Re: [bc-gnso] FW: New ICA Post on the LRO

[Phil Corwin <psc@xxxxxxxxxxx>]

I don't disagree, and never said they were.

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

Sent from my iPad

On Aug 4, 2013, at 10:51 PM, "J. Scott Evans" 
<jscottevans@xxxxxxxxx<mailto:jscottevans@xxxxxxxxx>> wrote:

I am not so sure any of these cases were wrongly decided.

Sent from Yahoo! Mail for iPhone

________________________________
From: Phil Corwin <psc@xxxxxxxxxxx<mailto:psc@xxxxxxxxxxx>>;
To: bc-gnso@xxxxxxxxx<mailto:bc-gnso@xxxxxxxxx> 
<bc-gnso@xxxxxxxxx<mailto:bc-gnso@xxxxxxxxx>>;
Subject: [bc-gnso] FW: New ICA Post on the LRO
Sent: Sun, Aug 4, 2013 10:05:16 PM

FYI/BC members may find my latest opinion piece of some interest---

http://internetcommerce.org/LROlooksDOA

LRO Looks DOA

The Legal Rights Objection (LRO) mechanism administered by the World 
Intellectual Property Organization (WIPO) on behalf of ICANN is starting to 
look like the reverse FISA Court of domain name system (DNS) rights protection 
mechanisms (RPMs) at the top level. In FISA Court, the government always wins – 
at WIPO, the LRO complainant always loses.
The FISA Court is of course the venue in which the U.S. government requests a 
surveillance warrant against a suspected foreign intelligence agent and is 
never denied (well, almost never – since the process started in 1979, 11 
requests have been denied out of a total of 33,942  received through the end of 
2012[1]). FISA Court proceedings are secret and non-adversarial, with only 
government lawyers presenting arguments. In contrast, the decisions resulting 
from LRO proceedings are published, and both complainant and respondent have 
equal ability to present their arguments. Yet, as of Friday, August 2nd all 28 
of the decided LRO complaints, out of a total of 69 filed, resulted in losses 
for the complainants[2].
The lopsided results arouse suspicions that trademark interests may have been 
fighting the last war and too intensely focused on potential cybersquatting at 
the second level (a concern that we believe is overblown due to the low traffic 
prospects for many new gTLDs). They consequently sought and obtained the 
Trademark Clearinghouse (TMC), Uniform Rapid Suspension (URS) RPMs – and also 
proposed other second level remedies such as a Global Protected Marks List 
(GPML) that ICANN did not grant. Yet they may have failed to adequately 
consider whether top level protections were sufficient, and in particular 
whether the threshold standard for successfully prosecuting a LRO was 
unattainably high.
As Thomas O’Toole observed in an excellent analysis recently posted on 
Bloomberg BNA’s E-Commerce and Tech Law Blog[3]:
[T]he only surprise the future might hold is the faint prospect that a WIPO 
panelist might actually rule in favor of a trademark owner…The biggest lesson 
so far has been that the Legal Rights Objection process is wholly ineffective 
for trademark owners seeking to knock down proposed domains containing generic 
strings. In many cases, companies owning marks for terms such as EXPRESS, HOME, 
VIP, LIMITED, MAIL, TUNES have lost LROs to domain applicants with no 
intellectual property rights in those terms whatsoever. Pinterest's failed 
challenge to Amazon's proposed .pin domain was particularly ominous for mark 
owners, because Amazon seems pretty clearly to be moving in on Pinterest's 
business…
The reason for this dour outlook can be found in passages from two early LRO 
rulings: the first one, Right at Home v. Johnson Shareholdings Inc., No. 
LRO2013-0300 (WIPO, July 3, 2013); and the second, my favorite, Express LLC v. 
Sea Sunset LLC, No. LRO2013-0022 (WIPO, July 9, 2013)…
In Right at Home, panelist Robert A. Badgley offered the first interpretation 
of key terms in Section 3.5 of ICANN's New gTLD Applicant 
Guidebook<http://newgtlds.icann.org/en/applicants/agb>. The guidebook uses 
highly qualified language, directing LRO panelists to decide whether the 
proposed new domain "takes unfair advantage" of the trademark owner's rights, 
or "unjustifiably impairs" the value of the mark, or creates an "impermissible 
likelihood of confusion" between the mark and the proposed domain.
In Badgley's view, this language creates a very high burden for trademark-based 
objections…Obviously, it is going to be very difficult for any trademark owner 
to demonstrate that a proposed domain is so fishy it satisfies the "something 
untoward ... if not to the level of bad faith" standard…
