Intellectual property (“IP”) rights are valuable business assets and can be licensed and/or assigned. Commercial transactions frequently involve cross-border parties and different national laws. The complex nature of such transactions often results in multi-jurisdictional disputes involving parties from different countries having different business, legal and cultural backgrounds, attitudes and expectations. This results in businesses turning to Alternative Dispute Resolution (“ADR”) procedures such as arbitration and mediation to resolve their disputes.

WIPO is the specialist UN agency for intellectual property. It was established by the WIPO convention on 26 April 1970. WIPO is at the forefront of IP ADR procedures. In 2012, trademark owners filed a record high 2,884 cybersquatting cases covering 5,084 internet domain names to be dealt with under procedures based on WIPO Arbitration and Mediation. Cybersquatting is where someone registers a domain name in bad faith usually with an intention to profit from a trademark belonging to someone else. Cybersquatters then offer to sell the domain name at an inflated price. Evidence of cybersquatting was found in 91% of WIPO panel cases in 2012, another record high.

In an intellectual property licence agreement, a WIPO contract clause or submission agreement must be entered into for the WIPO arbitration process to be invoked. This can allow for expert determination, mediation and/or arbitration and/or expedited arbitration. An expert determination will result in a final determination, mediation will result in a settlement and arbitration or expedited arbitration will result in an enforceable award. The amounts in dispute in WIPO mediations and arbitrations can be significant. They have varied from $20,000 US dollars to $700 million US dollars.

By way of example, the Morgan Freeman v. Mighty LLC case[1], is illustrative of the cybersquatting ADR procedure at WIPO.

This involved Morgan Freeman’s name which was used in a domain name and linked to an entertainment site, which apparently sold Viagra. Mr Freeman sent demand letters to the cybersquatter requiring the transfer of the domain name to him.

The domain name at issue was identical to Mr Freeman’s MORGAN FREEMAN trademark except for the “.com” suffix which was found not to be sufficient to serve as a distinguishing feature.

The panel found that Mr Freeman had strong common law trademark rights in MORGAN FREEMAN based on his extensive use of the name in connection with his career in the entertainment business for more than 40 years. While the name was not registered as a trademark, he was able to rely on common law rights in the name built up over a number of years.

The domain name was registered after Mr Freeman had established strong rights in his name and mark and there was no contractual relationship arising between the parties as regards a licence allowing the cybersquatter to use the name legitimately.

The panel agreed with Mr Freeman’s argument that the mark was so well known that it was not reasonably possible for the cybersquatter to demonstrate any legitimate interest in the domain name. The cybersquatter was held to have registered and used the domain name in bad faith.

We have seen an increase in Uniform Domain Name Dispute Resolution Policy (“UDRP”) disputes in WIPO.  This may be because the standard terms and conditions of registering one’s domain name include a binding ADR clause, allowing for WIPO to determine disputes.  There is no difficulty with enforcement of any Order, because the domain name at issue is merely transferred at the conclusion of the dispute resolution process.  While we may also see increases in licensing and contractual IP disputes being dealt with through the WIPO arbitration service, it remains to be seen whether it can go beyond that. Specialist national courts well versed in IP disputes, like our own Commercial Court, are still likely to be the preferred option for infringement and other IP disputes, given the requirement for both parties to agree to arbitration.

[1] WIP Case No. D2005-0263