2002 B.C. Intell. Prop. & Tech. F. 111801
For Sale Signs in Cyberspace: Whether Federal Rule of
Evidence 408 should be adapted to the Uniform Dispute Resolution Policy for
Internet domain names to bar evidence of offers to settle from arbitration
proceedings.
R. Jonas
Geissler
[†]
November 18, 2002
In
1996, Panavision International, L.P., demanded that Dennis Toeppen stop using
the domain name panavision.com because it was identical to the Panavision
trademarked name. Toeppen replied that he had a right to the domain name, which
he had registered with Network Solutions,
Incorporated.[1]
If your attorney has advised you otherwise, he is trying to screw you. He
wants to blaze new trails in the legal frontier at your expense. Why do you
want to fund your attorney’s purchase of a new boat (or whatever) when you
can facilitate the acquisition of ‘PanaVision.com’ (sic) cheaply and
simply instead?
[2]Toeppen had registered a series of well-known, trademarked names as
domain names and engaged in the business of attempting to sell the registered
domain names to the companies that owned the trademarked
names.
[3] Toeppen offered to
“settle” with Panavision for $13,000.00, in exchange for which he
would transfer the registered name and agree not to, “acquire any other
Internet addresses which are alleged by Panavision to be its
property.”
[4] The United
States Court of Appeals for the Ninth Circuit, in this ground breaking case,
found that Toeppen’s efforts evidenced a commercial use of the domain name
and violated both state and federal trademark dilution
acts.
[5] The court considered
Toeppen’s demand for payment in the principle case and in previous
cases;
[6] in fact, the demand was
crucial to the court’s determination that Toeppen was engaged in the
business
[7] of being a “cyber
pirate.”
[8] Since the
Panavision decision, “cyber pirates” have become known as
cybersquatters, and the term has entered the English lexicon. Cybersquatting,
at least according to trademark holders and their lawyers involves individuals
buying domain names identical or confusingly similar to the trademarks of other
entities and demanding payment from the trademark holders for the domain
names.[9] The highest levels of
American government heard and responded to a call for action against
cybersquatters by proposing a system for managing domain
names;[10] the Internet Corporation
for Assigned Names and Numbers (“ICANN”) followed
therefrom.[11]
ICANN created a
Uniform Dispute Resolution Policy
(“UDRP”)[12] to address
the “Toeppens” of the world with swift action on behalf of the
trademark holders.[13] The UDRP
functions through a group of approved arbitration
organizations,[14] which, in turn,
apply the UDRP through private arbitrators referred to as Panelists in their
written opinions.[15] With
remarkable ease UDRP Panelists found bad faith registration and use of domain
names that were the same as or confusingly similar to trademarked names. Demands
similar to Toeppen’s demand to Panavision were fodder for the claims of
bad faith.[16] ICANN’s
President announced the organization’s delight with the results of the
system it had implemented.[17]
Yet, in the short time the UDRP Panelists have been creating a new common
law for trademark protection on the Internet, the pendulum has begun to swing
back to the side of the property speculators – formerly referred to as
cybersquatters – who, all of a sudden, found a friend in the battle to
protect their personal property rights. Ironically, the friend was one of the
very UDRP Panelists who once transferred their domain names with such ease.
Panelist Michael DeCicco’s[18]
proposal: adopt the United States Federal Rule of Evidence (“FED. R.
EVID.”) 408 to bar discussions of offers of settlement, between
cybersquatters and trademark holders, from consideration in UDRP arbitration
proceedings.[19] Presently, not all
Panelists in all approved UDRP arbitration groups adopt DeCicco’s
position. Some arbitrators explicitly reject his
proposal.[20] Yet, the entire tenor
of the UDRP process has changed. Now, Panelists characterize requests for
payment in excess of out-of-pocket expenses – which were once considered
clear evidence of bad faith registration and use – as an “offer to
settle;” though such offers are still weighed by most Panelists, the
offers are no longer considered clear evidence of bad
faith.[21]
The shift in
characterization creates a higher burden for trademark holders and returns them
to their position before the implementation of the UDRP. They are subjected to a
system of requirements as strenuous as those used in the United States Federal
Courts to prove they are entitled to domain names.
But, is adoption of FED.
R. EVID. 408, or even a shift in characterization from “demands for
payment” to “offers to settle” appropriate? Ought the
arbitrators apply, sua sponte, an American law that may not be recognized by
international parties to arbitration? Even if both parties are American
domiciliaries, should the same standard of evidence as traditional litigation be
applied to a system that was designed to be both quick and efficient via private
arbitration? Is that standard of evidence capable of meeting the challenges of
a largely anonymous Internet?
This article will address these issues. I
begin with an explanation of the creation of the UDRP, its impetus and the
methodology used in its drafting and adoption. I consider whether adoption of
FED. R. EVID. 408 would be consistent with this history. Next, I turn to
Panelist Michael DeCicco’s argument for the adoption of FED. R. EVID. 408.
In the heart of this article, I attempt to evaluate the propriety of
DeCicco’s proposal given the character of the Internet. Finally, I
conclude with the repercussions on the UDRP if FED. R. EVID. 408 is adopted and
a model case for dealing with offers to settle.
1. Establishing a System for Domain Name
Management.
The privatization of the Domain Name System
(“DNS”), beginning in 1997, initiated the creation of the
UDRP.[22] The Department of
Commerce, through a process of notice-and-comment rule making, sought comments
on the state of the DNS.[23] The
Department of Commerce then promulgated a responsive proposed policy, the
“Green Paper,”[24] which
was, in turn, followed by a final statement of federal policy on the DNS, the
“White Paper.”[25] The
Green Paper proposed that the federal government establish a private, non-profit
corporation to administer the DNS; eventually this proposed corporation became
ICANN.[26] Under this plan, the
federal government would gradually shift the responsibilities of managing the
DNS from the Internet Assigned Number Authority (“IANA”), with which
the government had previously contracted for such management, to
ICANN.[27] The Green Paper
acknowledged that trademark protection in the DNS was a special dilemma; the
Department of Commerce sought comment as to whether registrars of domain names
should settle disputes with trademark holders or a separate body should do
so.[28] Most commentators on this
area of the Green Paper favored a single, uniform approach to domain name
dispute resolution.[29] The White
Paper did not specify what process would be put in place for such a unified
dispute resolution system. Rather, the White Paper directed the World
Intellectual Property Organization (“WIPO”) to report on a
recommended system to the ICANN Board of Directors, who would then implement a
dispute resolution system.[30]
Shortly after the White Paper’s release, an international group
incorporated in the state of California to form ICANN, a non-profit
corporation.[31] Through a series
of agreements with ICANN, the Department of Commerce and Network Solutions, Inc.