The second opinion, Express LLC v. Sea Sunset LLC, was one of the better 
opinions (and I am including the federal court stuff that we wade through every 
day) I have read in a while. Panelist Frederick M. Abbott carefully summarized 
the arguments on each side (there are good lessons here for attorneys working 
on the next round of legal rights objections), and the law that he was required 
to apply to the dispute. When Abbott turned to the reasoning behind his 
decision to reject Express LCC's objection to the proposed .express top-level 
domain, I got that sense that this panelist was a teeny bit irked that ICANN 
itself had not made the hard policy choices that the LRO had just dropped in 
his lap. It's one thing to ask a panelist to transfer a domain name that might 
have cost the registrant $10 or so; and it's quite another to ask a panelist to 
upset an investment of at least a half-million dollars in a new top-level 
domain. All based on a trademark registration for a generic term, in a single 
market, issued by a single government entity. Abbott declined to do it…
These two opinions, taken together, look like a terminal diagnosis for 
trademark owners with rights in generic terms. Right at Home creates a very 
permissive standard for what constitutes "unfair advantage" by a domain 
applicant. Express LLC states, almost categorically, that it is "not 
reasonable" to allow a trademark owner for a generic term to prevent that term 
from being used as a top-level domain.
O’Toole goes on to speculate that a trademark owner like Express LLC will have 
equally poor chances of success if it attempts to block others’ use of such 
hypothetical second level domains as clothing.express, fashion.express, or 
shoes.express using the traditional UDRP or the new TMC and URS RPMs -- because 
all of them focus on the domain name to the left of the dot and pay no heed to 
the gTLD to the right – and because Express holds no trademark rights in those 
hypothetical generic terms on the left side. We largely agree with his 
analysis, and suspect that this could be the next big trademark protection 
issue looming on ICANN’s horizon as brands complain about the necessity and 
cost of registering relevant domains at a gTLD that matches one of its 
trademarks but is operated by a third party (and, by the way, it’s not clear 
that a brand like Express would have any special “sunrise” registration 
priority for potential second level domains along the lines of O’Toole’s 
speculation). Other questions arise, such as whether Federal Express should 
have priority rights to, or a potential infringement claim against, 
federal.express.
Of course, no one was reckless enough to pay a $185,000 gTLD application fee, 
plus multiple related legal, consulting, and technical costs, to try to “squat’ 
at the top level on a unique trademark like Google or Microsoft. But when it 
comes to a dictionary word like Express, unless the applicant was so clueless 
as to propose its use solely for fashionable clothing, the LRO is essentially 
useless – and that may be the correct result. Indeed, short of halting the 
program, it’s not really clear how one can have a generic word TLD program 
without allowing the addition of top level domains that are identical to 
someone’s trademark for something; and that alone is not sufficient to prove 
trademark infringement.
Domain industry observers such as Andrew Allemann have opined that “The LRO is 
working just fine, thank you”[4], weighing in with this analysis:
The LRO was created to assuage fears that someone would cybersquat on a top 
level domain…Objections were filed against .VIP, .mail, and .home. Now, you 
tell me: when you hear these terms, what brand do you think is being 
cybersquatted?
Many of the objections were filed by competing applicants that engaged in 
trademark frontrunning by obtaining dubious trademarks for the string. Others, 
such as the United States Postal Service’s objection to .mail, were based on 
stretched interpretations of a trademark (and that’s being generous).
Another industry analyst, Kevin Murphy, has just declared that he will no 
longer report automatically on forthcoming WIPO decisions in LRO cases, 
stating[5]:
The Legal Rights Objection has, I think, said pretty much everything it’s going 
to say in this new gTLD application round. I’m feeling pretty confident we can 
predict that all outstanding LROs will fail.
This prediction is based largely on the fact that the 69 LROs filed in this 
round all pretty much fall into three categories.

