Responsibility of Auction Houses & Domain Registrars Regarding Legal Threats | DomainInvesting.com
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Responsibility of Auction Houses & Domain Registrars Regarding Legal Threats

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Gavel

As many of you read yesterday, the non-profit organization, Goodwill Industries International has sued the owner of Goodwill.com for alleged trademark infringement, after he won the name in a Namejet auction for north of $55k. This doesn’t come as a surprise to me at all. Case in point, one of my clients was a bidder in that auction, and when it was in the $25,000 range, he asked my opinion on the value. My reply was, “there’s a thrift shop like salvation army… could be TM risk if monetized that way.”

The surprise to me in this situation was actually what was found in the lawsuit pdf (also found on DNW). According to Goodwill Industries’ complaint, “Upon learning of the auction from Radia Holdings, Goodwill contacted the registrar of the domain name, Network Solutions, to attempt to prevent the auction from going forward, but was unsuccessful.”

Whether Network Solutions passed this information to its partner Namejet is something we probably won’t know. It also might be possible that the information may not have been sent through the appropriate channels at Network Solutions, and the issue died in the customer service queue. Whatever the case is in this situation, it bothers me that Goodwill Industries claims that Net Sol had information that would have rendered this domain name even more risky for a domain investor to monetize.

I read a post on Namepros where Snapnames VP of Engineering, Nelson Brady reached out to bidders on the JeniferLopez.com auction to inform them that Snapnames had received a notice from Jennifer Lopez’ lawyer regarding the name. Although the domain name later appeared to be registered to “domainqueue@gmail.com,” a company allegedly linked to bidder Halvarez, one has to wonder if Snapnames had or has a policy of informing bidders of potential legal threats.

As far as my client recalls, he didn’t receive any notice from Namejet while bidding on Goodwill.com. Of course one could argue that there are plenty of proper uses for Goodwill.com that would not infringe on Goodwill Industries’ trademark. Why would Namejet or other auction house risk dampening interest in an auction when there are plenty of ways it could be used without any problems? That wouldn’t make a lot of fiscal sense.

My question is this: what responsibility should a domain registrar or auction house have when they receive a legal threat for a domain name that is going to be listed for sale by them or a partner? I am sure domain registrars and domain auction houses receive legal notices all the time. They aren’t a judge or jury, so it’s probably not their place to provide legal advice, but should they make bidders aware of a potential legal threat?

Photo: http://www.flickr.com/photos/joegratz/ / CC BY-NC 2.0


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (8)

    Dan

    It’s a nasty situation and I think the registrars and auction houses would rather bury something in their T&C’s and try and make the buyer responsible than be forced to make a judgment call on individual domains.

    My view is that as we see the prices of domains continue to appreciate we will see more legal action (lawsuits and wipo) which adds uncertain risk to what would on the face of it appear to be clear generic terms.

    It just underlines the Caveat Emptor of buying domains, given that some wipo decisions seem to be bizarre in the extreme and that companies and individuals will often consider legal action in lieu of buying a domain.

    December 18th, 2009 at 2:11 pm

    M Menius

    Yes, an auction house should always make bidders/buyers aware of any known legal threat(s). Always.

    December 18th, 2009 at 2:45 pm

    jp

    I certainly wouldn’t complain if the auctions disclosed any possible outstanding claims against the assets being auctioned. They would get higher bids on some items I think then due to increased confidence. On the flipside they must not be doing it because so many of them auction off so many tms and if they listed claims on them those auctions they would bring less.

    In the end though I think it’s all about use. If the domain was used for a business broker, or even domain sales ironically then where would be the infringement?

    It’s kind of a gray area thing on a case by case basis. I could see allowing the auction to go through for Goodwill.com, but not something like a typo of Microsoft where realistically how could it be used for anything other than an infringement. Of course you could find good reasons to by typos and come up with non infringing uses like a gripe site, however you’ll never be able to profit off the typo legally so why bother buying, ergo why bother selling.

    December 18th, 2009 at 3:28 pm

    Leonard Britt

    The auction houses just place the responsibility on the buyer. I recall months ago seeing a domain which was a clear trademark issue in auction, notified Namejet and their only response was to have me fill out a form (as though I were the company with a complaint). I did not participate in the auction but recall there were a number of individuals who had placed a backorder. Someone won that domain but the auction house just washes their hands of the issue. Nice business.

    December 18th, 2009 at 4:34 pm

    Ms Domainer

    *

    It’s no wonder this field has such a nasty reputation.

    Yes, the term “Good will” is generic in that it has a meaning not having to do with the thrift store.

    However, it looks as though the buyer was clearly infringing.

    Quite frankly, I hope Goodwill.com whups the buyer’s ass.

    This charitable organization is all class and has been around for years and has helped the disadvantaged for longer than most of us have been alive. I’m a faithful customer of and donor to Goodwill (Mostly donor now, though back in the day when I was a poor graduate student, I bought a lot of necessities from there and Salvation Army).

    The fact that Goodwill Industries is well-known should have triggered a possible trademark warning, and that no warning was given just increases the slime factor of Namejet.

    The buyer is just as slimy and would garner no sympathy from me if he saw his $55,000 evaporate into thin air.

    *

    December 18th, 2009 at 5:25 pm

    pitbullstew

    you will atone…

    December 18th, 2009 at 8:52 pm

    fizz

    IMO it’s blatantly obvious that Brady’s “reaching out to bidders” in the JenniferLopez.com auction was purely for selfish gain – he simply wanted to scare off the opposition from bidding it up.

    December 19th, 2009 at 2:01 am

    check url availability

    Hi – Here’s an article today on ESPN related to an athlete’s domain name … http://sports.espn.go.com/ncf/news/story?id=4758848

    What’s your take on legal issues with people registering athlete’s names?

    December 20th, 2009 at 7:43 pm

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