UDRP and human rights

'Beyond the Governance Gap in International Domain Name Law: Bringing the UDRP in Line with Internationally Recognized Human Rights' by Monika Zalnieriute in (2020) 56(1) Stanford Journal of International Law comments

 This article maps the substantive international human rights implications of the influential Uniform Domain Names Disputes Resolution Policy (“UDRP”). The UDRP is an international legal framework for resolving disputes between trademark owners and domain name holders, created by Internet Corporation for Domain Names and Numbers (“ICANN”)—a multi-stakeholder non-profit corporation, responsible for managing domain names and addresses globally. I sketch out the human rights implications of the substantial aspects of the UDRP from an international perspective because ICANN has recently added a Core Value of respecting “internationally recognized human rights” to its Bylaws, and the UDRP review is underway in 2020. In this article, I analyze the dominant interpretive approaches of UDRP panelists to illustrate how, from an international human rights perspective, the substantive UDRP elements are currently too broad, and lead to problematic outcomes. While international human rights analysis does not automatically generate pinpoint policy prescription, it provides an additional framework to evaluate ICANN’s policies, expanding the focus and range of responses. I argue that a more precise articulation and reflection of the narrow scope and objectives of the UDRP within its substantial elements (including as they are interpreted and applied) is needed if ICANN is to uphold its human rights Core Value and to ensure that the UDRP is interpreted by the panelists as consistently as possible with international human rights principles. I propose several concrete ways to address the problematic substantive aspects of the UDRP from an international human rights perspective. In particular, the upcoming UDRP reform should include:

1) an explicit reaffirmation of the narrow scope and limited objectives of the UDRP; 

2) a clear articulation of the relationship between the UDRP objectives and substantive policy elements; 

3) a reaffirmation of the cumulative nature of the bad faith requirement; 

4) a revision of affirmative defences available to the respondent; 

5) an introduction of an additional defence of an unreasonable delay; 

6) an introduction of a choice-of-law provision; and 

7) a development of “Uniform Consensus View” at ICANN level to increase consistency and reduce the risk of rogue interpretations of the UDRP by panelists. 

Ultimately, I propose “returning” the UDRP to its original, narrower objectives to reduce the UDRP decisions’ potential to encroach upon fundamental human rights.

Trade Mark Cluttering and the DNS

'Does trade mark cluttering exist in Australia?' (IP Australia Economic Research Paper 07) comments

When cluttering of the trade mark register becomes significant, it has the potential to undermine competition and stifle innovative entrepreneurship. The Productivity Commission’s 2016 Inquiry Report, Intellectual Property Arrangements (PC 2016), identified trade mark cluttering as a possible problem to be addressed in order to ensure the effectiveness of the trade mark system in Australia. However, the PC report did not provide sufficient evidence in support of this claim. This paper explores more extensively whether there is any evidence indicating trade mark cluttering in Australia and assesses how significantly it has been affecting the register. We find that overall the extent of trade mark cluttering in Australia is not unduly serious on the evidence of two key indicators: less than 0.1 per cent of registered trade marks have been removed annually by a third party via the non-use removal procedures; while about 0.5 per cent of trade marks in force may be blocking other applications while they are not in use. Relative to the total number of trade marks on the register, these small proportions do not seem to be cause for concern. 

Nevertheless, potential sources of trade mark cluttering have been increasing in Australia: the first renewal rate has decreased from about 70 per cent in the 1980s to 50 per cent in the 2000s, and an increasing number of trade marks remain on the register for an average of an extra four to five years after their owners deregister their businesses. A comparison of the average number of classes per trade mark between Australia and some countries and priority pairs between Australia and the United States indicates that the per-class-based fee system and proof-of-use requirement have played a positive role in reducing the extent to which non-use trade marks and overly broad non-use classes remain on a register.

IP Australia states

Trade marks identify a unique product and serve to distinguish a business’s goods and services from those of competitors. The mark can be a symbol, letter, number, word, phrase, sound, smell, shape, logo, picture and/or an aspect of packaging. In the case of word marks, studies have found that the most competitively effective trade marks for businesses are unique and concise, with short common words generally working better than neologisms (Beebe and Fromer, 2018). 

Consumers often know little about the characteristics of the goods or services they are considering purchasing and there are numerous unobservable differences in the quality of goods and services. Trade marks therefore play an important role in bridging the information asymmetries between producers and consumers. For consumers, a unique trade mark helps them to identify their desired product by associating it with various attributes that serve to establish its quality and reputation. For producers, a registered trade mark gives the owner the exclusive right to use and authorise other people to use the trade mark. 

With clarity in trade marks, producers and sellers can create concise identifiers for specific goods and services, thereby facilitating market transactions. Therefore, clarity in the Trade Marks Register serves to provide transparency to other potential traders and enable them to easily identify where market opportunities do, or do not, exist and enabling them to target gaps in the market. 

Trade marks are by far the most widely used intellectual property (IP) right because they are not specific to an invention, like patents or design rights, but to the broader identity of a business. Trade marks are the legal underpinning of a business’s brand and the two concepts are closely related but often confused. A brand is an intangible asset that makes up a significant share of a company’s value, and branding is a key arm of a company’s business strategy.  Branding is also integral to a business’s innovation strategy, as it reflects the business’s attempts to define and position itself in the marketplace. Maintaining a business’s brand reputation is an ongoing work that involves continual refinement of its strategy and investment in response to the dynamics of changing markets and consumer tastes. A strong brand helps a business build customer loyalty and obtain a price premium for its products, increasing its revenues and profits. Trade marks are important for the protection of a business’s brand reputation.   

Trade mark cluttering refers to a phenomenon suspected to be a problem for many trade mark registers around the world: it occurs when a large number of unused trade marks or overly broad trade marks (including unused classes) remain on a register that block others’ use of the same or similar marks. This clutter substantially increases the costs to other applicants of creating and registering new trade marks (Graevenitz et al. 2012). These costs are an obvious burden for new entrants to a market, but they can also affect existing businesses trying to create new trade marks. Trade mark cluttering can undermine the effectiveness and the efficiency of the trade mark system by making it more difficult and expensive for new applicants to establish their brands, resulting in unfair advantages for incumbent firms over new entrants (Greenhalgh and Webster 2015). Consequently, it weakens the role of the trade mark system in promoting fair competition (Carter 1990) and increases the cost to consumers of searching and identifying their desired products in the market. Trade mark cluttering also has a negative impact on trade mark offices in terms of their wasted efforts administering unused trade marks and searching inflated trade mark registers. 

Closely related to trade mark cluttering are problems of trade mark depletion and congestion; these have been closely examined in the US by Beebe and Fromer (2018). Trade mark depletion occurs when a decreasing number of available words, signs, or their combinations remain unclaimed by any trade mark owner. Implicitly, depletion assumes the supply of trade marks is finite, contrary to an assumption that has long prevailed in economic thinking about trade marks (c.f. Posner and Landes, 1989) and governed policymaking. By contrast, trade mark congestion happens when, for any given mark that has already been claimed, that mark is claimed by an increasing number of trade mark owners. This can occur when a trade mark is assigned to multiple owners but in different classes of goods and services, as allowed under the Nice classification system administered by the World Intellectual Property Organization (WIPO). 

The problems associated with trade mark cluttering may be exacerbated and become systemic if growing numbers of applicants try to register trade marks but with no intention of future use, whether for defensive or other reasons (Graevenitz et al. 2012). 

The Productivity Commission’s 2016 Inquiry Report, Intellectual Property Arrangements (PC 2016), identified trade mark cluttering as a potential problem that needs to be addressed in order to ensure the effectiveness of the trade mark system in Australia. The Commission’s assessment was based on two main indicators of trade mark cluttering:

i. Rapid growth in the number of applications and registrations of trade marks in Australia in recent decades. 

ii. An increasing success rate of oppositions to trade mark applications on the grounds that the provisions of a mark were too similar to an existing mark (s. 44 of the Trade Marks Act (1995)) or that another similar mark already has achieved a reputation in Australia (s. 60). 