(“NSI”) relinquished control of the DNS in favor of
ICANN.[32] NSI remained the
registry for the root server of all .com, .net, and .org domain names, but
allowed other companies to become
registrars.[33] Up to that point,
NSI had administered its own domain name dispute resolution policy. Once ICANN
adopted its dispute resolution policy, however, NSI and all other registrars of
domain names were bound to adopt the ICANN
policy.[34] ICANN now serves as the
accreditation agency for all registrars and thereby has the power to require
those registrars to adopt the
UDRP.[35]
For the purposes of
analyzing the proposed adoption of FED. R. EVID. 408 in the UDRP, the intent
underlying the creation of ICANN is significant. At each step of the regulatory
process outlined above, the documents contain allusions to the international
implications of the Internet[36] and
the need to be inclusive of both U.S. and non-U.S.-based stakeholders in the
Internet when establishing the new
DNS.[37] It became the official
policy of the Untied States to gradually withdraw the federal government from
administration of the DNS and to globalize management of the
Internet.[38]
Adopting FED. R. EVID. 408, an American rule of evidence, would appear
inconsistent with the rhetoric of internationalism expressed at the time of
ICANN’s creation.[39] There
is no parallel to FED. R. EVID. 408 in the courts of all countries that have
access to the Internet. The rule bars admission of offers to settle or
compromise proffered to prove the validity or invalidity of a claim or its
amount.[40] This exclusion is based
on two grounds: “(1) The evidence is irrelevant, since the offer may be
motivated by a desire for peace rather than from any concession of weakness in
position, ... and (2) A more consistently impressive ground is promotion of the
public policy favoring the compromise and settlement of
disputes.”[41] Both offers to
settle and illusions to offers of compromise are excluded under the application
of this rule in federal court.[42]
Therefore, the rule is applied to bar offers to settle from admission into
evidence for the purpose of proving a claim or its amount, lest parties withdraw
from settlement negotiations for fear that their offers or responses may be used
against them.[43]
This is also
a rule that is usually exercised in the context of a more complex legal system
than the UDRP. It is counterbalanced by established exceptions to the exercise
of the rule[44] and open, pre-trial
discovery, which gives a broad base of evidence from which to
draw.[45] Moreover, to apply the
rule, the party seeking to exclude evidence must show that the statement to be
excluded was made in the course of compromise
negotiations.[46] This is a system
of many more involved steps that the streamlined UDRP arbitration procedure.
The arbitration process took shape after ICANN accepted the WIPO report on a
proposed dispute resolution system. ICANN delegated to its subcommittee the
task of writing the actual policy, which was then subject to the revision and
approval of the ICANN Board of
Directors.[47] ICANN sought public
comment on the proposed dispute resolution
policy.[48] ICANN approved the
final policy on October 24,
1999,[49] along with a set of rules
to govern application of the
policy.[50]
Under this new
policy, in order for an aggrieved trademark holder, the complainant, to secure
transfer of a domain name from an alleged cybersquatter, the complainant must
prove: 1. that the domain name is identical or confusingly similar to a
trademark or service mark in which the complainant has rights, 2. the domain
name holder, the respondent, has no rights or legitimate interests in the domain
name, and 3. the respondent has registered and used the domain name in bad
faith.[51] The policy then sets
forth factual circumstance, which, if the Panel finds are present, would
evidence bad faith use and
registration.[52] For purposes of
analyzing offers of compromise, chief among the factual circumstances listed in
the policy are:
circumstances indicating that you [, the Respondent,] have registered or
you have acquired the domain name primarily for the purpose of selling, renting,
or otherwise transferring the domain name registration to the complainant who is
the owner of the trademark or service mark or to a competitor of the
complainant, for valuable consideration in excess of your documents
out-of-pocket costs directly related to the domain name ...
.
[53]Panelists have applied this section to infer that a reply to the
complainant seeking an offer to compromise indicates intent, from the beginning,
to register and use the domain name in bad
faith.[54]
2. Creating a New Common Law for Trademark
Protection on the Global Internet.
Operating within the new framework of the UDRP, the Panelists’
first decisions focused on determining what sort of circumstance would meet the
requirements of paragraph 4 of the
UDRP.[55] Panelists adopted a
common law right to trademark.[56]
Panelists described characteristics of marks and their use by drawing analogies
to American trademark law[57] or the
Paris Convention.[58] Panelists
determined that offers to sell could be inferred: from listing false information
on the WhoIs database,[59] from
placement of a counter on a otherwise blank
website,[60] from listing a domain
name with a domain auction
service,[61] and from mere domain
name parking.[62] Most
significantly, Panelists determined that demands for payments, even once a
controversy had risen (i.e., after the respondent had received a cease and
desist letter or a complaint) were not offers to compromise. Rather, such
demands evidenced bad faith registration and use to secure valuable
consideration in excess of out-of-pocket expenses directly associated with the
domain name.[63]
The value of
stare decisis, in the Panelists’ opinions, is unsure. Some Panelists have
adopted rules established by past
Panels,[64] yet others have come to
decisions that appear contradictory to the weight of other
opinions.[65] Therefore, it is
presently unclear whether doctrine established in prior cases is binding in
future cases.
3. The Pendulum Swings Quickly for Change to a
New Policy.
In the short time the UDRP has been operational, the inertia behind
considering all offers to sell as bad faith has eroded; some offers are now
considered settlement negotiations that fail to evidence bad faith. The issue
of excluding offers to compromise by application of FED. R. EVID. 408 first
arose in a dissenting opinion by Panelist DeCicco in
Motorola, Inc. v.
NewGate Internet, Inc.
[66] But,
the first UDRP opinion involving application of FED. R. EVID. 408 by the
majority – therefore, the opinion potentially capable of future
application by stare decisis – was the same Panelist’s holding in
Milwaukee Radio Alliance, L.L.C. v. WLZR-FM LAZER
103.
[67] In that case, the
Panel found, as a matter of fact, that the respondent had refused complainant's
offer to purchase the disputed domain name for, “all out of pocket
expenses related to WLUM.COM (sic), namely registration fees incurred by [the
respondent] to date and any future transfer registration fees that they may
incur.”
[68] Moreover, based
on only the complainant’s filings, the respondent had failed to file a
response,
[69] the Panel found that
the respondent had replied that the offer was not
sufficient.
[70] Since the
respondent had defaulted in Milwaukee Radio Alliance, the Panel could
have drawn facts asserted by the complainant against the respondent under the
UDRP;[71] however, the Panel chose,
sua sponte, to exclude the “offer to settle” without the benefit of
a filed answer to the complaint.[72]
DeCicco did not require the party seeking to exclude the evidence to prove that
the statement was made in the course of
compromise.[73] In a later case,
however, DeCicco excluded evidence of an offer to settle, based on the
respondent’s request to do so under FED. R. EVID.
408.[74] Therefore, DeCicco’s
interpretation of FED R. EVID. 408 for application to the UDRP proceedings would
require the Panelist to exclude evidence of compromise, whether the respondent
requested such an exclusion or not.
Though DeCicco refers to FED. R. EVID.
408 in Milwaukee Radio Alliance, his doctrinal view of the rule’s
application is more clearly presented in his earlier dissent to the
Motorola case.[75] In
Motorola, DeCicco explains that the respondent had rejected the
complainant’s initial offer to transfer the domain name in exchange for
out-of-pocket expenses, and then the respondent had alluded to its own
willingness to transfer the domain name for some undetermined
determination.[76] DeCicco wished
to exclude this evidence by applying the same two policy reasons underlying FED.
R. EVID. 408: 1. “that there may be many reasons why one would offer to
settle a claim, such evidence is irrelevant,” and 2. “public policy
favors settlements.”[77]
DeCicco stated that settlement would be thwarted if, “parties feared their
offers to end a dispute might later be used to show their
liability.”[78] If offers to
settle were admitted, he feared, complainants would extend offers to settle
merely for the purpose of creating evidence of bad faith by the respondent
taking part in settlement
negotiations.[79] Lastly, Decicco
noted that it was proper for the Panel to apply a federal rule of evidence to a
UDRP proceeding the in exercise of the Panel’s discretion under the ICANN
rules for domain name disputes.[80]
Following the publication of the Motorola case, Panelist M. Scott
Donahey,[81] expressly rejected the
application of FED R. EVID. 408 to UDRP
proceedings.[82] Donahey explained
that the application of FED. R. EVID. to the UDRP is improper because the
purpose of 408 is to bar from admission offers of compromise for the purpose of
evidencing liability.[83] Donahey
stated that, “the mere fact that one offered to settle a matter by payment
of money should not be used as an admission of
liability.”[84] Donahey went
on, however, to say that an offer to sell a domain name for valuable
consideration in excess of out-of-pocket expenses related to the name is,
“not only evidence of, but conclusively establishes that, the domain name
has been registered and is being used in bad
faith.”[85] Donahey thus
bifurcated the concept of civil or criminal liability from that of bad faith
registration and use. Under this analysis, while an offer to settle may not be
used to determine liability in a trademark dilution action, for instance, it
may, nonetheless, be used to determine the rights in the domain name itself,
i.e., if the respondent had a bona fide interest in the name or if the
respondent was just a bad faith user. The only defense to asking greater than
out-of-pocket expenses is when the respondent has its own legitimate interests
in the domain name.[86] Therefore,
under Donahey’s analysis an offer to settle, if greater than out-of-pocket
expenses and without a legitimate interest, conclusively proves bad
faith.[87]
DeCicco again
dissented when a later panel disagreed with his application of FED. R. EVID.
