The Reality of Virtual ADR

The Internet is having a profound effect on the development of the alternative dispute resolution (ADR) process. It is used as a means for the resolution of conflict both directly, through the Uniform Domain-Name Dispute-Resolution Policy (UDRP) process, and indirectly, by offering traditional ADR process opportunities to remote parties. While Internet applications of ADR are neither technologically nor legally restricted to disputes arising out of Internet transactions, it seems to be particularly suitable for the resolution of e-commerce disputes when parties are frequently located far from one another.

Internet ADR

ADR is commonly understood to encompass any dispute resolution process for disagreeing parties to resolve their differences without litigation. It is a collective term for the ways that parties can settle disputes, either with or without third-party assistance.
Internet ADR offers a number of advantages: speed, efficiency, cost savings and ease of overcoming international conflicting laws. The parties may agree upon how, when and where to resolve difficulties.

Thanks to e-commerce, business among remote entities is common. Travel to resolve relatively small disputes may be too expensive and time-consuming. Mediation sessions that take place on the Internet, via e-mail, instant messaging, chat conference rooms or Internet videoconferencing, can resolve any issues that prevent dispute resolution due to parties being located remotely, such as those related to the expense of travel and accommodations.

While Internet ADR offers a high degree of flexibility for delivery, there are problems of process. Legal representations are, for example, difficult to maintain during the mediation process. This difficulty arises because representations that are specifically designed to deal with a particular transaction must then be applied to an additional (usually unanticipated) transaction involving the mediation or the third-party mediator. Additionally, privacy issues may arise, such as the possibility that material exchanged among the parties may be forwarded to other interested parties or copied without authorization.

UDRP

The Internet may assist negotiation, mediation or arbitration, or a combination of all three so as to facilitate alternative dispute resolution. Alternatively, the Internet may augment traditional ADR means of resolving disputes by providing stand-alone techniques and processes, such as UDRP. UDRP is a procedure instituted by the Internet Corporation for Assigned Names and Numbers (ICANN) for the resolution of disputes regarding the registration of Internet domain names. The UDRP currently applies to both established domain names, such as .com, .net and .org, as well as new top-level domain names, such as .aero, .asia, .biz, .cat, .coop, .info, .jobs, .mobi, .museum, .name, .pro, .tel and .travel.
UDRP is particularly useful for resolving domain-name disputes for two reasons.
First, a domain-name registrant must agree to use UDRP as part of the domain-name registration process.

As part of the domain-name registration process, a registrant must 'represent and warrant' that registering the name 'will not infringe upon or otherwise violate the rights of any third party.' UDRP, Sec. 2, http://www.icann.org/en/help/dndr/udrp/policy. Additionally, the registrant must agree to participate in UDRP, should any third party assert such a claim.

Second, domain names may be easily changed by a third party that is not usually a party to the domain-name dispute. A domain name is an identification string that is associated with at least one particular computer. The association between an Internet protocol (IP) address and a computer is stored on a table that is accessible by any other Internet computer and maintained by a registration authority. An IP address is used by the Internet protocol to allow any two computers on the Internet to communicate.

The third-party maintainers of the domain name/IP address table, are capable of independently changing the association between a domain name and an IP address on the domain name/IP address table. These maintainers are willing to make such a change as a result of a UDRP hearing. By doing so, the domain name table maintainer may change the ownership of a domain name.

A complainant in a UDRP proceeding must establish three elements to succeed: 1) the domain name is confusingly similar to a trademark in which the complainant has rights; 2) the registrant does not have any rights or interest in the domain name; and 3) the registrant registered the domain name and is using it in 'bad faith.' UDRP, Sec. 4. Using e-mail input from the trademark owner and the registrant, a UDRP panel will determine if a domain name needs to be transferred and will so order.

The UDRP has created a process for resolving domain name disputes more quickly and at less expense than litigation. Under the UDRP, a domain-name matter may be resolved in only 45 days and can cost as little as $750. If a domain-name registrant loses a UDRP proceeding, it must file a lawsuit against the trademark holder within 10 days to prevent ICANN from transferring the domain name.

Other Internet Disputes

Internet-related ADR procedures may be applied to a range of disputes, including interpersonal disputes, consumer-to-consumer disputes, marital separation negotiation, procedural court disputes and interstate conflicts.

The matters for which Internet ADR methods are most useful have three characteristics in common. The first ' and perhaps most important ' characteristic is the ability of an entity that is not a party to the dispute to change the ownership status of property subject to the dispute. For example, the ownership of intellectual property can be changed by various federal authorities, such as the copyright, trademark and patent office. These authorities can successfully engage in Internet ADR because they are empowered to change the ownership status of patents and copyright and trademark registrations. Alternatively, the parties are willing to accept and act on a virtual mediator's decision.