The Commission’s report largely attributed the cluttering to the introduction of the presumption of registrability in the Act, and suggested that this has swung the balance too far in favour of trade mark owners. IP Australia observed that the presumption of registrability was introduced in response to concerns that the previous legislation was too strict and prevented registration of marks that should have been registrable. It argued that “the increased likelihood of a trade mark application being registered is not in itself evidence that the register is cluttered” (IP Australia 2016). While the Commission’s report suggested Australia’s trade mark system is “lax” in encouraging businesses to seek rights as broadly as possible, it did not conclusively demonstrate the existence of significant cluttering in Australia as it did not provide evidence on non-use of trade marks on the register. 

In its submission to the Commission’s inquiry, IP Australia agreed that the trade mark system should not encourage applicants to seek registration of their trade marks without any intention to use them or for more goods or services than they need. IP Australia also suggested that this is an area in which more work should be done in order to identify the nature and extent of the problem (IP Australia 2016). It is against this policy background that the Office of the Chief Economist at IP Australia initiated its own investigation into the potential existence of trade mark cluttering in Australia, with the aim of providing an evidence base to support IP policymaking by the Australian Government.

'Confusing the Similarity of Trademark Law in Domain Name Disputes' by Christine Haight Farley in  (2019) 52 Akron Law Review 657 comments

This article anticipates doctrinal disorder in domain name disputes as a result of the new generic top-level domains (gTLDs). In the course of the intense and prolonged debate over the possibility of new gTLDs, no one seems to have focused on the conspicuous fact that domain name disputes incorporating new gTLDs will be markedly different from the first-generation domain name disputes under previous gTLDs. Now second-generation disputes will have the added feature of the domain name having a suffix that will likely be a generic word, geographic term, or trademark. This addition is significant. Rather than disputes over mcdonalds.com, we will have disputes over mcdonalds.ancestry. Before these new gTLDs, Uniform Dispute Resolution Procedure (UDRP) panels have routinely ignored the gTLD portion of the domain concluding that the suffix is inconsequential to their determinations of confusing similarity. This approach has already changed. While this change may seem trivial especially in a non-precedential system, the consequence of this change may be profound for trademark owners’ rights on the internet and portend a fundamental shift in how trademarks will be called upon to pick winners and losers in this new land grab. Farley,  

GTLDs

Everything Old Is New Again: Does the '.sucks' gTLD Change the Regulatory Paradigm in North America?' by Jacqueline D. Lipton in (2019) 80 University of Pittsburgh Law Review comments

 In 2012, the Internet Corporation for Assigned Names and Numbers (“ICANN”) took the unprecedented step of opening up the generic Top Level Domain (“gTLD”) space for entities who wanted to run registries for any new alphanumeric string “to the right of the dot” in a domain name. After a number of years of vetting applications, the first round of new gTLDs was released in 2013, and those gTLDs began to come online shortly thereafter. One of the more contentious of these gTLDs was “.sucks” which came online in 2015. The original application for the “.sucks” registry was somewhat contentious with a number of countries and others opposing the application. Nevertheless, ICANN granted the rights to a Canadian company, Vox Populi, which has subsequently made a splash in the domain name market offering a variety of pricing levels for different “.sucks” domain names. Complaints have been made to Industry Canada about the activities of Vox Populi in the domain name space, but, so far, the Canadian government has bowed out of involvement in the issue. This Article explores the way that the new gTLDs in general, and the “.sucks” domain name in particular, have affected the landscape for domain name regulation with a particular focus on North America.

DNS Scams

The Federal Court has ordered that Domain Corp Pty Ltd and Domain Name Agency Pty Ltd (also trading as Domain Name Register) pay combined penalties of $1.95 million for breaching the Australian Consumer Law.

The ACCC states

 From November 2015 to at least April 2017, the two Domain Companies sent out approximately 300,000 unsolicited notices to businesses, which looked like a renewal invoice for the business’s existing domain name. Instead, these notices were for the registration of a new domain name at a cost ranging from $249 to $275. 

The Court declared that the Domain Companies made false and misleading representations and engaged in misleading and deceptive conduct in sending these notices. Australian businesses and organisations paid approximately $2.3 million to the Domain Companies as a result of receiving the notices. 

“The Domain Companies misled businesses into thinking they were renewing payment for the business' existing domain name, when in fact the business was paying for a new domain name,” ACCC Acting Chair Delia Rickard said. Any business or consumer receiving a renewal notice for a ‘.com’ or '.net.au’ domain name should check that the notice is to renew their proper domain name. 

“These sham operations target small businesses, capitalising on a lack of understanding of the domain name system or a busy office environment. We encourage businesses to be vigilant when paying invoices, especially if it is for a domain name registration service,” Ms Rickard said. 

The Court also declared that the sole director of both Domain Companies, Mr Steven Bell (also known as Steven Jon Oehlers), was knowingly concerned in, and a party to, the conduct. 

The Court made other orders by consent, including injunctions for three years against each of the Domain Companies and for five years against Mr Bell. These injunctions include a requirement that if any of the parties decide to send out further notices, each notice has to prominently include the words, “This notice does not relate to the registration of your current domain name. This is not a bill. You are not required to pay any money”. 

The Court also made an order disqualifying Mr Bell from managing a corporation for five years and ordered him to pay costs to the ACCC, fixed at $8,000.

Reforming auDA and the dot au ccTLD

As a member of several auDA working parties in a past life I expressed concerns regarding regulatory capture. Those substantive nature of those concerns is evident in the Commonwealth government's Review of the .au Domain Administration report released today.

The report states

On 19 October 2017, the Minister for Communications, Senator the Hon Mitch Fifield, announced a review of Australia’s management of the .au domain (the Review). The not-for-profit .au Domain Administration (auDA) oversees the operation and management framework of the .au domain of the internet. auDA is endorsed by the Australian Government as the appropriate entity to administer Australia’s country code Top-Level Domain (ccTLD)—the .au domain—on behalf of Australian internet users.

The digital landscape has changed significantly since auDA was endorsed by the Australian Government in 2000. The internet has become all-pervasive and a critical enabler of the digital economy. The .au namespace plays an important role in supporting the digital economy, allowing entities and organisations to register domain names. As of late September 2017, over 3 million .au domain names had been registered in Australia.

While internet usage continues to grow, the overall communications environment is changing. Australians are accessing the internet in different ways and cyber security threats are increasingly prevalent. Future trends may have an impact on the domain space and it is important Australia has an effective .au administrator that is able to ensure the ongoing availability of .au domains while navigating future uncertainty.

auDA’s governance arrangements have not changed significantly since it was first established, with its structure and approach to governance set at a point in time when the internet and the domain industry was still in its infancy. The Review has found that reforms to auDA’s governance arrangements are necessary if the company is to perform effectively and meet the needs of Australia’s internet community.

In undertaking the Review, the Department has reflected on three principles:

• The Australian Government is committed to strengthening multi-stakeholder mechanisms for internet governance, noting the diversity of auDA’s stakeholders. 

• The .au namespace is a public asset given its increasing importance to the daily lives of Australians and should be governed with community interests in mind. 

• auDA has a monopoly position in administering the .au namespace and should be subject to stringent oversight requirements.

Importantly, the review acknowledges that auDA has overseen a significant ramp up in the number of domain names and has introduced many important policy and security initiatives. auDA has contributed to .au being seen globally as a secure and trusted namespace.

The government's Findings are -

The central finding of the Review is the current management and governance framework for auDA is no longer fit-for-purpose and that reform is necessary if the company is to perform effectively and meet the needs of Australia’s internet community.

In particular, the current membership model, and its relationship to corporate governance, is impeding auDA’s decision making and is contributing to ongoing organisational instability. The membership class structure is not reflective of Australia’s internet community nor auDA’s stakeholders. The current process where the majority of directors are appointed from the membership does not support effective governance outcomes.

Further, directors can be elected to the board with little regard to the skills required to effectively govern a modern domain administrator. Directors are also not required to meet probity, security or conflict of interest checks.

Ultimately, current governance and management framework arrangements are not satisfactory given the importance of the .au namespace to the Australian community. In considering stakeholder feedback and better practice guidelines, the Review identifies a range of reforms to improve stakeholder engagement, transparency and accountability, and mechanisms to promote trust and confidence in the .au domain name.

The Review considers that significant and urgent reforms are necessary to ensure that the .au namespace is administered in line with community and the Australian Government’s expectations.

