1

STATUS OF REPORT: This is the first report of the InternetNZ Domain Name Dispute Resolution Working Group, the membership of which is set out in Appendix 1. This report is designed to indicate initial thinking of the Working Group and to stimulate further debate.

2

MANDATE: InternetNZ has responsibility for maintaining the domain name space or system ("DNS") in the .nz country code top level domain ("ccTLD"). In doing so, under the various applicable RFCs (in particular RFC 1591 ) and its own rules, InternetNZ is charged with enhancing the use of the internet. To do so, from time to time, InternetNZ sets policy governing use of the internet in New Zealand following public consultation with affected participants or potential participants. Examples of such policies can be found on this site (eg that governing the creation of new second level domains ).

3

Currently, much of the day to day operational policy relating to the DNS is implemented by InternetNZ's wholly owned subsidiary, the New Zealand Internet Registry Limited (trading as Domainz). Most of the rules and policy governing how a person may obtain and use a domain name in the .nz space can be found therefore at Domainz's site .

4

The role of Domainz will change as a result of the implementation of the Report of the SRS Working Group (the final version of which can be found here) . At paragraph 100 of that report an indication was given that the SRS Working Group consider that some form of service for the resolution of disputes relating to domain names in the .nz space would be a valuable protection for registrants in a competitive shared registry system as proposed in that report. However, the SRS Working Group considered that this issue was outside its terms of reference. This coincided with an increased focus worldwide on alternative dispute resolution mechanisms in TLD spaces, which was recognised by InternetNZ council.

5

Therefore, InternetNZ Council resolved on Friday, 23 February 2001:

"[Motion 01/19]That a working group be formed under the auspices of the Society's Legal and Regulatory Affairs committee:

(a) to investigate whether there is a need for an organised service outside the court system, to resolve, or in some way assist in resolution of, disputes relating to ownership and/or any other rights associated with domain names in the .nz country code top level domain; and
(b) if such a service is considered necessary or advantageous, to recommend the nature, scope, and methods of operation of such a service together with a basic plan for implementation of those recommendations."

6

In other words, the Working Group has been charged with facilitating the formation of policy as to whether .nz should have an alternative dispute resolution ("ADR") system for domain name disputes and, if it should, what should it look like.

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WORK TO DATE: A series of trigger questions have been published to various lists maintained by the Society and have been posted on its website.

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Those questions were further publicised by writing to a number of organisations considered likely to have an interest in this issue.

9

In addition Working Group members have met and have debated various issues both in person and online. Meetings have also been held with representatives of WIPO's Arbitration and Mediation Centre , which is one of the dispute resolution organisations approved by ICANN to hear disputes under its Uniform Dispute Resolution Procedure ("UDRP")

10

It is fair to say that there has been a low level of response to date. That is not surprising but it means that the Working Group does not consider it appropriate to make any firm recommendations at this stage.

11

It is important to note also that the fact that this paper is being published does not prejudge the decision as to whether any ADR is needed for .nz domain names.

12

The Working Group is seeking empirical evidence of the need for an ADR system in relation to .nz domain names and would welcome any submissions on this point .

13

Despite the fact that the need for an ADR system has not been established by hard empirical evidence, it is clear that there have been and continue to be situations where domain names have allegedly been obtained for illegitimate ulterior motives seemingly in contravention of valid intellectual property rights. The Working Group considers that it is important for people to be aware of possible issues which may arise in an ADR system. This in turn may influence not only the structure of a system but the question as to whether one is necessary.

14

Finally on this point, the working group notes that international bodies such as ICANN itself and WIPO (see, for example, WIPO's " ccTLD Best Practices for Prevention and Resolution of Intellectual Property Disputes ") support ADR in the nature of UDRP. . All open generic top level domains ("gTLDs") have some form of ADR and many ccTLDs also either have their own system (eg Nominet's newly revamped Dispute Resolution Service for .uk) or adopt the UDRP or a variant of it through use of WIPO's ccTLD service . Although it may not survive into the final agreement, it is also interesting to note that those who prepared the first draft Free Trade Area of the Americas agreement (see the draft "still under negotiation" Article XX in the Trademark section) raise the possibility of the UDRP as a compulsory mechanism for signatories to that report New Zealand should not blindly follow those leads but neither can it ignore them

