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Attorney Howard Neu's Annual Reports on UDRP Cases Bring Good News & Bad News for Domain Investors

Earlier this week, we published our 18th annual State of the Industry Cover Story in which 22 domain experts explained what fueled the 2021 boom in the domain market and provided their forecasts for the industry's prospects in 2022. Those we ask for commentary are among the busiest people in the business, so several we call on each year can't respond before our deadline. One of those this year was pioneering domain attorney Howard Neu who was tied up compiling his own popular reports on critically important UDRP case results. Howard published his latest reports this week and was kind enough to send us a summary of his findings so we can share them with you. His commentary is below. 

As you know, my primary legal practice is in defending registrants who find themselves on the wrong end of a UDRP Action.  The UDRP was set up by ICANN to make it easier and cheaper for trademark holders to obtain domain names from registrants that they believe are

Attorney Howard Neu
NeusNews.com

"confusingly similar" to their trademarks.  The primary purpose was and continues to be the best way to defeat cybersquatters and typo squatters who try to capitalize off of the trademark holders' fame and popularity by directing users to their site.  To a very great extent, this has been very successful in defeating those "domainers" who give all domain investors a bad name.

At NeusNews.com, I publish semi-annually the results of cases brought before the two primary providers of UDRP; WIPO and the FORUM.  Within the past few days, I have published the Annual Reports for both providers (WIPO Report, FORUM Report).  I am happy to say that the cybersquatters are still losing their domains to the trademark holders with 3,515 domains transferred at WIPO from default cases and 1,642 domains transferred at FORUM from default cases.  That means that over 5,000 domains were transferred from virtual cybersquatters.  This is why all domain investors are looked down upon by trademark holders and major corporations as "cybersquatters".

Fortunately, however, for those domain registrants and investors who have legitimate businesses, either by offering a product or service online, or by investing in domain names that have value, the trend may be looking a little more positive.  First; noticeable is the percentage of contested cases where the Complaint has been denied - 42% at the FORUM and 39% at WIPO. Second; noticeable is the increase in findings of abuse by the Complainants, known as Reverse Domain Name Hijacking (RDNH) - 44 at WIPO and 10 at the FORUM. Third; Panelists are looking more closely at the non-contested cases to make sure that the Complainant has stated what is known as a Prima facie case against the Respondent and at WIPO in the last 6 months, 15 claims were denied and 2 were found to be guilty of RDNH, and 15 claims were also denied at the FORUM.

The biggest problem for domain investors, however, is that they are now being held to a higher standard than other registrants when it comes to whether or not the domain in question was registered and is being used in "bad faith".  The general rule is that if you register a domain where there is no "confusingly similar" trademark OR use it by not trading on the fame of an existing trademark, there is no "bad faith".  That is because the UDRP Rule is that if a domain is registered AND used in "bad faith" it will be transferred to the Claimant.  Domain investors, however, must show that they did extensive research before they acquired the domain to make sure that there were either no existing trademarks at the time of registration, or that there was at least more than one trademark holder.  

A recent case held that there was only one trademark holder of a mark that was "confusingly similar" to the registrant's domain, and that therefore the registrant domain investor was targeting the claimant even though the domain was never offered by the investor to the trademark holder for sale and was not using it to capitalize on the claimant's trademark. The panel held that the domain investor registered the domain in "bad faith" and transferred it to the claimant.  This is going to make it increasingly difficult for auction houses, including GoDaddy's Afternic and drop catchers like Snapnames and NameJet to find domain investors who are willing and able to spend the time necessary to research each domain that is up for auction to determine whether or not the domain can be bid upon and registered without resulting in a UDRP Action.

Editor's Note: The issue that Howard raises about domain investors now having to meet a higher standard than other domain registrants in UDRP cases is a matter of fairness that should concern all investors. Fortunately, the Internet Commerce Association (ICA) exists to address just this kind of development. I believe the best thing we can all do to protect our rights and insure a level playing field  is to support the ICA as a member.

(Posted January 21, 2022)   

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