To achieve this, the Review has made recommendations focusing on:

• clarifying the role of the .au domain administrator to ensure its activities are aligned with its responsibilities 

• reforming the management framework to support improved transparency, consultation and accountability by providing greater guidance on performance and reporting requirements 

• supporting effective stakeholder engagement and better representation of the Australian internet community, by acknowledging the .au DNS as a public asset and the multi-stakeholder approach to internet governance 

• outlining the role and expectations of the Australian Government 

• fostering greater trust and confidence in the .au namespace by enhancing security best practice and coordination of DNS administration.

... Reforming auDA will be a substantial process. Changes to its governance and membership arrangements involves significant constitutional reform, which requires the support of the membership base. The extent to which the membership supports reform is unclear.

The Review proposes two options to implement recommendations. The first option would see the Minister for Communications issuing revised terms of endorsement to auDA supported by an implementation plan with clearly identified milestones for reform. This plan would see a clear pathway for reform in place by three months, significant progress by 12 months, and the full reform package implemented within 24 months.

Alternatively, the Government could consider issuing an expression of interest to assess whether an alternative provider is able to perform the .au domain administration function in line with the revised terms of endorsement. This option may identify a viable alternative provider for the administration of the .au namespace mitigating the risk that constitutional reform of auDA cannot be achieved.

The stability, resilience and security of the .au namespace is paramount to the Government. The review recommends that auDA be given the opportunity to conduct the necessary reforms. However, the Government is committed to implementation of timely reform and will take action to ensure that Australia’s domain name is administered effectively and in the interest of all Australians. This includes transitioning the delegation for management of .au to another provider if auDA is unable to achieve necessary outcomes.

On that basis the report features the following recommendations

Purpose of the .au domain administrator

1. While auDA has an ongoing role in the security and stability of the .au space including as part of the critical infrastructure sector, this should not in the foreseeable future alter auDA’s role and purpose. 

2. That auDA continue to operate as a not-for-profit entity and does not seek to maximise profit. 

3. Consideration of commercial strategies relevant to the sustainability of the domain administrator should not detract from the domain administrator’s core function as described in the terms of endorsement and core purpose.

Management framework

4. That auDA provide an annual Strategic Plan covering at least a four-year-period and with the Strategic Plan reflecting company purpose and terms of endorsement. The auDA Board and management should present progress against the organisation’s purpose and its strategic objectives at auDA’s Annual General Meeting and in its Annual Report. 

5. That auDA develop a KPI framework to: a. measure its performance against its stated objectives in its terms of endorsement b. report against in its Annual Report and at its Annual General Meeting. 

6. As part of its Strategic Plan, that auDA outline how it intends to discharge its functions as a not-for-profit company and report on its effectiveness in its Annual Report and at its Annual General Meeting.

Transparency and consultation

7. That auDA reform its governance arrangements to ensure: 

a. that the nomination of all Board positions is undertaken by a Nomination Committee comprised of representatives from industry, the business sector, consumers, an auDA member representative, and the Commonwealth, represented by the Department

i. in establishing the Nomination Committee, the auDA Board will undertake a consultative merit-based process to identify members, with a Department representative as a panellist, and the Department to select the committee members from this process 

ii. the Nomination Committee will undertake probity and disclosure assessments and develop a skills matrix to ensure new directors have an appropriate mix of technical and corporate skills and industry experience 

iii. the Nomination Committee will shortlist: member candidates to stand for election by members; and independent candidates to stand for election by the Board 

iv. however, the first Board, following the reform of auDA’s governance arrangements will be selected according to the skills mix identified by the Nomination Committee with shortlisted nominees agreed with the Department 

b. length of terms directors can serve is capped at three years with directors appointed for no more than two consecutive terms 

c. the Board is structured so that the majority of the Board is independent of auDA’s membership 

d. that within 12 months the Board is reconstituted to ensure all appointments meet this criteria.

8. That auDA establish a Board Charter:

a. to set out the respective roles and responsibilities of the Board, Chair and CEO 

b. to set out the basis for appointment of the Chair 

c. that requires the Board to report on an annual basis to stakeholders publicly on its performance against this charter. 

9. That auDA:

a. formalise its transparency and accountability framework, consistent with recommendations in the Westlake review 

b. report annually on its performance against the framework in its Annual Report and at its Annual General Meeting.

Membership

10. That auDA reforms its existing membership model by creating a single member class or a functional constituency model and that membership reform is non-discriminatory and supported with transparent membership guidelines. 

11. That auDA diversify its member base in the short-term with a focus on extending membership to stakeholders that are underrepresented. 

12. That auDA report annually on its initiatives for growing its membership, and their effectiveness at diversifying the membership in its Annual Report and at its Annual General Meeting. 

13. That auDA review its assessment process for new members, in conjunction with the implementation of Recommendations 10, 11 and 12. 

Expectations and role of the Government 

14. That the Minister for Communications issue new terms of endorsement, setting out the Government’s expectations for .au domain administration and that auDA respond by publishing a statement on how it will deliver on these expectations. 

15. That the Government review these terms of endorsement within two years from when they are issued to ensure they remain fit-for-purpose, with reviews scheduled every three years going forward. 

16. That the Department of Communications and the Arts adopts a more formal oversight role of auDA, including that:

a. auDA report quarterly to the Department on its implementation of reforms, work agenda and key work priorities 

b. the Department conducts independent verification of some or all of auDA’s reporting provided through its Annual Report, including those requirements identified as part of the review 

c. a senior executive officer from the Department continue as a non-voting observer at auDA Board meetings and is present for all decisions taken by the Board. 

17. That the oversight role of the Department of Communications and the Arts is reviewed periodically by Government to ensure it is fit-for-purpose. 

Stakeholder engagement 

18. That auDA develops a public stakeholder engagement strategy and implementation plan to articulate how it will engage with stakeholders in all levels of operation and decision making. 

19. Through its Annual Report and at its Annual General Meeting, auDA should report on its performance against its stakeholder engagement strategy. 

20. That auDA publish conclusions from its review on its community activities and publish an implementation plan on future community activities. 

21. That auDA continue to engage with ICANN and other international bodies to represent Australian interests. 

22. That auDA’s stakeholder engagement strategy (Recommendation 18) include ICANN and other relevant international fora and bodies. 

23. As part of its Strategic Plan (Recommendation 4), auDA publishes a forward-looking international travel schedule and describes in its Annual Report the effectiveness of its international activity.

Trust and confidence in .au

24. As part of its international engagement (Recommendations 21, 22 and 23), auDA engage with key international security fora including ICANN’s Security and Stability Advisory Committee to ensure that it is kept updated on international security developments. 

25. That auDA develop and implements an enterprise security strategy based on domestic and international best practice in consultation with all relevant stakeholders. 

26. That auDA publishes a public facing version of its enterprise security strategy, having regard to relevant sensitivities. 

27. As part of its stakeholder engagement plan (Recommendation 18), that auDA maps its relationship with Australian Government security agencies and the internet industry and community on security of the .au namespace. 

28. That the Department of Communications and the Arts facilitate partnerships between auDA and relevant cyber security agencies. 

29. As part of its quarterly reports to Government (Recommendation 16) that auDA report on its security activities.

The report identifies  new terms of endorsement

Preamble

Australia’s country-code Top Level Domain (ccTLD) is an important resource, given the growing reliance of Australians on the .au namespace for economic and social activities. Noting there is a diversity of stakeholders in this namespace, the management of the .au domain must support multi-stakeholder engagement and be administered in the public interest. Responsibility for the administration of .au is ultimately derived from, and is subject to, the authority of the Commonwealth. The Australian Government can delegate the responsibility for managing the .au namespace to an appropriate entity or organisation. However, endorsement from Government is contingent on the entity satisfying a number of conditions. The Government provides the following terms of endorsement to auDA, as the .au domain administrator.

Core functions

The .au domain administrator will undertake the following core functions: • ensure stable, secure and reliable operation of the .au domain space • respond quickly to matters that compromise DNS security • promote principles of competition, fair trading and consumer protection • operate as a fully self-funding and not-for-profit organisation • actively participate in national and international technical and policy namespace fora to ensure that Australia’s interests are represented and to identify trends and developments relevant to the administration of the .au namespace • establish appropriate dispute resolution mechanisms.

