity for not more than 500 words of freeform text and limit the attachments to copies of the offending website.
The idea of providing a standardised wording is not a good one, especially when it comes to disputes concerning two conflicting rights. Disputes vary both in nature and content and, despite the fact that the URS is meant to be used for those clear-cut cases of abuse, this recommendation is based on the arbitrary assumption that all types of disputes will inherently be the same. A standardised format will be detrimental in the delivery of justice. We need to bear in mind that a URS examination (in a similar manner to the UDRP) is based solely based on the documents submitted by the parties and panels make their determinations based on the content of these very submissions. How will a panel be allowed to make conclusive determinations if a standardised format is only permitted? I appreciate that the URS is meant to be used for those types of activities that on their face they appear egregious, but for the panel to determine the harmful activity parties should be permitted to produce their contentions, which will not be able to do if a standardised form is adopted.
· Decisions should be taken by a suitably qualified ‘Examiner’ and not require panel appointments.
Have we not learned anything from the UDRP and the potential bias that this recommendation will invite? If one thing is clear after ten years of UDRP adjudication is that the way panels are assigned to decide individual cases is highly problematic and that there is not a mechanism to hold panels accountable for the decisions they reach. When the same panellists are used, the possibility for bias becomes rife (http://www.dncrunch.com/?p=3199). But, at least the UDRP still operates on the basis that panels are assigned from a pool of panellists. Now, the GAC wants to make this rule redundant and suggests that a suitably qualified ‘Examiner’ will be deciding the case. This recommendation will make someone very rich and will allow the trademark community to ‘play’ and abuse the notion of adjudicators’ impartiality and independence.
· Where the complaint is based upon a valid registration, the requirement that the jurisdiction of registration incorporate substantive examination should be removed
This recommendation is reasonable to the extent that all trademark registrations, despite whether the jurisdiction granting them provides substantial review or not, can be subject to a URS process. This can prove to be disadvantageous for mark owners, whose jurisdiction requires a more substantive review, but at the same time respects the individuality of every trademark registration system. As long as mark owners that fail to get their trademarks in their own jurisdiction do not seek to play the system by attempting to register them in less-demanding jurisdictions, then this recommendation does not add much.
· If, as expected in the majority of cases, there is no response from the registrant, the default should be in favour of the complainant and the website locked. The examination of possible defences of default cases according to para. 8.4 (2) would otherwise give an unjustified privilege tot eh non-cooperating defendant.
This recommendation has two problems: first of all, it designs a system based on the presumption of default (“as expected in the majority of cases”). No one, including the GAC, can determine whether or how many defaults will take place; similarly, no one can possibly pre-determine the reasons for the default, which brings me to the second problem. Default does not always mean bad faith. Despite the efforts of UDRP panels to establish such a normative rule, the simple fact remains that default can be attributed to a variety of reasons and, unless they are exhausted, bad faith is not to be considered the main reason behind default. This provision will be highly problematic for those registrants that are located in remote and isolated areas, where Internet connections are neither as available nor as inexpensive. Especially, governments of developing countries should object to this provision, as their registrants might find it difficult to receive the complaint and respond in the limited time of 14 days, which is currently recommended.
· The standard of proof should be lowered from ‘clear and convincing evidence’ to a preponderance of evidence.
This recommendation makes me wonder whether the GAC has really considered its potential implications. A preponderance of evidence means that it is most likely that not that the fact that the complainant asserts is true. This means that even if there is an indication that a domain name might be infringing a trademark, then the URS can be activated; but, there also might be a possibility that this is not the case. Why then drag the registrant into this process based only on a possibility and not on a fact? This provision, coupled with the standardised form and the default, will ensure that a trademark owner will always prevail in the URS.
· The ‘bad faith’ requirement in paras 1.2(f), 1.2(g) and 8.1(c) is not acceptable. Complainants will in only rare cases prevail in URS proceedings if the standards to be fulfilled by registrants are lax. Correspondingly, the factors listed in paras 5.7(a) (‘bona fide’) and b) ‘been commonly known by the domain name’ can hardly allow a domain name owner to prevail over the holders of colliding trademarks.