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STRUCTURE OF PAPER: This paper will:

• Set out the various alternative mechanisms that the Working Group considers might be used for resolution of disputes over domain names

• Analyse each mechanism against a series of criteria

• Raise further particular question

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OVERVIEW OF MECHANISMS: The mechanisms that the Working Group consider might be used for resolution of disputes over domain names are:

• Status quo - private inter party negotiation, arbitration and/or reference to New Zealand courts

• Facilitated mediation

• Internet Commissioner

• Internet Ombudsman

• Voluntary local dispute resolution procedure

• Mandatory local dispute resolution procedure

• Local dispute resolution procedure (whether mandatory or voluntary) with internal right of appeal

• Non-local dispute resolution procedure

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Some of these mechanisms might well be combined in the final design of a dispute resolution process. For example, an Internet Ombudsman could work alongside a local dispute resolution procedure and be used by participants as an alternative to that procedure or in addition to it. However, the Working Group considers that at this stage it would be useful to analyse each possible component in isolation.

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PRELIMINARY ISSUES: There are two preliminary issues which impact on how this matter is to be considered. Effectively, the Working Group has assumed at this stage that:

• Any dispute will be conducted under New Zealand Law no matter what mechanism is used; and

• Any mechanism will be able to be implemented separately or as part of the roll out of the Shared Registry System proposed for the .nz space in the final report of the SRS Working Group. It is understood by the Working Group that this roll out will involve the codification to some extent of certain rights and obligations of all participants in the DNS. For registrants, these rights and obligations will be accepted at the time they enter into a contract with a registrar to obtain or renew a domain name. Therefore, in order to avoid a two stage rewriting of rules applicable to the ,nz DNS (once in relation to dispute resolution and then again in relation to implementation of the SRS), the Working Group hopes that the two will coincide

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DESCRIPTION OF MECHANISMS: A brief description of each mechanism follows:

• NEW ZEALAND COURTS: New Zealand has a common law system which is administered through a range of judicial bodies. The Court system is hierarchical in terms of both sum involved and perceived legal significance of the matter in dispute.

• DISPUTES TRIBUNAL: At the lowest level, referees (who may or may not have formal legal qualifications but who are carefully selected and trained) hear disputes in the dispute tribunals around the country. Claimants and respondents represent themselves in a forum which is intended to dispense justice on the facts presented in an efficient manner without undue resort to legal debate. The threshold for disputes at this level is $7,500 which may be increased to $12,000 by agreement between the parties. Decisions of the Disputes Tribunal are not published and carry no precedent value. They are enforceable by action in the District Court.For more details see http://www.courts.govt.nz/tribunals/disputes_tribunals.html

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For our purposes however, it is important to note that the Disputes Tribunal does not have jurisdiction to hear trade mark claims and therefore is unlikely to be an appropriate forum for the hearing of domain name disputes.

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DISTRICT COURT: There are currently over 65 District Courts scattered throughout New Zealand. In the civil jurisdiction, the District Courts can determine claims involving up to $200,000. At the lower end of the scale, some claims involving less than $5000 are now dealt with by the Disputes Tribunals. In the criminal jurisdiction, the District Courts still cover minor offences, but can now also conduct trials for some more serious criminal offences.

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The difficulty with the District Court again (as with the Disputes Tribunal) is that trade mark and passing off cases must be heard in the High Court. Therefore, whilst not all domain name cases rest on trade mark grounds, the majority do and it is unlikely that a domain name dispute would be heard at District Court level. For more details see http://www.courts.govt.nz/courts/district_court.html

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HIGH COURT: The High Court has jurisdiction over major crimes and civil claims involving more than $200,000. Judges are based in or travel regularly to main centres in New Zealand to hear cases. The High Court also hears appeals from the District Court and from other lower courts and tribunals. The majority of applications for injunctions and other forms of interim relief are made to the High Court although the District Court now has jurisdiction to hear most applications where smaller sums are involved. All domain name dispute cases heard by New Zealand Courts to date have involved interim relief applications to the High Court. For more details on the High Court see http://www.courts.govt.nz/courts/high_court.html