Emerging domain issues such as commercial opportunities should not detract from the domain administrator performing its core functions.

Conditional requirements

In undertaking these functions, the .au domain administrator will uphold the following requirements and conditions: Effective governance arrangements for the .au namespace Good governance practices provide the foundation for the effective management of the .au ccTLD. The .au domain administrator must implement a governance structure that supports effective decision-making and represents the interests of stakeholders in a transparent and accountable manner.

Conditions:

That the .au domain administrator has:

• a governance structure which includes the following characteristics: 

• an independent process that can provide assurances of the suitability of candidates considered for board appointments, such as a Nomination Committee 

• a board that has the collective mix of technical and corporate skills, and industry experience, to effectively administer the .au namespace 

• a board that appoints a majority of directors who are independent of the organisation, including the Chair 

• appointment terms that support ongoing board renewal 

• a Board Charter that outlines the roles and responsibilities of the board, Chair and CEO and the basis for appointment of the Chair.

Facilitate effective stakeholder engagement

Noting that the .au namespace has a diversity of stakeholders, the .au domain administrator must engage and consult widely to ensure it can effectively represent the views of its stakeholders.

Conditions: 

That the .au domain administrator:

• consults with stakeholders on deliberations and decisions that will impact on the Australian internet community 

• develop a comprehensive stakeholder engagement plan, including how it will engage with key stakeholders such as industry, members of the community, Government and relevant international bodies and organisations  

• consistent with this stakeholder engagement plan, participate in international fora and relevant community activities 

• has a clearly defined membership structure that can represent the views of the Australian internet community 

• initiate activities that engage the internet community and support the diversification of its member base 

• establish an effective process for assessing and processing new members.

Support accountability and transparency

In managing a public asset, the .au domain administrator will be accountable to its stakeholders, including the Australian Government. Improved transparency and accountability is necessary to provide the assurance that the .au namespace is being managed consistent with Government and community expectations.

Conditions:

That the .au domain administrator has:

• an annual strategic plan that reflects these Terms of Endorsement and the company’s purpose with reference to how it will discharge its functions as a not-for-profit entity 

• a transparency and accountability framework 

• an effective reporting framework which would include reporting through its Annual Report and at its Annual General Meeting on performance against: 

• these terms of endorsement, supported by a key performance indicator framework • board performance against its charter 

• its strategic plan • the transparency and accountability framework 

• stakeholder engagement activities including international and community activities and initiatives that aim to expand the member base.

Engagement with the Australian Government

In providing its endorsement for an entity to administer what is a public asset, the Government has a strong interest in the management of Australia’s ccTLD. 

Conditions: 

That the .au domain administrator:

• provide quarterly updates on performance and work priorities to the Department 

• acknowledge that the Government reserves the right to independently review auDA’s reporting and reporting processes at any time 

• ensure that a senior officer from the Department is included in all relevant auDA governance processes, including, but not limited to, non-voting observer status at board meetings for all decisions 

• develop a strategy to enable an orderly transition to an alternative domain administrator in the event that endorsement is withdrawn by the Government.

Support trust and confidence in .au

Confidence in the .au namespace will be critical to the growth of Australia’s economy. In addition to the Department of Communications and the Arts, there are a number of other Australian Government agencies that have a role in supporting the security and stability of .au.

Conditions:

That the .au domain administrator:

• engage with key international security fora to ensure it is aware of international security developments and best practice 

• develop, maintain and, to the greatest extent possible, publish an enterprise security strategy which is informed by domestic and international best practice 

• work with the Department of Communications and the Arts to facilitate partnerships between auDA and relevant cyber security agencies

Commencement of these terms of endorsement

In agreeing to the terms of endorsement, the .au domain administrator is required to respond in writing within three months, providing an implementation plan on how it will meet these terms. The Australian Government will conduct a review within two years to assess the performance of the .au domain administrator and consider whether these terms of endorsement remain fit-for-purpose.

Domains and Squatters

The AIC research report by Tony Krone and Russell Smith on Criminal misuse of the Domain Name System comments

The DNS is a naming system for resources, such as personal computers or other devices, that connect to the internet via the World Wide Web. It coordinates internet addresses and domain names—the two kinds of unique identifiers that make internet connection possible. The study was funded by the auDA Foundation, which was established by the .au Domain Administration (auDA), the policy authority and industry self-regulatory body for the .au domain space in Australia. The aim was to support the objective of the Foundation by ‘promoting and encouraging educational and research activities that will enhance the utility of the Internet for the benefit of the Australian community’ (auDA Foundation 2015).

Methodology

Public source, non-technical literature was comprehensively reviewed to identify instances of DNS misuse, the risks that led to the commission of these instances, and the crime prevention and regulatory measures available to address the problem. The study was particularly focused on exploring existing legal and criminological frameworks that could be used to conceptualise the problem of DNS misuse and provide a framework for developing effective control strategies.

The literature review was international and examined English-language resources including academic sources, legal databases and relevant policy documents. The review primarily focused on the risks of misuse of the DNS from an Australian perspective although, due to the global nature of the internet, all legitimate users would benefit in many ways from a more secure and trusted domain name system, both as domain name owners and consumers.

Scope

The results address current identified risks, but they could also inform further and more detailed cross-disciplinary research into the nature of the problem and appropriate solutions. The research was not intended to be an overly technical examination of the problem and does not address the architectural or programming features of particular examples of misuse. Rather, it explores the issue from a policy perspective that will be beneficial in devising appropriate legal and policy responses.

The research looks at the connections that exist between various forms of misuse and DNS governance. The discussion explores the internet as a network of networks based on an addressing system known as the Internet Protocol (IPv4 and IPv6), which creates IP addresses for resources within the DNS and is focused on what might be called the ‘open web’ or the World Wide Web (the public internet) most users commonly access when using the DNS. Resources which are accessed via the public internet, but located behind a barrier such as a paywall or an account login for hosted services, are included in the research. These hosted resources are from the DNS core and so are not directly subject to DNS regulation, but rather are immediately subject to any regulation the host imposes or any conditions imposed on the hosting service. Regulation at the level of a hosting service varies, and debate about whether service providers are responsible for the online activities of those who use their services continues. The report deals briefly with resources that are essentially invisible to or hidden from the open internet, or that cannot be accessed directly from the public internet. While these parts of the internet present the majority of regulatory challenges and are of significant concern for law enforcement, they are not analysed in detail in this report as they are too far removed from the limited scope of regulation through the operation and governance of the DNS.

Research questions

These questions formed the basis of the current research.

• What is the DNS and how does it operate within the framework of internet governance?

• How has the DNS been misused for criminal purposes?

• What is known about perpetrators of DNS misuse? That is: –– What are their motivations and what benefits did they obtain? –– What are their countries of origin? –– Do they operate alone or with others? –– Why did they select the targeted domain name? –– How have instances of DNS misuse been dealt with and what were the outcomes of any investigations?

• What crime prevention strategies do domain name owners, DNS server owners and registrars currently use to prevent DNS misuse?

• What other crime reduction strategies could be implemented to prevent misuse of the DNS?

Findings

Background

This section explains the internet’s development and operation and reviews the environment in which criminal misuse of the DNS has emerged. It explains the internet’s infrastructure and discusses the operation and governance of the DNS, highlights weaknesses in the regulatory framework that increase the potential for misuse, and identifies the strengths that may help prevent misuse. The internet’s nature and its governance structures result in weak regulatory responses to misuse of the DNS.

Criminal misuse of the DNS

This section explores criminal misuse of the DNS by firstly considering illegal acts that do not amount to cybercrime offences, including property offences like the theft of hardware and domain names, and, secondly, misuse that falls within the general classification of cybercrime. It presents a tentative analytical model that relates forms of misuse to particular aspects of the DNS, namely to:

• the DNS architecture;

• domain names (or domains);

• domains as virtual spaces; and

• other layers at some remove from the DNS.

