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Cybersquatting complaints against .com domains are dropping

Here’s a story you’ve not heard told: For many years, the number of UDRPs aimed at .COM domains has been declining.

Does that come as a surprise? We hear about high-profile UDRPs all the time, and the newsworthy cases usually involve some valuable domain name that has been put in jeopardy. Since .COM tends to be the most sought-after suffix worldwide as well as the TLD registered in the greatest volume, it naturally ends up in the spotlight.

What we, as domain investors, remember most keenly are the egregious UDRP filings – when complainants abuse the process, attempting to confiscate some domain already purchased in good faith by someone else. In reality, though, most UDRPs address run-of-the-mill instances of cybersquatting, where bad faith on the part of the domain owner is too obvious and boring to merit reporting.

.COM registrations are at an all-time high. Yet the fact remains: Overall, .COM domains feature in UDRPs less and less. That wasn’t the headline of WIPO’s March article. Instead, their press release bore the provocative title, “Cybersquatting Cases Up in 2015, Driven by New gTLDs”.

WIPO – for those just joining the party – stands for the World Intellectual Property Organization. They’re a forum where UDRP complaints are filed and adjudicated. During 2015, WIPO processed 2,754 cases. For that same year, I count 1,437 UDRPs handled by the National Arbitration Forum (NAF), another major venue. All such forums are sustained by filing fees; so arguably there’s an incentive to drum up business (in the form of future complaints) by exaggerating the scale of cybersquatting. That’s my cynicism talking. Really, forums such as WIPO and NAF are necessary to safeguard both trademark holders and online consumers in general.

In fact, WIPO’s headline is entirely correct. Yes, it’s true that their 2015 case load rose by 4.6% compared to the previous year. It’s also true that nTLDs account for much or all of that increase. However, every data set implies multiple stories. The most flattering story can be unduly emphasized. For instance, it’s worth noting that the total number of domains registered worldwide grew by 5.2% last year. Normalized against that rate of growth, WIPO’s case load merely kept pace. Actually, the volume of cases handled by WIPO has fallen 4.5% from its 2012 peak. One UDRP panelist and litigator, publishing his own analysis of WIPO statistics last week for an audience of IP lawyers, even acknowledged the downturn. As he puts it:

[T]he number of domain names at issue in UDRP complaints per million eligible domain name registrations fell from 19.5 in 2014 to 14.5 in 2015.

Even while granting that the UDRP is less and less used by brand owners, the editor urges those same “brand owners … to make their voice heard as ICANN conducts a review of rights protection mechanisms” – presumably to bolster the UDRP in its growing obsolescence and defend the policy from those of us in the domain industry who’d like to see it revised and reformed.

I began looking into UDRP trends earlier this Spring. Here’s what caught my attention: During 2015, cases at WIPO involved 2,732 .COM domains. That’s the lowest total since 2007. Between 2008 and 2014, WIPO had always processed 3,153 – 3,795 .COMs annually. Based on a 7-year average of 3358, last year saw a decline of 18.6%.

After seeing this, I still wasn’t convinced. Have UDRP filings against .COM domains really been slowing down? There are a few complicating factors, which need evaluation:

  • nTLDs entered general availability in 2014. Naturally, we’d expect .COM percentages to be diluted at UDRP forums once new suffixes were added to the mix. So, if .COM really is implicated in fewer UDRPs, we’d need to see a trend beginning well before 2014. To be absolutely sure, we’d need to see a decline in absolute numbers, not just percentages.
  • Another complaint mechanism, the URS (Uniform Rapid Suspension), was introduced specifically for new TLDs and cannot be brought to bear on .COM. (The UDRP applies to both.) Therefore we must be careful to exclude URS cases, since they might exaggerate the proportion of nTLD complaints while minimizing .COM’s apparent role.
  • Counting domains themselves is a bad idea. Some UDRPs are filed against dozens or hundreds of domains at once. Should a single case involving 1000 domains be weighted equally with 1000 separate single-domain cases? Certainly not! Statistics could be hopelessly skewed due to a single cybersquatter registering boatloads of .XYZ domains at 1 penny apiece … or .SCIENCE or .TK absolutely free. We ought to be counting all complaints equally. The real question is how many UDRP cases are filed against domains that include a particular TLD.
  • Looking at WIPO alone is insufficient. Other forums exist. Theoretically, we’d see a decline in WIPO numbers if lawyers were filing more UDRPs elsewhere – perhaps “forum shopping” in order to find more favorable panelists or taking advantage of lower costs or better scheduling. In this scenario, a decline at WIPO might show up as an increase elsewhere. That possibility must be ruled out before drawing any conclusions about broad UDRP trends.

