Website-law.co.uk

Documented domain name management policies are exceptional. The rule is ad hoc registration of a range of domain names across a range of extensions, the domains being chosen by different people within an organisation at different times and for different purposes. The result: chaos.

If you have been asked to, or have decided to, formulate a domain name management policy for your organisation, this post should help. I have set out below details of what I consider to be the main principles and considerations which should inform any domain name management policy:

• Individually, domain names are not expensive (costing only a few pounds each per year).

• Providing domain names are all registered through an efficient domain name registrar or registration agent, managing even large portfolios should not be a significant administrative burden.

• There are usually many variations of any trade mark or name (including plurals, misspellings, derogatory variations, domains with common prefixes and suffixes, and hyphenations); and there are hundreds of possible domain name extensions (e.g. .com, .org, .de, .cn, .tv). For these reasons, there may be many thousands of domain names that are of (at least theoretical) interest to a trade mark owner.

• There are three main reasons for registering a domain name (or maintaining a domain name registration): first, because the registrant wants or may want to use the domain name to point to a website; second, because the registrant wants to stop others from registering or using the domain name; and third, as an investment.

• Domain names are typically registered for one or two or a few years at a time, and they lapse on a regular basis.

• It is possible to set up a watching service on domain names that “drop” off the register, so that they can be automatically registered when this happens. This practice is sometimes called “drop catching”.

• It is also possible to set up a watching service to monitor third party domain registrations that may trespass upon the watcher’s rights.

• Domain names purchased in the secondary market are much expensive than new registrations. During 2007, the average reported price of domains sold via Sedo (one of the main marketplaces for domain sales) was £1,253.

• Domain name arbitration proceedings are special contract-based administrative proceedings that can be used by trade mark owners to obtain domain names registered by others which trespass upon their rights.

• Domain name arbitration procedures are generally perceived to be complainant-friendly: around 70%-80% of complaints that go to a decision result in a transfer of the domain name to the complainant.

• Notifying a domain name owner in advance of commencing arbitration proceedings may lead to the owner taking actions which could prejudice those proceedings (e.g. transferring the domain to a new owner such that it becomes harder to prove that the domain was registered “in bad faith” (in UDRP proceedings)).

• Domain name arbitration proceedings are not inexpensive, but they are a lot less expensive than court proceedings. Typically, a complainant in a domain name arbitration involving one domain name might expect to pay between £800 and £900 in official fees, and (if professionally advised) £750 to £2,500 in professional fees.

• Domain name arbitration proceedings are much quicker than court proceedings, typically taking 7 to 9 weeks from start to finish.

• Shortly after the commencement of a domain name arbitration, the domain name will be “locked” so that it cannot be transferred by the owner during the course of the arbitration.

• In domain name arbitration proceedings, pre-complaint inter-party correspondence may be disclosed to the panel or expert decision maker – there is no equivalent to the “without prejudice” rule that applies in court.

• Where a trade mark owner purchases a domain on the secondary market in circumstances where that trade may have been able to recover the domain by means of domain name arbitration or or court proceedings, then that purchase may have the effect of encouraging others (professional cybersquatters and “domainers”) to register and use domain names which trespass upon the owner’s rights.

• Where a domain name is to be transferred, and the transferee is not entirely satisfied as to the bona fides of the transferor, then the consideration for the transfer will usually only be paid after the domain name is in the control of the transferor or (if this is not acceptable to the transferor) the domain or consideration will usually be held in escrow.

• UK litigation involving domain names will typically take the form of trade mark infringement and/or passing off proceedings. These kinds of proceedings call for specialist legal representation, and can be very expensive. It would not be uncommon for one party’s legal fees in a case taken all the way to trial to exceed £250,000 or even £500,000.

• In a trade mark infringement or passing off case, between 12 and 24 months may elapse between the date of issue of the proceedings and the trial (even longer in some cases).

• It is helpful to a complainant in domain name arbitration proceedings – and very helpful to a complainant in court proceedings – to be able to ground a complaint or claim in registered trade mark rights (rather than unregistered rights).

• One major advantage of litigation over domain name arbitration is that, in court proceedings, the successful party’s legal costs (or a portion of them) will usually be payable by the unsuccessful party. However, where domain name litigation is undertaken against individuals or companies without significant UK assets, recovering legal costs is likely to prove problematic.

There are of course other factors, but these seem to be to be the critical ones.

A complainant in domain name arbitration proceedings must establish rights in the trade mark or name used to ground the complaint.

For example, the Uniform Domain Name Dispute Resolution Policy (UDRP) only applies where:

“[the registrant’s] domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights” (Paragraph 4(a)).

Similarly, the Nominet Dispute Resolution Services (DRS) Policy only applies where the domain name in question was registered or otherwise acquired in a manner which trespassed upon the “Complainant’s Rights”:

“Rights includes, but is not limited to, rights enforceable under English law. However, a Complainant will be unable to rely on rights in a name or term which is wholly descriptive of the Complainant’s business ” (Paragraph 1).

Under the .eu Alternative Dispute Resolution Rules (ADR Rules), a complainant must show that the domain name is

“…identical or confusingly similar to a name in respect of which a right is recognized or established by the national law of a Member State and/or Community law” (Paragraph B11(d)(1)(i)).

Generally speaking, this is one of the easiest things to show in a domain name arbitration.

A relevant registered trade mark will almost always be sufficient to establish rights. For example, the WIPO “consensus view” is that, if a complainant owns a registered trade mark that will automatically satisfy the threshold “rights” requirement.

For decisions made under the UDRP, the jurisdiction in which the trademark is registered will be irrelevant. However, Nominet DRS proceedings will usually only take account of UK or Community trade mark rights in connection with this requirement; and .eu ADR proceedings will usually only take account of Community trade mark or EU national trade mark rights in connection with this requirement.

Where complainants do not have relevant registered trade mark rights, they will have to rely upon unregistered trade mark rights. This usually means providing evidence of rights enforceable under the law of a particular jurisdiction. For example, a UK-based complainant without registered rights would seek to argue that it had rights under the law of passing off. Evidence might include details of the complainant’s business, history, sales and marketing.

Many domain name disputes settle by agreement: the domain name registrant agrees to transfer the domain name to the person making the complaint, often in exchange for payment.

I am often asked what price should be paid.

My answer usually depends upon three factors: (i) the probability of being able to recover the domain name through arbitration (or court) proceedings; (ii) the probable costs of doing so; and (iii) the value of the domain name to the complainant.

For example, suppose that a competitor of ours had registered <seqlegal.co.uk>.  We might assess our chances of recovering the domain name through the Nominet dispute resolution services as very good (say 90%).  We would know that the costs of recovering the domain would likely be the basic Nominet fee (£750 plus VAT) plus our own time spent preparing the complaint (which for the sake of argument we can value at £750 plus VAT).

Taking into account each of these factors, we would be investing £1500 plus VAT in a 90% chance of recovering the domain name.  So, subject to my comments below, £1500 plus VAT would seem to be a reasonable price to pay for a purchase of the domain name (i.e. a 100% chance of recovering the domain name).  If however the chance of recovery was lower, or the costs of arbitration proceedings were higher, the level of a reasonable price would rise.

The value of the domain name may also be relevant.  If <seqlegal.co.uk> was critical to our business, I might not want to risk a 10% chance of not recovering the domain name.  In those circumstances, I might pay a premium for the 100% chance of recovering the domain name.

Of course, in many cases settlement may be undesirable irrespective of price. Brand owners may be reluctant to reward a cybersquatter, and a payment may encourage other cybersquatters to try their luck.