Domain Name Disputes Decline as Internet Matures

The wild wild Web is getting tamed. Cyber-squatters no longer freely roam its highways looking for easy marks. And trademark owners who once went after anyone who crossed their path are now choosing their battles much more carefully.

Signs of this shift in the Internet landscape are plentiful. But perhaps most telling is the sharp decline in the number of proceedings being filed under the Uniform Domain Name Resolution Policy (UDRP), the principle means for dealing with trademark disputes over top-level domain names, such as those ending in .com, .net, .org or .biz.

The number of UDRP proceedings has dropped by almost half in the last two years, and by nearly 30% in just the last year. Last month's 136 filings represents a two-year low. And this is the case even though domain name registrations during the period have remained at a steady 29 million.

Trademark lawyers attribute the drop off to a variety of factors. For one, they say, with the slowdown in the Internet economy, the rampant cyber-squatting of the early days has tapered off.

'People are recognizing that not everything with a dot in its name is going to make them money,' said David H. Bernstein, a partner at Debevoise & Plimpton.

He added that the legal track record developed over the last three years of the UDRP's existence has also discouraged cybersquatting. About 70% of the 6,000 decisions to date have come down in favor of the trademark owner.

On the other side of the issue, trademark owners who used to contest every domain name that possibly infringed are now taking a more measured approach.

'Companies are starting to recognize that just because [a domain name] is out there doesn't mean it registers with people,' Bernstein said.

He said that in this regard, search engines have gotten much more sophisticated, able to sift through many of the old 'tricks of the trade,' Internet exotica such as trademark stuffing, metatags and wallpapering.

As a result, trademark owners today consider possible infringers somewhat less of a threat, since '99 times out of 100,' consumers are able to find the site they are looking for, he said.

In balancing the costs and benefits of a challenge, trademark owners will look at the content on the infringing Web site ' pornography is a big red flag ' whether there have been any customer complaints and any publicity the site has gotten, Bernstein said.

Other considerations may also convince a trademark owner to forego a challenge, said Ira Jay Levy, a partner in the New York office of Goodwin Procter.

'Companies have seen that overly aggressive attempts to enforce your mark can actually backfire on you,' he said.

Letter Text Online

For instance, Levy said, the Toho Company of Japan, which has the rights to the Godzilla name and character, recently ordered a Web site owner to shut down his site Davezilla.com. Instead, the site owner put the text of the letter online and the story ended up in The New York Times.

There is even a Web site now, www.chillingeffects.org, that collects and posts cease-and-desist letters from overzealous trademark owners, Levy said.

In these belt-tightening times, money is also an issue. In addition to the cost of arbitrating the dispute ' which although relatively cheap is still not free ' should it win back the domain name, the trademark owner must then manage, renew and deal with it year after year, Levy said.

He said he recently had a case in which the site holder had won 'three or four' previous disputes, generating a lot of favorable publicity for himself in the process.

'After a lot of soul searching, the client decided not to go after [the site holder] even though it stuck in his craw,' he said.

On the flip side, Levy said, trademark owners have to worry that they are vigorously enforcing their rights, or risk a finding that their inaction is viewed as an abandonment of the mark.

One solution is to send a 'soft' notice ' a very neutral letter as opposed to the standard cease-and-desist letter ' to the domain name holder. Basically the letter says, 'We are watching you and if you start to infringe, we will go after you,' Levy said.

Trademark owners are also simply choosing to strike a deal with cyber-squatters, said Amy Goldsmith, a partner at Gottlieb Rachman & Reisman in New York.

The price for domain names has gone down ' these days, it typically ranges from a few hundred to a few thousand dollars ' and with an agreement the trademark owner gets the benefit of certainty and a promise from the cyber-squatter to refrain from further infringing behavior, she said.

Opting to Watch

In cases in which the domain name does not have a Web site, trademark owners are also opting just to watch the site, and then register the name when the current registration lapses, Goldsmith said.

Monitoring for possible infringements has become much easier with the advent of Internet watch services. 'It's expensive,' she said, 'but it's worth it.'

When faced with a real problem cyber-squatter, going to court can actually be a better alternative than the UDRP despite the added expense of litigation, Debevoise's Bernstein said. Under the Anti-Cybersquatting Piracy Act, courts can ' and do ' grant damages, attorneys fees and even injunctive relief, he said.

Low-Hanging Fruit

The nature of the disputes that end up in UDRP proceedings has changed as well, Bernstein said.

Trademark owners have used the last two or three years to clear away the most egregious cases of cyber-squatting, he said. 'You don't get those low-hanging fruit anymore.'

Cases these days tend to be more difficult, said Bernstein, who estimates he has arbitrated nearly 100 domain name disputes.

He said he sees more disputes in which both parties have an arguable right to the name, or in which a retailer is using the name of a manufacturer to sell its product.

The number of no shows '- initially almost half the UDRP filings resulted in defaults ' has also fallen off dramatically, he said.

'Respondents are more willing to pay the fees to contest the claim,' Bernstein said.

Another fertile ground for dispute are the free speech cases, in which a Web site parodies or criticizes a company, such as the myriad 'www.[your company name here]sucks.com' sites.

But, Bernstein said, these kinds of claims do not do very well in court. 'Trademark owners need to recognize that they have to allow free speech on the Internet.'

'That's the beauty of the Internet,' he said.

Tamara Loomis is a reporter for the New York Law Journal.

