Managing IP reported today that the World Intellectual Property Organization (WIPO) has published its Uniform Domain-Name Dispute-Resolution Policy (UDRP) statistics for 2011, and cybersquatting enforcement appears to be on the rise. WIPO received 2,764 UDRP Complaints over 4,781 domain names last year, which marks a 2.5 percent increase over 2010.

The retail industry led the Complaint charge, with the Internet and IT; biotechnology an pharmaceuticals; fashion; and banking and finance industries rounding out the top five.

WIPO’s director-general, Francis Gurry, pointed out to Managing IP that brand owners are already faced with the difficult task of using limited resources to combat infringements, which appear to be growing: WIPO Panelists determined that cybersquatting had occurred in 88 percent of all Complaints filed in 2011. Gurry warned that this task will become even more difficult with the introduction of new generic top-level domains (gTLDs), as the size of the domain name space will increase, but brands’ enforcement budgets may not.

WIPO has been a lead proponent and one of the architects of some of the dispute resolution procedures that will be available to trademark owners during the rollout of new gTLDs to help them combat or even prevent cybersquatting at the second level. Although there have been certain rights protections mechanisms put into place in the New gTLD Program, many brand owners are still concerned about the amount of time and resources they will need to devote to protecting their brands from infringements in the newly expanded domain name space.

At the end of September, Interpol coordinated a massive, multi-pronged effort to crack down on illegal Internet pharmacies that peddle fake prescription drugs. According to a recent article in The Register, police forces, customs agencies, ISPs, payment processors and delivery companies all contributed to the effort that arrested suspects in 81 countries.

Another major contributor to this takedown was Nominet, the United Kingdom domain name registry that operates the .UK ccTLD. Nominet suspended around 500 .UK domain names that were associated with these online pharmacies on the advice of law enforcement and regulatory agencies.

Nominet’s suspensions are different from the domain name seizures carried out by the U.S. Department of Homeland Security’s Immigration and Customs Enforcement (ICE) division on various occasions over the past year. Namely, whereas ICE moved the seized domain names to its own name servers and displayed a notice of seizure on the sites, Nominet simply stops the suspended domain names from resolving to content, effectively shutting the websites down.

Nominet used the fact that all of the domains contained fake WHOIS information as justification for the suspension, which violates the registration agreement for registering a .UK domain. Additionally, Nominent is currently working to develop a policy under which law enforcement will have a more formalized process for requesting that domains believed to be hosting criminal content be taken down without needing a court order.

The proactive approach that Nominet is taking should serve as a model for other registries, both those that operate ccTLDs as well as those that run gTLDs.

“Bad faith” can some times be the trickiest element to prove when trying to demonstrate that a registrant has cybersquatted a domain name. Many times, whether a domain owner has acted in bad faith comes down to timing, specifically when he or she first registered the domain name. This principle was called into question during a recent cybersquatting lawsuit in a Los Angeles federal court.

Erik Bethke, the founder of the virtual pet game and social network GoPets Ltd., had attempted to purchase the domain name GoPets.com from its owner, Edward Hise. Bethke initially offered Hise $750 for the domain, but when Hise rejected the offer, Bethke filed a UDRP arbitration with the World Intellectual Property Organization (WIPO). Unfortunately for Bethke, because Hise had registered GoPets.com five years before Bethke created GoPets Ltd., the complaint lacked evidence of bad faith and the WIPO Panel denied Bethke’s request to transfer the domain.

After the failed UDRP, Bethke again offered to purchase the domain, this time for $40,000. Hise responded asking for $5 million and threatening to add metatags to the code of GoPets.com in order to redirect visitors to Bethke’s site back to Hise’s domain. After sending that demand, Hise transferred ownership of the GoPets.com domain to Digital Overture, the company that he co-owns with his brother. Through Digital Overture, the Hise brothers have registered over 1,000 domain names.