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COURT OF APPEAL: The Court of Appeal, located in Wellington, is the highest level of Court based in New Zealand. The Court deals with civil and criminal appeals from matters heard in the High Court, and criminal matters on indictment in District Courts. As well, matters appealed to the High Court from a District Court can be taken to the Court of Appeal with leave if they are considered to be of sufficient significance to warrant a second appeal. The Court sits in panels of 3 or 5 Judges depending on the significance of the case. To date, no appeals involving domain name disputes have been brought before the Court of Appeal.For more details see http://www.courts.govt.nz/courts/court_of_appeal.html

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PRIVY COUNCIL: Currently New Zealand also retains a right of appeal from the Court of Appeal and High Court to the Judicial Committee of the Privy Council in London, England. For more details see http://www.courts.govt.nz/courts/privy_council.html and http://www.privy-council.org.uk/judicial-committee/index.htm

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FACILITATED MEDIATION: It is of course open to any parties who have a dispute involving a domain name to use mediation techniques to achieve an agreed resolution. By facilitated mediation the Working Group intends to refer to a process which:

• Is run according to a procedure specified by the ccTLD manager and agreed to by a registrant as a condition of obtaining a domain name.

• Is not compulsory but if agreed to be used by both parties is run according to that procedure.

• Is provided (ie facilitated) by the ccTLD manager. To do so, the ccTLD manager would provide skilled mediators (either from its own personnel or through externally approved suppliers) and appropriate assistance in terms of resolving logistics for the mediation.

• If it achieves resolution, results in a binding and enforceable agreement between the parties.

• If action is required on the registry record for a domain name (eg change of registrant, change of registrar, change of any other details, deletion of name from registry), would also bind the incumbent registrar to make such change on being officially notified of the agreement reached. (The registrar would be so bound pursuant to its separate arrangements with the ccTLD manager).

• If it does not achieve resolution contemplates that all submissions and discussions would be unable to be used in any further dispute resolution process. The exception to this might be where the mediation is the first step in the arbitral process. For example, some ADR models provide that if the parties cannot agree then the mediator takes on the role of arbitrator and renders a binding decision. Obviously this provides a significant incentive to the parties to reach agreement but may undermine the concept of mediation.

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INTERNET COMMISSIONER: Where rights and obligations of registrants are accepted by them at the time they contract for a domain name it would be possible to also provide that those rights and obligations be made subject to overview by a semi-inquisitorial body. The working group refers to this as an internet commissioner.

• The office of the Privacy Commissioner forms a good model for what is envisaged here. Effectively, in its "complaints" jurisdiction, the Office of the Privacy Commissioner has two functions:

• To investigate complaints made by persons alleging that their privacy rights (as codified by the Privacy Principles set out in the Privacy Act 1993) have been infringed. Whilst the Commissioner has no power to make any award, as part of this function, the Commissioner seeks to assist the parties to reach a resolution of the complaint themselves.

• To make recommendations to Proceedings Commissioners who then decide whether to bring actions in the Complaints Tribunal, a specialist body set up to adjudicate on privacy complaints.

(for more information see the Office of the Privacy Commissioner's website at http://www.privacy.org.nz )

• If the internet commissioner were a standalone body in the domain name dispute resolution process, its role would only cover the first function above, namely an investigation and mediation role. In this sense it may be seen as an enhancement to the facilitated mediation mechanism discussed above. In addition, the Commissioner could be given power to initiate investigation of domain name activities involving more than one party (for example in situations involving multiple fraudulent registrations).

• If a further adjudicative option is included in the overall dispute resolution process then the internet commissioner could be a precursor to a more formal adjudicative step.

