UDRP in Crisis – CAC Proposals Highlight Lack of ICANN Control
CAC’s Proposed Changes to the UDRP
As first reported by MIP, the Czech Arbitration Court (CAC) last week quietly published[1] a slightly amended version of its previous highly controversial Fast Track UDRP plans. Those earlier plans attracted unanimous criticism during the ICANN consultation that followed.[2]
Rather than deal with those criticisms through the proper ICANN process, CAC has thumbed its nose at the internet community and gone ahead with Proposals that, as CAC baldly states, contain the “core of [its] proposal”. This includes introducing a cut price filing fee; providing a list of tick boxes to help manufacture the Complaint; and also reducing the panellist’s decision to little more than regurgitating the provisions of the UDRP Policy. It will be doing so without further consultation with ICANN.
The UDRP Requires These Changes to be Approved by ICANN
Neither of these core steps is allowed as a Supplementary Rule change under a proper construction of the UDRP Policy and Rules. Supplementary Rules are prohibited from being inconsistent with the UDRP Policy and Rules. The UDRP also makes clear that Supplementary Rules are only meant to deal with practicalities required by the Provider. These proposals are fundamental changes that are at odds with the UDRP Policy and Rules.
UDRP Rule 15 requires that the decision must “provide the reasons on which it is based”. CAC states that in its new fast and cheap version of the UDRP there will be “no need for Panellists to produce a detailed decision.” A detailed and reasoned decision is a key feature of the UDRP, enabling consensus to develop and also allowing a party to analyse a decision that may then be referred to a court for review. The stock “outline” decisions proposed by CAC remove this central plank of the UDRP’s legitimacy[3].
UDRP Rule 19 requires that the entire initial fee be paid before the complaint can be dealt with by the Provider. The Rule requires that the whole fee must be paid by the complainant before the Complaint can be passed onto the Respondent. A split fee, with an additional fee only falling due if a Response is received, is not allowed under this Rule.
It is also objectionable that the CAC Proposes to provide a complainant with a tick box form to help create, complete and bolster their pleading. The UDRP Policy and Rules provide sufficient guidance to a party to enable them to make their case. The idea that a neutral provider should be assisting either party is unacceptable.
It has been said that the CAC Proposals are merely a change in the fees for the UDRP. The reality is that this will result in a much quicker process, with panellists signing off on stock decision forms much more quickly (and for a commensurately lower fee) than is currently typical. Registrants are entitled to rely on panellists reviewing the complaint in detail before reaching a decision.
UDRP Rule 14 confirms that an uncontested UDRP does not give rise to a default judgement. While it is clearly unwise not to respond to a complaint, there are numerous examples of registrants who have retained their domain when they have failed to file a Response. These results rely on the panellists being required (and commensurately remunerated) to undertake a full review of the Complaint and any other relevant evidence. This safeguard will be lost with the reduced fee (and resulting reduced scrutiny) under the CAC Proposals.
Time is also of the essence if a losing party wants to challenge a decision before the domain is transferred. Anything that shortens the timeline for the registrant to discover and review a complaint or decision is prejudicial to their rights. If you think legitimate registrants would not find themselves in that position, take a look at the appeal for the highly valuable oasis.co.uk domain in the comparable .uk DRS process[4], where the original complaint was missed by the registrant but he became aware of it in time to file a successful appeal.
These proposals are fundamental changes to the UDRP itself. UDRP Policy Paragraph 9 sets out the process required for any amendments to the Policy or Rules. U stands for Uniform, and that is how the Policy should remain.
The Commercial Driver Behind These Proposals
These proposals are part of a “race to the bottom” that is going on between the Approved UDRP Providers to win market share. CAC will no doubt be quickly followed by its competitors, since appealing to complainants (who pay the fees) is essential for the business models of the providers. WIPO has independently flagged its intention to introduce a similar fast and cheap version of the UDRP[5].
WIPO were the first to use the term “race to the bottom” with reference to CAC when [then] Deputy Director General Francis Gurry criticised CAC’s nomination for approval as a UDRP provider in July 2007[6]. His detailed critique of CAC’s then plans expressed concern about forum shopping, profit driven competition between providers, the loss of consistent and predictable decisions, the application of reduced panel fees in default cases and that CAC’s then plans were a violation of the UDRP Policy and Rules.
Mr Gurry added that such changes would be “regarded as a platform for changes to the UDRP....through a ‘back door’ of provider accreditation.” I think his words are equally apposite for the present changes to the UDRP that CAC have introduced.
Most UDRP Providers are just businesses that require as high a volume of UDRP complaints as possible. According to Domain Name Wire, 2009 saw the volume of UDRP complaints drop to a 3-year low and also the proportion of complaints (compared to domains registered) to an all-time low[7]. Competing businesses, which these Approved Providers are, must have proper regulation when they are carrying out such a sensitive and wide reaching service. Otherwise, the lowest common denominator will prevail.
ICANN’s Response
ICANN’s official response to these proposals was buried in its Public Comment Archive – jumping straight there from the Public Comment – Awaiting Summary page and not posted on the Recently Closed Comment Forums list.