After Hise transferred the domain, Bethke took legal action, suing him in a Los Angeles federal court for cybersquatting and trademark infringement. He attempted to circumvent the issue of when the domain had originally been registered by arguing that Hise’s renewing the domain name registration and then transferring it to Digital Overture amounted to a new registration. The Los Angeles judge sided with Bethke, awarding him $100,000 in damages as well as the domain name GoPets.com.

However, a three-judge panel of the 9th Circuit judges partially reversed this ruling, on the grounds that the Anitcybersquatting Consumer Protection Act (ACPA) is very clear about its definition of “registration” as referring to the initial domain name registration. In the decision, Judge William Fletcher wrote, “We see no basis in ACPA to conclude that a right that belongs to an initial registrant of a currently registered domain name is lost when that name is transferred to another owner.”

The judges did agree that both Hise and his brother had shown bad faith after the UDRP proceedings, and had also violated unfair competition laws during their negotiations with Bethke. The Los Angeles judge is now left to decide what relief might be appropriate for these offenses. Whether this decision will have any impact on the way domain transfers are regarded under UDRP precedent has yet to be seen.

Aside from highlighting how complex domain name-related matters can be, this case opens up the question of whether or not ACPA needs to be adjusted to more adequately cover scenarios of domain name transfers, as well as other issues.
 

As of earlier this week, luxury retailer Chanel Inc. has filed a massive cyberpiracy and trademark infringement lawsuit against 399 websites hosted on domain names that contain Chanel’s trademarks. According to Chanel, the sites have been selling counterfeit goods like shoes, handbags, clothing, jewelry and other accessories.

The lawsuit is seeking an order to seize the domain names listed in the complaint. Domain name seizures have been a popular tactic used by the U.S. government, especially the Department of Homeland Security’s Immigration and Customs Enforcement (ICE) division, to shut down the sales of counterfeit goods and pirated content online. The attorneys handling the Chanel case also filed a lawsuit on behalf of Tiffany & Co. back in April against 223 domain name owners. There are 19 defendants from the Tiffany suit that are named in the Chanel suit.

The lawsuit contends that the owners of these domains use search engine optimization strategies to rank highly in search results and make it easy for consumers to find their sites.

These two lawsuits are some of the biggest domain name-based lawsuits we have seen, and it will be interesting to watch how the Chanel case plays out. More than anything, instances like these should drive home to legislators the need to reform the Anticybersquatting Consumer Protection Act (ACPA).
 

Here at CADNA, we are all too familiar with the threats that typosquatting poses to brands in terms of diverting or stealing customers; exposing those customers to scams or malware; diluting brand image; and other potentially harmful activities. But a recent article in Wired describes a new level of typosquatting malfeasance. Researchers built a program that used typographic variations of major companies’ domain names to set up email servers, and collected over 20 gigabytes of misaddressed email over a period of six months.

The intercepted emails all contained what the researchers labeled “doppelganger domains,” named as such because they closely resemble the target domains, with only slight typographic variations. The emails revealed information like employee usernames and passwords; legal documents; trade secrets; and even highly sensitive network information that could easily be exploited by hackers.

The research revealed that as many as 151 of the Fortune 500 could be vulnerable to this type of email-grabbing scheme. Many “doppelganger domains” of the largest U.S. companies have been registered by parties in China, perhaps for corporate spying purposes. In addition to stealing information, cyber criminals could also use these typo domains to stage man-in-the-middle attacks on two companies that are corresponding.

And as is the case with other manifestations of typosquatting, the researchers concluded that companies can avoid this type of scheme by proactively registering and reclaiming typo, or “doppelganger” domains. Beyond pointing out what brands can do for themselves, this article also points to the larger need to reform anti-cybersquatting legislation. In particular here in the U.S., the Anticybersquatting Consumer Protection Act (ACPA), which is over ten years old at this point, needs to be updated and adapted to more effectively deter sophisticated forms of cybersquatting and typosquatting, especially in ways that make the practice unprofitable and overly risky for squatters.

