Why Merlin's UDRP Win is Frustrating | DomainInvesting.com
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Why Merlin’s UDRP Win is Frustrating

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Earlier today, Andrew Allemann published an article about Merlin Kauffmann’s successful UDRP defense of the FiberStar.com domain name. In this UDRP proceeding, he was represented by domain attorney John Berryhill.

I am glad to see that Merlin’s company won this UDRP. I am also glad to see language in the UDRP decision that favors people who own domain names as investments. I especially thought this was most relevant to people who invest in domain names:

Complainant’s assertion that Respondent’s sale price of $35,000 for the disputed domain name is evidence of bad faith under Policy ¶ 4(b)(i) fails also.  Complainant’s mark, FIBERSTAR, is composed of two common words, “fiber” and “star” and, as Complainant contends, fits within up to 15,000 generic-word domain names that are owned by Respondent.  Moreover, Complainant admits that it initiated negotiation over price by first contacting Respondent in connection with purchase of the disputed domain name.  Since, as reasoned above, there is no sustainable evidence that Respondent acquired the disputed domain name in bad faith, Respondent, as a legitimate reseller of generic-word domain names, is free to set the prices he deems reasonable for names in his inventory.  See Pocatello v. CES Marketing, FA 103186 (Nat. Arb. Forum Feb. 21, 2002) (“What makes an offer to sell a domain bad faith is some accompanying evidence that the domain was registered because of its value that is in some way dependent on the trademark of another, and then an offer to sell it to the trademark owner or a competitor of the trademark owner.”); see also Puky GmbH v. Ignatius Agnello, D2001-1345 (WIPO Jan. 3, 2002); see also Fifty Plus Media Corp. v. Digital Income, Inc., FA 94924 (Nat. Arb. Forum July 17, 2000).

The trouble I have with the UDRP process in general is that a different panel or panelist could completely find this irrelevant. The circumstances of another UDRP could be almost exactly the same and Mr. Berryhill could even represent a different domain owner, yet a panel could just as easily rule that offering to sell a domain name for $35,000 shows bad faith.

Domain names have become valuable assets for businesses, including those that invest in generic domain names. Owning and monetizing descriptive domain names is a legitimate business model. I think it is unfortunate that the UDRP process can be a crapshoot.

I am glad to see Merlin’s company prevail with a well reasoned UDRP decision, but it is frustrating to know that a UDRP with very similar circumstances could be decided in favor of the complainant while citing bad faith.


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 (20)

    Paul Buonopane

    It sounds like Fiberstar, Inc. contacted Merlin’s company in an attempt to buy the domain, and the panel decided that worked in Merlin’s favor. I’m curious whether the result would’ve been if there hadn’t been any attempt to purchase the domain, but rather a demand to transfer it without compensation.

    April 12th, 2016 at 12:13 pm

    Frank Schilling

    If a misguided single member UDRP panelist (or 3 member panel) unfairly rules against you on a generic valuable domain, you still have the option of turning to the courts to file suit against the Complainant.

    Here the registrar’s (and registrant) jurisdiction is important. I am based in the Cayman Islands and I like the higher legal standard here (based on English common law). Ill intentioned complainants looking to play roulette by trying to unseat you from valuable generic names back up quickly when faced with litigation in the Cayman Islands. Additionally, Uniregistry’s long-time physical presence in the Cayman Islands have helped educate the local legal establishment about the workings of IP law, so there is a fair, quick and moderate cost apparatus for respondents looking to bring legal action here. My presence in Cayman has served me well and that option is available to any Uniregistry client, large and small.

    The Cayman Islands will not help you defend against cybersquatting, however they offer legitimate advantages to generic name registrants, unfairly disadvantaged by an inequitable UDRP rulings and overt reverse domain name hijacking attempts.

    Move to Uniregistry.com

    April 12th, 2016 at 12:42 pm

      Garth

      Uncharted waters? UK Courts (English law) won’t overturn Nominet DRS decisions.

      In reply to Frank Schilling | April 12th, 2016 at 1:37 pm

      Ron

      Can you explain more about what advantage this has for Uniregistry clients?

      In reply to Frank Schilling | April 12th, 2016 at 2:14 pm

      Garth

      Lobby Cayman Government to have favorable legislation (wording) in place? Lay the tracks for the Adjudicator.