So I decided to examine NAF, the other major forum for UDRP filings. Whereas WIPO provides ready-made bird’s-eye-view statistics, the NAF website does no such thing. In order to analyze trends at NAF, I built a database and compiled information on 23,607 cases spanning 16 years and involving 47,861 domains. Fixing NAF’s errors and formatting inconsistencies alone took me days. After all that tedium, I fully expect to go to heaven when I die.

Here’s what I found.

Just like WIPO, NAF is seeing a record low in the number of .COM domains at issue. During 2014 and 2015, NAF UDRP cases included only 2,261 and 2,419 .COMs, respectively. Again, those totals are lower than any year since 2007. Between 2008 and 2013, NAF had always processed 3,108 – 4,042 .COMs annually. Based on a 6-year average of 3434, that’s a decline of 34.2% (2014) or 29.6% (2015). Remember, when measured against the same period, 2015 at WIPO saw a decline in .COM domains of 18.6%. As it turns out, the ebb tide at NAF is even more pronounced.

As I mentioned above, it’s crucial to count cases themselves, not domains. So how many UDRP cases at NAF involved at least 1 .COM? The answer is striking – an average decrease of 7.9% every year since 2010. NAF went from 1714 cases … to 1558 … 1521 … 1385 … 1235 … to 1135 last year. Extrapolating from data during the first third of 2016 I can also say this: If present trends continue, this year will see less than 1000 NAF UDRPs involving .COM domains.

Let’s take stock of this situation. Between 2010 and 2015, the number of UDRPs at NAF involving .COM domains declined by 33.8%. Yet the number of registered .COM domains grew by about 39.8% during that same period. (My estimate is based on the growth in the combined .COM / .NET base, going from 96.7 million early in 2010 to 135.2 million at the end of 2015.) When the number of UDRPs involving .COM is normalized relative to the number of .COMs in existence at the time, it turns out that NAF UDRPs against .COM domains in 2015 were less than half as likely – only 47.4% as frequent – as they had been in 2010.

The same trend is evident in other legacy gTLDs – “Not COMs” like .NET, .ORG, .INFO, and .BIZ. Since 2011, NAF has witnessed steady decline here too – from 433 cases … to 386 … 270 … 221 … to 227 last year. That’s an average annual decrement of 14.9%. So the reduction in complaints against legacy “Not COMs” is almost twice as fast as with .COM. Extrapolating based on NAF UDRPs filed so far in 2016, cases against such TLDs this year will total just 172.

Those are the numbers, folks. The trend is quite clear. UDRP complaints against .COM domains (as well as other legacy gTLDs) have been declining, it seems, for the past 6 years. This slowdown is too rapid and too consistent over time to be chalked up to mere chance. The trend is manifest at both the biggest UDRP forums. It’s measurable in absolute terms (not ratios tied to other TLDs). And the decline predates the nTLD program by 3 years.

Let me summarize:

Were it not for nTLDs, both WIPO and NAF would have returned to pre-2008 levels in the total number of domains they handled last year; and NAF’s UDRP case load would have reverted to pre-2006 levels during both 2014 and 2015.

So, yes, WIPO’s expedient headline, “Cybersquatting Cases Up in 2015” is true … but hardly the whole truth. 4.6% growth in the number of UDRPs almost kept pace with 5.2% growth in the name space. Unfortunately for consumers – but fortunately for domain arbitration forums – the number of UDRP and URS cases involving nTLDs is on the rise. Indeed, nTLDs have made up the shortfall in WIPO’s numbers almost exactly. Turns out, that second phrase in WIPO’s headline – “driven by new gTLDs” – is very true indeed!