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INTERNET OMBUDSMAN: The Ombudsman complaint resolution methodology requires a stand-alone organisation, with terms of reference, rules, and an ombudsman.In order to use the term "Ombudsman", it is necessary to comply with a number of criteria and to operate only after gaining the approval of the Chief Ombudsman under the Ombudsman Act 1975. To date, only two industries in New Zealand have gained this permission. Other than gaining that permission, an ombudsman appointed in relation to a particular industry has no formal connection with the Parliamentary Ombudsmen, although similar investigative techniques are employed. An Internet Ombudsman's principal powers and duties would be to:

The Internet Ombudsman would give advice regarding the procedure for referring a complaint and the participating members, i.e. the registrars and registry, would determine the code of practice that applies. It would not be a function of the Internet Ombudsman to provide information about the ccTLD, registrars, registry, Internet service providers or Internet services.The Internet Ombudsman service would be provided at the cost of the participating members (ie industry and/or the internet community through domain name fees) plus a "per complaint" fee for direct cost recovery purposes. In a sense an ombudsman would act as a statutorily authorised commissioner (see above).

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LOCAL DISPUTE RESOLUTION PROCEDURE: Clearly, if an LDRP option is considered appropriate, a significant amount of work will need to be done to draft and consult on the exact nature of the applicable rules. However, for current purposes, the Working Group makes reference to ICANN's uniform dispute resolution procedure as an example of an arbitral system applicable to domain names.

If an LDRP option is pursued, the Working Group's current thinking is that it would use the UDRP as a starting point and modify it to take account of the issues raised internationally with the UDRP; the UDRP review about to be undertaken; developments in other jurisdictions and local conditions.

• Very briefly, the UDRP is an arbitration model applicable to domain name disputes in the .com and .org spaces (and which has been adopted to some extent also by some ccTLDs).

• The arbitration is initiated by a complaint to an ICANN approved body of which there are currently five, the best known of which is the World Intellectual Property Organisation ("WIPO").

• A response is then allowed and the matter is considered on the papers by a panel consisting of 1 or 3 panellists appointed by the arbitral body.

• Any decision requiring a change to registry records is implemented by the incumbent registrar. In effect therefore the procedure is mandatory.

• There is no right of appeal, however, at any stage before during or after the procedure has been implemented a party may take such action as may be available to them in a court having competent jurisdiction.

• The Working Group proposes to look at both a MANDATORY LDRP analogous to the UDRP (subject to the above considerations) and a VOLUNTARY mechanism. The only difference between the voluntary and mandatory alternatives is that under the voluntary one unless both parties agree at the time to use the procedure and thereby be bound by the results, it cannot be invoked.

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NON-LOCAL DISPUTE RESOLUTION PROCEDURE: At least 20 ccTLDs have entered into arrangements with WIPO for it to provide dispute resolution services. Most of these appear to invoke the ICANN UDRP without alteration (eg Pitcairn Island (.pn), Tuvalu (.tv) and Venezuela (.ve)) whereas others have a modified form of UDRP administered under those rules by WIPO (eg Mexico (.mx)) (for more details see http://arbiter.wipo.int/domains/cctld/ ).

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As mentioned above, it would be possible for a combination some of the above mechanisms to be introduced however, for the purposes of analysing strengths and weaknesses of each the Working Group considers it necessary at this stage to consider them separately. This should also suggest possibilities for combination since a deficiency in one mechanism may be overcome by its combination with another.

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It is also possible that there are other dispute resolution mechanisms which the Working Group may have overlooked or that there are aspects of the above mechanisms that contributors have views on. The Working Group would welcome any submissions in this regard .

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CRITERIA AGAINST WHICH TO JUDGE MECHANISMS: To assess the characteristics of each mechanism, the Working Group has raised a number of criteria, as follows:

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The following table represents the Working Group's assessment of each mechanism against the above criteria.

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The assessments made are entirely subjective and at this stage lack any empirical evidence. They are presented as one possible assessment of the factors to be taken into account. The Working Group would welcome any submissions on weightings or as to whether there are any other criteria against which the mechanisms should be judged.

