RL.com: An Inside View of The Million Dollar Battle | Domain Investing
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RL.com – An Inside View of The Million Dollar Battle

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Guest contributor Richard Lau has a background that includes: forming/managing/buying/selling/brokering over 90 ICANN Registrars, the 2004 “Domainer of the Year” award, DomainManager.com and most recently iWhois.com

RL.com – an inside view of the million dollar battle

Background: Tools, time, tenacity

One of the first things I did as a domainer was put in the countless hours cold-calling, cold-emailing and making offers. Unrelated to my new ‘work’, my sister lent me a book about a Skip Tracer who used his skills to track down missing children. In the book were many hints, tips and anecdotes about finding people who, for whatever reason, didn’t want to be found. This seemed to dove-tail perfectly with domain registrants who had put incomplete, out-of-date or fake information in the public whois. Using these new found skills, I managed to track down registrants who had not been inundated with offers and was able to make calm, fair bids for domains that otherwise may have sold for over-inflated numbers. It was during this time that I found tools such as DomainTools.com and Intelius.com indispensable. I also realized paying for information, data and tools was money well spent.

iWhois.com has evolved from that learning process. On iWhois.com we have tried to create a portal that is useful first and foremost to myself. I eat my own dogfood. When I evaluate a domain, there are certain tools that I want at my fingertips: compete.com, DomainTools.com, Estibot.com and others. After searching for the whois for a domain, additional information is now only a click away rather than opening a new browser tab.

But before the convenience of iWhois.com, the tools were there, just not mashed up. And use them I did. Garnering domains for myself and my clients I quickly gained a reputation of being able to present offers to domain registrants that other domainers were not able to contact. This led to me being asked to investigate a rumor that a fellow member of Rick Schwartz’s Board was involved in fencing stolen domains. Unfortunately I was able to substantiate the claims, the member was banned from Rick’s Board and I was suddenly known as a Domain Hijacking Recovery Expert. I didn’t charge for my Hijacking Recovery services. It was my volunteer role in the domainer community.

Back in 2002 – 2004, domain hijacking was rampant. Think New Orleans after Katrina. There were no police. NSI (back then) had a policy of stone-walling. After over 1000 hours of pro bono work spent helping recover dozens of stolen domains in 2003 and 2004, I was honored to be awarded the first “Domainer of the Year” award in Oct 2004 at TRAFFIC in Delray Beach, FL.    Immediately following the Award Dinner at TRAFFIC, I was both blessed and cursed with the biggest Domain Hijacking Recovery Case I would ever, and will ever, deal with:  RL.com

The Story: $1,000,000 is a big number.

Before I explain how big $1,000,000 is. Let’s back up for a moment. Domain Hijacking Recovery is really just identity theft played out on the internet.  Jurisdictional confusion, lack of knowledge, lack of clarity in the law and competing priorities, all add to the carnage. But with my connections at many of the Registrars (being that I used to run one of the top 30 Registrars), I was able to cut through a lot of the noise and show Registrars cases where the domain they were responsible for had been hijacked away by an identity thief.  On the evening I received the Domainer of the Year Award, I was told by Greg Manriquez to look into 3 domains that had been reported as stolen yet were being offered for sale in the market. RL.com was one of the three and had been stolen about a year before. I was able to determine that RL.com had been hijacked away from one Brian Dale Mayberry. Mr Mayberry had used an email address of dale@mat.net and the hijacker was able to gain control of Mat.net, set up email service to receive email intended for dale@mat.net and then, since the Admin Email of RL.com was dale@mat.net, the Hijacker was able to simply do an account transfer and then a Transfer of Registrar of RL.com in Dec 2003.

 

Long story short, I teamed up with Mr. Mayberry to gain control back of RL.com. I paid him for the rights. The domain hijacker was based in China, and he transferred the domain to someone in India, who then sold it to John Laxton in California. Like a purse being stolen and run into Mexico, the jurisdictional issues are easier when the stolen purse comes back into the USA.

In Jan 2006, Mr. Laxton was informed that the domain he had purchased (apparently for $15,000 via paypal) was actually stolen and that he needed to return it. He refused and instead hired a lawyer to help him keep the stolen domain. Like a scene out of a movie, the chase since then has felt like someone is throwing everything they can out the back door of a stolen delivery truck. I won’t go into all the details, but suffice it to say that the domain moved into the name of John Laxton’s company, the company was put into bankruptcy, argued over abandonment vs fraud vs theft, jurisdiction in Virginia vs California, we’ve both changed lawyers (Lawyer up!), 900 of Laxton’s domains were put into a family friend’s name, and the list goes on, but finally, in May 2012, a Jury Trial in the US District Court – Northern District of California, found that the domain was indeed stolen and should be returned.