      In reply to Frank Schilling | April 13th, 2016 at 12:24 am

    Gerald M. Levine

    Eliot, there are certanly some anomalous decisions out there but taking the UDRP database as a whole this decision is consistent with expectations. I’d very much like to know what decisions you have in mind that go the other way that makes the process a “crapshoot.” There are circumstances under which high-volume registrants have been found infringing; maybe that’s what you’re thinking about, but for the most part I don’t find those decisions troubling when there’s infringing content. Gerald

    April 12th, 2016 at 12:53 pm

      Elliot Silver

      Here are a few recent UDRP decisions that went in favor of complainant that surprised me (off the top of my head):

      NHL.net (which was unused), ZT.com, Camilla.com, and Areas.com.

      I was also surprised about the numeric .com decision: http://www.wipo.int/amc/en/domains/search/case.jsp?case_id=33428

      There are several others that are pending that should be slam dunks for the domain owners.

      In reply to Gerald M. Levine | April 12th, 2016 at 1:16 pm

      Garth

      domainnamewire.com/2016/04/12/mike-mann-sues-block-soundstop-com-transfer

      No ads on the domain, just for sale to the world at large.

      In reply to Gerald M. Levine | April 12th, 2016 at 1:22 pm

      Nat Cohen

      Gerald,

      I’m surprised by your comment, as you better than just about anyone else are familiar with how certain panelists have broadened the scope of ‘bad faith’ far beyond the Policy’s narrow mandate to target clear-cut cybersquatting.

      I agree with you that taken as a whole, the decision reflects an accurate understanding of the Policy and is consistent with how most panelists interpret the UDRP. But Elliot’s comment that the UDRP is a ‘crapshoot’ is accurate.

      If by ‘anomalous decisions’ you mean panelists who consistently find that the business practice of investing in domain names is inherently bad faith, then that isn’t an anomaly. It is rather an intentional effort by some panelists to take advantage of the overly vague language of the UDRP and their unchecked power to ‘reinterpret’ the Policy as they see fit to create a bad faith standard that is inconsistent with the Policy and the majority interpretation and inconsistent with intellectual law principles.

      For example,

      ceat.com
      http://www.wipo.int/amc/en/domains/search/text.jsp?case=D2011-1981

      “the Respondent’s general offer to sell the domain name shows that the Respondent knew or should have known that someone with rights in the “Ceat” name would have an interest in the domain name. ”

      “Thus, the general offer to sell the domain name constitutes bad faith use.”

      nvrt.com dissent (Lowry)
      http://www.adrforum.com/domaindecisions/1659119.htm

      Reselling domain names does not constitute a bona fide offering of goods or services for the purposes of the UDRP. To allow such an absurd construction would eviscerate the UDRP because every respondent could demonstrate rights by simply offering the relevant domain name for sale to the general public at the time of registration. The UDRP could be easily circumvented.

      The missing factor Complainant cannot directly prove is Respondent specifically targeted Complainant. Respondent denies knowing of Complainant’s existence and denies targeting Complainant. However, Respondent was clearly targeting (i) someone who had a four letter trademark as a prospective purchaser (or their competitors) or (ii) someone with a legitimate business reason to use the four letters NVRT. While Respondent may not have actually known of Complainant’s existence, Complainant was a member of the fairly small class Respondent was targeting as prospective purchasers for the domain name. I would find Respondent targeted Complainant.

      bespoke.com dissent (Dreyfus)
      Moreover, the Respondent offers the domain name for sale to the public; even if it could be a legitimate activity, it does not imply a right in such registrants to sell domain names that are identical or confusingly similar to trademarks or service marks of others without their consent.
      The Dissenting Panelist finds that the Respondent’s only interest in buying the disputed domain name was to sell it for valuable consideration in excess of its out-of-pocket expenses, either to the trademark’s competitors, or to the trademark owner.

      There are many other decisions along the same vein. The consistent viewpoint is that reselling domain names is not a legitimate activity. Further, the panelists issuing these decisions don’t seem to understand that domain names can have inherent value outside of any trademarked use. They seem to believe that any value in a domain name is due to value created by a trademark owner, whether one that the domain owner is aware of or not, whether one that existed at the time of the domain registration, or in the future.

      These panelists do not require what most panelists require – evidence that the Domain Owner specifically targeted the Complainant in the UDRP. For panelists who view domain investing as inherently bad faith, it is bad faith for a domain investor to register a domain and to offer it for sale, even if the company bringing the complaint is a company that the domain investor never heard of who had no trademark rights at the time of the registration.

      This is a consistent position held by a minority of panelists, so I wouldn’t call decisions that result from this viewpoint an anomaly. Rather it is a defect of the UDRP that has the potential to be fixed through the recently started ICANN Working Group on RPMs and the UDRP.

      When the UDRP was first being developed in the late 1990s, domain investing was in its infancy. Eighteen years later domain investing is a booming, global billion dollar industry. It is well past time that the UDRP was updated to recognize domain investing as a legitimate activity, rather than having the UDRP serve as a tool to steal valuable domains relying on reasoning that is in conflict with established legal principles.