Despite the fact that there is little practical change to the earlier proposals, ICANN’s summary of the consultation concludes that “Because the CAC withdrew its proposal, there are no further steps to be taken to address the proposal.”[8] ICANN wrongly describes these major proposed changes to the UDRP as “a fee change only.” In doing so, ICANN is failing in its duty to the internet community.
CAC’s external counsel confirmed to MIP that they had been engaging in dialogue with ICANN for two months and that ICANN had confirmed that CAC had the power to undertake these changes[9]. This negotiation was undertaken secretly, while the ICANN consultation on CAC’s earlier proposals remained open.
No Contract Between ICANN and Approved UDRP Providers
Why is this being allowed to go ahead? It could be because ICANN have no real control over the Approved UDRP Providers, since astonishingly there is no contract in place between ICANN and those Providers. The UDRP itself exists only because it forms part of a contract, entered into by each of the 100 million plus gTLD domain name registrants it governs. It seems unbelievable that ICANN does not have in place a contract with the companies that implement the UDRP on its behalf. There are only four of them, after all.
ICANN does not mention that there is no contract in place with the Approved Providers on the webpage where they are listed[10]. However, ICANN Senior Counsel Samantha Eisner eventually admitted to me in an email that “ICANN does not currently enter into contracts with the Approved UDRP Providers...”
This appalling shortcoming is also reflected in the conclusion to ICANN’s summary on the original CAC proposals, which says “ICANN is reviewing the feasibility of entering into contracts with the UDRP Providers. ICANN is also reviewing the processes by which the UDRP providers propose changes to supplemental rules.”
To put it another way, ICANN are essentially admitting that they are currently unable to do anything, even if a Provider is abusing the UDRP Policy and Rules, because they have failed to put the requisite contractual rights and obligations in place. The only sanction they have is to withdraw the accreditation of a Provider.
In addition to these CAC Proposals, there are a number of situations on which ICANN could and should have intervened. Examples are:
· ICANN should be conducting the investigation into serious allegations made against the Hong Kong office of the Asian Domain Name Dispute Resolution Centre (ADNDRC). These allegations have led to ADNDRC initiating an investigation into itself[11]. This is something that should be handled by ICANN, as an independent third party. One would also anticipate that a contract would enable ICANN to suspend the accreditation of the Provider whilst an independent investigation was carried out, so that there was no risk of registrants’ interests being harmed in the interim.
· ICANN should have been able to suspend and investigate the National Arbitration Forum (NAF), following the blizzard of allegations of conflicts of interests that led to a law suit commenced by the Minnesota Attorney General in respect of the highly lucrative consumer credit arbitration run by NAF. Within a week of receiving the law suit, NAF signed up to a Consent Order prohibiting it from conducting any such arbitration in the future[12]. All of this was reported, for the Wall Street Journal headline was “Turmoil in Arbitration Empire Upends Credit-Card Disputes”, but ICANN was powerless to act.[13]
· Domain Name Wire has also accused NAF of improperly providing panellists with an opinion brief to assist them with their decision making process[14]. These allegations mirror some of those levelled in respect of their conduct in consumer credit arbitrations. Again, the lack of contractual regulation leaves ICANN powerless to intervene in a proper and proportionate way.
ICANN’s Disappointing Response
A question about these changes was apparently put to ICANN during the Public Forum at last week’s meeting in Nairobi. I understand that the response was essentially the same disingenuous one provided in the Summary on the Consultation referred to above. In other words, ICANN is dishonestly saying this is not a change to the UDRP, not an expedited process and simply a fee change.
I have sent a version of this article to Rod Beckstrom, the new ICANN CEO/President, inviting him to show that he has the broader internet user community at heart and to demonstrate it with actions and not just words.
I believe that ICANN’s Board should resolve that ICANN should suspend CAC’s Accreditation as a UDRP Provider with immediate effect, unless CAC stops applying this changed version of the UDRP.
Furthermore, the Board should resolve that, as a matter of urgency, a contract be prepared and presented to all of the Approved UDRP Providers – giving them the option of signing up to it or of no longer being an Approved UDRP Provider.
The previous regime at ICANN has been tarnished by a ruling from an eminent independent judicial panel – which stated that its handling of the .xxx gTLD application process was not fair[15]. This is an opportunity for the new regime to distance itself from its predecessor. It needs to show that it is prepared to actually deliver on behalf of the millions of domain name registrants who rely on them, ordinary people who are unwittingly affected by the issues set out above. In particular, it needs to act swiftly to stop these improperly proposed changes to the UDRP. ICANN has a public duty to do so.
About the Author
Jim Davies is an IP Consultant and Solicitor (England & Wales) at Wrays Lawyers in Perth, Western Australia. Wrays is the largest independent IP firm in Western Australia and this year it celebrates its 90th birthday. Jim is not registered to practice in WA. A version of this article was first published by Managing Intellectual Property magazine. Contact Jim.Davies@Wrays.com.au.