Reverse Domain Name Hijacking: Why UDRP Reform is Needed

Reverse Domain Name Hijacking is “a disgusting practice…”, according to Rick Schwartz (aka the Domain King), and co-founder of T.R.A.F.F.I.C.. “I always think about the mom and pop with one domain and their entire lives wrapped up in it. Along comes a bully and they are out of business. Robbing these folks of their dreams and livelihoods. It’s sickening when you look at it like that. That’s what really lights my fuse. I can handle a loss, they can’t. That’s why laws need to be written. Not to protect domainers, but to protect the masses.” Mr. Schwartz is not alone. According to my research, many in the domain name industry, as well as those outside the industry, feel the same way about Reverse Domain Name Hijacking.

Rick Schwartz was recently the victim of Reverse Domain Name Hijacking.

What is Reverse Domain Name Hijacking? The iCANN rules provide an accurate description. “Reverse Domain Name Hijacking means using the Policy in bad faith to attempt to deprive a registered domain-name holder of a domain name.” The key point to remember here is “in bad faith”. Reverse Domain Name Hijacking occurs when a company or individual files a UDRP (domain dispute) in an attempt to “bully” the current domain name owner into giving up the domain name.

An Explanation of Reverse Domain Name Hijacking
When a large corporation decides that they wish to create a product, not every company will do a thorough search to see if the product name is already being used by someone else. Even worse, there are times when a company will create a product around a domain name that they know already exists–in hopes of one day taking the domain name from the original owner by force or by intimidation. Many companies are able to intimidate a domain name holder, even though the original domain name holder is in the right–thus, we are led into the world of Reverse Domain Name Hijacking (RDNH), where a company looks to extend their trademark rights by trying to use legal intimidation to take away domain names from those who have legitimately purchased them.

Let’s look at a fictitious example to illustrate Reverse Domain Name Hijacking in action: Let’s imagine that you have a guy named Jack who really loves to eat mangos. During the early days of the internet, Jack decided to create his own website: MangoJack.com. Ten years later, a company (Brand X) decides to create a new flavor of their popular alcoholic beverage, Jack Hartzers whiskey. After some thought, the company decides to make a mango-flavored variety, and they brand the product “Mango Jack”. With this done, they set out to create a website for the drink, but find that MangoJack.com has already been taken. Brand X should have done thorough research before they made a final decision on the name of their product. However, because they did not do this, they are left with this situation. There are several options Brand X could take:
– They could create an alternate website name (ex: DrinkMangoJack.com)
– They could get in contact with the original owner of the domain name, and make the person an offer to buy the domain name from them.
– They could contact the domain name owner and use intimidation: send them a legal letter from their attorney, explaining that MangoJack.com in “infringing” on their trademark.
– They could file a UDRP (domain name dispute), hoping that the UDRP panelist(s) will make a decision in their favor.

Unfortunately, in this case, the fictitious company decides to to seize the name by legal intimidation. They file a UDRP (Uniform Domain Name Dispute Resolution Policy) domain dispute against the owner of MangoJack.com (filing a UDRP costs about $1,500), even though the original owner of the domain name has owned it for ten years, and has a solid, legitimate reason to have registered it in the first place.
Here is the part of all of this that really upsets many people, not only in those in the domain name industry. If the alcoholic beverage company wins, then they get the domain name without paying the original owner for the domain name. If the company loses, then, on the legal side of things, nothing happens to Brand X, the company. The original owner gets to keep the domain name, but the original owner is now out any money they had to spend in order to protect a domain name that was rightfully theirs to begin with. More, and more domain name holders are having to face this kind of situation.

Rick Schwartz, owner of SaveMe.com, had to deal with this kind of situation when someone decided to create SaveMe.com.br (a site created in Brazil), and challenged Rick’s ownership of the original domain name. Fortunately, Rick won the case, but because there are no laws against RDNH, he only got to keep the domain name. Rick Schwartz didn’t receive anything to help with the legal fees he incurred working to keep control of his domain name.

Fortunately, unlike so many other people who must deal with this kind of underhanded tactic, Rick’s story has a happy ending. Rick decided that one of the ways to help deter Reverse Domain Name Hijacking was to bring those guilty of it out into the light of the public eye–by writing a few blog posts giving details of his situation (Márcio Mello Chaves is a Wolf in Sheep’s Clothing, and Márcio Mello Chaves, Labeled a REVERSE DOMAIN NAME HIJACKER in Saveme.com Case). By alerting the general public about people who have been found guilty of RDNH, Rick is hoping to make it less appealing for other major brands to participate in this practice.