408.[88] In that case the
respondent rejected an initial offer by the complainant to purchase the domain
name for $750.00, but replied to a cease and desist letter with an offer to sell
for $100,000.00.[89] The majority
of Panelists determined that this evidenced bad faith when the respondent failed
to provide the panel further evidence that it was not seeking valuable
consideration in excess of its out-of-pocket
costs.[90] DeCicco considered
respondent’s reply to the cease and desist letter as part of on-going
compromise negotiations, therefore, barred by FED. R. EVID.
408.[91] DeCicco expressed a policy
reason for the application of FED R. EVID. 408 to cases such as this:
“[A]llowing Complainants to offer such evidence encourages mark holder to
bait domain name registrants (who may or may not also be trademark holders) into
‘negotiations’ aimed primarily at conjuring up evidence to be used
in a UDRP (or other)
proceeding.”[92] DeCicco was
applying this American rule to an American respondent, but a British complainant
in that case.
DeCicco is not the only Panelist to adopt American statutory
or common law.[93] However, in
other cases involving parties from different countries, the choice of law bore a
relation to the jurisdiction of the courts that could reach the respondents,
i.e., where the respondents could challenge the finding of the administrative
arbitration under the UDRP or where the complainant could otherwise sue the
respondent.[94] DeCicco’s
application of the Federal Rules of Evidence does not appear related to the
location of the complainant or the respondent; he makes no mention of their
domicile or citizenship in his series of opinions advocating adoption of FED. R.
EVID. 408.[95] Rather, it appears
that DeCicco’s advocacy is for a blanket adoption of an exclusionary rule
for all UDRP cases based on the same policy as that of the federal rule, i.e.,
attempting not to discourage settlement. But does that policy fit the realities
of the Internet?
4. Repercussions.
The reality of Internet-related arbitrations is not the same as the
conventional courtroom proceedings in which FED. R. EVID. 408 is routinely
applied. Evidence is more difficult to gather. Jurisdiction over the parties
in a UDRP proceeding is exercised by virtue of the registrants’
contractual obligation with the
registrar;
[96] registrants have not
conceded to in personam jurisdiction in American courts where application of
FED. R. EVID. 408 would be proper. There is no set of unified laws in which the
Internet functions, globally.
Practical Difficulties:
A trademark
owner who seeks to take possession of a domain name that is the same as or
confusingly similar to its trademark may find it difficult to gather the
requisite evidence to show bad faith registration and use (under the UDRP) other
than through its own interaction with the domain name holder. If this
interaction with the domain name holder is excluded under DeCicco’s
analysis in Motorola and Milwaukee Radio Alliance, with what is
the trademark holder left?
The difficulty of collecting evidence for the
prosecution of crimes committed via the Internet is illustrative of the
difficulty trademark holders would face in gathering evidence to prove bad faith
by cybersquatters.[97] Panels have
admitted that just such difficulties exist with regard to gathering evidence
from cybersquatters.[98]
Eliminating from the trademark holders’ quiver its most valuable legal
weapon, the ability to draw on demands made on it for valuable consideration as
evidence of bad faith registration and use, would handicap the trademark holders
and incapacitate the UDRP. Without this weapon, trademark holders would find it
nearly impossible to evidence the first indicia of bad faith under registration
and use the UDRP.[99] Only those
cybersquatters who attempt to sell their domain names to third parties, i.e.,
through auction services[100] or
listing “this domain name is for sale” in the WhoIs
database,[101] would be to create
the necessary evidence to meet the first indicia of bad faith registration and
use. Others could hold domain names hostage indefinitely, passively, only
demanding payment in the context of negotiations for settlement to shield
themselves from UDRP proceedings.
The other practical difficulty is
determining the appropriate law to apply to the proceeding. If the respondent
fails to reply to the complaint, it may become difficult or impossible to know
where the respondent actually resides; therefore, it would be impracticable to
apply the Which? Ltd. test of applying the law of the respondent’s
jurisdiction.[102] Moreover, even
if the respondent does reply, and law to which it is subject to jurisdiction is
evident, there are still a dearth of articulated criteria for determinations of
the applicable choice of law.[103]
When DeCicco found against the complainant in Milwaukee Radio
Alliance, he did so without reference to the nationality of the
respondent.[104] In so doing,
DeCicco was giving weight to the authority of the Federal Rules of Evidence,
though it may have been inapplicable to the respondent, i.e., he may have lived
outside the United States. However, other Panelists have deemed that where
there is diversity of national citizenship between parties, a party cannot argue
for the application of its law to the disadvantage of the foreign
party.[105]
Symptom of a
Greater Ill:
In a sense, the issue of whether to adopt FED. R. EVID. 408
is a symptom of a larger issue with the UDRP and ICANN as a whole: American
control over the DNS. The United States government declared its official policy
to leave the realm of the
DNS,[106] but other
countries’ governments have expressed the reservation, that the United
States still has too much control over the
DNS.[107] There is nationalism on
the internet; netizens are first citizens of their own country, then users of
the Internet.[108] Anecdotally,
there is evidence that other country’s citizens wish that Americans did
not dominate Internet
governance.[109] Empirically,
there is evidence that parties to domain name arbitrations, thus far, have
exhibited nationalistic
behavior.[110] If the ICANN Board
of Directors operates as the policy making arm of Internet governance, then
arbitration panels under the UDRP constitute the analogous judicial arm. It may
be extrapolated from the recent surge of nationalism surrounding the ICANN Board
of Directors election that these same countries that do not want to see the
United States dominate the ICANN Board would no more wish to see United States
law dominate the judicial system of the Internet.
In that there is a need
for a uniform statutory rule, or at least a uniform set of criteria for choices
of law, the issue of adopting FED. R. EVID. 408 is illustrative of what Prof.
David Post calls cyberspace’s constitutional
moment.[111] “The U.S.
government created ICANN to administer a few technical rules. But ICANN seems
poised to make itself an international government for the Internet, not a
technical-standards body. ICANN's regime is neither democratic nor
constitutional.”[112] If
there is a single statutory standard to apply for the whole Internet, with
regard to offers to compromise in domain name disputes, that single standard may
have to wait for the resolution of the greater issue of constitutionality to
give such a governing law legitimacy.
However, if the issue of admissibility
of offers to settle can be determined by a clear choice of law rule that
arbitrators should apply, that could be solved within the confines of the
current structure by articulating specific criteria for the choice of law;
thereby, resolving the smorgasbord approach currently used.
And it appears
that the determination of admissibility of offers to settle, specifically, can
be resolved by adopting a common law rule to the UDRP.
5. The Possible Solution
The answer to the problem of dealing with offers to settle is found in the
Panelists’ treatment of such an offer in
Penguin Books, Ltd. v. The
Katz Family.
[113] In that
case, the Panel did not specifically exclude consideration of offers to settle
from evidence. Rather it considered the evidence presented in the complaint,
response, reply, and sur-reply to decide whether the offer to settle proved bad
faith registration and use.
[114]
The Panel stated it was unwilling to infer bad faith intent from the fact that
the parties entered into settlement negotiations subsequent to the filing of the
initial complaint and before the reply and sur-reply, particularly when the
complainant initiated the first offer to
settle.