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  1. Nat Cohen

    Joseph,

    Thanks for doing the hard work to uncover the real story of a long term trend of declining UDRP complaints against .com and other legacy domains.

    What conclusions to draw? One conclusion is that the problem of cybersquatting that rises to the level that it justifies a UDRP complaint is limited, manageable and shrinking.

    There may be several factors that explain falling UDRP rates.

    My guess is that falling revenues from domain parking plays a large role. If, as an example, revenues have fallen by half, then many infringing domains that were marginally profitable due to parking revenues barely covering renewal fees would become unprofitable and would likely not be renewed, shrinking the number of infringing domains that are registered.

    A bigger factor may be that established brands have now had 16+ years to use the UDRP to police their brands and to go after typosquatted domains. By this point, brands should have recovered all the obvious typosquatted variations on their brands that are used in an infringing way.

    New brands and start-ups are savvier now, and most likely know to register the obvious misspellings at the same time they secure their primary brand. And the many brand protection companies, such as MarkMonitor and Marksmen, and law firms know to counsel their established clients that when launching a new product or service to register the obvious typos.

    Unfortunately while the number of legitimate UDRP complaints are steadily falling, the number of abusive UDRP complaints are hitting record highs, as evident by Reverse Domain Name Hijacking decisions hitting record highs in 2013 and again in 2015 and we are on track for another record in 2016.

    According to your research, this means that a higher and higher percentage of UDRP complaints against legacy domains are abusive complaints. The ICANN working group on RPMs and the UDRP gives us our first opportunity to revise the UDRP to address the growing problem of those who abuse the UDRP to target domains they are not entitled to.

    Nat

    • Joseph Peterson

      @Nat Cohen,

      There’s a fair bit of truth in what you say. For example, I think we’d all expect parking revenue and cybersquatting to be causally linked. So it’s no surprise to see both PPC earnings (for domain owners) and UDRPs (against domain owners) declining concurrently.

      I’ll resist the temptation to delve into underlying causes here in the comments section because that topic deserves to be (and probably will be) an article in its own right.

      With UDRPs against .COM and other legacy gTLDs shrinking … and findings of RDNH (reverse domain hijacking) hitting record highs, there can be only 2 logical conclusions:

      (1) “[A] higher and higher percentage of UDRP complaints against legacy domains are abusive complaints”

      or

      (2) The percentage of abusive UDRP complaints is today what it has always been, but UDRP panelists are increasingly acknowledging that longstanding pattern of abuse with a formal declaration of RDNH.

      Possibly a mixture:

      Abusive UDRP complaints on the rise (in absolute numbers)
      + Legitimate UDRP complaints shrinking
      + Increased recognition of UDRP abuse by panelists.

      • Nat Cohen

        Joseph,

        That’s a very good point. There are plenty of posts on DNW about abusive UDRP complaints where Andrew has asked “Why didn’t the panel find RDNH?”.

        Since a finding of RDNH is not required but is at the discretion of the panel, many panels choose not to make an RDNH finding for whatever reason even though to many observers the complaint clearly seems abusive.

        There likely is greater awareness now than in in the past on the part of many panelists that abusive and frivolous complaints are themselves a serious problem and deserve to be called out.

        The split among panelists about whether the registration in bad faith requirement can be ignored if there is a ‘change in use’ has, in my view, helped produce the surge in RDNH decisions.

        The minority of panelists who are willing to ignore the requirement that a domain must be shown to be registered in bad faith has given hope to many brand owners whose trademarks post-date the domain registration and has led to many frivolous complaints. The majority of panelists who don’t subscribe to the “change in use / renewal in bad faith” interpretation often swat down these complaints with an RDNH finding since the complaint is clearly non-compliant with the Policy.

        That would be another research project – though a smaller one – to review RDNH decisions to see the trend in RDNH decisions based on the domain being registered before the trademark and there being no evidence of bad faith registration.

