Please note. This document refers to WIPO's INTERIM REPORT. On April 30, 1999, WIPO released its Final Report, which adopts some of the changes (but not all!) advocated in this document. For my comments on this Final Report, please see documents available from my WIPO Comments Page.

Major Flaws in the WIPO Domain Name Proposal --
A Quick Guide

A. Michael Froomkin, Professor of Law
Member, WIPO Panel of Experts, Internet Domain Name Process

Executive Summary

The World Intellectual Property Organization's plan to restructure the way Internet domain names in .com, .net, and .org are assigned and adjudicated is deeply flawed. The plan, contained in WIPO's "Interim Report" is designed to solve problems caused when Internet domain names collide with trademarked words. WIPO was asked to make suggestions for better dispute resolution, and it claims to have produced a plan that creates no new rights for intellectual property holders. In fact, however, the plan would impose extensive Alternate Dispute Resolution on all domain name registrants accused of infringing of any type of intellectual property with their registration.

The WIPO plan's flaws include:

Bias. The plan is biased in favor of trademark holders;
Enabling censorship. The WIPO plan fails to protect fundamental free-speech interests including parody, and criticism of corporations;
Zero Privacy. The WIPO plan provides zero privacy protections for the name, address and phone number of individual registrants;
Intimidation. The WIPO plan creates an expensive loser-pays arbitration process with uncertain rules that will intimidate persons who have registered into surrendering valid registrations;
Tilts the playing field. The WIPO plan would always allow challengers to domain names registrations to appeal to a court, but would often deny this privilege to the original registrant;
Smorgasbord approach to law. Instead of directing arbitrators to apply applicable law, WIPO proposes using additional, different, rules it selected-rules that will often disadvantage registrants.

A brief memo explaining these points follows. A more detailed, 50-page version, is also available in various file formats from http://www.law.miami.edu/~amf . This paper also proposes an alternate, fairer, reform plan.

The key elements of the simpler reform plan are:

Reduce speculative registration: Require advance payment before registration
Penalize false contact details: De-register domains with fake contact information
Consider creating special rules to penalize large-scale domain speculation
Trust courts to continue to clarify relevant law
Understand that rapid changes in technology may make domain names less important
Create differentiated commercial and non-commercial top-level domains

The Quick Guide

A radical new plan could change the way that disputes over Internet domain names ending in .com, .org, and .net are resolved--to the advantage of trademark holders, and at the expense of individuals and small businesses who register domains. The draft plan was announced by the World Intellectual Property Organization (WIPO), a UN organization, two days before Christmas. Shortly after the close of the comment period this Friday, March 17 [extended from March 12], WIPO will submit a revised version of its plan to ICANN, the Internet Corporation on Assigned Names and Numbers.

WIPO claims its proposals are designed to do no more than allow intellectual property rights holders to vindicate their existing rights better, cheaper, faster. No one would object if this is what WIPO's proposals actually did, but in fact they do something very different indeed.

WIPO claims that its proposals create no new rights for intellectual property rights-holders beyond what is found in existing, applicable, law. In fact, WIPO's proposals create a host of new rights for trademark holders, and new potential liabilities for domain name registrants.

In its draft report, WIPO proposes that all domain name registrants in .com, .org, and .net be contractually required to agree to an "administrative" arbitration procedure. WIPO claims that its proposals are unthreatening because anyone dissatisfied with the results of "administrative" arbitrations will be able to challenge the results of the procedure in court. In fact, challengers to domain name registrations (usually trademark holders who want the domain) will retain all their rights to go to court if they lose in the "administrative" proceeding. But many registrants who lose in the "administrative" proceeding will have no hope of meaningful judicial review, and for some there will be no court with subject-matter jurisdiction over their claim.

A fuller explanation of why I think the WIPO proposals are flawed and unfair are available in my 50-page report, A Critique of WIPO's RFC 3, available from http://www.law.miami.edu/~amf . My report demonstrates that the practical consequences of the WIPO proposals would be one-sided:

WIPO's proposals consistently and substantially advantage TM rights-holders and holders of intellectual property generally, at the expense of others.
WIPO's proposals fail to take due account of the function of the Internet in ensuring and enhancing freedom of expression. Non-commercial use is not an absolute defense in a WIPO arbitration, putting parody, political, and disgruntled customer sites at risk.
WIPO's proposals would create an enormous potential for "reverse domain name hijacking" in which wealthy parties could threaten to impose substantial costs on registrants unless they surrender their domain names without a fight. Many individuals and small businesses likely will surrender their domain names rather than run the risks of losing in the administrative procedure--not least because WIPO proposes that the arbitrators in its "administrative" procedures use such vague and uncertain substantive rules that few registrants could have confidence about the outcome.
WIPO's proposals require the collection of large amounts of personal data when an individual registers a domain name. But the policies fail to require that the undertakings holding this data adhere to state-of-the-art privacy principles, or even any meaningful privacy principles for use of personal data at all. Instead, WIPO proposes that registrants' name addresses, phone numbers and other information be on an open, world-readable database.
WIPO has not published the details of the procedures it proposes be used in all "administrative" proceedings. As a result, there is no guarantee that the process will support fundamentals of due process such as actual notice to defendants.
WIPO proposes that ICANN impose contractual terms on all parties involved in the domain name registration process. If ICANN forces every registry, registrar and registrant to agree to fixed contractual terms, it opens itself, the registries, and perhaps the registrars to anti-trust (competition law) liability.
The contractual terms proposed by WIPO have a substantial chance of being declared unenforceable by a US court, either because they are unconscionable, or because they are the rare type of contract of adhesion that could not be bargained around in any circumstances.
WIPO instructs arbitrators in its "administrative" dispute resolution policy that while they should consider applicable national law, they should also be guided by a number of "principles" WIPO claims (often inaccurately) to be guiding courts around the world. For example, WIPO instructs arbitrators to "balance" the intended use of complainant against the use of the registrant, and presumably favor the one the arbitrator thinks is "better". The result will be decisions inconsistent with those that would be rendered by a court.
WIPO threatens to introduce a number of uncertain and somewhat arbitrary new rules at a time when the courts are just beginning to work out sound and predictable legal rules to deal with conflicts between domain names and trademarks. The introduction of uncertainty combined with a "loser pays" ADR rule works against individuals and small businesses who, having registered a domain for $70 or less, will be unable or unwilling to risk thousands of dollars if they lose in the WIPO process. Large international corporations, on the other hand, often will gladly take the risk, especially as they can always go to court if it doesn't work out.