[115] Such an analysis
of offers to settle serves as a model for future case. The Penguin Books
Panel did not mention FED. R. EVID. 408; it did not apply an American law to bar
evidence from its consideration, even between two American parties to a dispute.
Rather, without explicitly stating so, it considered the totality of the
circumstances. This
consideration of all facts
adheres to the loose structure of the alternative dispute resolution model and
comports with earlier UDRP Panels’ considerations of the totality of the
circumstances to determine crucial points in other UDRP
decisions.[116] Chief among the
facts that the Panel cited to exclude the compromise negotiations was that the
complainant made the first overture toward settlement; this was not a demand
from the respondent leveraged by holding the website
hostage.[117]
A black-line
test for offers to settle can be extrapolated from the Penguin Books
opinion: if the complainant, itself, makes the initial offer to settle, then the
respondent should not be able to use rejections of that offer as evidence of bad
faith registration and use. However, if the respondent replies to the offer
with a counter offer that is grossly disproportionate to its costs and its
interests in the name, then the Panel could use this circumstance as indicia of
bad faith, just as a federal judge may consider extortionate levels of demands
for settlement. In the area in between these two extremes, i.e., where the
respondent initiates an offer to sell once the controversy has arisen for an
amount that reasonable people may differ as to their opinions of what the
respondent is truly seeking, then the Panel should consider the totality of the
circumstances with the attendant burden on the complainant.
The difficulty
in the advocated even-handed method of dealing with offers to settle by a
totality of the circumstances analysis may appear obvious; it is nearly
impossible to gauge a totality of the circumstances based on only the
complainant’s pleading when the respondent fails to answer. It would be
inequitable to bar all offers to settle from consideration merely because the
respondent fails to reply; doing so would give respondents the ability to veto
the process by not participating yet demanding extortionate payments through
settlement negotiations. In such a position, a Panel may require a greater
level of documentation from Complainants in order to properly evidence that a
respondent does not reasonably wish to settle, but rather, extort a sum far
disproportionate to the respondent’s interest in the domain name at issue.
The solution should be just as self-evident as the problem; the complainant has
the burden of proof. If the complainant can sufficiently allege and document a
legitimate cybersquatting, then the UDRP will still work to its advantage. If,
however, there is merely an offer to settle with the complainant, then this will
no longer justify stripping the ownership of a domain name from the respondent.
It is the reasonable exercise of the Panelists’ discretion, not the blind
adherence to a rule of evidence intended for use in the more complex,
time-consuming, and costly system of federal litigation.
[†] Associate, Wolff &
Samson, P.A.,
www.wolffsamson.com;
College of William and Mary in Virginia, B.A., 1996; Villanova University School
of Law, J.D., 2001.
[‡] As a preliminary
matter, I must clarify the method of citation used for Uniform Dispute
Resolution (“UDRP”) opinions in this article – and that which
I advocate for uniform adoption for all citations to UDRP opinions. Panelists
in different approved arbitration groups have referred to cases differently,
both in reference to cases decided from within their arbitration group and those
decided by other groups. The UDRP opinions are, at present, published in
complete form only on the Internet. The Bluebook: A Uniform System of Citation,
16
th ed., 1996, suggests that Internet resources be listed by their
author’s name, title, the date on which the site was last visited or
modified, and the URL.
See Rule 17.3.3. This method, however, is
insufficient and cumbersome for the UDRP opinions as they are commonly referred
to by the case name and not the author’s name. Therefore, the suggested
system treats UDRP opinions like slip opinions published from electronic legal
resources, such as WestLaw or Lexis. The suggested system would cite as
follows: the complainant’s entity or personal surname v. the same for the
respondent (all underlined), followed by the arbitration organization’s
common abbreviation (e.g. WIPO, NAF. DeC), the organization’s assigned
case number for that case, and a pinpoint citation to the specific page (when
applicable), and finally the complete date on which the opinion was issued in
parentheses (this date follows the Panelist(s) name(s) at the end of the opinion
or dissent). The complete date, not just the year is required due to the
unsettled nature of this area of law, and the fact that the year listed in the
case number refers to the year in which the case was filed, not the year in
which the case was decided. Parenthetical explanations of the Panelists’
decisions may follow, as would be the case with conventional court opinions.
For example, the first case decided under the UDRP would be cited as follows:
World Wrestling Federation Entertainment, Inc. v. Bosman, WIPO D99-0001,
p. 5 (Jan. 14, 2000) (holding an offer to sell constituted both bad faith
registration and use). Short citation may be used for UDRP cases previously
cited in the same work and would require, the complainant’s name, case
number, and the pinpoint site to the printed page. For example, the case above
would be short cited as follows:
World Wrestling Federation, Inc.,
D99-0001, at p. 5. Rather than listing the URL for each UDRP decision, this
system allows easy reference to the UDRP decisions through the Internet
Corporation for Assigned Names and Numbers (“ICANN”) homepage for
the UDRP, <
http://www.icann.org/udrp/udrp.htm>.
[1] See Panavision
Int’l, L.P. v. Toeppen, 141 F. 3d 1316, 1319 (9th Cir. 1998) (finding
the defendant was subject to specific jurisdiction in California, as the U.S.
District Court had found (
See Panavision Int’l, L.P. v.
Toeppen, 938 F. Supp. 616 (C.D. Cal. 1996)), and affirming the same
court’s later ruling in favor of plaintiff’s motion for summary
judgment, in part; ruling that the defendant’s registration of the
panavision.com and
panaflex.com domain names violated federal and
state trademark dilution acts (
See Panavision Int’l, L.P. v.
Toeppen, 945 F. Supp. 1296 (C.D. Cal. 1996))).
[2] Panavision Int’l,
L.P., 141 F.3d at 1319.
[3] Id. at 1319 (stating:
“Toeppen has registered domain names for various other companies including
Delta Airlines, Neiman Marcus, Eddie Bauer, Lufthansa, and over 100 other marks.
Toeppen has attempted to ‘sell’ domain names for other trademarks[,]
such as
intermatic.com to Intermatic, Inc. for $10,000 and
americanstandard.com to American Standard, Inc. for $15,000”).
[4] Id. at 1319
(characterizing the defendant’s demand for payment as an “offer to
settle”).
[5] Id. at 1324-25 (citing
Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227, 1239 (N.D. Ill. 1996), as
an illustration of the defendant’s pattern of offering to sell domain
names to trademark holders of that name as evidence of trademark dilution ).
[7] Id. at 1325 (holding:
“Toeppen’s ‘business’ is to register trademarks as
domain names and then sell them to the rightful trademark owners”).
[8] Id. at 1317 (using
the term “cyber pirate” to describe the defendant as one who,
“steals valuable trademarks and establishes domain names on the Internet
using these trademarks to sell the domain names to the rightful trademark
owners”).
[9] See Milton Mueller,
Rough Justice: An Analysis of ICANN’s Uniform Dispute Resolution
Policy (last modified Nov. 9, 2000) <
http://dcc.syr.edu/roughjustice.htm>
(describing the start of the cybersquatting movement by the registration of
mcdonalds.com in 1994 by a private party and the abuse of the domain name
system that followed).
[10] See Improvement of
Technical Management of Internet Names and Addresses, 63 Fed. Reg. 8,826, 8,827
(1998) (proposed Feb. 20, 1998) (stating that there was a need for change in the
Internet because: “Mechanisms for resolving conflict between trademark
holders and domain name holders are expensive and cumbersome. Without changes, a
proliferation of lawsuits could lead to chaos as tribunals around the world
apply the antitrust law and intellectual property law of their jurisdictions to
the Internet. Many commercial interests, staking their future on the successful
growth of the Internet, are calling for a more formal and robust management
structure”).