This model helps to explain misuse occurring within the architecture of the internet (software engineering) as well as misuse facilitated through human interaction (social engineering). The section then examines opportunities for misuse in terms of the DNS’ primary purpose, which is to overcome restrictions created by the internal architecture of the early internet. This misuse concerns how machines use internet addressing to make connections between resources. Misuse through software engineering is further classified according to whether the DNS is itself the target of misuse or is used to facilitate other offending; facilitating other offending may involve misusing the DNS as a mechanism to do harm, a vector to transmit harm or a platform from which to commit harm.

The outward appearance and presentation of internet for human users is then considered. A division can be drawn between misuse intended to manipulate machines through software engineering and misuse intended to manipulate people through social engineering. To distinguish between abuses of the DNS and abuses that exploit applications layered above the DNS, DNS misuse may also be categorised according to the architecture of the internet. This helps identify who could potentially prevent misuse and potential points for regulatory intervention.

Perpetrators of misuse

The many and varied forms of DNS misuse identified in this study make it difficult to describe a typical offender or criminal justice response, particularly given the absence of criminological research in this area. The limited research so far conducted has found a high incidence of organised crime activity. This often involves loose groups of people, usually young men with limited technical abilities who rely on online guidance. Perpetrator profiles also differ according to the extent of the perpetrator’s involvement in the darkweb. There is limited evidence to indicate where those misusing the DNS are located.

Legal responses to DNS misuse

Although some instances of misuse can be addressed through the criminal justice system, there are many impediments to harnessing the criminal courts as a regulatory response. Few conventional crime categories are relevant apart from, arguably, some property crime offices such as theft of domain names, or the criminal infringement of intellectual property rights. Of greater relevance are specific offences created under cybercrime legislation that governs unauthorised access to networks, data interference and acts of online dishonesty associated with domain name misuse. There are also criminal offences arising from social engineering, including identity misuse, misleading and deceptive conduct, and fraud. To date, these have not been used due to problems of evidence and proof, jurisdiction, and the limits of law enforcement resources in identifying suspects, seeking mutual legal assistance and mounting prosecutions. Over time, as the jurisprudence of DNS criminality develops, criminal proceedings may be more successful. Whether this would deter criminals from committing DNS crime remains conjectural.

In addition to criminal justice responses to DNS misuse, there are a number of avenues for redress through the use of the civil laws relating to obligations and intellectual property. ‘Webjacking’, and disputes about the registration of domain names that could lead to legal action about ‘cybersquatting’ or ‘domain name squatting’, can be resolved by taking action under the Uniform Domain-Name Dispute-Resolution Policy (UDRP) adopted by domain name registrars. In appropriate cases of infringement of contractual rights or intellectual property related to registered names, where economic loss can be quantified and proved, civil action can be taken in relation. Where business interests are at stake, injunctive relief can also be useful.

Preventing misuse of the DNS

A number of environmental crime prevention strategies could be used to reduce the harms associated with DNS misuse, including routine activities theory, crime pattern theory and rational choice theory. Crime prevention is considered by reference to various regulatory touchpoints within DNS regulation. Importantly, these regulatory touchpoints often lie outside the scope of national laws, which creates opportunities for exploiting regulatory weaknesses for criminal purposes. Some strategies to reduce the risk of DNS abuse include:

• enhancing identification checks when registering domain names;

• using Domain Name System Security Extensions;

• making DNS abuse less profitable by coordinating reporting mechanisms and controlling online profit centres;

• neutralising offender rationalisations; and

• improving user education on the risks of DNS misuse.

Conclusions

The DNS is fundamental to the functioning of the internet, and its potential for misuse is one of the most important legal and regulatory challenges facing internet governance in the years ahead. A failure of the DNS would impede machine-to-machine communication, and make it difficult for users to navigate the internet.

However, the capacity to regulate possible misuse of the DNS is limited. While the DNS requires centralised authority, no single global entity is responsible for the regulation of all its aspects. This is because regulation of the DNS, like other aspects of the internet, occurs under a multistakeholder model of governance and a distributed administration model. It is also a result of the fact that much of what happens on the internet is beyond the jurisdictional reach of the criminal law of individual nations.

Nonetheless, regulating DNS registration and addressing the security weaknesses of internet architecture would provide some limited means of controlling the environment to prevent criminal misuse of the DNS and the internet. Although there will always be a place for criminal justice responses to internet abuse, in the global regulatory environment in which the DNS operates prosecution of DNS misuse will be difficult, and is likely to be reserved for the most serious and obvious infringements. As with other online crime, enacting a uniform set of policies to prevent misuse before it arises is likely to be the most effective strategy.

The 2018 WIPO report on cybersquatting  indicates that banking and finance (12% of all cases), fashion, 'internet and IT' account  for around one-third of all cybersquatting disputes handled by WIPO’s Arbitration and Mediation Center in 2017. Trade mark owners filed  3,074 cases under the Uniform Domain Name Dispute Resolution Policy (UDRP).  Cybersquatting disputes relating to new generic Top-Level Domains (New gTLDs) accounted for more than 12% of WIPO’s 2017 caseload (some 6,370 domain names.) with registrations in the  .STORE, .SITE, and .ONLINE new gTLDs,the most-commonly disputed.

WIPO Director General Francis Gurry states

By abusing trademarks in the Domain Name System, cybersquatting undermines legitimate commerce and harms consumers. This is true especially where squatters use domain names to offer counterfeit goods or for phishing, as is seen in numerous WIPO cases. The availability of the highly effective UDRP procedure is an indispensable support for the credibility of commerce on the Internet and for protection against fraudulent practices.

The US (with 920 cases filed in 2017) remained the country where most WIPO UDRP cases originated, followed by France (462), the UK (276), Germany (222) and Switzerland (143).  Complainants asserted fraud, phishing or scam in almost one-third of banking and finance-related decided cases filed in 2017.

WIPO notes that  Philip Morris leads the list of filers with 91 cases,  followed by Michelin,  Electrolux, Andrey Ternovskiy (Chatroulette), Sanofi, Zions Bank, Carrefour, Virgin, Accor,  BASF and LEGO.

DNS Territorialisation

'Territorialization of the Internet Domain Name System' by Marketa Trimble in (2017) 45 Pepperdine Law Review comments 

A territorialization of the internet – the linking of the internet to physical geography – is a growing trend. Internet users have become accustomed to the conveniences of localized advertising, have enjoyed location-based services, and have witnessed an increasing use of geolocation and geoblocking tools by service and content providers who – for various reasons – either allow or block access to internet content based on users’ physical locations. This article analyzes whether, and if so how, the territorialization trend has affected the internet Domain Name System (“DNS”). As a hallmark of cyberspace governance that aimed to be detached from the territorially-partitioned governance of the physical world, the DNS might have been expected to resist the territorialization trend – a trend that seems antithetical to the original design of and intent for the internet as a globally distributed network that lacks a single point of control. However, the DNS has never been completely detached from physical geography, with which it has many ties, and the article shows that the territorialization trend is detectable in the DNS as well. The article contemplates what impact, if any, the trend will have on the future of the DNS – a future that is challenged by the role of internet search engines, whose predominant use by internet users could render the DNS, as we know it today, obsolete.

Domains

'Valuable Words: The Price Dynamics of Internet Domain Names' by Thies Lindenthal in (2014) 65(5) Journal of the Association for Information Science and Technology 869–881 estimates

the first constant quality price index for Internet domain names. The suggested index provides a benchmark for domain name traders and investors looking for information on price trends, historical returns and the fundamental risk of Internet domain names. The index increases transparency in the market for this newly emerged asset class. A cointegration analysis shows that domain registrations and resale prices form a long-run equilibrium and indicates supply constraints in domain space.

The study explores a large dataset of domain sales spanning the years 2006-2013. Differences in the quality of individual domain names are controlled for in a hedonic repeat sales regressions. 

Lindenthal comments -

Internet domain names bring the location back to the otherwise location-less Internet economy. A domain name provides a virtual street address for any website or service on the Internet. It is comparable to a tract of land on which a business or just a private homepage can be built on. This space-network analogy is as old as the World Wide Web and numerous terms related to the Internet exhibit a spatial connotation: Labels for technical network addresses, for instance, are called domains, users are visitors, Internet browsers have been baptized Navigator or Explorer, websites are home pages, users communicate in chat rooms – the list can be easily extended.