Access to Court

WIPO claims that access to courts will be preserved under it system. It is true that if a challenger loses, he gets a second bite at the apple: he can go to court just as if nothing ever happened. If, on the other, the challenger wins, he immediately gets the domain name from the original registrant. In the US, at least, that registrant now has no options: a court will only hear complaint that states a cause of action. But the original registrant has no cause of action against the new possessor of the domain: the winner committed no tort; he violated no contract (indeed, there is no contract between the parties), and he violated no statutory duty. The original registrant cannot sue the winner, he cannot sue the arbitrator, so his only recourse is to sue the registry -- which everyone agrees is blameless.

Freedom of Expression

Despite the US Government White Paper, WIPO's proposals are not limited to trademark conflicts with domain names; rather, WIPO proposes to entertain any complaint against a domain name registration based on any claim that an "intellectual property" right has been violated. In other words, persons who assert rights based on European doctrines of "rights of personality" will be able to contest domain registrations on the grounds of invasion of privacy, reputation, protection against defamation, and even "a right of informational self-determination," i.e., a right exclusively to determine whether and to what extent others might be permitted to portray one's life story in general, or certain events from one's life. Although a registrant and registry may be located in jurisdiction such as the USA that does not recognize this limit on the freedom of speech, there is nothing in the WIPO proposal that ensures absolute defenses such as the First Amendment always would apply.

Privacy

The WIPO proposals are insensitive to privacy concerns. One day, everyone on the planet may have their own domain. Data collection and publication requirements suited to businesses are not appropriate for ordinary people who register a domain and who understandably do not what their name, telephone number, and address published on the world wide web. It is even less suited to social, ethnic, religious, and political groups who have reason to fear retaliations if the information were disclosed. Every collector and keeper of this personal data should be held to the highest standards of protecting individual privacy.

"Famous" trademarks

WIPO proposes extensive rules to identify and privilege globally famous and well known trademarks. Currently, however, there is no consensus procedure for identifying globally famous or globally well-known marks. WIPO proposes vague and manipulable principles to fill this gap. Although WIPO suggests that only "a small number of names is involved...it is likely that famous and well-known marks that may qualify ... number in the hundreds, rather than the thousands" WIPO has not backed up that estimate with any numerical limit on the process. Under WIPO rules the potential number of terms (including common words with other meanings) that firms could prevent from being registration in any gTLD is potentially unlimited.

WIPO's interim report can be seen at http://wipo2.wipo.int/process/eng/rfc_3.html

Comments, which are due by March 17, can be made using a comments button visible on the same page.

AN ALTERNATE PLAN

Many people agree that a few simple measures would go a long way towards ameliorating the domain name/trademark mess. No one knows exactly how effective they would be. My proposal is to try them and see. It would be a mistake to build a baroque contractual and administrative structure on the assumption that technology is static. The importance of the domain name system as a tool for users to locate sites may be a temporary phenomenon, one quickly displaced by a new generation of search engines, intelligent agents, or context-driven artificial intelligence.

Require advance payment before registration of a domain, thus greatly increasing the cost of mass domain name speculation.
Allow de-registration (takedown) of domains when contact details are shown to be false by an aggrieved trademark holder.
Consider taking the lead from the Toeppen and One In A Million courts and establish special rules to deal with organized, repeat abusers of the system.
Create differentiated top-level-domains. Some non-commercial, open-access domains would be reserved for expressive activities. Other, new controlled-access domains, could be administered by bodies such as WIPO itself, which would ensure that all registrations were properly harmonized with existing trademark registrations and legitimate customer expectations.
Trust that as courts continue to make clear how domain names will be treated under law name speculation will become increasingly unattractive.
Recognize that the technology in this area is moving very quickly, and the current visibility and importance of domain names may soon be antiquated.

Background information

A. Michael Froomkin is a Professor of Law at the University of Miami School of Law. He was appointed as the sole "public interest" representative on the Panel of Experts that the WIPO Secretariate consults from time to time during the preparation of its report on Internet domain names.

WIPO held the last of a series of public consultations in Washington DC on Wednesday, March 10, in the Department of Commerce Auditorium.

Professor Froomkin's "Critique of WIPO's RFC 3" is available from http://www.law.miami.edu/~amf in various file formats.

The deadline for comments to WIPO on RFC has been extended to this Friday, March 17.

Major Flaws in the WIPO Domain Name Proposal -- A Quick Guide