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In each category the mechanism is judged on a scale of 1-5 with 1 indicating that in the Working Group's view a mechanism rates positively against the criteria in question and 5 indicating that it rates negatively:

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EXPLANATION OF RANKINGS. By way of example, it is likely that the Court process would be most costly for the participants (5) and slow (5) but would adhere most closely to New Zealand law (1) and provide ultimate finality (1). (There are of course exceptions to every rule and the working group is aware that defended UDRP disputes can be complicated and therefore costly). On the other hand, facilitated mediation might not necessarily adhere to New Zealand law (ie the decision reached by agreement might not necessarily be one which would be awarded by a Court) (4) but would certainly be quicker than a Court process (1) and less costly (2).

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It is also important to note that these measures may not carry equal weight and therefore it is not possible to simply add up a mechanism's rating and find the one that has the lowest total in order to pick the "best". For example, some might argue that a significant defect with the UDRP is that it has not developed any precedent value in its decisions - therefore there is inconsistency and uncertainty. To those people this might tend to suggest that the precedent value criteria is more important than, say, the harmonisation criteria and should be weighted accordingly. A multi-national constantly faced with defending its trade marks in many jurisdictions would no doubt weight harmonisation more highly.

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It is not the working group's intention to arrive at some magical numerical formula which will enable a decision to be taken. What is important is that thought be given to the advantages and disadvantages of each mechanism in a relatively structured manner so that a reasonable decision can be made.

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The Working Group is keen to hear from contributors their views of the advantages and disadvantages of the various mechanisms (if possible, ranking those mechanisms in some fashion).

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The criteria are also no doubt subject to variances depending on the nature of the mechanism itself. For example, the Working Group has suggested that a Commissioner or Ombudsman's decision would have a low degree of adherence to New Zealand law. By this we intend to suggest that the decisions under those types of mechanisms are normally made under a more codified set of rules and allow the Commissioner of Ombudsman a degree of discretion not normally accorded to an arbitrator for example. That presumption could of course be altered so that the Commissioner or Ombudsman was required to adhere closely to New Zealand legal principles for example in the NZ Trade Marks Act 1953 or Fair Trading Act 1986.

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The Working Group would be interested in any submissions as to how contributors consider the advantages and disadvantages of the various mechanisms should be weighed.

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COMBINING MECHANISMS. It is of course possible to combine different mechanisms. The Nominet DRS is a good example of this. There, Nominet provides a facilitated mediation service as well as an LDRP with a right of appeal.

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It is considered by the Working Group that the primary driver as to whether a multi-tiered system is required will be one of cost vs benefit. Empirical evidence of the size of the domain name dispute problem in New Zealand and whether it appears to be growing or not will be important in considering this. We also need to make educated guesses (for that is all they can be at this early stage), based on relevant factors (including overseas experience), as to how the introduction of an shared registry system into the .nz space will impact on the level of domain name disputes, if at all.

45

Finally on this point, if some form of ADR is introduced, a decision will also need to be taken as to the role of the Courts. Alternatives are:

• Exclusion of a right to apply to Court until the ADR process is exhausted

• Concurrent jurisdiction so that a claimant would be able to choose whether to use the ADR or the Courts at any stage

• In any case, it is possible that an appeal to the Court would be available on questions of law where the ADR is more in the nature of an arbitration.

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The Working Group welcomes submissions on the role of the Courts should an ADR system be adopted.

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REMAINING QUESTIONS/ISSUES

• There are a number of issues which will arise in the next phase of consideration of the questions raised in this paper. Some of these have already been adverted to in the trigger questions document.

• The Working Group welcomes comments on any of the trigger questions in light of the issues raised in this paper.

• There are other issues which are relevant to the consideration of a dispute resolution model but which do not all impact directly on the choice of whether ADR is necessary or, if it is, what it should look like. The use of the WHOIS database in the process, requirements for keeping information in that database up to date and blocking of transfer of domain names on initiation of a complaint ("cyberflight") are examples of these issues. Some of these (eg blocking of transfers) will of course need to be dealt with in any ADR model and will need to be addressed therefore at a later stage.

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PROCESS FROM HERE
The Working Group will recommend that the following adjusted timetable apply:

• Submissions on this paper due by November 30

• Final discussion paper issued in draft for comment February 1, 2002 (there being little point issuing this over the Christmas/New Year period)

• Comments on Final draft due by 1 March

• Final report to InternetNZ Council 29 March 2002