Lessons and questions from WIPO’s UDRP statistics

A review of cybersquatting filings at the World Intellectual Property Organization in 2015 provides some food for thought for brand owners, who need to make their voice heard as ICANN conducts a review of rights protection mechanisms. Gareth Dickson of Cooley reports.

Statistics released by the World Intellectual Property Organization (WIPO) reveal a slight rise in the number of Uniform Domain Name Dispute Resolution Policy (UDRP) complaints filed with the provider in 2015 compared to the previous year. The increase is explained in part by the continued expansion of the domain name system (DNS) under ICANN’s new generic top-level domain (gTLD) programme.

A closer look at these statistics together with other contextualising data reveals insights into cybersquatting trends, as well as which countries have the most litigious brand owners and those whose residents are accused of the most bad faith registrations

A review of similar statistics for the Uniform Rapid Suspension System (URS) allows participants in ICANN’s review of its rights protection mechanisms (RPMs) to identify the upward and downward trajectories of the UDRP and the URS respectively, and to consider their responses to those trends.

WIPO’s data in isolation

Legacy v new TLDs

WIPO’s 2015 statistics, which can be viewed in full at http://www.wipo.int/pressroom/en/articles/2016/article_0003.html, note a near 5% increase in the total number of UDRP filings at the provider over the previous year. In part this rise is due to the ever-increasing number of new domain extensions in which bad faith registrations can occur: WIPO received disputes concerning 334 names in 41 of the new TLDs.

But with more than 4,300 names having been subject to UDRP complaints in total, so-called legacy TLDs still account for the vast majority—more than 92%—of all names complained about. And within these legacy extensions, .com remains far and away the most complained-about TLD, carrying more than 70% of the burden in 2015.

As might be expected, complaints concerning the new TLDs focused on the generic newcomers, with the .xyz, .club and .email extensions accounting for more than 100 complaints altogether. The .moscow and .paris domains were the city TLDs with the most complaints (11 and ten respectively), while .tokyo and .quebec had four complaints each and .nyc and .brussels had three apiece. The most complained-about professional services TLD was .lawyer, with seven complaints, while the .attorney extension was complained about three times. That .lawyer and .attorney are the only two professionals services TLDs in WIPO’s report may say more about some lawyers’ aversion to risk than it says about trends in new TLD cybersquatting, but it is hard to know for sure.

Geographic spread

WIPO’s statistics also reveal that most complaints came from the US, as did most respondents. Table 1 shows WIPO’s breakdown of the top ten countries of origin for complainants and respondents.

Table 1: Top ten countries of origin for complainants and respondents

These figures illustrate quite different geographical concentrations of complainants and respondents: the top ten countries by complainant account for 82% of the total number of UDRP disputes filed at WIPO; the top ten countries for respondents account for only 67% of disputes.

This suggests that complainants are more highly concentrated in a smaller selection of countries than is the case for respondents. Perhaps this is to be expected. Complainants have a relatively high barrier to entry into the UDRP process: they must not only have rights in a trademark or service mark, which itself requires a certain level of financial commitment, but they must also be able to finance a complaint. By contrast, a respondent need only purchase a single domain name.

“Recent history, and filings in the first five months of this year, indicate that 2016 will provide a third consecutive year-on-year increase in the number of UDRP filings.”

We may also note how the rankings change when complainants’ and respondents’ countries are weighted for the size of their population, in order to extrapolate at a high-level what attitudes to online trademark rights might be in those countries. Using such weighted statistics, Swiss entities file more complaints per million inhabitants (20.2) than any other country and more than parties from the next four countries—the Netherlands (5.7), France (5.6), the UK (3.5) and Germany (3.4)—combined.

Respondents’ countries are more evenly distributed: the Netherlands has 5.4 respondents per million inhabitants; Switzerland 5.3; Australia 4.4; and the UK 3.1. The US, which has the largest number of respondents in absolute terms, has only the fifth highest number of respondents per million inhabitants (1.9), while China has a very low rating of 0.3 respondents per million inhabitants.

WIPO’s dataset also shows that parties in Spain, Australia and Canada were respondents in UDRP proceedings more often than they were complainants.

WIPO’s data in context

Although WIPO’s statistics are interesting, their real value to brand owners and to domain name investors is apparent only when they are considered as part of the ongoing evolution of the domain name landscape.

WIPO has not suffered two consecutive years of decline in the number of UDRP filings since the early 2000s, and each instance of a year-on-year decline since then has been followed by at least three years of year-on-year increases in the number of filings. A similar pattern appears to be developing at WIPO today: the last decline was in 2013, as the new TLDs were coming online, and sure enough complaints rose in 2014 and have risen again in 2015. Recent history, and filings in the first five months of this year, indicate that 2016 will indeed provide a third consecutive year-on-year increase in UDRP filings.

