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Why Cancel a Domain Name in a UDRP Case?

While the most common results of a UDRP proceeding are either transfer of a disputed domain name to a complainant or denial (that is, allowing the respondent to retain it), there is another possible outcome: cancellation.

I’m always surprised to see a UDRP decision in which a domain name is cancelled. True, many trademark owners don’t really want to obtain control of a disputed domain name (and, instead, they simply want to get it taken away from a cybersquatter). Plus, maintaining a domain name incurs an ongoing expense as the result of renewal fees, and many trademark owners already have large (and, therefore, costly) domain name portfolios.

But, the cancellation remedy means that a UDRP victory may be short-lived because cancelled domain names become available for registration by anyone, including another (or even the same) cybersquatter.

A trademark owner that files a UDRP complaint incurs real expense (through filing fees and legal fees)—payments that rightly could be seen as an investment. Allowing a domain name to be cancelled instead of transferred seems like a wasted investment.

Here’s one way of looking at the math:

  • The least amount of money that a trademark owner could expend on a UDRP complaint is about $500—if it files at the Czech Arbitration Court (the least expensive UDRP service provider) and prepares the complaint itself, without outside counsel. (In reality, most UDRP complaints incur total expenses of thousands of dollars.)
  • A popular registrar such as GoDaddy charges about $15 per year to renew a .com domain name.
  • Therefore, a trademark owner could maintain a transferred domain name for more than 30 years for less than the cost of filing the cheapest possible UDRP complaint.

Under this scenario, why would a trademark owner risk having a domain name fall into the hands of another cybersquatter if it could keep the domain name for itself and avoid having to file a second UDRP complaint?

The risk is real, as domain names cancelled in UDRP proceedings don’t necessarily remain cancelled for long. For example, although the pharmaceutical company Sanofi won a UDRP complaint last year for 21 domain names, 20 were quickly re-registered (by multiple registrants) after they were cancelled and are being used in connection with websites that most trademark owners would consider problematic.

True, not many trademark owners request the cancellation remedy. At WIPO (the most popular UDRP service provider), only 1.69% of all cases have resulted in cancellations. But, the number of cancellations is on the rise, reaching 2.16% in 2015 and 2.09% in 2016.

What explains this (slight) increase in cancellations? One reason could be the arrival of cybersquatting in the “new” gTLDs. For example, some recent UDRP decisions that resulted in cancellations involved the top-level domains .support, .xin, .engineer, .istanbul, .host, .accountant and .bid. Perhaps the prevailing trademark owners felt that these domain names would not be attractive to other cybersquatters after they were cancelled.

Whatever the reason, trademark owners should think long and hard about whether to request the cancellation, rather than transfer, of a disputed domain name in a UDRP proceeding. It would seem that a domain name worth pursuing is worth keeping.

By Doug Isenberg, Attorney & Founder of The GigaLaw Firm

Learn more by visiting The GigaLaw Firm website. Doug Isenberg also maintains a blog here.

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