Relationship Between the Domain Dispute Policy and the Anticybersquatting
By Jay Hollander
Jay Hollander, Esq. is the principal of Hollander and Company LLC, www.hollanderco.com, a New York City law firm concentrating its efforts in the protection and development of property interests relating to real property, intellectual property and commercial interests, as well as related litigation.
The content of this article is intended to provide general information relating to its subject matter. Providing it does not establish any attorney-client relationship and does not constitute legal advice. Personal advice in the context of a mutually agreed attorney-client relationship should be sought about your specific circumstances.
On the battlefield between trademark owners and alleged
cybersquatters, one of the accepted rules of engagement
in recent years has been that most domain name disputes
would be resolved according to the Uniform Domain Name
Dispute Resolution Policy (UDRP), an administrative policy
created by the Internet Corporation for Assigned Names
and Numbers (ICANN).
There is good reason for this rule of engagement. Compared
to a courtroom battle, fighting for domain names in an
administrative UDRP proceeding makes good economic and
business sense. First, it is fast, with papers being submitted
within weeks and decisions coming barely a few months later.
Second, the only relief possible is a transfer or cancellation
of the domain name. In other words, there is no fear of
paying the other side's legal fees to keep a litigant up
To be sure, if unsuccessful trademark owners wanted to
go further and start a court case, either in conjunction
with or after, a UDRP proceeding, they could, either under
the Anticybersquatting Consumer Protection Act (ACPA) or
under other trademark or unfair competition statutes and
court precedents. Some have chosen this dual-track course,
but most haven't.
There have been many questions and complaints about how
to resolve domain name disputes ever since the Internet
went corporate in the mid 1990s. All the pertinent recent
laws, such as the ACPA, the Federal Trademark Dilution
Act (FTDA), and the UDRP itself, were written with the
main goal of protecting trademarks. Some people expressed
worries that the balance had tilted too far in the direction
of corporate trademark holders and, even though the UDRP
rules specifically allow either party to take a dispute
to court, it wasn't altogether certain how a person who
does not own a trademark might seek relief in the courts
if he lost his domain name under the UDRP procedure and
thought it an unjust ruling.
But a recent case coming out of the U.S. Court of Appeals
for the First Circuit has made attempts by trademark owners
to recover domain names a potentially more expensive and
longer battle than they may have assumed. The case shows
how a domain name registrant that loses a UDRP case can
potentially still recover the domain name in federal court.
The case is Sallen v. Corinthians Licenciamentos LTDA,
and it involves a dispute between a Brazilian soccer team
known as the Corinthians and a man who owned the domain
name "corinthians.com" and used it to post scriptures
from the Bible book of Corinthians,. The court raised "important
issues about the relationship between" the ACPA and
the UDRP. Specifically, the court ruled that the ACPA grants
to domain name registrants who have lost domain names under
the UDRP an affirmative cause of action in federal court
for a declaration of non-violation of the ACPA and for
the return of a wrongfully transferred domain name.
The court's decision surprised some because in the Sallen
case, the domain name registrant, had contractually agreed
to arbitrate any dispute under the UDRP when it registered
the domain name with an ICANN-accredited registrar, and
an administrative panel already had concluded that the
domain name registrant had failed the same basic cybersquatting
tests set down under the ACPA.
The New Wrinkle in the Court's Ruling
A party always has been free to initiate litigation over
rights to a domain name by filing a claim in a competent
court instead of initiating a UDRP administrative procedure.
He also was allowed to seek a "de novo," or new,
review of a dispute in the courts, according to UDRP rules,
but very few losers under the UDRP did so. In the Sallen
case, the new wrinkle is that the loser of the UDRP ruling
sought injunctive relief under the ACPA, a law particularly
designed to protect trademark holders, not alleged cybersquatters.
Did Sallen, after being found a cybersquatter under the
UDRP, have the right to seemingly turn the ACPA on its
head by using it against a trademark owner to recover a
domain name he lost?
The lower court said "no," agreeing with the
trademark owner that, because the owner had represented
to the court that it had no intention of further suing
Sallen after winning the UDRP proceeding, there was no
longer a required "case and controversy" actually
before the court to adjudicate.
In other words, because Sallen had lost before the administrative
panel and because the trademark owner had no plans to sue
for other relief in federal court, that court had no further
power or "jurisdiction" over the matter.
But the Court of Appeals disagreed, saying that there
was still a real dispute if each party claimed the right
to the same domain name and Sallen claimed that the UDRP
determination was wrong.
Using that simple logic, the First Circuit has ruled that
a court finding in favor of a domain name registrant under
the ACPA trumps previous contrary determinations by a UDRP
panel, and, in so ruling, has opened the door to federal
court review of UDRP rulings, by making it clear exactly
how a loser under the UDRP can go forward with a claim
in federal court under the ACPA.
What the Appeals Court Decision Means to You
It is important to note that the First Circuit's decision
does not mean Sallen has won the domain name; he still
has to persuade the court that he has the right to it.
What he won is simply the right to be heard. But this fact
alone has important implications to domain name registrants
and trademark owners alike.
If you are a respondent in a losing UDRP action, it means
all is not lost, or as they say, "It ain't over 'til
it's over." If you are simply convinced that an injustice
has occurred, you can do what Sallen did. But be aware
that you must move fast and file your case in court within
just 10 business days of losing a UDRP ruling.
More importantly, there is also a financial risk in this
strategy. Unlike the UDRP remedies, which are limited to
transfer or cancellation of the domain name, a registrant
found to be a cybersquatter under the ACPA is liable for
damages to the trademark owner equal to either statutory
damages up to $100,000 per domain name, or actual damages
and profits, as well as court costs and attorneys' fees,
at their election and at the court's discretion.
On the other hand, if you're a trademark holder who has
won a domain name under the UDRP, you might want to hold
off on that victory party for a few days. While it has
been rare in the past for losing respondents to seek review
in the courts, the court's decision in Sallen logically
can be expected to encourage others to try this mode of
attack. And that means that, before you make a move, you,
along with your attorney, need to analyze your particular
fact pattern and decide whether the UDRP is the best procedure,
or the only procedure, you wish to consider and to take
steps in advance of any UDRP filing to be prepared for
an ACPA review immediately following the ruling, whether
you win or lose.
Although it's too soon to tell for certain, the appellate
decision in the Sallen case may be the first sign of the
transformation of the UDRP from an inexpensive method of
actually resolving the bulk of domain name disputes into
nothing more than an inexpensive lower court determination,
to be followed by a lengthy and expensive appeal.
Copyright © Jay Hollander, 2007. All Rights Reserved.