The next most important characteristic of Internet ADR is that it can facilitate an economic advantage for the parties, including the reduction in costs by avoiding state-sanctioned litigation, particularly when such litigation involves more than one jurisdiction, transaction locations where state-enforcement or state judicial systems are inefficient, and when transactions require rapid resolution.

Additionally, recourse to courts in disputes resulting from international Internet transactions is equally problematic due to the difficult questions of which law applies and which authorities have jurisdiction over such disputes. Moreover, international proceedings are generally expensive and usually exceed the value of the goods in dispute.

When an Internet transaction involves the laws of two countries, the right type and level of consumer protection cannot always be harmonized. This is true even in regional conflicts, such as among American states or European Union members. Thus, the use of Internet ADR may be useful, so long as each country authorizes it (with few exceptions, lack of authorization is not an issue).

Congress enacted legislation in 1988 to authorize ADR throughout the United States ' the Judicial Improvements and Access to Justice Act, 28 U.S.C.A. 652 (1993 & Supp. 2003). This Act permits district courts to submit disputes to arbitration. Ten years later, Congress amended this statute with the enactment of the Alternative Dispute Resolution Act of 1998 (28 U.S.C.A. 652), which sets forth that each district court require, by local rule, that litigants in all civil cases consider using an ADR process in the appropriate state of litigation.

Abroad, the May 2008 Directive 2008/52/ EC of the European Parliament and of the Council 'encourages the use of ADR, particularly through the use of mediation. This directive applies to crossborder disputes in civil and commercial matters. Like the United States' ADR promotion statute, this directive provides member states with the authority to permit ADR and that said states should suggest mediation to litigants, without, however, compelling them to use it. Individual Asian countries have done the same.

The last characteristic of a dispute susceptible to Internet ADR is accessibility of the Internet to the parties involved with the dispute. Such access may be communal, such as through a library system, thereby allowing those without individual Internet access to avail themselves of Internet ADR.

Conclusion

For an e-commerce company, which can face litigation from literally anywhere in the world, Internet ADR can save time and money and may make it able to defend lawsuits that might otherwise be more cost-effective to pay off in a settlement, regardless of the strength of the e-commerce company's case.

Jonathan Bick is Of Counsel at Brach Eichler LLC in Roseland, NJ. He is also an adjunct professor at Pace and Rutgers law schools, and the author of 101 Things You Need to Know about Internet Law (Random House 2000) (http://amzn.to/TUbFM1). He can be reached at [email protected].

The Internet is having a profound effect on the development of the alternative dispute resolution (ADR) process. It is used as a means for the resolution of conflict both directly, through the Uniform Domain-Name Dispute-Resolution Policy (UDRP) process, and indirectly, by offering traditional ADR process opportunities to remote parties. While Internet applications of ADR are neither technologically nor legally restricted to disputes arising out of Internet transactions, it seems to be particularly suitable for the resolution of e-commerce disputes when parties are frequently located far from one another.

Internet ADR

ADR is commonly understood to encompass any dispute resolution process for disagreeing parties to resolve their differences without litigation. It is a collective term for the ways that parties can settle disputes, either with or without third-party assistance.
Internet ADR offers a number of advantages: speed, efficiency, cost savings and ease of overcoming international conflicting laws. The parties may agree upon how, when and where to resolve difficulties.

Thanks to e-commerce, business among remote entities is common. Travel to resolve relatively small disputes may be too expensive and time-consuming. Mediation sessions that take place on the Internet, via e-mail, instant messaging, chat conference rooms or Internet videoconferencing, can resolve any issues that prevent dispute resolution due to parties being located remotely, such as those related to the expense of travel and accommodations.

While Internet ADR offers a high degree of flexibility for delivery, there are problems of process. Legal representations are, for example, difficult to maintain during the mediation process. This difficulty arises because representations that are specifically designed to deal with a particular transaction must then be applied to an additional (usually unanticipated) transaction involving the mediation or the third-party mediator. Additionally, privacy issues may arise, such as the possibility that material exchanged among the parties may be forwarded to other interested parties or copied without authorization.

UDRP

The Internet may assist negotiation, mediation or arbitration, or a combination of all three so as to facilitate alternative dispute resolution. Alternatively, the Internet may augment traditional ADR means of resolving disputes by providing stand-alone techniques and processes, such as UDRP. UDRP is a procedure instituted by the Internet Corporation for Assigned Names and Numbers (ICANN) for the resolution of disputes regarding the registration of Internet domain names. The UDRP currently applies to both established domain names, such as .com, .net and .org, as well as new top-level domain names, such as .aero, .asia, .biz, .cat, .coop, .info, .jobs, .mobi, .museum, .name, .pro, .tel and .travel.
UDRP is particularly useful for resolving domain-name disputes for two reasons.
First, a domain-name registrant must agree to use UDRP as part of the domain-name registration process.

