[bc-gnso] FW: ICA Webpost -- ICANN Should Investigate NAF’s UDRP Practices

[Phil Corwin <psc@xxxxxxxxxxx>]

FYI--


http://internetcommerce.org/NAF_UDRP_FAIL

ICANN Should Investigate NAF’s UDRP Practices
Submitted by Philip Corwin on Fri, 02/24/2012 - 19:47
On February 23rd the ICA sent a letter to ICANN requesting that it initiate an 
immediate investigation of the UDRP arbitration practices of the Minneapolis, 
Minnesota-based National Arbitration Forum (NAF). NAF is the number two 
provider of UDRP arbitration services, led only by the World Intellectual 
Property Organization (WIPO) – in 2010, WIPO handled 2,696 UDRP filings while 
NAF’s total was 2,177.
NAF has been regarded warily by domain registrants for some time. It entered 
into a consent decree with the Minnesota Attorney General in 2009 - after being 
sued by that law enforcement agency for “consumer fraud, deceptive trade 
practices, and false advertising” - in which it agreed to exit the consumer 
credit and collections arbitration field. Yet so far as we know that 
well-publicized embarrassment provoked no inquiry from ICANN as to whether NAF 
should remain an accredited UDRP provider. Statistical studies have also 
indicated that NAF relies on a very small pool of “neutrals” to perform the 
majority of its UDRP cases, and that these favored few find for complainants 
substantially more than average.
Our request for the investigation was prompted by two recent cases that fell 
far below even NAF’s usual standards, and that belie any perception of 
even-handed treatment of registrant rights. In the first case a “rights holder” 
was awarded a generic domain whose name was identical to the rights it had 
disclaimed in order to get its US trademark approved. In short, it had no 
relevant rights, and in our view the case should have been summarily dismissed 
for bad faith attempted reverse domain name hijacking.
In the second case, an initial three paragraph complaint was unilaterally 
amended at the 11th hour, in violation of relevant ICANN UDRP Policy, by a 
191-page supplemental filing. The decision for complainant handed down just 
four working days later -- before the registrant had any meaningful opportunity 
to respond to what amounted to an entirely new filing.
These two decisions have already caused one Internet law expert to opine: 
“Charades of adjudication such as the ones described here make us seem to our 
clients to be part of some racket, almost like the old Soviet “lawyers” who 
were paid to help put you in jail.” 
http://www.likelihoodofconfusion.com/the-domain-game/
Practices like this, if tolerated by ICANN, undermine whatever faith remains in 
the UDRP as an even-handed process. ICANN has accredited entities like NAF to 
be UDRP arbitration providers, which empowers them to extinguish or transfer 
the valuable intangible rights represented by a domain name. The fact that the 
GNSO (ICANN’s internal policymaking body) has unwisely chosen to defer the 
initiation of a UDRP reform inquiry until mid-2014 at the earliest does not 
mean that ICANN can absolve itself of the responsibility to exercise some 
oversight over the UDRP arbitrators it has accredited. Domain registrants 
should not be expected to tolerate these types of shoddy practices until 2016 
or later, which is the soonest that any UDRP procedural reforms emerging from a 
policy development process could be expected to take effect.
ICANN also needs to realize that a fairly administered UDRP regime is not only 
crucial to current registrants in the existing gTLDs but to the future 
registrants who will decide whether its new gTLD program is a success or 
failure. In addition to the UDRP, registrants in new gTLDs will also be subject 
to the thoroughly untested Uniform Rapid Suspension (URS) proceeding. If this 
is the type of
“justice” that registrants can expect to be meted out in return for NAF’s $1300 
UDRP filing fee (1-2 domains, single member panelist), what can they expect 
under the URS, which ICANN has promised trademark interests will cost a mere 
$300 for filings against one or multiple domains held by the same registrant? 
(To their credit, both NAF and WIPO have indicated that no credible process can 
be provided at that bargain basement rate, which may explain why ICANN is 
months late in initiating a URS implementation process).