·         Front-running. These are the cases where the objector is an applicant 
that secured a trademark on its chosen gTLD string, usually with the dot, just 
in order to game the LRO process…

·         Brand v Brand. The objector may or may not be an applicant too, but 
both it and the respondent both own legit trademarks on the string in question. 
WIPO’s LRO panelists have made it clear, most recently yesterday in Merck v 
Merck 
(pdf<http://www.wipo.int/export/sites/www/amc/en/domains/lro/docs/lro2013-0068.pdf>)
 and Merck v Merck 
(pdf<http://www.wipo.int/export/sites/www/amc/en/domains/lro/docs/lro2013-0069.pdf>),
 that having a famous brand does not give you the right to block somebody else 
from owning a matching famous brand as a gTLD.

·         Generic trademarks. Cases where an owner of a legit brand that 
matches a dictionary word files an objection against an applicant for the same 
string that proposes to use it in its generic sense. See Express v 
Donuts<http://domainincite.com/13691-donuts-beats-dot-brand-in-fight-over-express-gtld>,
 for example. Panelists have found that unless there’s some nefarious intent by 
the applicant, the mandatory second-level rights protection mechanisms new gTLD 
registries must abide by are sufficient to protect trademark rights.
In short, the LRO may be one of many deterrents to top-level cybersquatting, 
but has proven itself an essentially useless cash sink if you want to prevent 
the use of a trademark at the top level.
The impact of this, I believe, will be to give new gTLD consultants another 
excellent reason to push defensive gTLD applications on big brands in future 
new gTLD rounds.