Financial Penalties for Reverse Domain Name Hijacking
Like many other undesirable and unethical business practices, Reverse Domain Name Hijacking would be curbed (somewhat) if there was a financial penalty involved. If the company or individual involved in a UDRP was labeled a “Reverse Domain Name Hijacker” based on the findings in the URDP, a financial penalty, if included, might make those Reverse Domain Name Hijackers think twice before filing a UDRP. In my opinion, if there is a potential financial penalty involved, individuals tend to think twice before doing something. Apparently, though, I’m not the only one who thinks that there should be a financial penalty involved with Reverse Domain Name Hijacking:

Elliott Silver says that a company’s “only risk is a slap on the hand (if that) for a RDNH finding…”

According to Elliott Silver, “If you aren’t familiar with RDNH in a UDRP, it’s when “the Panel finds that the complaint was brought in bad faith, for example in an attempt at Reverse Domain Name Hijacking or was brought primarily to harass the domain-name holder, the Panel shall declare in its decision that the complaint was brought in bad faith and constitutes an abuse of the administrative proceeding…as it stands right now, there is no penalty for companies who are found to have attempted a Reverse Domain Name Hijacking. In essence, a company with a legal staff on retainer can take a gamble and spend $1,500 on a UDRP to get a descriptive domain name, and their only risk is a slap on the hand (if that) for a RDNH finding. Many people/lawyers don’t even seek RDNH findings since there aren’t any repercussions for them.”

Domain Name Wire also weighed in a while back, offering 4 Ways to Reform UDRP NOW by saying, “Put some teeth into Reverse Domain Name Hijacking. Reverse Domain Name Hijacking (RDNH) doesn’t have any financial penalties. Add some.”

Nat at DomainArts.com wrote a great blog post about Why Reverse Domain Name Hijacking needs to be a Real Penalty. The blog post explains RDNH financial penalties well: “The only thing standing in the way of a company carelessly deciding to toss some pocket change at an abusive domain filing, with all the burden that filing places on a domain owner, is that the Complainant risks being found guilty of Reverse Domain Name Hijacking. Yet this is a toothless deterrent. A RDNH finding is a meaningless slap on the wrist, lacking in any consequence to the complainant.”

Andrew Alleman, from Domain Name Wire, says that “RDNH actually does come with penalties, but not in the UDRP process…”

I recently spoke with Andrew Alleman from Domain Name Wire regarding Reverse Domain Name Hijacking and financial penalties. “RDNH actually does come with penalties, but not in the UDRP process. A Texas court just handed down a $100k fine against the city of Paris for RDNH.” He mentioned his recent article titled “City of Paris ordered to pay $100k for reverse domain name hijacking“. So, at this time, the current “financial penalty” for Reverse Domain Name Hijacking comes after a UDRP decision is made. And it must be in the form of a civil lawsuit.

Lack of A Consistent Standard for UDRP
The main problem surrounding Reverse Domain Name Hijacking seems to be finding a consistent standard for UDRP. It is understandable to file a UDRP against someone who has created a web site using your brand name that you have been using for years. But many of UDRP disputes are filed by companies that did not register their domain name until (years) after the original owners registered their domain name. Since most of the larger corporations can afford to spend $1,500 on the off chance that they might win the UDRP, and since monetarily there is very little for the larger corporations to lose, many feel that it is worth the effort, despite this being a highly immoral practice.

Because the larger corporations have the time and legal resources to use intimidation tactics to obtain a desirable domain name, many companies will file a UDRP against the owner of the desired domain name, even if the original owner has had it years before the larger corporation created whatever product would be associated with the original domain name. The only way that this kind of situation can be turned around is if people take decisive action, and start voicing their disdain for companies that practice Reverse Domain Name Hijacking–those who file UDRP domain disputes in “bad faith”. If we work to create a negative side to Reverse Domain Name Hijacking, then less and less companies would engage in this practice.

So, what can be done about Reverse Domain Name Hijacking? The public needs to be educated. Rick Schwartz explained it so eloquently to me, as only Rick Schwartz can say it: “Anyone that owns a domain name needs to educate themselves about what IS and what is NOT a violation. If you have no money, shame the company in public to their own customers. Hold their feet to the fire. Don’t run, don’t hide, FIGHT!”