Some may view our request as too much ado over domains that have annual 
registration costs of less than $10. But that entirely misses the point. Aside 
from the fact that the secondary marketplace puts a high value on 
non-infringing generic domains, making them valuable intangible assets every 
bit as worthy of respect as trademarks, there are bigger issues at stake. The 
recent PIPA/SOPA Internet blackout arose out of concern over domain censorship 
as a result of ISP and search engine blocking. If those are major concerns for 
Netizens, then what about domain “theft” carried out under color of a 
purportedly balanced process? That’s the ultimate in censorship.
While there are more than twice as many Facebook users as registered domains, 
domains nonetheless remain the only true guarantee of Internet freedom. Users 
of Facebook, Google+, Apple Apps, Twitter, and all other manner of social 
networking intermediaries and software do not own their identities on those 
platforms and are subject to corporate policies that can change on a whim. But 
a non-infringing domain operated in conformity with applicable law can be one’s 
perpetual Internet identity, printing press, and business– so long as it 
receives protection against overreaching trademark interests abetted by a 
system that makes a mockery of registrant due process rights. In no way do we 
condone cybersquatting – but we do take issue with attempts to hijack domains 
in which the complainant has no legitimate rights; as well as expansive views 
of what constitutes a “confusingly similar” domain that, carried to logical 
conclusion, would make most of the DNS subject to trademark holder takeover.
ICANN needs to look into this matter and do the right thing on behalf of all 
domain registrants. In that process, it should invite input from registrants 
and counsel who believe they have been mistreated by NAF, and it should make 
the results of its findings public. After all, it is an organization that 
professes its commitment to transparency and accountability.
We have also suggested that, if ICANN finds NAF to have been operating in an 
unacceptable manner, it should be subject to a ‘consent decree’ that requires 
it to mend its ways as a condition of continued accreditation to administer 
UDRP cases. In short, let’s have a UDRP regime that is even-handed in both 
perception and reality.
Our letter to ICANN follows:
VIRTUALAW LLC

Philip S. Corwin, Founding Principal
1155 F Street, NW Suite 1050
Washington, DC 20004
202-559-8597/Direct
202-559-8750/Fax
202-255-6172/Cell
psc@xxxxxxxxxxx
February 23, 2012
By E-mail
Mr. Steve Crocker, Chairman of the Board
Mr. Rod Beckstrom, President
Internet Corporation for Assigned Names and Numbers (ICANN)
4676 Admiralty Way, Suite 330
Marina del Rey, CA 90292-6601
Re; Request for Initiation of Immediate Investigation into UDRP Practices of 
the National Arbitration Forum (NAF)
Dear Chairman Crocker and President Beckstrom:
On behalf of the members of the Internet Commerce Association (ICA) I am 
requesting that ICANN staff immediately initiate an investigation of the 
practices of the National Arbitration Forum (NAF) in its administration of 
ICANN’s Uniform Dispute Resolution Policy (UDRP). Two recent NAF decisions have 
further heightened already prevalent concerns among domain investors and 
developers in regard to NAF’s lack of adequate quality control in its handling 
of UDRP cases, as well as the perception that it is willing to sacrifice the 
substantive and procedural rights of domain registrants to encourage forum 
shopping by complainants.
ICANN has chosen not to enter into binding contracts with accredited UDRP 
providers, which in our view is an unwise choice that results in a lack of 
clear delineation of their powers and responsibilities, and deprives ICANN of 
flexible enforcement powers to assure that UDRP administration is indeed 
“Uniform” within and among accredited providers. We nonetheless believe that 
ICANN has a fundamental responsibility to exercise oversight over those 
entities it has empowered to extinguish or transfer domains. A failure to make 
adequate inquiry into NAF practices would be an abdication of that 
responsibility and would communicate the message that ICANN is not protective 
of the valuable intangible rights of domain name registrants. That impression 
has already gained traction in the wake of the GNSO’s December 2011 decision to 
defer the initiation of any inquiry into UDRP reform until mid-2014 at the 
earliest, notwithstanding the substantial input received from multiple ICANN 
constituencies that UDRP review was overdue, particularly in regard to 
procedural matters.