        Nat

        • Nat Cohen

          Today’s Bootler.com decision provides a perfect example of a clear-cut frivolous complaint where the panelist declined to make an RDNH finding.

          The complainant – “Complainant has common law rights in the BOOTLER mark which date back to at least as early as December 2, 2015.”

          The domain was registered in 2003.

          As the panelist says: “To suggest Respondent had the aforethought to predict Complainant would choose this very word to start a business in 2015 defies logic.”

          Yet when it comes to RDNH, even though the complainant acknowledged that the domain was registered in 2003, the panelist says “There is no evidence before the Panel of bad faith on Complainant’s part.”

          http://www.adrforum.com/domaindecisions/1677296.htm

          So your point is quite correct that the number of RDNH decisions is the result both of the number of abusive complaints and of the willingness of panelists to exercise their discretion to make an RDNH finding when it is deserved.

    • Joseph Peterson

      Thanks, Kassey. While I did pull the plug on my last series of articles after exactly 2 years, I’m far from done writing. Glad to see your own blog so active! It’s 1 of my favorites.

  2. Acro

    Some UDRP cases involve multiple Respondents, with several domains. Sometimes, UDRP cases are brought forth by multiple Complainants against the same Respondent. How are these being normalized?

    I don’t doubt your math is very close to being representative of the trend here being a decline, just curious whether there is a provision for these.

    Regarding the reasons behind the decline: as time passes by, those willing to challenge an aged .com lose interest. Or, they are driven by education and common sense, and acquire the domains in the aftermarket, versus risking a loss and a RDNH finding in a UDRP.

    • Joseph Peterson

      @Acro,

      I compiled all NAF cases (23,607) in a database. Then I extracted all domains (47,681). Here’s what I’m counting:

      (1) Total number of domains with a given TLD.
      (2) Total number of cases involving at least 1 domain with a given TLD.

      Example A:
      NAF case #1621900 applied to 3 domains:

      navigant.construction
      navigantchicago.co
      naviganttrading.com

      That case adds +1 to both count (1) and count(2).

      Example B:
      NAF case #1604178 applied to 3 domains:

      synthroid.xyz
      buysynthroid.xyz
      genericsynthroid.xyz

      That case adds +3 to count (1) but only +1 to count (2).

      It is possible to perform other counts:

      (3) / (4) Total number of respondents / complainants implicated in cases involving at least 1 domain with a given TLD.

      Among the UDRPs with multiple domains, most have a single complainant and a single respondent. As you say, any cases with multiple complainants or multiple respondents would need to be taken into account – but only for count (3) / (4).

      I have chosen not to perform count (3) / (4). Counting respondents / complainants would be interesting, of course. However, it’s quite tricky. A single person or company might appear under various names. Even formatting discrepancies can be a world of trouble when performing database counts. Consider the difference between these:

      Tim Hennings
      Hennings, Tim
      Object Publishing Software
      Object Publishing Software, Inc.
      Object Publishing Software, Inc. c/o Tim Hennings

      And that’s not to mention cases where the respondent is, say, “WhoisGuard, Inc.” If I were counting distinct respondents, then the statistics would be rather fuzzy.

      Just to be clear, my math isn’t just “very close to being representative of the trend here being a decline”. Precisely: It is a decline. Both count (1) and count (2) show a clear decline.

  3. Talkia

    Joseph P. I read few or more than few of your responses and writtings here and there; and you got “likes” from me.

  4. Larry

    Great comments by Nat (I have to read them more thoroughly I just scanned).

    One paradox I have always noted is that domain sales and UDRP’s go hand in hand.

    If end users saw the value in domains they would pay more for them. And there would be more legitimate inquiries from companies willing to pay for domains.

    But by the same token if those same end users saw value in domains they would also file more UDRP’s (whether justified or not) to try and get the domain that way. A true double edged sword.

  5. Johnny

    Great article. Plenty of food for thought.

    With the release of (.web), it won’t be long before most gTLDs are obsolete and sent to the dustbin of history. This will increase the value of dot-com and shrink the number of UDRP filings drastically by 2020…

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