What the GAC seems to be suggesting here is that no standards should apply for the determination of cybersquatting. If this is the case (and it appears to be so), then we are talking about a dispute resolution mechanism that will afford intolerable levels of discretion to the ‘Examiner’ to make final determinations. The GAC misunderstands the nature of the bad faith provisions. In the UDRP (and in similar proceedings) the complaining party carries the burden of proof, who has to prove that all three elements (identical or confusingly similar, no rights and legitimate interests and bad faith registration and use) are applicable. The list of bad faith factors is only indicative and is meant to provide the panel with some guidance as to how to determine bad faith. Now, the GAC wants to abandon this direction and give the freedom to the Examiner to make any determinations it wants without any guidance. This does not assist in the creation of a ‘Uniform’ system, but contributes to a system that will be based on arbitrary justifications and reasoning.
Similarly, the GAC wants to jettison the ‘fair use’ provisions within the URS, the only tool at the disposal of domain name holders to prove legitimate rights on the domain name. And, the justification offered by the GAC is simply nonsensical.
· A ‘loser pays’ mechanism should be added.
This recommendation is problematic for various reasons. First and foremost, the URS is a rapid review process. It is not a full and robust review of the underlying facts. Conclusions are rapid, thus mistakes will inevitably be made. Losing the domain name is bad, but the financial consequences of a URS action on the registrant can be disastrous.
The STI anticipates that a URS action will run about $500 — far cheaper than court, and about a third the price of a UDRP action. While this is considered a small amount of money for a large trademark owner, it is an enormous amount of money for a small businesses, an NGO, and an individual in any part of the world. A loss, even for a good faith registration, could be financial disastrous.
The 'Loser Pays' is inherently pro-complainant, and would especially favor big brand complainants who can outspend any individual legitimate registrant.
· There should be a clear rationale for appeal by the complainant. The time for filing an appeal in default cases must be reduced from 2 years to not more than 6 months. In addition, the examination of possible defences in default cases according to para 8.4 (2) means an unjustified privilege of the non-cooperative defendant.
There are three issues that the GAC addresses here and all three seek to work only to the advantage of the trademark owner.
a. The GAC suggests that the complainant should be given the right of an appeal: This would be fine, if both parties were subjected to the same deadlines and limitations. But, the truth is that complainants and domain name holders are asked to operate on completely different timeframes. The complainant, for instance, has all the time in the world to prepare the complaint before submitting it; the respondent has only 14 days to do what the complainant might have taken months to prepare. Moreover, the appeal process is meant to provide relief to the losing party and this is what the Applicant Guidebook suggests (12.1 Either party shall have a right to seek a de novo appeal of the Determination based on the existing record within the URS proceeding for a reasonable fee to cover the costs of the appeal). Why is it necessary to make such an explicit mention to the right of the Complainant to appeal?
b. The time for filing an appeal in default cases must be reduced from 2 years to not more than 6 months: This reduction is arbitrary and too short. A good compromise would suggest for the filing of an appeal in default cases to be reduced from 2 years to not more than 1 year.
c. In addition, the examination of possible defences in default cases according to para 8.4 (2) means an unjustified privilege of the non-cooperative defendant: Once again, the GAC here operates on the assumption that the reason for default is bad faith. Many respondents appear non-cooperative not because they are acting in bad faith, but because there are such provisions that indiscriminately equate default with bad faith, thus limiting the chances of a successful response. At the same time, what the GAC deems as non-cooperative, can be reasons for the respondent not being able to respond on time due to various technical or personal reasons.
· A successful complaint should have the right of first refusal for transfer of the disputed domain name after the suspension period so that the complainant is not forced to pursue a UDRP proceeding to secure a transfer.
The original justification of the URS as introduced by the IRT was that the distinct feature of the URS was its remedies. According to the IRT report:"The URS is intended to supplement and not replace the UDRP. They are separate proceedings with distinct remedies. The URS is designed to provide a faster means to stop the operation of an abusive site. The UDRP is designed to result in the transfer of the abusive domain name."
Seeking to allow the transfer of the domain name under the URS becomes problematic at various levels. First of all, the whole foundation of the URS's justification (and the way it was 'sold' to the Internet community) collapses. Secondly, by allowing transfer under the URS a variety of issues emerge: what will be the compatibility between the URS and the UDRP? What will the differences be between the two mechanisms?
If the URS is not meant to be a process that invites substantive evaluation but rather seeks to examine superficially the alleged infringement, then allowing a remedy that seeks transfer of the domain name is against due process and basic principles of justice.
Finally, transfer of the domain name under the URS was never part of the original IRT recommendation.
Konstantinos Komaitis, the individual!
Views are my own and my own only!