On Wednesday, May 4, the U.S. House Judiciary Subcommittee on Intellectual Property, Competition, and the Internet convened the “ICANN Generic Top-Level Domain (gTLD) Oversight Hearing.” Subcommittee members, especially Chairman Bob Goodlatte (R-VA), Ranking Member Mel Watt (D-NC), and House Judiciary Committee Ranking Member John Conyers (D-MI) engaged ICANN representative Kurt Pritz in heated questioning about the new gTLD policy and other aspects of ICANN.

In my capacity as CADNA President, I served as a witness, presenting testimony to the Subcommittee and answering questions. You can view a full video of the hearing here.

Ultimately, the Subcommittee – both Democrat and Republican members – asked ICANN to consider delaying the launch of new gTLDs to give Congress more time to look into the program and potentially hold additional hearings. We are hopeful that this hearing will increase congressional interest in ICANN and lead to more oversight over the organization.

Like the recent decision to allow contributory cybersquatting as a cause of action under the AntiCybersquatting Consumer Protection Act (ACPA) that we blogged about in January, another recent court decision could provide brand owners with valuable precedent in future proceedings against cybersquatters.

This decision was handed down in a civil suit, The North Face Apparel Corp. et al. v. Fujian Sharing Import & Export Ltd. et al, where the judge ordered the defendants to transfer approximately 100 cybersquatted domains (many of which were peddling counterfeit merchandise). The defendants failed to comply, and simply moved their operations to a group of different domain names not identified in the injunction.

In response to this action, the judge issued a unique contempt order. This included the following provisions:

• Plaintiffs are authorized to shut down newly discovered counterfeit websites owned or controlled by the defendants as they are identified, to transfer the domain names, and to confiscate any profits from the selling of counterfeit products on those websites without further court order;
• Infringing registries are required to temporarily disable the newly located domains after two days and then to transfer the domains to plaintiffs after an additional ten days;
• An ISP which hosts one of the identified counterfeit websites owned or controlled by the defendants must deny access to the IP addresses utilized by those websites within three days of receiving notice of the order; and
• “Internet providers,” including ISPs as well as back-end service providers, web designers, sponsored search engine or ad-word providers, and any parties delegating IP addresses must also cease providing supplying services to the defendants within two days of receiving notice of the order.

The judge’s order enables the plaintiffs to pursue relentless squatters without having to bring new motions for each new domain name the squatters register. Essentially, this decision could be a powerful tool for brand owners to get ahead of the “whack-a-mole” game that enforcing against cybersquatting often becomes.

Representatives from CADNA are attending the ICANN meeting in San Francisco and will be blogging about their observations. Check back here for updates, and follow our tweets @CADNA.

During this two-and-a-half hour session, members of the ICANN Board painstakingly went through each area of contention identified by the Governmental Advisory Committee (GAC) on which the Board still disagrees with the GAC. After presenting each issue, the Board members opened up the floor for comments or questions from attendees. Instead of outlining each issue here, it is more efficient to point readers to the Board’s response, available here, which breaks down each group’s opinions on each issue.

Again, one of the biggest outstanding issues, complete with multiple sub-issues, is trademark protection in new gTLDs. This session pointed out one of the biggest problems with the ICANN process – it uses “consensus” as a measure of progress. While consensus is positive, it can be (and within ICANN, often is) misleading. On various areas where the Board and the GAC were in total disagreement, certain participants in this meeting argued that the disagreement was not so absolute, but that there were just certain points on which disagreement remains.

So we reach the root of the problem. Among similar-minded people, consensus is easy to achieve. In other words, in a room full of people who regularly participate in the ICANN process, who are familiar with ICANN’s point of view and manner of operation, it is easy to gloss over the objections made by people outside the ICANN community. The GAC represents not only governments, but their constituencies as well – everyday Internet users and businesses. While some participants have verbalized their disagreement with the ICANN Board’s position of certain issues, the Board and other members of the ICANN community must remember that these are not the only opinions that should be taken into account.

Representatives from CADNA are attending the ICANN meeting in San Francisco and will be blogging about their observations. Check back here for updates, and follow our tweets @CADNA.