We largely agree with Murphy’s analysis. There may well be a few cases in the 
remaining objections to be adjudicated by WIPO in which the complainant 
prevails. But we suspect that they will be such unique outliers that they will 
actually reinforce what an exceedingly narrow remedy the LRO has turned out to 
be. That limited utility has already led one disgruntled complainant/competing 
applicant to declare, “Seems the entire WIPO LRO process was set-up to fail by 
ICANN with the guidelines they gave the Panelists.”[6]
And, as Murphy observes, filing a LRO with WIPO is not inexpensive. Total 
filing fees for a single objection to a single new gTLD application can range 
from $10,000 for a single-expert panel, and up to $23,000 for a 3-expert 
panel[7]. On top of the fees there are of course legal costs for the attorney 
preparing the complaint and related expenses for amassing documentation. If the 
LRO continues to be a preordained shutout for complainants then it is unlikely 
that it will be used very much at all in the second round of gTLD applications 
unless significant – and undoubtedly controversial – changes are made in the 
adjudication standard to give complainants a higher probability of prevailing.
As for the other objection procedure available to third parties, the Community 
Objection[8] administered by the International Centre for Expertise of the ICC 
(International Chamber of Commerce), no judgment can yet be rendered on its 
efficacy because the Center has yet to issue a single decision on the dozens of 
cases[9] filed with it. However, with standing limited to established 
institutions associated within a clearly defined community objectors first have 
to surmount that procedural hurdle, and then make the string substantive  case 
that there is substantial opposition to the gTLD application from a significant 
portion of the community to which the gTLD string may be explicitly or 
implicitly targeted. Additionally, complaints were voiced at the recent Public 
Forum in Durban that ICC fees[10] , which begin at 17,000 Euro but can quickly 
mount given the 450 Euro hourly rate for expert arbitrators, are not affordable 
for many community organizations.
Summing up, the LRO may well have been an effective deterrent against 
applications for unique trademarked terms but has so far been useless in regard 
to applications for generic word trademarks, regardless of the trademark’s 
strength and legitimacy. Its lack of general applicability also seems to be 
setting up a series of second level domain disputes that may well be outside 
the existing scope of the UDRP, URS, TMC, or other available rights protection 
and prioritization mechanisms. All of this may lead to further debate within 
ICANN on the appropriate scope of trademark rights protections– as well as 
litigation being filed by unsuccessful complainants who refuse to take WIPO’s 
decision as the final judgment on their claims.
The clear lesson to brand owners of generic word trademarks is this: If and 
when the second round of new gTLD applications commences, if you wish to own 
your trademark at the top level of the DNS (or at least stop others from owning 
it) you had better open your wallet and apply for it. That compulsion toward 
unwanted defensive registrations is almost sure to generate further controversy 
amid charges that ICANN has developed a Midas Touch-like mechanism for 
generating perpetual revenues for application and use fees for the protection 
of dictionary words.
Of course, the inflow of defensive applications for generic word trademarks 
could be a mere trickle compared to the potential surge of defensive and 
offensive applications for non-trademarked generic words if ICANN ultimately 
spurs the Governmental Advisory Committee (GAC) advice to prohibit “closed 
generic” gTLDs unless they satisfy a high public interest standard. In that 
scenario, every company of any heft will have to seriously consider gTLD 
applications for the major language words describing its key activities and 
products, lest a competitor do so first and lock them away. But that’s an issue 
falling outside any trademark protection debate and a discussion for another 
day.
[1]http://en.wikipedia.org/wiki/FISA_Court
[2]http://www.wipo.int/amc/en/domains/lro/cases/
[3]http://www.bna.com/icann-legal-rights-b17179875369/
[4]http://domainnamewire.com/2013/08/01/the-lro-is-working-just-fine-thank-you/
[5]http://domainincite.com/13949-thats-all-folks-no-more-lro-news
[6]http://www.thedomains.com/2013/07/31/constantinos-roussos-of-dotmusic-limited-the-entire-wipo-lro-process-was-set-up-to-fail-by-icann/
[7]http://www.wipo.int/amc/en/domains/lro/fees/
[8]http://www.iccwbo.org/products-and-services/arbitration-and-adr/expertise/introduction-to-icann-new-gtld-dispute-resolution/
[9]http://www.iccwbo.org/WorkArea/DownloadAsset.aspx?id=19327354883
[10]http://www.iccwbo.org/products-and-services/arbitration-and-adr/expertise/icann-new-gtld-dispute-resolution/costs-and-payments/


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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[1] http://en.wikipedia.org/wiki/FISA_Court

[2] http://www.wipo.int/amc/en/domains/lro/cases/

[3] http://www.bna.com/icann-legal-rights-b17179875369/

[4] http://domainnamewire.com/2013/08/01/the-lro-is-working-just-fine-thank-you/

[5] http://domainincite.com/13949-thats-all-folks-no-more-lro-news

[6] 
http://www.thedomains.com/2013/07/31/constantinos-roussos-of-dotmusic-limited-the-entire-wipo-lro-process-was-set-up-to-fail-by-icann/

[7] http://www.wipo.int/amc/en/domains/lro/fees/

[8] 
http://www.iccwbo.org/products-and-services/arbitration-and-adr/expertise/introduction-to-icann-new-gtld-dispute-resolution/

[9] http://www.iccwbo.org/WorkArea/DownloadAsset.aspx?id=19327354883

[10] 
http://www.iccwbo.org/products-and-services/arbitration-and-adr/expertise/icann-new-gtld-dispute-resolution/costs-and-payments/