The wild wild Web is getting tamed. Cyber-squatters no longer freely roam its highways looking for easy marks. And trademark owners who once went after anyone who crossed their path are now choosing their battles much more carefully.

Signs of this shift in the Internet landscape are plentiful. But perhaps most telling is the sharp decline in the number of proceedings being filed under the Uniform Domain Name Resolution Policy (UDRP), the principle means for dealing with trademark disputes over top-level domain names, such as those ending in .com, .net, .org or .biz.

The number of UDRP proceedings has dropped by almost half in the last two years, and by nearly 30% in just the last year. Last month's 136 filings represents a two-year low. And this is the case even though domain name registrations during the period have remained at a steady 29 million.

Trademark lawyers attribute the drop off to a variety of factors. For one, they say, with the slowdown in the Internet economy, the rampant cyber-squatting of the early days has tapered off.

'People are recognizing that not everything with a dot in its name is going to make them money,' said David H. Bernstein, a partner at Debevoise & Plimpton.

He added that the legal track record developed over the last three years of the UDRP's existence has also discouraged cybersquatting. About 70% of the 6,000 decisions to date have come down in favor of the trademark owner.

On the other side of the issue, trademark owners who used to contest every domain name that possibly infringed are now taking a more measured approach.

'Companies are starting to recognize that just because [a domain name] is out there doesn't mean it registers with people,' Bernstein said.

He said that in this regard, search engines have gotten much more sophisticated, able to sift through many of the old 'tricks of the trade,' Internet exotica such as trademark stuffing, metatags and wallpapering.

As a result, trademark owners today consider possible infringers somewhat less of a threat, since '99 times out of 100,' consumers are able to find the site they are looking for, he said.

In balancing the costs and benefits of a challenge, trademark owners will look at the content on the infringing Web site ' pornography is a big red flag ' whether there have been any customer complaints and any publicity the site has gotten, Bernstein said.

Other considerations may also convince a trademark owner to forego a challenge, said Ira Jay Levy, a partner in the New York office of Goodwin Procter.

'Companies have seen that overly aggressive attempts to enforce your mark can actually backfire on you,' he said.

Letter Text Online

For instance, Levy said, the Toho Company of Japan, which has the rights to the Godzilla name and character, recently ordered a Web site owner to shut down his site Davezilla.com. Instead, the site owner put the text of the letter online and the story ended up in The New York Times.

There is even a Web site now, www.chillingeffects.org, that collects and posts cease-and-desist letters from overzealous trademark owners, Levy said.

In these belt-tightening times, money is also an issue. In addition to the cost of arbitrating the dispute ' which although relatively cheap is still not free ' should it win back the domain name, the trademark owner must then manage, renew and deal with it year after year, Levy said.

He said he recently had a case in which the site holder had won 'three or four' previous disputes, generating a lot of favorable publicity for himself in the process.

'After a lot of soul searching, the client decided not to go after [the site holder] even though it stuck in his craw,' he said.

On the flip side, Levy said, trademark owners have to worry that they are vigorously enforcing their rights, or risk a finding that their inaction is viewed as an abandonment of the mark.

One solution is to send a 'soft' notice ' a very neutral letter as opposed to the standard cease-and-desist letter ' to the domain name holder. Basically the letter says, 'We are watching you and if you start to infringe, we will go after you,' Levy said.

Trademark owners are also simply choosing to strike a deal with cyber-squatters, said Amy Goldsmith, a partner at Gottlieb Rachman & Reisman in New York.

The price for domain names has gone down ' these days, it typically ranges from a few hundred to a few thousand dollars ' and with an agreement the trademark owner gets the benefit of certainty and a promise from the cyber-squatter to refrain from further infringing behavior, she said.

Opting to Watch

In cases in which the domain name does not have a Web site, trademark owners are also opting just to watch the site, and then register the name when the current registration lapses, Goldsmith said.

Monitoring for possible infringements has become much easier with the advent of Internet watch services. 'It's expensive,' she said, 'but it's worth it.'

When faced with a real problem cyber-squatter, going to court can actually be a better alternative than the UDRP despite the added expense of litigation, Debevoise's Bernstein said. Under the Anti-Cybersquatting Piracy Act, courts can ' and do ' grant damages, attorneys fees and even injunctive relief, he said.

Low-Hanging Fruit

The nature of the disputes that end up in UDRP proceedings has changed as well, Bernstein said.

Trademark owners have used the last two or three years to clear away the most egregious cases of cyber-squatting, he said. 'You don't get those low-hanging fruit anymore.'

Cases these days tend to be more difficult, said Bernstein, who estimates he has arbitrated nearly 100 domain name disputes.

He said he sees more disputes in which both parties have an arguable right to the name, or in which a retailer is using the name of a manufacturer to sell its product.

The number of no shows '- initially almost half the UDRP filings resulted in defaults ' has also fallen off dramatically, he said.

'Respondents are more willing to pay the fees to contest the claim,' Bernstein said.

Another fertile ground for dispute are the free speech cases, in which a Web site parodies or criticizes a company, such as the myriad 'www.[your company name here]sucks.com' sites.

But, Bernstein said, these kinds of claims do not do very well in court. 'Trademark owners need to recognize that they have to allow free speech on the Internet.'

'That's the beauty of the Internet,' he said.

Tamara Loomis is a reporter for the New York Law Journal.