[11] See Management of
Internet Names and Numbers, 63 Fed. Reg. 31,741, 31,750 (1998) (stating that a
new organization should, among other things, have a policy whereby:
“Domain name registrants would agree, at the time of registration or
renewal, that in cases involving cyberpiracy or cybersquatting (as opposed to
conflicts between legitimate competing rights holders), they would submit to and
be bound by alternative dispute resolution systems identified by the new
corporation for the purpose of resolving those conflicts. Registries and
Registrars should be required to abide by decisions of the ADR
system.”)
[12] See Uniform Domain
Name Dispute Resolution Policy (hereinafter “the Policy”) (last
modified Sept. 29, 1999)
<http://www.icann.org/udrp/udrp-policy-29sept99.htm>. See
also Second Staff Report on Implementation Documents for the Uniform
Dispute Resolution Policy (last modified Oct. 25, 1999)
<http://www.icann.org/udrp/udrp-second-staff-report-24oct99.htm>.
[13] See Improvement of
Technical Management of Internet Names and Addresses, 63 Fed. Reg. at 8,830
(stating there was a need for a swift resolution policy to protect adversely
affected trademark holders).
[14] See Information
Concerning Approval Process for Dispute-Resolution Service Providers (last
modified May 6, 2000)
<http://www.icann.org/udrp/udrp-provider-approval-process.htm>.
[15] See Rules for
Uniform Domain Name Dispute Resolution Policy (hereinafter “the
Rules”) (last modified October 24, 1999) <
http://www.icann.org/udrp/udrp-rules-24oct99.htm>
(defining what a Panelist is and what their duty is with regard to applying the
UDRP).
[16] See,
e.g.,
Mondich v. Brown, WIPO D00-0004, at pp. 2-3 (Feb. 16, 2000) (finding that
when respondent replied to the complainant’s notification of complaint
with an inquiry as to whether complainant would like to “buy” the
domain name or she would “probably have to sue” him, the Panelist
found that, without contrary evidence on a default, “it is possible to
infer that the domain name was registered and used for that purpose,”
i.e., for the purpose of selling in excess of the documented out-of-pocket
expenses directly related to the domain name). The panel found no evidence of a
demand for a specific amount of money in this case and the complainant stated
that, “she was not sure if the respondent originally intended to register
and use the Domain Name in bad faith;” nevertheless, the panel supported
an inference of an offer to settle by the mere inactivity of the domain name,
i.e., the respondent had not yet set up his web business though he had a similar
conventional business.
Id. See also Swan v. Begg, NAF
FA0002000093559, at pp. 2-3 (Mar. 13, 2000) (holding that respondent’s
reply to complainant that it was willing to transfer the domain name
cybergauge.com to complainant for $700.00 evidenced bad faith);
Biofield Corp. v. Kwon, DeC AF-0102, at pp. 3-6 (Mar. 23, 2000) (holding
that emails between the complainant and respondent in which the former offered
$1000 for the transfer of the domain name
biofield.com and the latter
responded with an invitation to negotiate evidence bad faith registration and
use by an offer to sell for valuable consideration in excess of out-of-pocket
expenses associated with the domain name). These cases are illustrative of the
evidence once considered offers to sell meeting the bad faith use and
registration requirements of the UDRP; however, had the calculus of later
Panelist’s opinions applying FED. R. EVID. 408 been applied here, such
evidence may have been excluded in these case, resulting in a different
outcome.
[17] See David McGuire,
WIPO, ICANN Happy with Cybersquatting Decisions (posted Feb. 24, 2000)
<
http://www.newsbytes.com/pubNews/00/144454.html>
(quoting ICANN President Mike Roberts stating: “So far the record seems
very strong,” in a story espousing the success of the first set of cases
under the UDRP despite concerns during the drafting of the UDRP).
[18] See World
Intellectual Property Organization, List of Mediators and Arbitrators,
Biographical Data: Paul Michael DeCicco (last visited Dec. 6, 2000) <
http://arbiter.wipo.int/domains/panel/profiles/decicco.pdf>
(detailing Mr. DeCicco’s experience as an attorney for intellectual
property, including his position as lead counsel for defendants in
Porsche
Motor Car North America v. Porch.com, 51 F. Supp.2d 707 (E.D. Va. 1999),
which he characterizes as the first case of in rem jurisdiction over domain
names. Mr. DeCicco opposed the exercise of in rem jurisdiction over domain
names in that case; in rem jurisdiction is the initial basis of jurisdiction now
exercised by the UDRP panels, some of which Mr. DeCicco has been a
member).
[19] See Motorola,
Inc. v. NewGate Internet, Inc., WIPO D00-0079, pp. 5-10 (Apr. 20, 2000)
(dissenting to the majority on the basis of FED. R. EVID. 408);
Milwaukee
Radio Alliance, L.L.C. v. WLZR-FM LAZER 103, WIPO D00-0209, p. 4 (June 5,
2000);
Netvault Ltd. V. SV Computers and Walia, WIPO D00-0095 pp. 7-9
(July 19, 2000) (dissenting).
[20] See CBS
Broadcasting, Inc. v. Saidi, WIPO D00-0243, p. 4 (June 2, 2000) (rejecting,
expressly, the dissenting opinion of Panelist DeCicco in
Motorola, Inc.,
D00-0079).
[21] See Do the
Hustle, LLC v. Monkey Media, LLC, WIPO D00-0625, p. 4 (Sept. 5, 2000)
(finding: “The offer to sell the domain name to settle the dispute does
not necessarily establish bad faith”).
Cf. World Wrestling
Federal Entertainment, Inc.,
supra, D99-0001, at p. 5.
[22] See Improvement of
Technical Management of Internet Names and Addresses, 63 Fed. Reg. at 8,826,
supra (explaining that the President directed the Secretary of Commerce
to privatize, increase competition in and promote international participation in
the DNS, as part of the administration’s Framework for Global Economic
Commerce on July 1, 1997, <
http://www.ecommerce.gov/framewrk.htm>).
For a more in depth explanation of the Internet, in general, than is warranted
here,
see Barry Leiner,
A Brief History of the Internet (last
updated Aug. 4, 2000) <
http://www.isoc.org/internet/history/brief.html>.
[23] See Request for
Comments on the Registration and Administration of Internet Domain Names, Fed.
Reg. (July 2, 1997).
[24] See Improvement of
Technical Management of Internet Names and Addresses, 63 Fed. Reg. at
8,826.
[25] See Management of
Internet Names and Numbers, 63 Fed. Reg. at
31,741.
[26] See
Improvement of Technical Management of Internet Names and Addresses, 63 Fed.
Reg. at 8,828 (granting a mandate to a non-profit corporation to accomplish the
following four tasks:
1. To set policy for and direct the allocation of number blocks to regional
number registries for the assignment of Internet addresses; 2. To oversee the
operation of an authoritative root server system; 3. To oversee policy for
determining, based on objective criteria clearly established in the new
organization's charter, the circumstances under which new top-level domains are
added to the root system; and, 4. To coordinate the development of other
technical protocol parameters as needed to maintain universal connectivity on
the Internet).
[27] See id. at
8,826-8,827 (explaining that, “as the Internet becomes commercial, it
becomes inappropriate for U.S. research agencies ...to participate in and fund
these functions,” specifically DARPA, a government agency that had
contracted with IANA for management of the DNS).
[28] See id. at
8830 (stopping short of creating a monolithic system for the entire Internet,
the policy suggests that each registrar establish its own policy based on
certain minimums). The Green Paper also states that domain names that are
disputed constitute only a small portion of those registered.
Id. at
8829. Then as now, this is true, for every name that was disputed in the past
year under the UDRP, there were approximately 3,500 newly registered domains
that did not cause a dispute.
See Rough Justice: An Analysis of
ICANN’s Uniform Dispute Resolution Policy,
supra, at p. 28.
