On March 16, 2009, the World Intellectual Property Organization (WIPO) announced that a record number of domain name dispute complaints were filed with WIPO in 2008. The 2,329 complaints filed in 2008 represent an 8% increase over the number of cases filed in 2007.

Cybersquatting and the UDRP

Cybersquatting is the bad faith registration and/or use of a domain name that is identical or confusingly similar to another’s trademark or trade name. Cybersquatters, like real-world squatters, occupy valuable virtual real estate that would be more productively or appropriately used by the rightful owners of the trademarks or trade names that are incorporated or referenced within the domain names.

To combat cybersquatting, the Internet Corporation for Assigned Names and Numbers (ICANN), the entity charged with administering the domain name system, instituted the Uniform Domain-Name Dispute-Resolution Policy (UDRP) in December 1999. The UDRP, and highly similar policies, are now incorporated contractually into the domain name registration agreements for all .biz, .com, .info, .name, .net, and .org top-level domains, and certain country code top-level domains such as .us. Currently, WIPO and other dispute resolution providers administer UDRP arbitration proceedings through which trademark and trade name owners may recover domain names that have been registered and used in bad faith.

Under the UDRP, a domain name will be ordered transferred to the complainant if the complainant demonstrates the following: (1) the domain name is identical or confusingly similar to the complainant’s trademark; (2) the current registrant has no rights or legitimate interests in the domain name; and (3) the registrant registered and is using the domain name in bad faith. The UDRP can be a more efficient process for resolving domain name disputes than pursuing the cybersquatter in U.S. federal court. In addition to often being efficient, UDRP proceedings are very effective for trademark owners. According to WIPO statistics, more than 30% of UDRP cases settle without a panel decision. Of those cases that do proceed to a panel decision, 85% of the decisions favor the trademark owner/complainant, while only 15% favor the domain owner. The vast majority of UDRP cases result in the disputed domain name being transferred to the trademark owner. However, it is important to make sure that the UDRP requirements have been fully established and set forth in the UDRP complaint as the victory percentage for trademark owners has dropped in recent years as cybersquatters have become more savvy in responding to UDRP complaints.

UDRP After 10 years: 2008 Sets Record for Number of Proceedings

More than 14,000 domain name disputes have been resolved through the UDRP since its launch in December 1999. The 14,000-plus UDRP cases covered more than 26,000 separate domain names and involved parties from more than 100 countries. The United States, United Kingdom, Spain, France, Germany, Switzerland and China were the most frequently cited locations for UDRP complaint filers. However, the vast majority of domain names involved in disputes were registered in the United States, and 79% of the disputed domain names were .com domain names. These facts likely reflect the large economic role of the United States in global commerce as well as the continued preference for .com domains among Internet users and merchants.

The top five business sectors involved in UDRP proceedings were biotechnology and pharmaceuticals, banking and finance, Internet and IT, retail, and food, beverages and restaurants. The foregoing five sectors accounted for more than 40% of all filings. Entertainment, media and publishing, fashion, and hotels and travel accounted for the majority of the remaining proceedings. The fewest complaints were filed for domain names related to sports, insurance and luxury goods.

Proposed Expansion of Domain Name Space May Result in Increased Use of UDRP

ICANN has proposed releasing a virtually unlimited number of additional domain names; e.g., internationalized domains containing non-Latin scripts and customizable domain registries (such as .bathtubs or .beverages) that may sell such domains to the public. With this proposed expansion in the number of available domain names coming as soon as late 2009, the number of cybersquatters is expected to also greatly increase. If this occurs, the UDRP and UDRP-like procedures will become even more valuable tools for trademark owners to protect their marks and brand identities.