During the ICANN meetings in KL, after the IDN workshop, I had a chance to have a very good conversation with Kim G. von Arx, General Counsel of CIRA (.CA) on the issues surrounding IDNs on a legal perspective, especially regarding UDRP (and CDRP -- Canadian DRP) implications. One of the most intriguing issues, and one which we both agree that we cannot be sure whether UDRP (or CDRP) is ready to handle, is how an IDN should be viewed: native form vs. Punycode form... or both.
More specifically, the contention is what happens if a registrant maintains that it is the native form that it intends to register, whereas the Punycode form happens to confuse with a trademark (e.g. xn--cocacola.com)? And vice versa, that is the native form of the IDN confuses with a trademark, yet the registrant maintains that s/he is really interested in the Punycode form only (and that in fact is what is being registered).
Basically, it is a question of which form is the definitive form of an IDN and how should conflicts be resolved when disputes arise contending the different forms of the IDN. This problem will become even more complex for registrations in languages / scripts where variant preparations are implemented (i.e. creation of multiple native forms and corresponding Punycode forms of an IDN).
Even though the UDRP had stood up well so far in terms of handling cases for IDN disputes, perhaps it is of interest to explore the implications brought about by the different forms of an IDN, before disputes of this nature arises.