When to Hold 'em and When to Fold 'em

Should you press forward when the respondent surrenders in a UDRP proceeding? At least one UDRP panelist thinks you shouldn’t.

In Laerdal Medical v. Lee, WIPO Case No. D2007-1672 (Jan. 21, 2008), the panelist devoted a lot of ink to scolding the complainant for its arbitration tactics.

The Complainant apparently did not try sending a cease and desist letter first, they just fired off a UDRP complaint. Then, when the Respondent got the complaint, he tried to turn over the domain name in exchange for the Complainant dropping the proceeding. The Complainant agreed to do so, but only if it was reimbursed the $7500 it had spent thus far on the proceeding. The Respondent refused, so the Complainant pressed forward.

The Panelist called this “Unnecessary Use of Administrative Proceedings.”

The Panel accepts that there will be circumstances in which an offer from a respondent to a complainant to settle a UDRP dispute prior to formal commencement, or indeed prior to panel appointment, could justifiably not be entertained. This might include circumstances in which for example:

1) a privacy service is in use by a respondent and the true underlying registrant of the disputed domain name may have chosen not to identify itself; or

2) a respondent has a history of abusive domain name registration; or

3) the terms of a respondent’s transfer offer are manifestly unreasonable; or

4) a respondent’s offer appears to be disingenuous, for example, is clearly being made in a attempt to unduly delay proceedings; or

5) where a respondent has been shown to have ignored previously sent communications from a complainant asserting its claimed rights and requesting transfer of the disputed domain name; or

6) where there is a bona fide interest in the publication of a decision.
…

[T]he Respondent’s offer to transfer the Disputed Domain Name to the Complainant appears to have created a reasonable basis on which to settle the matter. In as much as no circumstances appear present that would justify a lack of a cease and desist communication effort, the Complainant’s subsequent claim for legal costs covering also the cost of preparing the UDRP complaint would appear excessive.

I am not certain where the panelist came up with this list. While pre-suit settlement is usually desirable in the litigation context, in the UDRP context, the Complainant paid for a decision. If he is not to receive that decision, should he not be reimbursed for his expenses? I handled a case once in which the respondent offered to pay all of the complainant’s expenses in order to avoid an adverse UDRP decision. The complainant decided that a positive UDRP decision was worth the fees and expenses and declined the offer.

The decision continues:

On the basis of these facts the Panel finds that the Complainant has acted in a manner which is contrary at least to the spirit of Paragraph 15(e) of the Rules. While the Complaint itself (as is evident from the Panel’s above decision ordering transfer) is found to have merit, the manner in which the Complainant has conducted itself during the course of the proceedings leaves something to be desired. The Complainant, however much of its own time and money may initially have gone into the preparation of its Complaint, has by forcing a decision, without the presence of the above-mentioned justifying factors, in effect proceeded to lay claim to not only more of its own time, but that of the Respondent and Panel. Despite opportunities to obtain transfer early in the proceedings the Complainant refused to settle the matter unless it received substantial costs. Taking into account all circumstances of this case, the Panel finds that the Complainant’s conduct pursuing the proceedings regardless of the settlement offers to transfer the domain name constitutes, if not actual abuse (in the sense of a Complaint filed in bad faith to harass a respondent), then at least an unnecessary insistence on use of these administrative proceedings.

I strongly disagree with this for the following reasons:

Negotiation with cybersquatters is usually not cost effective. I prefer to resolve all issues non-adversarially. In the domain disputes context, it is often possible to do so. Some large scale domainers have a reputation for being reasonable. You don’t practice in this area for long without learning who they are. Those guys usually get a quick email, a handshake, and a move-on from me. Unfortunately, that is not always the case.

Statistically speaking, you will usually blow as much money debating a cybersquatter and negotiating a settlement agreement as you will blow on a UDRP proceeding. When I first started doing domain disputes, I wasted a little time debating the UDRP and trademark law with denizens of clowns, many of whom thought that trolling domainer message boards was a substitute for attending law school. I have learned that there are certain indicators that suggest that it is better to lodge a UDRP (or an ACPA complaint) than to send a demand letter.

Settlement after you’ve drafted the complaint is a waste of resources. There is always an inherent value in a UDRP decision in your favor. It stands as proof that you defend your trademark rights, and that they are defendable. That $7500 is well-spent money when filing the next complaint. Once the Complainant spent his $7500, he was entitled to a decision on the merits.

Every cybersquatter needs his first defeat. One of the factors in determining bad faith is whether the respondent has a history of cybersquatting. The Panelist agreed that if a respondent has a history of cybersquatting, failing to settle is justified. However, generally speaking, panelists do not consider resolved disputes to be evidence of a history of cybersquatting. While this might be the first time that this particular respondent got caught, there is an inherent value in “marking” cybersquatters with that tag early and often.

What about the cybersquatter? It seems strange that the Panelist scolded the Complainant for failing to settle the matter. What about the Respondent? Shouldn’t he have had to pay something? Why should the Panelist eat the entire $7500? Until the UDRP is amended to provide for costs and fees to be awarded, it makes little to no sense to settle a strong case once the complaint has been filed.

The Better Rule: I believe that the better rule in this kind of circumstance arose in Asphalt Research Technology, Inc. v. National Press & Publishing, Inc., WIPO Case No. D2000-1005.

In that case, the Complainant also made first contact by way of a UDRP complaint. Under the particular facts of that case, the panel held:

[U]nder the facts of this case, in which the Complainant produced no evidence that it had attempted to contact the Respondent and negotiate a resolution of the matter prior to initiating the panel proceeding, and where the domain name at issue consists of a well known common, descriptive English phrase, and where the Complainant knew that Respondent had registered for sale other domain names all of which consist of common and/or descriptive words and phrases together with the generic Top Level Domain names, the Panel is of the opinion that this proceeding was brought in bad faith and constitutes an attempt at Reverse Domain Name Highjacking.

While I disagree with the rule’s application to the facts of that particular case, I do agree with the rule itself. If the Complainant’s case is clearly specious to begin with, and the first contact is by way of filing a complaint under the UDRP, then the panel should find RDNH.