Understanding domains as a novel form of land offers the opportunity to transfer established theoretical and empirical frameworks for the pricing of land into virtual space. Theoretically, Alonso-Muth-Mills models of urban layouts (Alonso, 1964; Mills, 1972; Muth, 1969) explain differences in land rents by differences in the distance to jobs or amenities. Applying this reasoning to domains, the price of a domain is hypothesized to depend on its ‘proximity’ to potential users. Since a voyage on the world wide web usually begins with the user entering the domain name of the desired website into her web browser, distance to the user can be seen as the effort a user is required to make to correctly remember and type a domain name. An appealing domain name like Apple.com is easy to recall and quickly entered. In this sense, an intuitive domain name is like a convenient down-town address linked to excellent transportation systems. Long or cryptic domain names are more burdensome, which is comparable to a longer commute to a location somewhere in the outskirts.

Ieong et al. (2012) provide a similar, albeit non-spatial explanation for the value of domains. They show that domains help users to evaluate the reliability of search results from online search engines. Domains serve as brands for the displayed information. Based on this line of thought, differences in domain prices could also stem from the brand-potential inherent in the domain name. Again, the catchy and easy to remember names will sell at a premium above registration costs.

Differences in ‘location’ and ‘brandability’ fuel a heated race for the shortest and most memorizable domain names that sprung up since the very first domain was created in March 1985. By now, more than 240 million unique domain names are registered (Verisign, 2012) – with no end of growth in total numbers in sight. An active secondary market facilitates investments in domains. Exclusive domains oftentimes trade for 5 or 6 figure dollar amounts, and some for even more. The current record in reported sales prices is the widely covered 13 million US dollar transaction of sex.com in 20102. Trading of and investing into domains has quickly evolved from a geeky pastime of a few to the serious bread and butter industry feeding hundreds of professionals today.

The focus of this paper is to estimate the first constant quality price index for Internet domain names. It adapts an empirical framework borrowed from real estate research which is suitable for valuing infrequently traded and non-standardized assets like houses, antiques, pieces of art – or, by analogy, virtual locations. The linguistic nature of Domains causes substantial heterogeneity in their quality, which makes domain names very comparable to traditional asset classes where the intrinsic value of an asset is not directly observable as well. The index spans 7 years and is updated on a monthly basis.

Despite all rapid growth in the last decade, domain names are still a relatively small investment class that lacks any information on its inherent risk and return profile. Market participants and investors simply do not know whether domain names are a ‘good’ investment. Did domain holdings deliver positive returns in the last years at all? How big were any returns?

Rational investors evaluate return and risk of their holdings simultaneously. The market index is the best proxy fundamental risk of domain names. The price volatility of a market portfolio hypothetically containing all domain names cancels out any domain-specific volatility. The fundamental or market risk of domains can be compared to the risk of an investor’s portfolio, which puts any return on this portfolio into a risk-adjusted perspective. Furthermore, the fundamental risk of domains can be compared to the risk of other investment classes like stocks, bonds or real estate.

The massive increase in virtual space and new extensions (ICANN Internet Corporation For Assigned Names and Numbers, 2012a) scheduled for 2013 and 2014 by the Internet Corporation for Assigned Names and Numbers (ICANN), is, among other reasons, motivated by a perceived scarcity of domains. This paper provides first evidence that supply of domain space is currently constrained indeed.

Finally, any cautious economist will surely ask: Are domains names for real or just another fad? Or does an economic rationale justify the prices paid? A comparison of domain prices to share price indices for IT companies shows that domains are not a totally detached ‘new economy’. The value of locations on the web is closely correlated with e.g. the NASDAQ 100.

The remainder of this paper first presents a primer on Internet domain names, including a brief introduction on the nature of domain markets. Section 3 provides an overview of the data this study analysis relies on. This motivates the choice of an adequate index estimation methodology in the subsequent section. Section 5 discusses the empirical results leading to general conclusions.

Domains and Confusion under the ACL

In Vendor Advocacy Australia Pty Ltd v Seitanidis [2013] FCA 971 Middleton J has questioned whether consumers pay much attention to the difference between dot com and dot au domain names, and considered whether momentary or transitory confusion that might arise from use of similar domain names by different enterprises would amount to misleading or deceptive conduct.

His Honour noted that in considering Section 18(1) of The Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) - which provides "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive" - the principles and substantial case law in relation to s 52 of the Trade Practices Act 1974 (Cth) continue to be applicable. He commented that -

In circumstances where a trader adopts a descriptive trade name the use by another trader of a trade name that also uses those descriptive elements will not generally (in itself) constitute misleading or deceptive conduct.

The judgment states that

Since at least 2001, the applicant company Vendor Advocacy Australia Pty Ltd (‘VAA’) has carried on a business in Australia of representing and advising owners of real estate in selling their properties and in their dealings with real estate agents. Mr Ian Reid, who is the founder and principal of the business of VAA, has had a long career in the real estate. After working for VAA for a number of years, from about January 2011, the respondent, Mr Peter Seitanidis, carried on a similar business in competition with VAA. It is fair to say that there has been and continues to be a high level of animosity between Mr Ian Reid and Mr Seitanidis, demonstrated through their actions towards each other.

Seitanidis is the registrant of several domain names featuring the words vendoradvocacy and vendoradvocate. The judgment states that

VAA disclaims any ownership of the expression ‘vendor advocacy’, and does not seek to prevent competitors from using that term. However, VAA seeks the relief it does because it believes there is the likelihood that consumers who intend to contact VAA will be misled, and that consumers who intend to visit VAA’s website will instead be directed to Mr Seitanidis’ site.

In general terms, VAA has sought relief in respect of:

• Breaches by Mr Seitanidis of copyright in VAA’s listing authority; 

• Breaches by Mr Seitanidis of copyright in the text of VAA’s website; 

• Mr Seitanidis’ conduct in passing himself and his business off as being VAA; and 

• Misleading or deceptive conduct engaged in by Mr Seitanidis.

I need say very little about the copyright allegations, as on the fourth day of the trial Mr Seitanidis admitted breach of copyright, and VAA (upon its election to accept damages) indicated it was willing to accept $1.00 offered by Mr Seitanidis by way of nominal damages. A dispute remains as to the need for and the extent of declaratory and injunctive relief in respect of the copyright breach, to which I will return.

If VAA cannot succeed in its misleading and deceptive conduct claim, it cannot otherwise succeed in its passing off claim. Therefore, I proceed to consider only the misleading and deceptive conduct claim, which requires me to determine whether Mr Seitanidis engaged in conduct that misled or was likely to mislead, and whether he should be restrained from such conduct in the future.

At the outset, I indicate that whilst throughout these reasons I will be referring to the promotional activity of VAA and the need to put the documentation and oral evidence in context, this is primarily in an endeavour to show the relevant state of knowledge of consumers, and to put the conduct of Mr Seitanidis in context. There is no requirement for VAA to establish any reputation as an element of the misleading and deceptive conduct claim. However, to establish misleading and deceptive conduct in this proceeding depends upon the level of consumer perception of VAA’s reputation and how it promoted itself.

Middleton J went on to state that -

Consumers may often remember promotional and advertising material imperfectly, and so may type in a domain name or visit a website they think is that of the advertiser, without being certain of the correct address. Further, the consumer may hear and see an advertisement but may not act on the material until some later time. In these circumstances, a consumer may not have the advertisement or promotional material in front of them, and may be forced to rely on that imperfect recollection. In addition, a consumer viewing a website may do so in circumstances that do not allow for in-depth consideration (for example, a website viewed on a mobile telephone screen), which compounds the imperfect recollection. In circumstances where a descriptive phrase is used, this imperfect recollection or confusion cannot give rise to liability on the part of a rival trader without more.

Further, clearly the “real life” use of brands is important, as is the use of a brand in the circumstances of the promotion or advertising relied upon by any applicant. ....

Basically, the enquiry is into the reason the misconception has arisen – to find a person liable, it must be because the impugned conduct has sufficiently caused the likelihood of deception, or the deception in fact: see eg Bromberg J in REA Group at [116] to [122]:

A certain amount of confusion is an inevitable outcome of the use of descriptive words.