Preexisting Concerns About NAF
Along with WIPO, NAF is one of the two principal UDRP forums. Our understanding 
is that WIPO, while far from perfect and notwithstanding its strong ties to 
intellectual property (IP) interests, is perceived by registrants and their 
counsel as doing a far better job in producing predictable and consistent UDRP 
decisions of a generally good quality in conformance with ICANN Policy, while 
maintaining an even-handed approach in such procedural matters as the selection 
of examiners.
NAF, to the contrary, is regarded warily. As you should be well aware, NAF was 
sued in July 2009 by the Office of the Attorney General of Minnesota, which 
alleged that “[t]hrough its conduct, the National Arbitration Forum has 
violated Minnesota’s statutory prohibitions against consumer fraud, deceptive 
trade practices, and false advertising” 
http://www.ag.state.mn.us/PDF/PressReleases/SignedFiledComplaintArbitrationCompany.pdf
 . Just days after that lawsuit was filed, NAF entered into a consent decree 
with the State of Minnesota in which it agreed to withdraw from arbitration 
activities for all consumer credit and collection disputes; prior to that 
withdrawal NAF had conducted more than 200,000 such arbitrations per year 
http://pubcit.typepad.com/files/nafconsentdecree.pdf .
So far as we are aware, ICANN took no action to inquire into NAF’s 
administration of UDRP cases notwithstanding the wide publicity that its 
consumer arbitration withdrawal received. Within weeks after entering into the 
consent decree NAF issued a press release noting that it would continue to act 
as a UDRP arbitrator http://www.adrforum.com/newsroom.aspx?&itemID=1534&news=3 .
A 2010 study documented that, while NAF listed a total of 141 UDRP panelists, a 
mere ten of them (7 percent) were assigned two-thirds (66.3 percent) of all 
UDRP arbitrations, raising questions regarding whether examiner selections were 
random or skewed http://www.dnattorney.com/study.shtml . The top five panelists 
who transferred the largest percentage of domains (found in favor of the 
complainant) were all among those ten most favored examiners, raising a 
perception that NAF may skew toward appointing examiners who favor complainants 
inordinately. The NAF examiner assigned the most cases – ten percent of all 
cases arbitrated during the review period – was sued in 2009 for judicial 
misconduct 
http://domainnamewire.com/2009/07/22/national-arbitration-forum-panelist-sued-for-judicial-misconduct/
 . It is our information that NAF routinely employs examiners who also act as 
counsel for complainants, but has rejected well-qualified counsel who tend to 
represent respondents.
To the contrary, WIPO appears to have done a credible job in evenhanded 
panelist appointments. A similar study of WIPO panelist assignments found these 
results:
Analyzing WIPO UDRP data from 1999 until early 2010, it turns out that the five 
WIPO panelists who have heard the most cases are in the bottom quartile when it 
comes to finding in favor of the complainant and transferring or canceling a 
domain. 8 of the top 10 busiest panelists are in the bottom quartile. In other 
words, there’s little possibility that cases are being handed to arbitrators 
because they’re more likely to rubber stamp them for the 
complainant.http://domainnamewire.com/2010/04/26/wipo-panelist-study-sheds-more-light-on-udrp-practices/
It has also been reported that NAF provides its examiners with a law 
clerk-penned memo for each case to be decided. This additional document appears 
to violate UDRP Policy that an examiner should decide cases based entirely upon 
the submissions of the complainant and respondent, and is a practice that 
facilitates the issuance of hasty “cut and paste” decisions 
http://domainnamewire.com/2009/11/30/national-arbitration-forum-provides-shortcut-to-udrp-arbitrators/
 . There is no transparency as to the number and identity of these clerks, but 
they are likely employees of NAF, not third party neutrals, and have a 
substantial influence on the outcome of arbitrations.