Total legal bill on both sides are estimated to be at least $1,000,000. That’s a big number. In $100 bills that would weigh about 20 lbs. In $1 bills that’s over 2000 lbs. Mucho dinero. On a domain that Laxton paid $15,000 for. This is beyond the value of a domain. Some would say we are well past the appraised value of $300,000 by several multiples.  Are we both crazy, or are we both insane?  I can’t speak for what motivates Laxton, but I’ll be the first to admit that I’m a bit crazy.  Legal battles get my heart pounding. Dangle a domain legal battle in front of me that touches on issues like “are domains property or service?”, “when is a stolen domain stolen versus abandoned?”, and “who qualifies to be an Expert Witness in a domain case?” — well, it’s just too much for me to walk away from.  And other than opening the legal bill invoices, I had more fun at the Jury Trial over RL.com than at any Domain Conference, except perhaps ICANN Prague.

Property vs Service and when is a demand a demand?

The latest box to be tossed out the back of the delivery van is amusing. Wait. Did you think the case was over because a Jury of our peers told Laxton to return the domain? No… you see, that’s the second round. We won once before on summary judgment, Laxton appealed and the case was sent back down to decide whether the domain was stolen or abandoned. Now, in the third round, Laxton is trying to get the Jury Decision overturned. And if that doesn’t work, I’m sure he’ll try to Appeal the Decision. Is there a session on Domain Law at the upcoming TRAFFIC in October? My fee is a mere $1,000,000. (Just kidding, no, seriously.)  Anyway, the latest paper to be tossed against the wall of Justice to see if it sticks is a disjointed mess of words. I’m no lawyer so let me try and paraphrase as best I can. I think the argument is something like “wait – the Jury can’t tell us to give the domain back because we think a domain is a service not property and you can only tell us to give property back.” So, umm, you admit the domain is stolen but you should be able to keep it because you believe it is legally defined as a service not as property? Picture for a moment that you own 1-800-Flowers and someone used identity theft to move 1-800-Flowers off your business to theirs. Since it’s a service, does that mean it can’t be returned? Even if they somehow sold it? Doesn’t make sense in the real world. Can’t imagine it’ll make sense in the Court of Law. But arguments like this take money to take apart. It’s like paying $500 an hour to have your lawyer tell your 2 year old that they can’t eat your dog’s food. I mean… really?

Oh, and here’s another doozy argument…. Since Mr. Mayberry had sold the rights to RL.com to my company, when we told Laxton back in 2006 to return the domain to Mr. Mayberry, apparently we were wrong? We apparently should have told Laxton that he needed to give the domain to us. A bit of six of one, half a dozen of another wouldn’t you think? Laxton returns the domain to Mr. Mayberry, Mr. Mayberry then follows through on his agreement and transfers it over to my company. Now, and unless I’d read it myself I wouldn’t have believed it, Laxton is saying, and I’m paraphrasing in my non-lawyerly way “since you told us to give the domain back to Mayberry instead of directly to you, that was an error, and so we should be able to keep the domain”. Hmmmm, ok, so my big brother goes over to the neighborhood bully’s house and says to give back our bike, but the bully should be able to keep it since it’s actually a bike we borrowed from our cousin. Givemeafreakingbreak. I can’t believe a lawyer is being paid to write this garbage – maybe he’s not. Laxton’s current lawyer is claiming to have taken this on a contingency (he only gets paid if he wins) and Laxton is claiming to have no money. I can however believe my lawyer is being paid handsomely to rebut it. Only because I see the bills.

So, that’s how you get to over $1m in legal bills. Silly arguments based on ridiculous stances.

Where do we go from here? I’m lawyered up. Bills are paid promptly. If all you take from this rambling short story is one thing: hire the best lawyer you can afford, and pay the bill before it’s due. Did I think we’d be this deep? No. This case started over 6 years ago, and in the meantime I’ve kept working on many projects. Face.com for one. That’s all I can say. On the other side, Laxton has sold Staff.com which Estibot.com estimates it to be worth $305,000. That should cover a few more wildly creative legal papers. After that he can sell DryCleaner.com and maybe Techs.com.

Grab some popcorn and enjoy the ride. Once it is over I’ll write an ebook about this. It’ll be a fun read. How does $1/copy sound? Just need to sell a million.

Notes:

Latest filing: http://customer.aplegal.com/rl/DE%20349%20Notice%20of%20Renewed%20Motion%20and%20Renewed%20Motion%20for%20Judgment%20as%20a%20Mattter%20of%20Law.pdf

CRS Recovery Inc et al v. Laxton et al: http://dockets.justia.com/docket/california/candce/4:2006cv07093/186437/

Howard Neu: Could the Case of Mayberry V. Laxton Be The Definitive One On Domains As Property: BLAH” class=”delete_me_please


About The Author: Richard Lau is a domain name investor and industry expert. His holding companies include Ocean.net and he has been been involved in the operation of almost 100 ICANN registrars. He has received a host of honors including the 2004 inaugural Domainer of the Year award from the T.R.A.F.F.I.C. conference.