As part of the domain-name registration process, a registrant must 'represent and warrant' that registering the name 'will not infringe upon or otherwise violate the rights of any third party.' UDRP, Sec. 2, http://www.icann.org/en/help/dndr/udrp/policy. Additionally, the registrant must agree to participate in UDRP, should any third party assert such a claim.

Second, domain names may be easily changed by a third party that is not usually a party to the domain-name dispute. A domain name is an identification string that is associated with at least one particular computer. The association between an Internet protocol (IP) address and a computer is stored on a table that is accessible by any other Internet computer and maintained by a registration authority. An IP address is used by the Internet protocol to allow any two computers on the Internet to communicate.

The third-party maintainers of the domain name/IP address table, are capable of independently changing the association between a domain name and an IP address on the domain name/IP address table. These maintainers are willing to make such a change as a result of a UDRP hearing. By doing so, the domain name table maintainer may change the ownership of a domain name.

A complainant in a UDRP proceeding must establish three elements to succeed: 1) the domain name is confusingly similar to a trademark in which the complainant has rights; 2) the registrant does not have any rights or interest in the domain name; and 3) the registrant registered the domain name and is using it in 'bad faith.' UDRP, Sec. 4. Using e-mail input from the trademark owner and the registrant, a UDRP panel will determine if a domain name needs to be transferred and will so order.

The UDRP has created a process for resolving domain name disputes more quickly and at less expense than litigation. Under the UDRP, a domain-name matter may be resolved in only 45 days and can cost as little as $750. If a domain-name registrant loses a UDRP proceeding, it must file a lawsuit against the trademark holder within 10 days to prevent ICANN from transferring the domain name.

Other Internet Disputes

Internet-related ADR procedures may be applied to a range of disputes, including interpersonal disputes, consumer-to-consumer disputes, marital separation negotiation, procedural court disputes and interstate conflicts.

The matters for which Internet ADR methods are most useful have three characteristics in common. The first ' and perhaps most important ' characteristic is the ability of an entity that is not a party to the dispute to change the ownership status of property subject to the dispute. For example, the ownership of intellectual property can be changed by various federal authorities, such as the copyright, trademark and patent office. These authorities can successfully engage in Internet ADR because they are empowered to change the ownership status of patents and copyright and trademark registrations. Alternatively, the parties are willing to accept and act on a virtual mediator's decision.

The next most important characteristic of Internet ADR is that it can facilitate an economic advantage for the parties, including the reduction in costs by avoiding state-sanctioned litigation, particularly when such litigation involves more than one jurisdiction, transaction locations where state-enforcement or state judicial systems are inefficient, and when transactions require rapid resolution.

Additionally, recourse to courts in disputes resulting from international Internet transactions is equally problematic due to the difficult questions of which law applies and which authorities have jurisdiction over such disputes. Moreover, international proceedings are generally expensive and usually exceed the value of the goods in dispute.

When an Internet transaction involves the laws of two countries, the right type and level of consumer protection cannot always be harmonized. This is true even in regional conflicts, such as among American states or European Union members. Thus, the use of Internet ADR may be useful, so long as each country authorizes it (with few exceptions, lack of authorization is not an issue).

Congress enacted legislation in 1988 to authorize ADR throughout the United States ' the Judicial Improvements and Access to Justice Act, 28 U.S.C.A. 652 (1993 & Supp. 2003). This Act permits district courts to submit disputes to arbitration. Ten years later, Congress amended this statute with the enactment of the Alternative Dispute Resolution Act of 1998 (28 U.S.C.A. 652), which sets forth that each district court require, by local rule, that litigants in all civil cases consider using an ADR process in the appropriate state of litigation.

Abroad, the May 2008 Directive 2008/52/ EC of the European Parliament and of the Council 'encourages the use of ADR, particularly through the use of mediation. This directive applies to crossborder disputes in civil and commercial matters. Like the United States' ADR promotion statute, this directive provides member states with the authority to permit ADR and that said states should suggest mediation to litigants, without, however, compelling them to use it. Individual Asian countries have done the same.

The last characteristic of a dispute susceptible to Internet ADR is accessibility of the Internet to the parties involved with the dispute. Such access may be communal, such as through a library system, thereby allowing those without individual Internet access to avail themselves of Internet ADR.

Conclusion

For an e-commerce company, which can face litigation from literally anywhere in the world, Internet ADR can save time and money and may make it able to defend lawsuits that might otherwise be more cost-effective to pay off in a settlement, regardless of the strength of the e-commerce company's case.

Jonathan Bick is Of Counsel at Brach Eichler LLC in Roseland, NJ. He is also an adjunct professor at Pace and Rutgers law schools, and the author of 101 Things You Need to Know about Internet Law (Random House 2000) (http://amzn.to/TUbFM1). He can be reached at [email protected].