      Nat

      In reply to Gerald M. Levine | April 13th, 2016 at 9:01 am

      Gerald M. Levine

      Nat, thank you. Your points are well taken and you say much that I agree with. I was just reflecting on what I see as the consensus at this time and referring only to the decision Elliot was commenting on. I want to study some of your examples more closely. Gerald

      In reply to Nat Cohen | April 13th, 2016 at 10:43 am

    Chris

    What if the company was called MyAmericanFiberStarFirstPlusPro, would an asking price of $35k for the matching .com be justified?

    But what is so special about generic words anyway, can’t domains have generic value regardless of whether or not they are words? What about microstar – surely worth at least as much as fiberstar? Or Fiber1 or FiberAbc?

    We could afford an arbitrary protection to registrants of domains that comprise generic words, but it would surely be more logical to apply the same logic to all domains that have generic value.

    But then, every domain has a certain amount of generic value. And therefore the registrant should win every defense so as long as he considers his asking price reasonable.

    If that is absurd, we must conclude that it is not the registrant who should be the judge of what is reasonable. The more reasonable judge would be the market itself. $35k is arguably fair value for fiberstar.com only if there is one party willing to pay $35k, and another willing to bid the domain up to almost the same level. The chances of this are slim. At an asking price of $35k I would award this domain to the complainant. At $3500 I would give the respondent the benefit of the doubt. It’s tricky to know where to draw the line, but highly debatable whether it would be right to afford respondents such free reign as suggested here.

    April 12th, 2016 at 3:58 pm

      John

      Although I personally think the domain is garbage and wouldn’t even register it for reg fee, nonetheless I regard your reasoning to be far worse and completely and utterly wrongheaded, lopsided, unprincipled while attempting to appear principled, and completely out of touch with reality. In fact, your statement is more like what I would expect from an employee in the legal department of Fiberstar, Inc. itself or someone completely outside the domain investing industry with an axe to grind against it.

      In reply to Chris | April 12th, 2016 at 6:46 pm

      Elliot Silver

      I would not trust lawyer panelists to have to determine how much a domain name is worth in order to decide the winner of a UDRP.

      In reply to Chris | April 12th, 2016 at 7:36 pm

      Chris

      Then Estibot decides. $4100 or below here is a win for respondent, while complainant wins above. Respondent may however request that domain be sent to auction if they feel hard done by.

      In reply to Elliot Silver | April 12th, 2016 at 7:56 pm

      Elliot Silver

      No offense, but using Estibot for something important is a terrible suggestion and $4,100 is a silly, arbitrary number.

      In reply to Chris | April 12th, 2016 at 8:04 pm

      Garth

      A registrant can ask whatever they wish. It’s their asset.

      In reply to Chris | April 12th, 2016 at 11:19 pm

      Chris

      When it’s not blatant infringement, you presumably mean.

      I’m not disputing the obvious fact that the registrant can ask whatever they want, just considering whether the system should allow it.

      Domains aren’t like other most assets where another option will suit the buyer’s purpose just as well. Often nothing comes close to the exact match .com, giving monopoly power to the owner.

      In reply to Garth | April 13th, 2016 at 6:29 am

      Ariel

      Subjecting determination of bad faith to the asking price presupposes heavy-weight objective criteria in the appraisal of domain names, and is therefore complete nonsense.

      The well known fact that the #1 appraisal source in the industry (estibot) is no more than a general indication at best attests to the lack of such criteria.

      The UDRP is an important procedure put in place to protect legitimate business interests from malicious use by others. Proposing that the UDRP panel measure bad faith according to asking price would mean that the UDRP becomes quasi a market price regulator, which it certainly isn’t meant to be.

      The burden of proof lies with complainant to show that respondent has in fact registered and/or used the domain name in bad faith.

      In reply to Chris | April 13th, 2016 at 10:45 am

      Chris

      I find Estibot, which bases appraisals on objective criteria, to be a reasonable guide much of the time.

      Asking price can be relevant. Say a domain owner has priced a domain, which has no special value but matches a trademark, far above the others in his collection, we might wonder why.

      Some speculators decide which expired domains to register and set asking prices based on such factors as whether the string is already taken in other extensions, and how frequently the string appears in Google – which may be influenced by any matching trademarks/good will.

      In reply to Ariel | April 16th, 2016 at 6:44 pm

    Chris

    None taken, I wasn’t being entirely serious. There is of course no easy solution although I think it’s fairly obvious in a lot of cases whether or not a price is one that the market will bear.

    April 12th, 2016 at 8:32 pm

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