January 27, 2021 9 min read

Opinions expressed by Entrepreneur contributors are their own.

Domain names are a peculiar property: Prices can range from the typical X.99-dollars-a-year deals offered by registrars still available on the market and up to staggering amounts for highly wanted addresses which are typically held by entities that well-understand their value and price them accordingly.

The value of these titles derives from the commonness of their words and the reputation that such monikers, or similar ones, have acquired. The domain’s human reputation (how users perceive the title) and algorithmic reputation (how search engines value it) require time, money and hard work to acquire.

Owners of reputable names are rightly concerned about similar ones in use, due to their potential of diluting the reputation of their own brand. The availability of online options is steadily decreasing and disputes between owners of similar domain names inevitably emerge.

The internet’s sheriff

All domain names under top-level domain suffixes are well regulated by the Internet Corporation for Assigned Names and Numbers (ICANN). By registering a top-level domain name you accept ICANN’s authority and adhere to their rules, and in particular, to the Uniform Domain-Name Dispute-Resolution Policy (UDRP).

The UDRP comes into action when one believes that a third party’s domain infringes its rights. In such case, the UDRP allows the rights owner to take an action against the supposedly infringing name by initiating an Administrative Proceeding. If successful, said action may result in the cancellation of the disputed domain, its transfer to the complainant, or otherwise making changes to the title.

Domain name rights versus trademark rights

When taking a closer look into the UDRP, it turns out that URL-coining options are closely related to trademark rights. Domain name rights do not exist without underlying trademark rights, and for a good reason. Only the possession of lawfully acquired trademark rights allows one to exclude third parties from making use of its trade name (or similar sounding ones). A trademark owner does not need to register a domain name as its trademark is enough for exercising rights under the UDRP.

However, domain names are not just as any other use of a trademark. Trademarks are registered for specific classes of goods or services, and their scope of protection is limited to these goods or services. In contrast, domain name rights are wider in the sense that they allow a trademark owner to act against similar domain names even if they are used for the sale of goods or services outside the scope of its trademark’s protection.

This anomaly is balanced by UDRP’s additional elements required to be proven in the proceeding by the trademark owner, the complainant, which are not required in standard trademark infringement proceedings.

Related: Now You Can Register Domain Names For Less Than $1 Per Year

Three steps to success

The first element required for substantiating the grounds for a UDRP Administrative Proceeding is proving that the domain name is confusingly similar to the complainant’s trademark.

Similarly to trademark laws in most developed countries (which are members of the TRIPS Agreement), the trademark rights requirement in the UDRP is satisfied not only by having a registered trademark but also by having an unregistered well-known trademark. This theoretically allows an owner of a reputable domain name to establish its rights, without registering a trademark, if it manages to prove “that its mark has become a distinctive identifier which consumers associate with the complainant’s goods and/or services” according to the World Intellectual Property Organization (WIPO) Panel View on Selected UDRP Questions.

The second element that needs to be proven is that the respondent, or owner of the disputed domain name, does not have rights or legitimate interest in respect to the domain name, while the third element is that the disputed title was registered in bad faith.

This should raise an important question: Why would a trademark owner want to use the UDRP Administrative Proceeding against an infringing domain name instead of simply filing a trademark infringement lawsuit which requires them to prove only the first of the three elements of the proceeding?

The answer lies in several major advantages UDRP proceedings have over trademark infringement proceedings.

Highway to the domain justice zone

UDRP proceedings are significantly simpler: While court proceedings are a cumbersome beast — with an inspection of documents stage, filing of evidence and expert opinions, court hearings, cross-examination of witnesses and summation issues to consider — UDRP proceedings merely consist of each party’s filing of its arguments and evidence at once, based on which the Panel assigned to the proceeding issues its decision.

Second, UDRP proceedings are significantly faster than their trademark infringement counterpart. The latter takes up to several years to complete, whereas UDRP investigations are conducted under strict timeframes resulting in an issuance of a decision well-under two months from the filing of the complaint.

Third, these proceedings are also significantly cheaper. Filing fees are only 1,500 USD for a proceeding with a single-member Panel (or 4,000 USD for a three-member Panel), and since the entire legal work required comes down to the preparation of one comprehensive document with all arguments and evidence of each party, it amounts to only a fraction of the attorney fees required for conducting a full court proceeding.

UDRP proceedings allow each party to appoint an attorney from anywhere in the world, removing the need for intermediaries and tremendously expanding the variety of counsels suitable to represent in the process.

On top of that, since the proceedings are carried out remotely without any oral hearings and cross-examinations, there are no travel expenses and lost work days. Not only that, but the complainant can elect in which of the six tribunals qualified by ICANN the proceeding will take place, and the parties may even select the members of the Panel that would hear the case. In addition, no further actions need to be taken to enforce decisions, ICANN will automatically cancel, transfer or make changes to a domain name in accordance with any decision issued in a UDRP proceeding.

Related: 4 Tips for Taking Your Brick-and-Mortar Store to the Online Realm

To UDRP or not to UDRP…

As much as UDRP proceedings provide a cheaper alternative to trademark infringement proceedings concerning domain names, they also have shortcomings that should be taken in account.

The only remedies that can be awarded in UDRP proceedings are the cancellation or transfer to the domain name to the complainant. Any damages caused to the complainant are irrelevant to these proceedings, so any compensation is out of the question. Similarly, any aspect of trademark infringement outside the scope of the domain name itself will not be considered, so any remedy awarded will not prevent the respondent from continuing to make any use that infringes the complainant’s trademark outside the disputed domain name.

Second, the aforementioned UDRP proceedings require proving two additional prerequisites on top of the domain name’s being confusingly similar to the complainant’s trademark.

While similarity speaks for itself, proving that the respondent does not have rights or legitimate interest in respect to the domain name, and that the disputed domain name was registered in bad faith, is much more challenging.

In order to prove registration in bad faith, the complainant needs to show that the respondent acquired the domain name for the purpose of trading it with the complainant or its competitor, preventing the complainant from using the domain name, disrupting the business of the respondent’s competitor, or attracting users by confusing them to think that the domain name is associated with the complainant.

It can be taught from the UDRP’s guidance to respondents on how to prove they do have rights or legitimate interest in respect to their domain name, that is proving any of the following: They have been using the domain name for a bona fide offering of goods or services, they have been commonly known by the domain name before filing of the complaint, or their use of the domain name is noncommercial or fair-use, without intent for commercial gain to misleadingly divert consumers or to tarnish the complainant’s trademark. This means that a complainant should try to prove the opposite of all of the above, as the respondent’s successfully proving only one of them is enough for the rejection of the complaint.

A case study: I offer a UDRP Administrative Proceeding held last year before the Czech Arbitration Court, in which my firm represented the respondent, a company named Futura Genetics who owns the domain name www.futuragenetics.com. While the complainant, a company called Futura Gene (who is also the owner of a trademark and domain name corresponding to the company’s name) claimed that the respondent’s domain name is confusingly similar to their trademark, we managed to prove that the respondent had a legitimate business interest in the domain and had registered it in good faith, which led to the Panel’s decision to reject the complaint and let our client keep its online title.

Related: 8 Mistakes to Avoid When Naming Your Business

Indeed, many UDRP complaints are rejected due to complainants’ failure to establish the respondent’s lack of business interest in the domain name and its registration in bad faith, making these proceedings somewhat favorable to respondents, even in cases wherein the intentions behind registration of the disputed domain names are questionable. On the other hand, there are circumstances (like cyber-squatting) in which UDRP proceedings can provide a swift, affordable and efficient solution. The important thing is to set realistic expectations and to choose wisely the path most suitable for each situation.