As Emmett J noted in the context of trade marks in Connect.Com.Au Pty Ltd v GoConnect Australia Pty Ltd (2000) 178 ALR 348; (2000) 50 IPR 535; [2000] FCA 1148, at [61]:

The possibility of blunders by members of the public will always be present when names consist of descriptive words. So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be: see Sir Ninian Stephen at CLR229 in Hornsby Building.

A further consequence of this principle, noted by Marshall J in Insurance News Pty Ltd v JEM Nominees Pty Ltd t/a Insurance News Australia (2008) 80 IPR 239; [2008] FCA 1966, at [17], quoting Emmett J with approval, is:

...that for a descriptive name to become distinctive, “a very substantial amount of use in the relevant market would be necessary for it to acquire any secondary meaning.”

At [58] his Honour said: [58]

... where a descriptive trade name is used there will always be the possibility of confusion ... {and} where a descriptive name is used it will be difficult for that name to become distinctive of a particular business. Application to like businesses would not ordinarily mislead the public: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre.” (emphasis added)

These principles have been applied in many cases: see eg Equity Access Pty Ltd v Westpac Banking Corporation and Another [1989] FCA 506; (1989) 16 IPR 431; Australian Telecommunications Corporation v Hutchinson Telecommunications (Aust) Ltd (1009) 17 IPR 615; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 (Gummow, French and Hill JJ); Commercial Dynamics Pty Ltd v M Hawke Nominees Pty Ltd (1996) ATPR 41-503 (Jenkinson, Miles and Finn JJ); Guide Dog Owners’ & Friend’s Association v Guide Dog Association of NSW & ACT [1999] FCA 316; (1998) 43 IPR 531 (Heerey, Carr and Mansfield JJ) and Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 (Goldberg J).

And at [258] to [266] -

It is important to recall that conduct causing confusion is not necessarily co-extensive with misleading and deceptive conduct: see Google Inc v Australian Competition and Consumer Commission (2013) 294 ALR 404; [2013] HCA 1 at 407 [8] per French CJ, Crennan and Kiefel JJ; Campomar [2000] HCA 12; (2000) 202 CLR 45 at 85 [102], and REA Group at [79] per Bromberg J.

Therefore, I may summarise my conclusions as follows. The phrase “vendor advocacy” is descriptive and was generally used by various traders in the same line of business. I am not satisfied that the words or brand relied upon in this proceeding by VAA have any secondary distinctive meaning. VAA has primarily promoted itself by reference to the persona of Ian Reid. I do not consider that any consumer which assume that a reference to vendor advocacy, or Australian Vendor Advocacy, would be associated with VAA or Ian Reid. In fact, because Ian Reid has been so much at the front of the promotion of VAA, without his presence the consumer may well assume it is not associated with him or VAA. Any imperfect recollection of consumers would arise from VAA’s adoption of a name consisting of descriptive words. The lack of recall will be as a result of the promotional activity adopted by VAA, by reference to the descriptive words ‘vendor advocacy’.

Looking then at the domains. There is no doubt that once the consumer enters the domain of Mr Seitanidis there can be no confusion of the type complained of by VAA. The content of the sites are quite distinct. Even if there was momentary ‘confusion’ in the mind of a consumer upon searching vendor advocates, or even Australian Vendor Advocacy, I do not think this would justify in a finding of misleading and deceptive conduct on the part of Mr Seitanidis.

A transitory incorrect impression, or a transient period of being misled even, would not necessarily lead to there being liability imposed upon a respondent: see eg Knight v Beyond Property Pty Ltd [2007] FCAFC 170; (2007) 242 ALR 586, at [54], [58].

I have not needed to enter the debate as to the significance of the various accoutrements of domain names, such as “.com.au”. I agree with the observations of various judges that consumers do not pay any real attention to such references: see eg Architects Australia at [21]; Solahart Industries Pty Ltd v Solar Shop Pty Ltd [2011] FCA 700; (2011) 281 ALR 544 at [49]; Sports Warehouse v Fry Consulting Pty Ltd [2010] FCA 664; (2010) 186 FCR 519 at [155] and REA Group at [128] to [129].

I do observe that, in the context of searching the internet, consumers will be vigilant when confronted, as they are, with many domain names referring the phrase “vendor advocacy”. Of course, if the consumer knows of Ian Reid and are looking for his business, they will look for the entity or entities specifically associated with him.

I interpolate that if the consumer had visited a VAA site previously, the consumer would be familiar with the Ian Reid persona, and could not be misled by the conduct of Mr Seitanidis in his use of his domain names. In this context, I accept that the websites of VAA were very popular. I do not know the extent of the popularity compared to all websites of vendor advocates. In any event, the popularity of the VAA website does not lead to the conclusion that any secondary meaning has been established through such websites in the terms “vendor advocacy” or “Vendor Advocacy Australia”, or that a not insignificant proportion of consumers would associate those terms with VAA. A consumer on the internet would still view the terms as descriptive and would not assume any association between each website.

If there is an imperfect recollection of the type suggested by VAA, any confusion, as I have said, arises from the advantage of a descriptive trade name as used by VAA. If the consumer has never heard of VAA, Mr Ian Reid, or Vendor Advocacy Australia, he or she may be ‘confused’ with the various different vendor advocates, but this would not be because of the conduct of Mr Seitanidis. Therefore, in my view, VAA failed to demonstrate that the conduct of Mr Seitanidis complained of was misleading and deceptive.

ACPA v UDRP

'What is in a Name?' A Comparative Look at the ICANN Uniform Domain Name Dispute Resolution Policy and the United States Anti-Cybersquatting Consumer Protection Act' by Terrence Fernbach is a 54 page Munich Intellectual Property Law Center (MIPLC) Master's Thesis.

Fernbach argues that

Since the establishment and rise of the Internet, there have been situations where others have tried to capitalize on the unique nature of domain names by registering domain names of popular trademarks and/or individuals’ names, and then turning around and selling these domain names to the owners of the trademark or to the individual. This action, known as “cybersquatting”, has been the reason for the enactment of multiple dispute resolution systems by both governments and private institutions. Further, the amount of cybersquatting cases has increased over the years, with the World Intellectual Property Organization reporting increases in cybersquatting cases over the past few years.

This thesis is designed to be more of a practical guide for an American attorney who is faced with domain name dispute case. As a result, this thesis will focus on the International Corporation for Assigned Names and Numbers’ (ICANN) Dispute Resolution Policy, and the Anti-Cybersquatting Consumer Protection Act (ACPA). This thesis will provide three different hypothetical scenarios that may arise in domain name disputes: where two parties have the same name, or where an individual in engaging in a form of cybersquatting, or where a group has created a website for the purposes of criticizing a corporation. This thesis will also highlight the advantages and disadvantages of the ICANN procedures as laid out in the Uniform Domain Name Dispute Resolution Policy (UDRP) and the procedures available under United States federal law as laid out in the ACPA, and discuss legal strategies and probable outcomes for the three different hypothetical scenarios. Finally, this thesis will conclude that while ICANN’s Dispute Resolution Policy has some disadvantages when compared to the ACPA, it is the better dispute resolution option to use for most cybersquatting activities due to its relative speed, efficiency and lower cost, but the Lanham Act provisions as outlined by the ACPA are better suited for those cases where the client wishes for more remedies than just the transfer or the cancellation of the disputed domain name.

 In discussing ACPA he comments that

There are a few advantages in using the ACPA. First, the ACPA is a good method to use in trying to acquire an infringing domain name from a foreign cybersquatter. This is because of the ACPA’s in rem provisions, and the ACPA does not have the same burdens of proof that are found in the UDRP. However, it is important to note that the in rem provisions only apply if the disputed domain name was registered with a registrar or other domain name authority that is located within the United States.

Second, the ACPA also allows for monetary damages, statutory damages and injunctive relief, in addition to the same remedies available under the UDRP. This gives a wide array of remedies available to a plaintiff, most of which are unavailable by the UDRP. Also, the ACPA has the same remedies at its disposal as the UDRP, so the plaintiff can still seek the same relief that would be afforded by the UDRP while also seeking other remedies.