While many of the UDRP cases submitted to NAF appear to have been decided in a 
fair and well-thought manner, all of the above practices already indicated a 
lack of quality control and a perception of pro-complainant bias even prior to 
the issuance of the two badly flawed decisions that sparked this letter.
The Decisions
Attached to this letter are two memos prepared by the esteemed attorney Paul 
Keating of Barcelona, Spain. We will not repeat his detailed rendition of the 
relevant facts but focus on the most salient points. We would also add that the 
registrants of the domains at issue are not members of the ICA and are in no 
way known to us other than through these case histories and review of the NAF 
arbitration decisions.
In the case of Hardware Resources, Inc. v. Yaseen Rehman, the complainant 
alleged that the domain hardwareresources.org was identical to and confusingly 
similar to its trademark for “HR Hardware Resources”. But the UDRP only 
provides protection for rights holders; it cannot create nonexistent rights or 
expand those that were lawfully granted. Had the examiner taken a minute to 
check on the complainant’s trademark filing with the U.S. Patent and Trademark 
Office (USPTO) he would have noticed that each of the relevant trademarks was 
accompanied by the following statement:
“NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO USE "HARDWARE RESOURCES" APART FROM 
THE MARK AS SHOWN.”
In other words, the complainant had already conceded that it had no rights to 
the generic term “hardware resources” in order to obtain its U.S. trademarks. 
As Mr. Keating notes, “Trademark disclaimers are there for a reason; without 
the disclaimer the USPTO would not have issued the registration. It defies 
logic to permit a registration with a disclaimer and then support a trademark 
in only what has been disclaimed.”
In our view the complaint should have been dismissed at that point accompanied 
by a finding of reverse domain name hijacking for bad faith filing. On this 
issue, the WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Second 
Edition ("WIPO Overview 2.0"; 
http://www.wipo.int/amc/en/domains/search/overview2.0/#46) states:
4.17 In what circumstances should a finding of Reverse Domain Name Hijacking or 
abuse of process be made?
Paragraph 15(e) of the UDRP Rules provides that, if "after considering the 
submissions the panel finds that the complaint was brought in bad faith, for 
example in an attempt at Reverse Domain Name Hijacking or was brought primarily 
to harass the domain-name holder, the panel shall declare in its decision that 
the complaint was brought in bad faith and constitutes an abuse of the 
administrative proceeding". Reverse Domain Name Hijacking is defined under the 
UDRP Rules as "using the UDRP in bad faith to attempt to deprive a registered 
domain-name holder of a domain name"…To establish Reverse Domain Name 
Hijacking, a respondent would typically need to show knowledge on the part of 
the complainant of the complainant's lack of relevant trademark rights, or of 
the respondent's rights or legitimate interests in, or lack of bad faith 
concerning, the disputed domain name…The fact of default by a respondent does 
not necessarily prevent a finding of Reverse Domain Name Hijacking in 
appropriate cases, and WIPO panels have on occasion entered such findings on 
their own initiative, especially where the complainant has intentionally 
attempted to mislead the panel by omitting material evidence.(Emphasis added)
The fact that the Pakistani-domiciled respondent offered the domain to the 
complainant for $40 is hardly evidence of bad faith cybersquatting; rather, it 
is testimony to the apparent lack of sophistication of a registrant unaware 
that such a non-infringing generic domain could probably fetch at least $four 
figures in the secondary domain marketplace. Likewise, the fact that the 
respondent failed to participate in the UDRP is most likely due to a lack of 
knowledge regarding his rights or an inability to afford counsel. Again, 
relying upon the WIPO Overview, a default judgment need not favor the 
complainant in these circumstances:
4.6 Does failure of a respondent to respond to the complaint (respondent 
default) automatically result in the complainant being granted the requested 
remedy?
