[gnso-rpm-wg] TMCH Blog

George Kirikos icann at leap.com
Thu Feb 2 18:57:52 UTC 2017

To continue the "economics tutorial", this is all directly related to
the concept of signalling:


The classic example comes from the education credentials market. How
does a job candidate signal that they're a high quality hire? The idea
is that high quality job candidates can obtain good degrees, and it's
much costlier for low quality job candidates to get those same

Let's apply this to the TMCH -- implicitly, trademark holders are
jumping through hoops at present to determine that their marks are
"worthy" of protection. The hoops they're jumping through are:

1. pay the TMCH fees, and
2. show evidence of national TM registration in a jurisdiction, and
3. show proof of use

However, unlike the academic credentials market above, where "good"
and "bad" job candidates face different costs, in the TMCH the "good"
and "bad" trademark holders face essentially the SAME costs! (i.e. the
fees are the same, one can get a Pakistani TM for under $10, and one
can throw up a webpage for free to show "proof of use").

In other words, the mechanisms for signalling are entirely broken in
the TMCH. Economics 101. The "bad guys" certainly know it's broken. As
a policymaking body, we should understand *why* it's broken, and
either (1) make stronger signals to differentiate and distinguish
between worthy and unworthy marks, or (2) as I suggested earlier, set
an explicit direct price to change the balance and behaviour directly.


George Kirikos

On Thu, Feb 2, 2017 at 1:36 PM, George Kirikos <icann at leap.com> wrote:
> Hello,
> (and trying to combine multiple responses in one email)
> On Thu, Feb 2, 2017 at 12:51 PM,  <trachtenbergm at gtlaw.com> wrote:
>> I think you are trying to apply domain speculation thinking where it is all about monetary value to protection of trademark rights, which is not necessary focused or valued in terms of specific monetary value.  They are not the same thing.
>> If life isn’t fair is an acceptable justification then why change the current system because it is not fair that some may have gamed it by using trademark registrations obtained solely for the purpose of registering valuable domain names during sunrise?  You can’t have it both ways.
> 1. The "domain speculation thinking" is your term for what is simply
> rational economic decision-making. Even for trademark protection,
> rational trademark holders prioritize enforcement based on a
> comparison between the economic benefit of stopping the abuse relative
> to the economic cost of that enforcement.
> 2. The "life isn't fair" in my statement was referencing the fact that
> not everyone has the same wealth. That is entirely different from
> those misusing trademark registrations obtained solely for the purpose
> of registering valuable domain names -- those TMs would be invalid in
> jurisdictions requiring use (and thus shouldn't have been granted in
> the first place).
> 3. Some folks continue to dance around the issue, and ignore the
> economics completely. Each and every time you try to add a wrinkle to
> the procedure (i.e. "tweaks" that seek to give better proof of use, or
> other modifications), all that does is slightly change the "costs" for
> some actors, but doesn't change the underlying economics by much. i.e.
> it attempts to impose a "price" indirectly, rather than explicitly and
> directly setting a price that would actually change behaviour.
> 4. For those saying "small" trademark holders would be affected ---
> fine, change the economics accordingly --- should the quota be 10,000
> marks? Should the cost be $1? Once you make the cost explicitly be $1,
> that just says "Fine, we're going to accept all the gaming behaviour,
> because we're prepared to look the other way!" That's an invitation to
> those who are misusing the sunrise periods to continue doing what
> they're doing.
> While some constituencies in the GNSO might be fine with that balance
> (i.e. accept every TM, and allow all kinds of abuse of the sunrise
> periods), other constituencies might draw the line for that balance
> elsewhere.
> 5. Let me give you an example -- ACPA allows damages of up to $100,000
> for cybersquatting. That's an explicit cost on cybersquatters that
> they take into account, and has a deterrent effect. What if that limit
> instead was $500? Behaviour would obviously change accordingly,
> because cybersquatters are rational.
> 6. A further example -- it costs $1000+ to file a UDRP (on top of
> legal costs, so a number like $5000 might be more relevant for those
> who use lawyers). If the total costs were $300, there would be a lot
> more filings (which would reduce the benefits of cybersquatting, and
> thus change the economics of abuse).
> In conclusion, the economics of all the actors are paramount, and seem
> to be mostly ignored. By focusing on those economics directly, as
> policymakers we can precision-target the policies to directly target
> those behaviours, and reduce all the "collateral damage" on the
> innocent actors.
> Sincerely,
> George Kirikos
> 416-588-0269
> http://www.leap.com/

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