Montreal-based eResolution said it could not find enough customers, thanks to a system that rewards arbitrators who favor trademark holders. Under the system created by the Internet Corporation for Assigned Names and Numbers (ICANN), a complainant can select the arbitrator that will hear its case. Since most complainants are trademark holders, they seek out those who tend to favor their side, eResolution alleged.
"The market share of eResolution kept on shrinking to a point where the proceeds no longer covered the costs of maintaining the service," eResolution President Karim Benyekhlef said in a statement last week. "In the end, we were, for all practical purposes, financing the legitimization of a system we knew badly needed change."
ICANN's Uniform Dispute Resolution Policy (UDRP) has long been criticized as sympathetic toward trademark holders. In August, Michael Geist, a law professor specializing in Internet law at the University of Ottawa, released a study examining some 3,000 cases involving more than 6,000 domain names decided under UDRP.
Geist concluded that the ICANN system promotes "forum shopping." Since the complainant has the right to pick the arbitrator that handles its case, companies and individuals were uniformly selecting the ones that give them the greatest chance of winning.
Geist found that nine out of 10 cases went to either the World Intellectual Property Organization (WIPO) or the National Arbitration Forum (NAF) and that complainants won more frequently with those groups than with eResolution. According to his data, complainants won 82.2 percent of the time with WIPO, 82.9 percent with the NAF, but only 63.4 percent with eResolution.
Geist added that over time, forum shopping has continued to rise. He found that in February there were 183 new cases with WIPO and 96 with the NAF, but only three new cases with eResolution.
The Canadian company, which will focus on software development and ASP (application service provider) solutions, said it will continue to carry out the administration of all pending cases through to their completion.
ICANN declined to comment. WIPO and the NAF could not be immediately reached for comment.