Consensus view: A respondent's default does not automatically result in a 
decision in favor of the complainant…the complainant must establish each of the 
three elements required by paragraph 4(a) of the UDRP. Although a panel may 
draw appropriate inferences from a respondent's default (e.g., to regard 
factual allegations which are not inherently implausible as being true), 
paragraph 4 of the UDRP requires the complainant to support its assertions with 
actual evidence in order to succeed in a UDRP proceeding. There are many 
examples of cases (typically involving complaints based on wholly unsupported 
assertions or mere conclusory statements) to which there has been no response 
where (not withstanding such respondent default) the decision has nonetheless 
gone in favor of the respondent on grounds that the complainant has failed to 
prove its case. (Emphasis added)
Finally, the fact that this generic domain resolved to a page featuring links 
to providers of hardware products and services is in no way evidence of bad 
faith. Again, with reference to the WIPO Overview:
2.6 Do parking and landing pages or pay-per-click links generate rights or 
legitimate interests in the disputed domain name?
Panels have generally recognized that use of a domain name to post parking and 
landing pages or PPC links may be permissible in some circumstances, but would 
not of itself confer rights or legitimate interests arising from a "bona fide 
offering of goods or services" [see also paragraph 3.8 below] or from 
"legitimate noncommercial or fair use" of the domain name, especially where 
resulting in a connection to goods or services competitive with those of the 
rights holder. As an example of such permissible use, where domain names 
consisting of dictionary or common words or phrases support posted PPC links 
genuinely related to the generic meaning of the domain name at issue, this may 
be permissible and indeed consistent with recognized sources of rights or 
legitimate interests under the UDRP, provided there is no capitalization on 
trademark value (a result that PPC page operators can achieve by suppressing 
PPC advertising related to the trademark value of the word or phrase). By 
contrast, where such links are based on trademark value, UDRP panels have 
tended to consider such practices generally as unfair use resulting in 
misleading diversion. (Emphasis added)
The second case is thatof Auto-Owners Insurance Company v. Nokta Internet 
Technologies. The problem in this case was gross procedural unfairness under 
NAF Supplemental Rules that are in conflict with ICANN’s own UDRP Policy.
The original complaint was but three paragraphs in length and did not allege 
any bad faith registration on the part of respondent (a required element to 
find for complainant) but asserted simply that the respondent lacked legitimate 
interest in this generic domain because it contained PPC links to, not 
surprisingly, insurance products. Mr., Keating served as counsel to respondent 
and prepared a response explaining that the complainant’s asserted rights were 
in a non-distinctive design mark.
At the 11th hour the panel then accepted a 191-page supplemental filing (13 
pages of argument and 178 pages of exhibits) from the complainant, which the 
panel had not itself requested. Mr. Keating was in the process of preparing a 
response to this outsized supplemental filing when, a mere four working days 
after its receipt, the panel issued a 13-page decision in favor of complainant!
The supplement was filed under NAF Supplemental Rule 7, which NAF panels have 
held to be controlled by ICANN Policy Paragraph 12, and which reads:
12. Further Statements
In addition to the complaint and the response, the Panel may request, in its 
sole discretion, further statements or documents from either of the Parties. 
(Emphasis added)
Complainant’s 191-page supplemental filing not only had not been requested by 
the panel, it essentially constituted an entirely new complaint to which 
respondent was not afforded adequate time to respond. This entire process was 
fundamentally unfair on its face.
As Mr. Keating concludes:
ICANN must resolve this issue. NAF’s SR7 is in inherent conflict with the UDRP 
which is the only binding obligation of the respondent. The ADR provider may 
not adopt rules that are in conflict with the UDRP and the panels may not 
enforce supplemental rules to the extent they are in conflict with the UDRP and 
the basic concept of fairness that is supposed to prevail under the Policy. By 
failing to address such abuse, ICANN is exposing the entire contractual 
arbitration process to distain and legal challenge. While not perfect, 
stability and inherent fairness is fundamental to the proper functioning of the 
UDRP. The panel (and NAF) in this case ignored both.