[29] See Management of
Internet Names and Numbers, 63 Fed. Reg. at 31,746 (stating: “Most
comments also favored creation of an on-line dispute resolution mechanism to
provide inexpensive and efficient alternatives to litigation for resolving
disputes between trademark owners and domain name registrants ... favoring ... a
uniform approach to resolving trademark/domain name
disputes.”)
[30] See
id. at 31,747 (directing that:
WIPO initiate a balanced and transparent process, which includes the
participation of trademark holders and members of the Internet community who are
not trademark holders, to (1) develop recommendations for a uniform approach to
resolving trademark/domain name disputes involving cyberpiracy (as opposed to
conflicts between trademark holders with legitimate competing rights), (2)
recommend a process for protecting famous trademarks in the generic top level
domains [(“gTLDs”)], and (3) evaluate the effects, based on studies
conducted by independent organizations ... of adding new gTLDs and related
dispute resolution procedures on trademark and intellectual property
holders.)
[31] See A. Michael
Froomkin,
Wrong Turn in Cyberspace: Using ICANN to Route Around the APA and
the Constitution, 50 Duke L.J. 17, 24 (2000) (describing the federal
government’s abrogation of control over the DNS to ICANN).
[32] See Management
of Internet Names and Addresses (last visited Nov. 12, 2000)
<
http://www.ntia.doc.gov/ntiahome/domainname/index.html> (listing a
timeline of events marking the transition of power from the federal government
to ICANN).
[33] See Amendment 12 to
Cooperative Agreement (last modified Mar. 12, 1999)
<
http://www.ntia.doc.gov/ntiahome/domainname/amend12.htm>.
[34] See A. Michael
Froomkin,
Wrong Turn in Cyberspace: Using ICANN to Route Around the APA and
the Constitution, 50 Duke L.J. at 24 (describing ICANN’s efforts to
force NSI to allow more registrars and force all registrars to adopt the
UDRP).
[36] A Framework for Global
Electronic Commerce (last modified July 1, 1997)
<
http://www.ecommerce.gov/framewrk.htm> (stating that, “The
legal framework supporting commercial transactions on the Internet should be
governed by consistent principles across state, national, and international
borders that lead to predictable results regardless of the jurisdiction in which
a particular buyer or seller resides).
[37] See Testimony of
Beckwith Burr (last modified June 10, 1998) <
http://www.ntia.doc.gov
/ntiahome/domainname/burr06-10-98.htm> (contending that the new system
proposed in the Green Paper would invite American and non-American Internet
stakeholders to work in the new organization).
[38] See Management of
Internet Names and Numbers, 63 Fed. Reg. at 31,748 (promising that:
The U.S. Government believes that the Internet is a global medium and that
its technical management should fully reflect the global diversity of Internet
users. We recognize the need for and fully support mechanisms that would ensure
international input into the management of the domain name system. In
withdrawing the U.S. Government from DNS management and promoting the
establishment of a new, non-governmental entity to manage Internet names and
addresses, a key U.S. Government objective has been to ensure that the
increasingly global Internet user community has a voice in decisions affecting
the Internet’s technical management.)
Despite this promise, the European Union appears skeptical that the United
States government will actually relinquish complete control of the DNS.
See Communication from the Commission to the Council and European
Parliament: The Organization and Management of the Internet International and
European Policy Issues 1998-2000, at p. 14 (Apr. 7,
2000).
[39] See FED. R.
EVID. 408:
Evidence of (1) furnishing or offering or promising to furnish, or (2)
accepting or offering or promising to accept, a valuable consideration in
compromising or attempting to compromise a claim which was disputed as to either
validity or amount, is not admissible to prove liability for or invalidity of
the claim or its amount. Evidence of conduct or statements made in compromise
negotiations is likewise not admissible. This rule does not require the
exclusion of any evidence otherwise discoverable merely because it is presented
in the course of compromise negotiations. This rule also does not require
exclusion when the evidence is offered for another purpose, such as proving bias
or prejudice of a witness, negativing a contention of undue delay, or proving an
effort to obstruct a criminal investigation or prosecution.
[40] See FED. R. EVID.
408 Advisory Committee Notes.
[42] See,
e.g.,
Outlook Hotel Co. v. St. John, 287 Fed 115 (3d Cir. 1923) (holding that a
letter offering settlement was privileged though not expressly without
prejudice).
See also similar application of state rules of evidence
modeled on FED. R. EVID. 408,
e.g.,
Armstrong v. Kline, 149 P.2d
445 (Cal. App. 1944) (excluding the statement, “she asked what I thought
about settling”);
North River Ins. Co. v. Walker, 170 S.W. 983 (Ky.
1914) (excluding statement inviting party to come visit to try to make a
compromise settlement).
[43] See generally 4
Wigmore, Evidence § 266 (explaining the policy reasons behind second basis
for exclusion);
see also Fed R. Evid. 408 Advisory Committee Notes,
supra, note 40.
[44] See,
e.g.,
Ogden v. George F. Alger Co., 91 N.W.2d 288 (Mich. 1958) (finding that
state rule modeled on FED. R. EVID. 408 did not bar substantial offer to
plaintiff because controversy had not yet arisen);
Federal Mut. Ins. Co. v.
Lewis, 191 A.2d 437 (Md. 1963) (holding that analogous state rule did not
bar evidence of offer to compromise used to explain delay in taking action).
[45] See FED. R. CIV. P.
26,
et seq. (allowing for broad pre-trial discovery).
Cf.
the Rules,
supra, note 12 (failing to include any provision for
pre-hearing discovery, but rather leaving to the complainant to annex any
documentary or other evidence it already has to its complaint,
see ¶
3(b)(xv)).
[46] 10 J. Moore & Bendix,
Moore’s Federal Practice § 408.04 (1988 & Supp. 1990).
[47] For a list of all crucial
dates in this process of creating and adopting the UDRP,
see Timeline
for the Formulation and Implementation of the Uniform Dispute-Resolution
Policy (last modified Oct. 17, 2000)
<
http://www.icann.org/udrp/udrp-schedule.htm>.
[48] See Mail
Index (last visited Oct. 12, 2000)
<
http://www.icann.org/comments-mail/comment-udrp/current/maillist.html>
(listing only 118 total comments on the proposed policy, some of which were
pasted, apparently, not in regard to the UDRP but rather as publicity for other
web sites).
Cf. Management of Internet Names and Numbers, 63 Fed. Reg.
at 31,741 (noting that 340 comments were made to the Green Paper, amounting to
some 1500 pages; comments can be found at
<
http://www.ntia.doc.gov/ntiahome/domainname/130dftmail/>).
[49] See the Policy,
supra, note 12.
[50] See the Rules,
supra, note 15.
[51] See the Policy,
supra, note 12 (stating that these are the three elements of disputes to
which the UDRP applies). If a complainant asserts these three elements to a
dispute resolution provider, in compliance with the rules of procedure, then the
respondent must submit to an administrative proceeding.
Id. The
complainant bears the burden of proving that each of the elements are present.
Id.
[52] Id. (stating that
the factual circumstances in particular evidence bad faith registration and use,
but without limitation; therefore, the policy preserves discretion in the
Panelists to find bad faith registration and use by other means too).
[53] Id. (listing this
as the first of four indicia of bad faith registration and use). The other
three indicia are: engaging in a pattern of conduct to prevent the trademark or
service mark owner from using the same in a domain name, registering the domain
name primarily for the purpose of disrupting the business of a competitor, and
using the domain name for commercial gain to attract Internet users by
likelihood of confusion with the complainant’s mark as to the source,
sponsorship, affiliation, endorsement, or product offered through the site to
which the name resolves.
Id.
[54] See section II,
infra.
[55] See World
Wrestling Federation, D00-0001, at p. 5 (holding registering a domain name
with the intent of later selling it for cost in excess of out-of-pocket expenses
constitutes “use” under paragraph 4 of the UDRP).