Lau serves on the Advisory Board to DomainTools.com and is also an investor in DomainName.com, SSLCertificates.com, DomainAgents.com, RegistrarManager.comAboutUs.com and other domain related companies.

Connect with Richard: Website | Twitter

Niche Websites

Comments (15)

    Anticareer

    Seems like the only winner here is the lawyers and their fees. Whoever loses will lose $500k plus the domain, whoever wins will have spent $500k on a domain that is worth half that. Not exactly smart uses of money.

    July 12th, 2012 at 12:33 pm

    JS

    great guest post !

    July 12th, 2012 at 12:39 pm

    Donna Mahony

    Super post! Super important post! I want more…saving up my pennies and I’ll be one of the millions buying the book!

    July 12th, 2012 at 12:45 pm

    JNet

    “But arguments like this take money to take apart. It’s like paying $500 an hour to have your lawyer tell your 2 year old that they can’t eat your dog’s food. I mean… really?”

    Priceless !

    July 12th, 2012 at 12:54 pm

    Donna Mahony

    @Anticareer I think domainers are the big winners here. People like Richard who put their time, knowledge and cash up to fight this type of thing are doing a service for everyone of us who may be in the same position one day. Thanks Richard! You are a man of all action and few words and I appreciate your efforts.

    July 12th, 2012 at 12:56 pm

    @Domains

    Great post, you are fighting the good fight and are clearly in the right, but is it worth spending an amount in legal fees for a property that is worth much less than the legal fees? Sounds like it has almost become personal and a win-at-any cost battle. All that time and money probably could have been spent on more productive things.

    July 12th, 2012 at 1:19 pm

    Ian

    Excellent post!

    Just a heads up, I believe you have your decimal point one spot too far to the right for your calculation of the weight of 1 million. :)

    July 12th, 2012 at 1:55 pm

    Shaun Pilfold

    Great article Richard and a hell of a fight. Like a bad movie, when it all over, Ralph Lauren will say, “hey that should be ours” ;)

    July 12th, 2012 at 2:16 pm

    Andy Booth

    Great story Rich, thanks for sharing. Hopefully not another almost decade to wait…

    July 12th, 2012 at 5:06 pm

    Damon

    I struggled very hard to read this article.
    Skipped through most of it to be honest.
    I hope your e-book is more engaging (and shorter).
    Sorry mate… but my eyes were closing two paragraphs in.

    July 13th, 2012 at 1:12 am

    picas

    but Chinese hackers ..may be they are Chinese goverment workers was not punished …so hijacking and robbery are happening again…

    July 13th, 2012 at 4:08 am

    Nat Cohen

    As Donna said, Richard is fighting the fight for all of us who want legal protection for our domains. We’re lucky that Richard is willing to step up and pay what it takes to ensure a just result that will benefit us all.

    July 13th, 2012 at 8:10 am

    Stephen Douglas

    The Big Lau has been a huge fan (and useful resource for my companies) since 2000.

    I’ve partied with him, and talked seriously with him. He’s a smart guy, a nice guy, and one of the domain industry’s biggest UNSUNG heroes. While many “interesting” domainers have been featured in story after story on blogs over the years, (including mine, not to diminish any subject of those articles or the subjects), few have recognized the absolute genius, cool shiznit qualities of RIchard Lau.

    I would rate him in the top 20 of the most important domainers I’ve met in the last 12 years. What’s ironic is that Rich would never put himself in that group. Trust me, he’s there.

    It’s shameful that I haven’t celebrated that, and now Elliot has brought this up and I feel guilty.

    Richard, please forgive my failure to thank you for everything you’ve done for me.

    cheers mate

    July 13th, 2012 at 10:01 am

    Karl B. Hensel

    Sir,
    I am a newbie as you call us. Can I ask you a question off topic? I need help and know of no one else in this complex business. Can I just throw it out there for everyone or perhaps you can write an artricle on how newbies need to proceed always with caution.
    Greatest respects,
    Karl

    July 15th, 2012 at 5:49 pm

    Dave Jordan

    Wow, awesome post. I just cringe thinking about the insane dollar amounts the lawyers are collecting, and can only feel sorry for the people involved. What really gets me is that once all these battles are over, some SEO schmuk could inadvertently flush the million dollar domain down the toilet with some redirects. For example, I know an individual privy to the infamous Toy’r’us debacle, when the company purchased toys.com for $5,000,000 and the stellar team at “un-named marketing company” redirected the domain and promptly lost ALL the traffic.

    July 17th, 2012 at 3:47 pm

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