This morning, attendees gathered for the Welcome Ceremony, where ICANN leaders Peter Dengate Thrush and Rod Beckstrom, along with Ira Magaziner, Vint Cerf, Larry Strickling and Andrew McLaughlin spoke on the evolution of the Internet and ICANN, and their visions of the organization’s future role in the continuing development of Internet technologies.

The overarching theme of this morning’s ceremony was the commitment to ICANN’s multi-stakeholder model. As the Chair of the ICANN Board Peter Dengate Thrush pointed out, ICANN’s primary function is to preserve the security and stability of the Internet; promote competition as appropriate; and develop policies from the bottom-up. All these functions, according to the speakers, are better achieved through a multi-stakeholder model.

Throughout the history of the Internet and leading up to the development of ICANN, various governments have clashed over Internet-related issues. Ira Magaziner, policy advisor to President Clinton and one of the architects of ICANN, stressed that allowing Internet governance to be controlled by an intergovernmental body would stifle innovation and creativity, because it would become bogged down in bureaucracy.

As an interesting counterpoint, Larry Strickling, Administrator of the National Telecommunications and Information Administration (INTA) supported the multi-stakeholder model, but also emphasized that ICANN needs to work more cooperatively with governments. In order for the reality of ICANN to meet its vision, a great deal of work remains to be done. While he offered his support of ICANN’s progress, Strickling made it clear that there was still plenty of room for improvement, particularly in terms of implementing the recommendations made by the Accountability and Transparency Review Team and working towards the political stability of the Internet.

ICANN CEO Rod Beckstrom wrapped up the ceremony and, unsurprisingly, took a very optimistic perspective toward ICANN’s progress thus far and what it can accomplish in the future. In particular, he recalled the recent meeting between the ICANN Board and the Governmental Advisory Committee as a success in accountability and transparency, as well as cooperation between the two groups. This somewhat rosy hindsight view of the meeting may seem surprising to members of the intellectual property community, as one of the biggest outstanding issues – trademark protection in new gTLDs – was completely omitted from those discussions. But on the other hand, Vint Cerf, one of the fathers of the Internet, insisted that IP protection does not actually fall under ICANN’s purview.

This is news to us. As the chief Internet governor, ICANN is ideally positioned to protect IP rights in the domain name space. In one very prominent example, trademark protections feature prominently in every version of the Applicant Guidebook for new gTLDs (albeit imperfectly). It should be interesting to see what other surprising facts are revealed over the course of the meeting here in San Francisco.
 

Earlier this month, the Obama administration’s inter-agency strategy to reduce counterfeit and other illegal prescription pharmaceuticals was released. Enforcing U.S. intellectual property rights is part of the administration’s efforts to rebuild the American economy, create jobs and increase exports; combating counterfeit or illegal pharmaceuticals is an important aspect of this endeavor.

The strategy outlined a multi-channel approach to deal with the problem of “rogue” online pharmacies. Specifically regarding the online component, White House Intellectual Property Enforcement Coordinator Victoria Espinel challenged the private sector to voluntarily participate in the effort to address rogue online pharmacies responsible for distributing illegal pharmaceuticals. In response to this challenge, companies such as American Express, eNom, GoDaddy, Google, MasterCard, Microsoft, Network Solutions, Neustar, PayPal, Visa, and Yahoo! agreed to support a non-profit group that will be formed later this year to educate the public and start taking voluntary enforcement action against illegal Internet pharmacies.

Illegal online pharmacies pose a threat to American intellectual property, but also to the health and wellbeing of consumers. It is encouraging to see the Obama administration and these companies taking positive steps toward shutting down distributors of illegal pharmaceuticals.

While CADNA supports the administration’s taking action to address the issue of illegal online pharmacies, we also have to wonder why ICANN has not stepped up and taken more responsibility for resolving this problem. Despite its unique role in Internet governance, ICANN has continually refused to become involved with regulating any content that appears on websites, even when that content is obviously harmful to Internet users around the world.