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WEB ARBITRATION IS BIASED: STUDY

Posted on August 20, 2001

      The 18-month-old worldwide system for deciding who owns Web addresses is biased in favour of trademark owners because they are flocking to arbitration providers whose records favour complainants, says an exhaustive study to be released today.

      "There's a built-in incentive for the provider to be complainant-friendly because it drives up business," said Michael Geist, the study's author and a professor of e-commerce law at the University of Ottawa.

      The study concludes that the domain-name arbitration system for dot-com, dot-org and dot-net Web addresses needs major changes to remedy a process that allows complainants to pick the most favourable forum and permits a single arbitrator -- chosen by the arbitration provider -- to decide a case.

      Among Mr. Geist's recommendations:

      - Mandatory three-member panels, replacing the current system of a mix of single-member and three-member panels. Complainants would pay for the entire cost of a three-member panel. Currently, complainants pay for a single-member panel, but split the cost of a three-member panel with a respondent.

      - Minimum and maximum limits on how many cases a particular arbitrator is assigned.

      - Continual reviews of the quality of decisions from arbitrators.

      - Creation of a database that makes it easier to analyze patterns in domain-name decision-making.

      Companies that believe they are the victims of cybersquatting -- where a Web site name is registered and used for the sole purpose of selling it for a profit to a trademark holder -- could have a much more difficult time in winning cases if the Internet Corporation for Assigned Names and Numbers decides to implement the reforms proposed by Mr. Geist.

      And he hopes to make his report the basis of the arbitration system that the Canadian Internet Registration Authority (CIRA) is to set up by October for dot-ca Web addresses. Mr. Geist sits on CIRA's board.

      Right now, complainants win more than eight in 10 cases for disputes involving dot-com, dot-net and dot-org addresses, according to Mr. Geist's review of the more than 3,000 decisions rendered between December, 1999, and July 7, 2001.

      But that rate varies dramatically among the four arbitration providers, eResolution Inc. of Montreal, the World Intellectual Property Organization (WIPO), the National Arbitration Forum (NAF) and the CPR Institute for Dispute Resolution, which has heard just a handful of cases and is excluded from most of Mr. Geist's analysis.

      WIPO, where complainants have won 82.2 per cent of the time, has heard 58 per cent of cases. The statistics are similar at NAF, where complainants have won 82.9 per cent of the time and the company has 34 per cent of the market.

      By contrast, complainants have won just 63.4 per cent of cases heard through eResolution, which has a 7-per-cent share of the market.

      Mr. Geist said the bias in the process stems from a combination of several factors. First, complainants are allowed to pick which arbitration provider handles their cases.

      Second, participants can decide whether a single arbitrator or a three-member panel decides the issue. Respondents aren't required to pay any of the costs of a single arbitrator, so many opt for that route, with the result that more than 90 per cent of cases are heard by a single arbitrator. However, single arbitrators are much more likely to decide in favour of complainants: complainants won 83 per cent of the time with single-member panels and 60 per cent with three-member panels.

      Third, arbitration providers are allowed to decide who hears a case. At NAF, just six people -- out of a total roster of more than 130 -- heard more than half of the firm's caseload. Those six panelists decided in favour of complainants 94 per cent of the time.

      In an e-mail, the company said it allocates cases randomly and that some panelists don't hear certain kinds of cases or don't have the time to hear a large number of cases. NAF also allows complainants to change from a more-expensive three-member panel to a single arbitrator in cases where the respondent doesn't submit a defence. In cases without a respondent submission, complainants are much more likely to win.

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