Third, unlike the UDRP, the parties can freely engage in discovery. This allows the plaintiff to access information regarding prior registrations done by the defendant, if any, and to access other information that could help establish the bad faith aspects of the plaintiff’s claim. Also, since this is a federal court action and not an arbitration panel, the parties can attack the credibility of each other’s testimony. This can not happen in the UDRP proceedings, which has the potential of becoming a sort of “I said – he said” situation, with both parties stating their respective submissions are accurate to the best of their knowledge.

Fourth, under the ACPA, the plaintiff can also seek damages from the domain name registrar, provided the plaintiff can prove the registrar acted with bad faith to profit from the registration and maintenance of the infringing domain name. While the UDRP does not have any liability provisions for domain name registrars, the ACPA, through its safe harbor provisions, only waives a registrar’s liability if they act in due diligence and in good faith. This provision allows a plaintiff a cause of action against domain name registrars who basically aid in cybersquatting. Combined with the in rem provisions of the ACPA, the plaintiff can get a cause of action against the domain name itself and, if applicable, get monetary damages from the domain name registrar.

Finally, unlike the ICANN arbitration panels, the federal courts are better suited to handle more complex litigation issues, such as affirmative defenses of acquiescence and fair use. Also, false advertising and unfair competition claims are outside the realm of the UDRP arbitrators. Meanwhile, these issues can be dealt with fairly in the federal courts. As a result, if a plaintiff would have a more complex domain name dispute issue, they would probably be better off using the ACPA instead of the UDRP.

Disadvantages of the ACPA

While there are benefits in using the ACPA for a domain name dispute, there are some disadvantages as well. First, federal litigation is not very fast. In fact, it may take months or even years to finally get a case resolved in federal court. This is not a great option for the plaintiff who wants to quickly get a domain name from the registrant/defendant.

Second, federal litigation is expensive. While arbitration under the UDRP may cost around the mid four-figure range, including agency and arbitration panel fees and attorney’s fees, federal litigation will cost a lot more, and could range in the tens of thousands of dollars at least. Considering the usual remedies involved in a domain name dispute, the plaintiff in an ACPA action might end up winning a Pyrrhic victory, spending a huge sum of money for what could have been achieved, at a much lower cost, using an arbitration proceeding under the UDRP.

Third, while the in rem provisions seem like an advantage, it may not prove to be much of an advantage when compared to the UDRP. In the ACPA, the plaintiff can get in rem jurisdiction only if the applicable domain name registrar is within a federal judicial district. On the other hand, the UDRP Policy applies to any domain name registrar that has agreed to be bound by the UDRP Policy. This gives the complainant an opportunity to get relief under the UDRP with a foreign domain name registrant as opposed to the in rem provisions of the ACPA, since the UDRP Policy can apply to domain name registries and registrars outside of the United States, which the ACPA only applies to American registries and registrars. Considering the remedies are the same for these two different provisions, it might be a better option for a plaintiff to use the UDRP Policy instead of the ACPA. Fourth, as eluded to earlier, federal judges may not necessarily be experts in trademark law. It is quite possible that a federal litigation using the ACPA may be presided over by a judge with no real experience in trademark law or with domain name issues. While having a case presided over by a judge who is unfamiliar with the nuances of the legal issues behind the case is a potential problem with any federal litigation, it could be a problem in a domain name dispute case, especially when dealing with concepts such as parody and fair use.

Just like the UDRP, the ACPA has a series of advantages and disadvantages that will require the plaintiff to consider whether they want to use the ACPA or use the cheaper and faster UDRP arbitration proceedings.

DNS Disputes

'The Evolution of Precedent in Mandatory Arbitration - Lessons from a Decade of Domain Name Dispute Resolutions' by Andrew Christie & Fiona Rotstein in (2011) 30(1) The Arbitrator & Mediator 65-74 notes that -

In just over a decade, the international system for mandatory arbitration of domain name disputes has disposed of more than 30,000 disputes, between parties from more than 150 countries, in short timeframes and at low cost. Despite the absence of an appellate body and a doctrine of stare decisis, the system has evolved a comprehensive and largely noncontroversial body of precedent, that provides clear guidance to parties on most of the legal and procedural issues involved in a domain name dispute. This paper explores both why and how, exactly, such a sophisticated precedential system has evolved voluntary, and identifies the lessons that may be drawn from this experience for other arbitration systems.

The authors conclude that -

The implementation of the doctrine of precedent in the curial system of dispute resolution requires three features: published past decisions, a rule requiring decision-makers to follow past decisions, and an appellate body to enforce the rule. Neither traditional arbitration nor non-traditional arbitration exhibits all three features. At most, only the first feature is present in arbitration systems. Nevertheless, it is undeniable that some non-traditional arbitration systems have evolved into de facto precedential systems. The UDRP, the mandatory arbitration system for resolving domain name disputes, is a paradigm of this.

What lessons can be drawn from the decade of experience of the UDRP about the relevance of precedent to arbitration generally? It is argued that two key lessons can be identified. The first lesson is that arbitrators, for wholly rational reasons, will desire to obtain the outcomes of a precedential system. That is, arbitrators rationally desire to operate a system that is transparently fair to the parties, that is efficient for them as decision-markers, and that maintains the integrity of the system. Consequently, arbitrators will voluntarily seek to comply with the principle of stare decisis, even when there is no formal requirement to do so let alone a mechanism to enforce such compliance.

The second lesson is that arbitral service providers have a critical role to play in enabling arbitrators to achieve this outcome. While publishing arbitral awards is a necessary condition for a de facto precedential system, it is most likely not a sufficient condition – at least when there is a substantial body of awards to form the corpus of precedents. Once the body of awards becomes unmanageably large such that no individual could realistically expect to read and understand all the awards, it will be necessary for arbitral service providers to produce value-added resources for accessing the jurisprudence of the body of awards. Ultimately, it may be necessary for the service provider to produce an ‘informal’ codification of that jurisprudence.

dot au regulation

The Board of auDA, the nongovernment body responsible for the dot au gTLD, has announced its acceptance of the final report of the Names Policy Panel established in 2010.

The Panel, drawn from industry and community representatives, advised the Board on potential changes to rules governing dot au domain names. Its report is sensible and forward-looking, avoiding the regulatory capture that is increasingly evident in decision-making by ICANN.

The Board has accepted the following recommendations -

Domain Name Eligibility and Allocation Policy Rules for Open 2LDs

• the requirement for registrants to be Australian (or registered to trade in Australia) should remain in place.
• the “special interest club” eligibility criterion for org.au and asn.au domain names should be more clearly defined.
• auDA should publish the results of its periodic audits.
• auDA’s position on third party rights with respect to domain name leasing or sub-licensing arrangements should be clarified and published.
• the close and substantial connection rule for id.au should be relaxed to include domain names that refer to personal hobbies and interests.
• direct registrations under .au should not be allowed at this time.

Reserved List Policy

• the Reserved List Policy should be retained, and updated as necessary to ensure consistency with Commonwealth legislation.
• the names and abbreviations of Australian states and territories should remain on the Reserved List, but may be released on application provided that the proposed registrant is eligible to use the name under normal policy rules, and that they have received permission from the relevant state or territory government.

Domain Monetisation Policy

• the Domain Monetisation Policy (2008-10) should be abolished as a separate policy;
• Schedules C and E of the Domain Name Eligibility and Allocation Policy Rules for Open 2LDs (2008-05) should be amended to include domain monetisation under the close and substantial connection rule for com.au and net.au domain names (as exemplified in Attachment A to the Panel’s report);
• the existing conditions of use on domain names registered on the basis of domain monetisation under the “close and substantial” connection rule should be retained;
• the definition of “domain monetisation” should be replaced with a description of permissible practice, to accommodate a range of monetisation models; and
• the Guidelines for Accredited Registrars on the Interpretation of Policy Rules for the Open 2LDs (2008-06) should be amended to include additional explanatory material regarding domain monetisation.

Prohibition on Misspellings Policy

• the Prohibition on Misspellings Policy should be retained in its current form.

The Board noted the following recommendations, pending further information from auDA staff regarding implementation issues -

• That registrants should be able to license a domain name for a 1, 2, 3, 4 or 5 year period.
• in the absence of any compelling technical or policy reason to maintain the restriction, single character domain names should be released (subject to the registrant being eligible to register the name).