[56] See Indiana
Mulch and Stone, L.L.C. v. Keith’s Farm Market, NAF FA0002000093676,
p. 2 (Mar. 15, 2000) (acknowledging that the complainant had a trademark,
noting, specifically, 13 year-old reputation complainant had established, when
the complainant had only asserted a common law trademark by thirteen years of
use, not registration).
[57] See Ellenbogen
v. Pearson, WIPO D00-0001, p. 6 (Feb. 17, 2000) (determining what
constitutes commercial use under the UDRP by comparison to the criteria set
forth in American statute, 15 U.S.C. § 1125(c), and an American
court’s interpretation of that statute, citing
Intermatic, 947 F.
Supp. at 1239).
See also Beverages and More, Inc. v. Glenn Sobel
Mgt, DeC AF-0092, p. 7 (Mar. 9, 2000) (adopting the definition of
cybersquatting from American law, citing
Sporty’s Farm L.L.C. v.
Sportman’s Market, Inc., 202 F.3d 489, 495 (2d Cir. 2000) and the
Anticybersquatting Consumer Protection Act of 1999, Pub.L. No. 106-113 (1999),
S.Rep. No. 106-140, at 4 (1999) (stating that the Act was passed, "to protect
consumers and American businesses, to promote the growth of online commerce, and
to provide clarity in the law for trademark owners by prohibiting the bad-faith
and abusive registration of distinctive marks as Internet domain names with the
intent to profit from the goodwill associated with such marks--a practice
commonly referred to as 'cybersquatting")).
[58] See Parfums
Christian Dior v. 1Netpower, Inc., WIPO D00-0022, p. 6 (Mar. 3, 2000)
(determining that the domain name at issue is identical or confusing similar to
complainant’s trademarks, which have, “become well-known marks in
the sense of art. 6 bis (sic) of the Paris Convention”).
[59] See Parfums
Christian Dior v. QTR Corp., WIPO D00-0023, pp. 3-4 (Mar. 9, 2000) (holding
that listing dior.org and five other domain names with incorrect contact
information that stated, “This domain name is for sale,” in part of
the address section of the WhoIs database clearly indicated that the respondent
had registered the domain name primarily for the purpose of selling it for
valuable consideration; therefore, its actions constituted bad faith
registration and use).
See also America Online, Inc. v. QTR
Corp., NAF FA0001000092016, p.2 (Feb. 10, 2000) (same).
[60] See Home
Interiors & Gifts, Inc. v. Home Interiors, WIPO D00-0010, p. 6 (Mar. 7,
2000) (stating: “ ... the fact that the Respondent has posted only a
counter at the web site which records traffic to the site is tantamount to an
advertisement that the website is for sale and an indicator of its
value”).
[61] See
Ellenbogen, D00-0001, at p. 6 (holding that the respondent listed the
domain name wusicweb.com on the domain name auction service greatdomains.com for
the purpose of obtaining valuable consideration in excess of out-of-pocket
expenses; therefore, the listing supported a finding of bad faith registration
and use).
[62] See Beverages
and More, AF-0092, at pp. 5-6 (holding that registering a domain name, which
is identical to a trademarked name, that does not resolve to an active website
is domain parking; further, that domain parking is an evasive tactic evidencing
bad faith registration and use). The Panel cited the Second Circuit’s
holding in
Sporty’s Farm L.L.C., 202 F.3d at 495, to explain the
policy behind the Anticybersquatting and Consumer Protection Act of 1999.
Id. The Panel adopted the position for the UDRP that cybersquatters park
domain names rather than make explicit offers to sell to shield themselves from
liability under existing United States trademark dilution laws.
Id.
[63] See note 16,
supra;
see also,
Home Interiors & Gifts, D00-0010, at
p. 6 (considering that the respondent failed to reply to the complainant’s
offer to buy the domain name at issue, after the complainant had already issued
a notice to respondent that the domain name was confusingly to its marks,
evidenced that respondent had no rights or legitimate interests in the domain
name and the respondent had registered and used the domain in bad faith). Note
also that the rejection of an offer to sell the domain name at issue for out of
pocket expenses only, an offer to settle by the complainant, is considered bad
faith by Panels who find bad faith by inaction on behalf of the respondent.
See Ingersoll-Rand Co. v. Gully, WIPO D00-0021, p. 4 (Mar. 9,
2000) (citing
Telstra Corp. Ltd. V. Nuclear Marshmallows, WIPO DOO-0003,
p. 7 (Feb 18, 2000)).
[64] See,
e.g.,
Home Interiors & Gifts, D00-0010 at p. 6 (referring to
Mondich, D00-0004 and
Telstra, D00-0003, for doctrine determining
legitimacy of interest in domain names and bad faith registration and use).
[65] See,
e.g.,
Ingersoll-Rand, D00-0021 at p. 4 (stating that determinations of what is
well known or famous are outside the Panel’s mandate;
cf.
Parfums Christian Dior, D00-0022, at p. 6 (determining that the marks at
issue are well-known and famous marks)).
[66] See Motorola,
Inc., D00-0079, at p. 9.
[67] See Milwaukee
Radio Alliance, D00-0209, at p. 4.
[69] See id. at p. 1
(stating that WLZR-FM LAZER 103 was a party to the dispute notwithstanding the
fact that no response had been filed).
[71] See Talk City,
Inc. v. Robertson, WIPO D00-0009 (Feb. 29, 2000) (citing UDRP Rule 14(b)
directing that the Panel, “shall draw such inferences ... as it considers
appropriate,” and UDRP Rule 14(a) directing that the Panel shall,
“proceed to a decision on the complainant,” when the respondent
defaults and UDRP Rule 15(a) directing that the Panel shall render a decision on
the basis of the statements and documents submitted). The Panel, in that case,
held: “Given Respondent’s failure to submit a substantive answer in
a timely fashion, the Panel accepts as true all of the allegations of the
complaint”.
Id. See also Noodle Time, Inc. v. Max
Marketing, NAF AF-0100, p. 2 (Mar. 9, 2000) (stating: “failure of the
respondent to answer the claims ... should be considered as an admission that
such claims are true”);
Alcoholics Anonymous World Services, Inc. v.
Raymond, WIPO D00-0007, p. 3 (Mar. 6, 2000) (adopting American common law
rule that failure of a party to submit evidence on fact in its controls may
permit the court to draw an adverse inference regarding those facts, citing
Mondich, WIPO D00-0004).
[72] See Milwaukee
Radio Alliance, D00-0209, at p. 4 (explaining that though the complainant
alleged bad faith by the respondent’s demand for costs greater than out of
pocket expenses in its ¶ 27 complaint, that the Panel shall
“determine the admissibility of evidence,” under UDRP Rule 10(d)).
Without explanation as to its choice of law, the Panel then applied FED. R.
EVID. 408 to exclude the offer to settle or any invitation to further negotiate
the transfer of the domain name from the Panel’s consideration.
Id.
[73] Cf. 10 J. Moore
& Bendix, Moore’s Federal Practice § 408.04 (1988 & Supp.
1990),
supra, note
45.
[74] See LifePlan
v. Life Plan (Relation Dynamics), NAF FA0005000094826, p. 4 (July 13, 2000)
(exercising its discretion to accept evidence, the three-member panel held:
... Respondent shows that the ‘offer’ was made in ... the
context of negotiations aimed at settling the parties’ on-going domain
name dispute. Under ¶ 10(d) of the Rules, the [P]anel ‘shall
determine the admissibility of evidence.’ Rules for Uniform Domain Name
Dispute Resolution Policy, ¶ 10(d). Respondent’s argument that
evidence of the offer should not be considered pursuant to Federal Rule
of Evidence 408 is thus well taken and such ‘evidence’ is omitted
from the Panel’s consideration (emphasis in original).
[75] See
Motorola,
supra, D00-0079, at p. 7-10.
[77] Id. at p. 8-9
(stating that both of the reasons that underlie the federal rule are applicable
to UDRP proceedings).
