Web address dispute mechanism biased: study

The current arbitration system for resolving ownership disputes over Internet domain names appears biased in favour of the trademark owners, calling into question the legitimacy of the process, says a new study.

The study, conducted by Michael Geist, a law professor at the University of Ottawa Law School, which specializes in Internet and e-commerce matters, has identified several key problems with the Uniform Domain Name Dispute Resolution Policy (UDRP).

Of concern to Geist are, firstly, a feature of the system that essentially allows complainants to shop around for a favourable arbitration company and, secondly, the prevalence of decisions made by a single arbitrator rather than a three-member panel.

Since the party who believes its copyright has been violated is allowed to pick which of the four UDRP-sanctioned arbitration-provider firms adjudicates the case, and results of past cases are public record, it is possible for complainants to choose a provider whose decision records favour the trademark holder, Geist said.

Additionally, since the main concern of complainants is a win, a visibly large number of favourable decisions attract more cases to the arbitration firm, giving it a financial incentive to decide in favor of trademark-holders, Geist said.

This “forum shopping” is made clear by Geist’s numbers which show that the World Intellectual Property Association, and the National Arbitration Forum – where complainants are successful over 82 per cent of the time – share 92 per cent of the domain name arbitration market. By contrast, eResolution Inc., where complainants are successful only 63 per cent or the time has captured only seven per cent of the market.

On the question of one-member versus three-member panels, Geist found that “almost all of the really bad decisions that have been rendered have been rendered by a single panel when you get three people together you get better decisions – and that impacts both sides.”

One of the finding that surprised Geist was the that complainants actually asked for three-person panel more often than respondents, even though statistically that made a win 20 per cent less likely.

“The reason, I suspect, is that if you are a complainant with a good case you don’t want to gamble with that case. With the single-panel situation there is a risk involved that you might end up with a particular panelist that just doesn’t render a good decision. For complainants with strong cases it’s in their interest to ensure that only the best decisions are rendered because they also face the risk that a bad decision will mean they lose a case that they shouldn’t,” Geist explained.

Since the current system favours the trademark holder, a group that is skewed toward wealthy and powerful corporations, Geist admits that there may be some resistance to changing the 18-month-old UDRP, but he remains hopeful that the Internet Corporation for Assigned Names and Numbers (ICANN) will recognize the benefits of a policy tune-up.

“I’m encouraged by the fact that in the history of domain name dispute resolution – and we’ve had rules around on that for about six years – [the procedure] has changed fairly regularly. We’ve actually been through about four or five different sets of rules. Each time a set of rules has been produced, as we become more experienced with their operation we find that there may be some changes needed to improve the system,” Geist said.

“[The UDRP] has obviously adjudicated a huge number of disputes and I think there’s a recognition that we now have a large enough body of decisions that we’re in a position to reach some conclusions, and make some recommendations about what to do next,” he said.

Geist also said that, like other aspects of the law, domain name dispute resolution needs to be both fair, and perceived to be fair, or the legitimacy of the whole system will be called into question, casting a shadow over larger e-commerce issues.

“[Domain names] are one of the more valuable pieces of property that are out there – it’s a virtual property – but it’s an important piece of property. There are many that hold this system out as a potential model for resolving other kinds of e-commerce disputes, so the extent to which this is used as a model means we need to get it right,” he said.