What provides arguably more insight for those seeking to identify trends is how the number of domain names at issue in these cases has changed in light of the growth of the DNS. Figure 1 compares WIPO’s statistics with the growth of the DNS.

Figure 1: UDRP filings v DNS growth, 2008 to 2015

As Figure 1 shows, although the number of complaints has increased since 2013 to near the all-time high set in 2012, the number of domain names at issue in these complaints has fallen sharply since the end of 2013 and is currently at its lowest level since 2008. It can also be seen that the average number of domain names per UDRP complaint has fallen from just over 2 in 2014 to 1.5 in 2015; and the number of domain names at issue in UDRP complaints per million eligible domain name registrations fell from 19.5 in 2014 to 14.5 in 2015.

There are a number of possible explanations for the decline in the number of domain names being challenged through UDRP proceedings, although none of them is conclusive.

1. One suggestion is that brand owners are resolving their disputes via other means, such as the URS, which is the main alternative to the UDRP when it comes to new TLD disputes.

While this is possible, data from the National Arbitration Forum shows that the volume of URS complaints is idling, despite the explosion in new TLD registrations over the last two-and-a-half years. There were 214 URS complaints filed in 2014, concerning 250 new TLD domain names, and 209 URS complaints, concerning 255 new TLD domain names, in 2015. In the same period the number of new TLD registrations tripled from 3.75 million to 11.25 million.

Furthermore, adding 2015’s URS figures to the 2015 UDRP figures moves 2015 from the lowest number of challenged names since 2008 to only the second lowest number of challenged names since 2008. So a shift away from the UDRP in favour of other RPMs is far from certain and does not explain the larger trend.

2. Another suggestion is that brand owners are exercising restraint in considering disputes while they wait to see which registrations are renewed and which of the hundreds of new extensions will fail, as some inevitably will. Certainly, brand owners have to prioritise how they use their resources and most would not consider it economical to pursue every instance of bad faith registration in each of the new TLDs. Nonetheless, the existence—and the extent—of any such forbearance depends on the number of genuine disputes that actually exist, which leads to a third possibility.

3. It is possible that the decrease in the number of domain names being challenged via UDRP proceedings is due to the fact that there are in fact fewer genuine domain name disputes, because cybersquatting itself is on the decline. It is difficult to say whether this is the case: using the number of UDRP complaints as a means for calculating the total number of bad faith registrations requires us to make the rather simplistic assumption that the ratio of UDRP complaints to bad faith registrations is roughly consistent, year in, year out.

Nonetheless, the high cost of names in some new extensions and the availability of preventative rather than curative RPMs in a number of new TLDs suggest that this is at least a plausible explanation, as does the drop in the average number of domain names per complaint.

It is also plausible that as e-commerce becomes increasingly reliant on apps, buttons, search engine optimisation and the ‘Internet of Things’ and less reliant on customer-facing domain names, fraudsters simply no longer need domain names: instead, they can gain the confidence of consumers by reproducing the look and feel of a trusted user interface.

Impact for ICANN’s review of its RPMs

WIPO’s statistics for UDRP filings in 2015 provide lessons for brand owners and signposts for ICANN’s review of its RPMs.

For brand owners, the statistics show that each of their UDRP complaints is likely to involve fewer domain names now than in the past and that, as a result, they are less likely to be able to reduce their costs by consolidating complaints. But even though this makes pursuing UDRP complaints slightly more expensive on a per-name basis, it suggests that fewer individuals are registering large numbers of infringing domain names in the first place.

Brand owners must try to explain the reduction in the number of domain names being challenged through the UDRP as they participate in ICANN’s review of its RPMs. The data discussed above suggest that brand owners are rejecting the URS even as the number of eligible domain name registrations continues to rise significantly; but they do not prove it.

The statistics also suggest that brand owners are either putting off commencing UDRP proceedings or that there are fewer genuine domain name disputes than there have been in the last seven years; but they do not explain why.

If brand owners are biding their time until the dust settles after the completion of the new gTLD programme, ICANN needs to know that. If they are finding that disputes are increasingly revolving around website content rather than domain names, ICANN needs to know that too.

All stakeholders in the domain name ecosystem have their own unique insight into the functioning of existing RPMs, whether they are domain investors, brand owners, consumers, registry operators or service providers. ICANN is listening for advice: brand owners should make sure their voice is heard.

Gareth Dickson is a senior associate in the Litigation department at Cooley. He can be contacted at: gdickson@cooley.com