[79] Id. See
also A. Michaeil Forkin,
A Commentary on WIPO’s The Management of
Internet Names and Addresses: Intellectual Property Issues, revised version
(last modified May 19, 1999)
<
http://personal.law.miami.edu/~amf/commentary.htm> (critiquing the
WIPO’s proposal for the dispute policy because it created a trap for the
unwary who would sit passively and accept an offer to sell, because that would
evidence bad faith even if the domain name holder did not initiate the sale).
[80] Id. at p. 10,
footnote 5 (stating that Rule 15(a) gave the Panel the power to decide the
applicable law and Rule 10(d) empowered the Panel to determine admissibility of
evidence).
See also the Rules,
supra, note 15.
[81] See World
Intellectual Property Organization, List of Mediators and Arbitrators,
Biographical Data: M. Scott Donahey (last visited Dec. 6, 2000)
<
http://arbiter.wipo.int/domains/panel/profiles/donahey.pdf>.
[82] See CBS
Broadcasting, Inc., D00-0243, at p. 4 (stating that the panel rejects the
argument set out in the dissenting opinion in
Motorola, D0-0079).
[85] Id. (citing Policy,
¶ 4(b)(i)).
[86] Id. (citing
Avnet, Inc. v. Aviation Network, Inc., WIPO D00-0046, p. 2 (Mar. 24,
2000)).
[87] This analysis was applied
in a later case in which the Panel cited specifically to Donahey’s
conclusion in the earlier
CBS Broadcasting case.
See CBS
Radio, Inc. v. Ron Bunce, WIPO D00-0902, pp. 8-9 (Oct. 24, 2000) (rejecting
respondent’s contention that
CBS Broadcasting, D00-0243, did not
apply because negotiations took place in California where its rule of evidence
similar to FED. R. EVID. 408 should bar offers to compromise from admission;
rather the Panel upheld the complainant’s argument that
CBS
Broadcasting,
supra, operated to admit evidence of the demand for
consideration in excess of out-of-pocket expenses, notwithstanding that the
demand was made in the context of compromise negotiations). The Panel held that
the demand for valuable consideration in combination with the fact that the
parties were, in essence, competitors evidenced bad faith registration and use.
Id. Moreover, the Panel held that it is not required to adopt a state
rule of evidence to exclude settlement negotiations; the Panel has the
discretion to determine admissibility of evidence under the rules (¶ 10(d)
and ¶ 15(a)).
Id. at p. 9 note 5.
[88] See
Netvault, D00-0095, at p. 7.
[91] Id. at 8 (stating
that FED. R. EVID. 408 is made applicable to the Panel by the Rules ¶
10(b)).
[92] Id. (stating that
any statement in the context of a situation like that in this case was not
competent evidence of bad faith, “nor anything else for that
matter”).
[93] See note 57,
supra;
see also Home Interiors & Gift, D00-0010, at p.
5 (holding that since both the complainant and the respondent are domiciliaries
of the United States, and courts there have had recent experience with similar
suits, the Panel may look to the principles of law set out in the decision of
those courts to the extent it is helpful to the Panel in determining whether the
complainant has met its burden under ¶ 4(a) of the Policy).
[94] See Which? Ltd.
v. Halliday, WIPO D00-0019, p. 6-7 (Mar. 27, 2000) (explaining that under
¶ 15 of the Rules, the Panel should decide what principles of law are
appropriate to apply to a dispute and stating: “Since the Respondent is
domiciled in the United Kingdom, and any legal action would have to be taken
against him in that country, the Panel considers principles of law set out in
decisions of Courts in the United Kingdom”).
[95] This appears to be what A.
Michael Forkin called the ‘smorgasbord’ approach to law.
See
A. Michael Forkin,
A Commentary on WIPO’s The Management of Internet
Names and Addresses: Intellectual Property Issues,
supra.
Principally, Forkin was concerned with the lack of articulated criteria for the
arbitrators to use when deciding what law to apply when parties were from
different countries.
Id.
[96] See Bennett
Coleman & Co. Ltd. v. Lalwani, WIPO D00-0014, p. 3 (Mar. 11,2000)
(holding that jurisdiction is proper because the respondent is bound to
arbitrate by the registrar’s user agreement, which applies to the present
maintenance and renewal of domain names). By continuing to hold the domain
name, the respondent was bound by the updated user agreement, including the
arbitration clause.
Id.
[97] See ACLU v.
Johnson, 194 F.3d 1149 (10th Cir. 1999) (explaining that prosecution of
out-of-state parties, whose only contact is via the Internet, is beset with
difficulty, if the state can even get jurisdiction over such parties).
[98] See Beverages
and More,
supra, AF-0092, at p. 6 (noting the difficulty of
collecting the requisite evidence of cybersquatting from passive domain name
holders; therefore, justifying a finding of bad faith by inaction given the
correct circumstances).
[100] See note 61,
supra.
[101] See note 59,
supra.
[102] See note 94,
supra.
[103] See note 95,
supra.
[104] Cf. Which?
Ltd.,
supra, D00-0019, at p. 6-7.
[105] See Bennett
Coleman & Co., D00-0014, at p. 4 (holding that the complainant could not
be prejudiced by the fact that it had not registered a trademark in the United
States even though it had registered its domain name with NSI, which is located
in the United States, because the complainant’s rights in the mark would
likely be recognized under its own sovereign passing-off law in India).
[106] See note 38,
supra.
[107] Angela Profitt,
Drop
the Government, Keep the Law: New International Body for Domain Name Assignment
Can Learn from United States Trademark Experience, 19 Loy. L.A. Ent. L.J.
601, 608 (1999).
[108] See, Damien
Cave,
Why Netizens Can’t Learn to Stop Worrying and Love ICANN, The
New Republic Online (last modified September 26, 2000) <
http://magazines.enews.com/online/cave092600.html
> (quoting Esther Dyson, ICANN interim chairperson, that the rush of
160,000 individuals to register for the ICANN vote – when only 500 people
were expected to vote in the first on-line election of the ICANN Board of
Directors – was attributable to nationalism.)
[109] See ibid
(citing an article in Der Spiegel,
Aufruf zur Wahl der Regierung des
Internet (last modified May 2, 2000) <
http://www.spiegel.de/netzwelt/politik/nf/0,1518,74756,00.html>,
which called on German citizens to register to vote in the ICANN election, an
effort the ICANN chief policy officer, Andrew McLaughlin, characterized as:
“[A] plan ... to ensure that Americans didn’t dominate.”)
[110] See Milton
Mueller,
Rough Justice: An Analysis of ICANN’s Uniform Dispute
Resolution Policy, at p. 16 (stating: “Interestingly, even in a global
dispute resolution system national preferences play a significant role in the
selection of arbitrators”). Analyzing preference of non-US complainants
to use WIPO, an international organization based in Geneva, Switzerland, while
U.S. based NAF receives 92% of its business from within the U.S.
Id.
[112] See Solveig
Singleton,
The Internet Needs an Independence Day (last modified July 6,
1999) <
http://www.cato.org/dailys/07-06-99.html>
(stating that ICANN governs the Internet because control of the DNS is control
of the Internet; ICANN has this and has ambitions of more government).
[113] Penguin Books, Ltd.
v. Katz Family, WIPO D00-0204, p. 6-8 (May 20, 2000).
[114] Id. at 6
(stating that UDRP Rule 4(b)(i), “does not state that any offer to settle
is bad faith. The Policy surely does not mean that every offer to settle any
domain name is evidence of cybersquatting”).
[115] Id. at 8.
[116] See
Golfer’s Warehouse, Inc. v. Lynch, NAF FA92532, p. 3 (Mar. 14,
2000) (holding that the complainant had met its burden of proof under a
“totality of circumstances”
analysis).
[117] See
note 115,
supra.