Conclusion
The two cases cited above are reportedly just the tip of the iceberg of NAF’s 
questionable arbitration of UDRP cases. ICANN has accredited NAF to act as a 
UDRP arbitrator, and if ICANN does nothing in response after being made aware 
of such conduct it will in effect be sanctioning practices that are at odds 
with fundamental notions of fairness and reasonable due process in UDRP 
adjudication.
We urge ICANN to fully investigate NAF’s administration of UDRP cases and, if 
it finds that the NAF has engaged in practices that are biased against 
respondents, that are at odds with ICANN policy and procedures, and that fail 
fundamental standards of fairness and professional conduct, to condition NAF’s 
further accreditation as a UDRP provider upon its entry into a “consent decree” 
with ICANN – with violation of such agreement to result in withdrawal of 
accreditation. At a minimum, that decree should address such matters as:

  *   · Practices designed to assure that selection of panel experts are random 
and unbiased.
  *   · Limiting the basis of examiner decisions solely to the submissions of 
the two parties.
  *   · NAF’s explicit recognition that a non-infringing generic domain’s links 
to products and services related to that domain name is consistent with 
recognized sources of rights or legitimate interests under the UDRP.
  *   · Permanent dismissal of examiners who evidence an inability to inquire 
into such basic evidentiary elements as the legal basis for claim of trademark 
rights.
  *   · Limitation of Supplemental Rules solely to administrative matters, and 
permanent deletion of all such Rules that are in conflict with ICANN Policy.
These are but a start, and ICA would be pleased to put ICANN staff in touch 
with expert counsel who have represented respondents before NAF Panels and may 
well have additional suggestions for reform.
In addition, given the fact that the decisions in the two cases cited above are 
insupportable on, respectively, substantive and procedural grounds, we hereby 
ask ICANN to immediately instruct the relevant registries and registrars that 
no transfer of the domains in question to the complainants should be undertaken 
until this matter has been fully investigated and resolved. If ICANN finds that 
these decisions lacked adequate basis or were fundamentally unfair it should 
seek to have the prior decisions vitiated and the cases reheard.
Conclusion
IP interests repeatedly assert that any digital infringement of their rights 
constitutes “theft”. But domains, like trademarks, constitute valuable 
intangible assets, and when a domain is transferred through a UDRP process that 
is procedurally and substantively flawed that is an even greater theft, because 
digital files can be infinitely and perfectly copied while only a single entity 
may control a domain.
As ICANN undertakes a substantial expansion of the DNS through its new gTLD 
program, it is essential that the rights protection measures it employs are 
balanced in both substance and practice. NAF’s administration of the UDRP in 
the cases cited above appears to be seriously flawed and creates the appearance 
of substantial bias and ineptitude. ICANN has a responsibility to make serious 
inquiry into this matter and to take remedial action based upon its findings.
Thank you for considering our request in this matter.
Sincerely,
Philip S. Corwin
Counsel, Internet Commerce Association
ICA Background
ICA is a not-for-profit trade association representing the domain name 
industry, including domain registrants, domain marketplaces, and direct search 
providers. Its membership is composed of domain name registrants who invest in 
domain names (DNs) and develop the associated websites, as well as the 
companies that serve them. Professional domain name registrants are a major 
source of the fees that support registrars, registries, and ICANN itself. ICA 
members own and operate approximately ten percent of all existing Internet 
domains on behalf of their own domain portfolios as well as those of thousands 
of customers.


Philip S. Corwin, Founding Principal
Virtualaw LLC
1155 F Street, NW
Suite 1050
Washington, DC 20004
202-559-8597/Direct
202-559-8750/Fax
202-255-6172/cell

Twitter: @VlawDC

"Luck is the residue of design" -- Branch Rickey

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