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Astronomical Increases in Domain Names: Low Constancy of Abusive Registrations

When ICANN implemented the Uniform Domain Name Dispute Resolution Policy (UDRP) in 1999 the number of registered domain names were in the low eight digits. Registered domain names passed the first million in 1997. Today, they are in the first third of nine digits, and continuing to grow. In its newly released publication gTLD Marketplace Health Index (Beta) (July 21, 2016) ICANN offers through a couple dozen metrics a picture of the multiple parts that corporately go into making a healthy marketplace. It’s “Beta” because the Health Index s a work in progress. There are more metrics to come; it leaves  for further study a list of other issues, equally important to marketplace health that are currently under review including the effectiveness of rights-protection mechanisms for trademark owners (RPMs) some of which date to the implementation of the Uniform Domain Name Dispute Resolution Policy (UDRP) in 1999.

To answer to these metric resistant questions ICANN has also commenced a review of the RPMs, first as it relates to new gTLDS, including the Post-Delegation Dispute Resolution Procedures (PDDRPs), the Uniform Rapid Suspension System (URS); and the Trademark Clearinghouse (TMCH) (phase 1), followed by a review of the UDRP (phase 2) (Doug Isenberg published a lucid overview on this site, April 27, 2016, and Philip S. Corwin provided some institutional context in an earlier Post, March 15, 2016).

I’d like to connect these two important initiatives, the Health Index and RPMs review to draw an initial observation which is signaled in the title, namely relative constancy of abusive registrations despite the astronomical increases in the number of domain names. Would it not have been more intuitive that increases in opportunity would lead to more squatting of rights’ holders?

The “protection mechanisms” in issue concern trademark rights. Mr. Isenberg lists a number of possible refinements to the UDRP that are likely to be vigorously opposed when the discussion reaches phase 2. (I won’t comment on phase 1 except to note that competing constituencies are expressing strong opposing views that will undoubtedly grow as the participants get into phase 2). The UDRP was implemented to provide a quick and efficient remedy to trademark owners against abusive registration of domain names. The question is, is it doing the job? Or, does it need retooling in some way?

The past 16 years has not only seen extraordinary growth and diversity of domain names (as illustrated through ICANN’s metrics), but in parallel there is also the development of a robust secondary market and business interests barely nascent in 1999. Domain name holders naturally have a stake in this review of RPMs not only because they have rights too, but a good (not a high) percentage of complaints lack merit, and a high percentage of those that lack merit are abusive in their own way. This necessarily creates tensions, relieved I think by a balancing of parties’ respective rights. It is notable that an infinitesimally small number of UDRP awards are challenged in courts of competent jurisdiction; and of those that are challenged, an infinitesimally small number are “reversed.”

First, what do we learn from ICANN’s Health Index (Beta)? It tells us that there are approximately 174 Million domain names in gTLDs (81% dot com) and in 2015 there were roughly 5000 domain name disputes (involving approximately 6000 to 7000 domain names), principally administered by WIPO (with more) and the Forum (with less). Between 2010 and 2015 the number of domain names rose at the rate of about 10 Million per year (122,540,00 to 174,258,000; the second half of 2015, though, had a particularly sharp increase which included a surge of new gTLDs—6098) (Marketplace Health Index, pg. 5, figures 7 and 24). However, the total number of disputes decided against registrants (all providers) has diminished (and correspondingly the percentage of registrants successfully defending their choices has increased): 3573 in 2012 (89.6%), 3261 in 2013 (96.7%), 3009 in 2014 (82.1%), and 3129 in 2015 (84.9%) (2014 and 2015 decisions included URS disputes).

A complementary palette of statistics comes from WIPO, which tracks awards on an annual basis—the Forum is less forthcoming (the last heard was a brief recap for 2014 and silent (so far) for 2015). Looking at the WIPO statistics for the same years in ICANN’s metrics we find the following:

— [2012] 2054 decisions resulting in either cancellation or transfer (90.84%);
— [2013] 1890 decisions resulting in either cancellation or transfer (90.22%);
— [2014] 1914 decisions resulting in either cancellation or transfer (89.55%);
— [2015] 1990 decisions resulting in either cancellation or transfer (91.33%).

The percentages are lower than reported by ICANN for 2013 and higher for 2014 and 2015, but consistent with the Forum’s experience (judging from its 2014 information: it reported that it handled a total of 1836 disputes, 1557 under the UDRP and 218 under the URS). And, interestingly, the Forum noted: “[C]omplainants prevailed 92% of the time, up from a Forum average of 88%. Where respondents did respond, the success rate in having the complaint denied was 46%.” The percentage is significantly lower (but not zero) when respondents default.

In the first few years of the UDRP Panels denied complaints at a higher rate: 18.69% in 2000; 20.08% in 2001; 16.07% in 2002. By 2012 the rate settled in the 10%-15% range; despite the increasing number of complaints the number of denials over the years has hovered around 200 (rising in some years to 260, and falling in others to 180). At the same time there began the extraordinary climb of domain names registrations. Between January 1 and December 22, 2000 the number of domain names rose from 10,008,475 to 26,993,431 (Zooknic, Internet Intelligence, History of gTLD domain name growth through 2009); using WIPO’s statistics, 1205 disputes went to award in 2001. Each of the following years was fairly stable, around 1000 disputes per year (with some fall back and gain through 2011) until 2012 (when the 2000 mark was reached). The number of disputes administered has remained fairly stable from 2012 for both providers.

But not so the number of registered domain names! By the end of 2012, Verisign reported the number of domain names in the dot com space rose to 100 Million (240 Million across all top-level domains). The “first quarter of 2016 closed with a base of approximately 326.4 million domain name registrations across all top-level domains (TLDs) [not just gTLDs], an increase of 12 million domain names, or 3.8 percent over the fourth quarter of 2015.” Second quarter 2016, dot com registrations are in the 127 Million range. Of complaints filed in 2015 (WIPO), legacy extensions accounted for approximately 85% of the disputes (dot com 71.71%, dot net 6.88%, dot org 5.25%, dot info 2.13%, and dot biz 1.18%). Of the new gTLDs dot xyz ranked highest at 1.63% (62 domain names in issue) followed by dot club at .63% (22 domain names in issue).

Putting aside the discrepancies in percentages between ICANN Health Index and WIPO + Forum  (some of which is apples and oranges) it appears that although the number of domain names has increased astronomically there has been no corresponding increase in the number of abusive domain name registrations; it continues to hover around 2000 + disputes for WIPO and slightly lower for the Forum.

If there is no correlation between the number of registered domain names and the number of infringements we would have to conclude that the population of respondents, for the most part and save those responding to abusive claims of cybersquatting, have no real understanding of “rights” and respond to impulse buying. The typical daily lists of awards are populated with second level domains that could not possibly be found lawful and go undefended. It would seem that the very stability of this largely interchangeable population suggests that the various rights-protection mechanisms have been (are) effective in discouraging any significant addition to its ranks. I take that as a significant achievement.

Mr. Levine is the author of a treatise on trademarks, domain names, and cybersquatting, Domain Name Arbitration, A Practical Guide to Asserting and Defending Claims of Cybersquatting under the Uniform Domain Name Dispute Resolution Policy. (Legal Corner Press, 2015). Learn more about the book at Legal Corner Press. Available from Amazon and Barnes & Noble.  Ongoing Supplement here.

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