The UDRP is a risk domain investors need to consider when investing in domain names. Anyone can file a UDRP regardless of whether or not there is any merit to it. While the vast majority of UDRP cases involve clearly infringing domain names, there have been too many UDRP filings involving domain names comprised of absolutely generic terms and short acronym domain names that have considerable value.
There have been numerous Reverse Domain Name Hijacking (RDNH) decisions, but there is no penalty for filing a meritless UDRP for either the complainant or its legal representatives. This can make the UDRP appealing for companies that are unable to purchase a domain name from a registrant or simply do not wish to even try to purchase a domain name. The UDRP has occasionally become a a tool to extract a valuable domain name from a registrant without having to pay what it is worth.
At best, defending a UDRP can become a cost suck for a domain registrant. At worst, an adverse UDRP decision can deprive a domain registrant of a valuable domain name. Sometimes, it seems, a UDRP decision can come down to the panelist chosen to preside over the decision.
Nat Cohen posted a thread of tweets that I think is worth reading. Nat starts off by asking why domain investors distrust the UDRP, and he shares his thoughts on why he believes this is the case.
Why do domain investors distrust the UDRP? Because of decisions like the ones reviewed in this article by Gerry Levine. Some panelists misuse their position of trust and responsibility. They twist the UDRP to interfere with and undermine the domain name aftermarket. /1 https://t.co/HfaVK4UM89
— Nat Cohen (@domainarts) August 26, 2021
Bad decisions result from a toxic brew of arrogant panelists who trust their guesses more than the evidence, UDRP administrators who accredit and assign disputes to attorneys who don’t have the temperament to exercise needed restraint, and a vaguely worded Policy. /2
— Nat Cohen (@domainarts) August 26, 2021
The heart of the problem is that the Policy is so vaguely written that it enables Panelists to call whatever they don’t like to be “Bad Faith”. This enables panelists who don’t like speculating in domain names to order the seizure of domain names held by domain investors. /3
— Nat Cohen (@domainarts) August 26, 2021
As Gerry covers in his article, the flimsy justifications include: the asking price is too high, the domain owner hasn’t developed the domain name, the domain owner must have heard of and targeted an obscure company halfway around the globe, the domain name was renewed, etc. /4
— Nat Cohen (@domainarts) August 26, 2021
The UDRP has operated for 21 years under the influence of overreaching panelists who continually attempt to “re-interpret” the UDRP to give brand owners new justifications to seize domain names they covet. Fortunately many panelists do exercise restraint. /5
— Nat Cohen (@domainarts) August 26, 2021
But the UDRP is a free-for-all, where panelists are not bound to follow consensus views or prior reasoning and are free to adopt their own personal approach. This means the UDRP is lacking in consistency. Any UDRP complaint is a risky crapshoot for the domain name owner. /6
— Nat Cohen (@domainarts) August 26, 2021
More worryingly, there is no process in place to prevent the UDRP from spiraling out of control. There is no accountability and no oversight. This is an ICANN policy but ICANN does not exercise active oversight. The six different UDRP providers are left to their own devices. /7
— Nat Cohen (@domainarts) August 26, 2021
The UDRP providers accredit whomever they wish, assign cases to whomever they wish, and in general are incentivized to attract brand owners to use their services, while domain name registrants have no say in anything. /8
— Nat Cohen (@domainarts) August 26, 2021
The UDRP was created for brand owners, many of the panelists are attorneys who actively represent brand owners and who bring complaints on behalf of brand owners while concurrently serving as panelists, and brand owners can forum shop between six UDRP providers. /9
— Nat Cohen (@domainarts) August 26, 2021
Domain name registrants are shut out of the process. We have to grin and bear it as our domain names are seized on the flimsiest of pretexts. Gerry’s article surveys some of the recent poor outcomes produced by this slipshod excuse for a system of justice known as the UDRP. /10
— Nat Cohen (@domainarts) August 26, 2021
Well said Nate… How can we help ICA and others to try and reform, change, address such issues?
I think this is the biggest risk of domain investors and domains in general. With crypto assets/tokens exploding with $2 trillion in liquidity and a better settlement layer and open process, I think policy leaders do not see potential disruption starting to happen. Alot of Investors would rather risk buying a digital native asset thats open and transparent then deal with analog, legal systems run by shaddy back dealing “leaders” that fail to lead. Wish ICANN would get real leadership in place to make domains THE asset class for the next 20 years with any accountability. It’s scary to see the continual bad decisions with no hope or action in sight to address the issues. Maybe a Domain Insurance DAO to handle such situations swiftly along with a media arm to exploit crappy panelist and the leadership overseeing them? Thanks for addressing this very concerning and long standing issue with UDRP/ RDNH but not seeing anything changing anytime soon but more theft abuse on great assets from crappy panelist and policy structure.
I’ve been screaming this too, Nat. The UDRP process is flawed and it’s providers/panelists are out of control. This is exactly what I look forward to talking with you about next month at the ICA 15th anniversary meetup.