One of the features of the Uniform Domain Name Dispute Resolution Policy (UDRP) is that there are no direct orders that can be made against a trademark owner who brings a weak and frivolous claim and loses. It does not win the domain name, of course, but even if it has been reckless in bringing the claim and makes the most outrageous claims against the domain name holder, the latter cannot file a counterclaim in the UDRP case and cannot obtain an order for damages or an order for costs against the unsuccessful trademark owner.
The possibility of having an order for costs made against you if you lost has always been a disincentive against bringing a frivolous court action, but as an unsuccessful complainant in a UDRP case could never have costs awarded against it, there seemed to be no disincentive against bringing the claim even if you knew it would fail. The only danger was that if you lost the case, there was a risk that the Panel might make a finding of Reverse Domain Name Hijacking (RDNH) against you. But this was always seen to be an empty threat, as a finding of RDNH did not have any teeth and had no consequences, in terms of costs or on any other basis. So, the view was that there was no real disincentive against your bringing a weak UDRP claim.
But not any longer, perhaps, in view of a recent decision in the US Federal District Court in Texas. Indeed, it may well be that there are financial consequences of bringing a frivolous claim or one to harass the domain name owner.
On the basis of the recent US decision[1], a successful trademark owner in the UDRP proceedings may have the tables turned on it and it may end up having to pay damages for its own RDNH, as did the trademark owner in that decision.
In the case in question, the trademark owner had won in the UDRP proceedings before a single panelist and the domain name was ordered to be transferred from the respondent to the complainant.[2] So there was no question of RDNH at that stage as the complainant had succeeded. But when the Complainant/ trademark owner had filed the Complaint it had submitted to the jurisdiction of the courts of Texas, where the registrar of the domain name was situated. When the Respondent/ domain name holder lost the UDRP case, it brought an action in the US court under the US Anti Cybersquatting Consumer Protection Act to reverse the UDRP panelist’s decision and retrieve the domain name. It also claimed damages for RDNH.[3] The trademark owner defaulted and the Judge made an order for the cancellation of the order for transfer of the domain name and damages for RDNH and costs, in total $125,000. So the successful (in the UDRP case) trademark owner lost the domain name, had a finding of RDNH made against it and was ordered to pay damages. It was a default judgment, so the court’s reasoning will not carry as much weight as if it had been a defended case where the judge gave a considered verdict after hearing both sides. But what does carry weight is that the order was made and will presumably be executed. Now that potential claimants know they might be at risk even if they win on the UDRP, let alone if they lose, they may be more cautious about bringing such claims when they know they are weak and may lay themselves open to a finding of RDNH in later court proceedings.
A company faced with the decision of whether to bring a weak UDRP claim thus has to consider the following: if it wins, its success may be short – lived, as the domain name holder may sue in the courts to overturn the UDRP decision, retrieve the domain name and recover damages for RDNH as well.
If it (the trademark owner) loses the UDRP case, the domain name holder, whether it gets a finding of RDNH or not, could presumably bring court proceedings, not to retrieve the domain name, as it still has it, but for RDNH by itself and to obtain damages on that claim. This latter situation would apply where, as in the Texas case, the trademark owner had submitted to a jurisdiction where the US Anti Cybersquatting Consumer Protection Act applied and on which the claim in this case was made or to another jurisdiction where there is a similar cause of action to recover damages for harassment or other untoward behaviour which is at the root of RDNH.
In any event, the Texas decision and the thinking and analysis that will undoubtedly follow it, will give new meaning to RDNH. It was previously thought to be of little value, now it has real value, as a successful Complainant in UDRP proceedings may find it loses the later court proceedings. Moreover, in an appropriate case, a successful Respondent in UDRP proceedings may decide to sue in court proceedings for damages for RDNH, the damages that it could not obtain in the UDRP case.
It is an odd result. For a successful UDRP complainant, it could have a Phyric victory: win in the UDRP and lose everything in a US court. For the unsuccessful UDRP respondent it could be a Phyric loss: lose the UDRP case, but subsequently win everything in court.
Potential claimants in UDRP cases should therefore pause and reflect, before filing the complaint, whether the claim is reasonable and whether evidence exists to support it. Otherwise they will be at risk, even if they win the UDRP case and also if they lose. Perhaps the lesson is: do not bring frivolous claims. Or, as that famous philosopher, Anonymous, said: “Be careful what you wish for as you may receive it.”
[1] Williams v. Ville de Paris
[2] Ville de Paris v. Williams [3] The action was brought in the United States District Court and relied on the US Anti Cybersquatting Consumer Protection Act, which, although it deals mainly with claims by trademark owners against domain name holders: “In a small effort to prevent reverse domain name hijacking … makes a trademark owner who knowingly misrepresents a domain name to be infringing, liable to the domain name holder for damages and attorneys fees resulting from cancellation.” See: http://cyber.law.harvard.edu/property00/domain/legislation.html.