Dominion.Domains

Be careful – that expiring domain you’re buying could come with Trademark trouble - MorganLinton.com

Labeled as auctions in Legal Discussion started by Jahe, Jun 23, 2018.

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Should bidders be alerted to verified trademark infringement claims on an auctioned domain?

  1. Yes

    28 vote(s)
    84.8%
  2. No

    5 vote(s)
    15.2%
  1. Jahe

    Jahe Established Member

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    https://morganlinton.com/be-careful...d-come-with-trademark-trouble/#comment-166448

    I spoke with a GoDaddy rep on this issue last week, and was told that even if a Trademark holder notifies GoDaddy to alert them that a domain name on auction infringes their Trademark rights; they will not add a disclaimer or disclose to auction bidders that they have been contacted by a verified registered Trademark holder. Thus, they allow the domain name to be sold, pocket the money, and let the new domain registrant get UDRP'd or sued almost immediately after the domain auction closes on their platform ( at least according to the GoDaddy rep).

    To those who have a solid understanding of IP law and UDRP process; should registries voluntarily disclose to all auction bidders when they have received a verified notification of trademark rights on a domain at auction? Would this disclosure improve transparency?

    I've noticed that GoDaddy reps do follow the NamePros forum. They seem interested in hearing feedback on improving their customer service experience.
     
    Last edited: Jun 23, 2018
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  2. 1Darko

    1Darko Active Member VIP

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    If they received a written notice they should reveil it, imo!
     
  3. DanSanchez

    DanSanchez MarkYourWorld.com VIP

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    Are you really surprised a company like Godaddy doesn't have domainer's best interest at the forefront of their operations? I still voted no, because their due diligence shouldn't even allow these sort of blatantly dangerous auctions to take place.

    Godaddy is *actually* profiting from active trademarks, there has to be a liability for them in this...? Looking for expert opinions.
     
    Last edited: Jun 23, 2018
  4. Jahe

    Jahe Established Member

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    @DanSanchez I am surprised because GoDaddy prides itself on its customer service.

    The 9th circuit sided with GoDaddy on secondary liability regarding the due diligence question on domain names appearing on their auction platform. However, the question was never raised if domain names should be auctioned without a disclaimer, when a trademark owner has made potential infringement claims on the auctioned DN to GoDaddy. In my view, that is unethical, to not disclose a potential lawsuit or UDRP in that specific scenario.

    For example, NikeShoes.com appears on auction. GoDaddy legal receives notification from Nike that they will pursue ACPA or UDRP claims against the winner. GoDaddy does not disclose alert from Nike, allows the auction to transpire, it sells for $10,000 to highest bidder. A week later, Nike files UDRP, 90 days later panel transfers domain to Nike. Bidder is out of $10K.

    I believe trademark due diligence is the responsibility of domain investors and so the 9th circuit has agreed. We all saw what happened with the WashingtonJournal.com travesty (never buy a domain with conducting a trademark search): https://domaingang.com/domain-law/w...-domain-he-and-new-owner-got-hit-with-a-udrp/

    But when a registry is alerted by a verified trademark holder, a disclaimer should be added to any auction IMO. This would be a great move for GoDaddy and other registries. Any experts please chime in...
     
  5. NameSplice

    NameSplice Established Member

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    Wow!
    I hope this isn't the way it goes. Not everyone is familiar with UDRP and TM.

    If GD knowing that a UDRP will be filed against the winner (and does not disclose the info about it) and the winner happens to not only lose the money paid for the name but also has to surrender the name or get sued by TM holder, to me this is just as bad as robbery.

    If they have the information of the UDRP filing then the name should not be auctioned at all imo.
     
  6. DNWon

    DNWon eCommerce Branding Specialist Gold Account VIP

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    Caveat Emptor
     
  7. Jahe

    Jahe Established Member

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    The thing is they may not receive the UDRP filing info from WIPO (whereupon they would freeze the domain name) until the domain is already sold. However, they may have received the alert of intent to file from the Trademark holder at the start of auction. I believe it is unethical to not disclose to bidders the intent of a verified trademark holder to file a UDRP; because that would prove bad faith, because the TM holder alerted the registry which should have disclosed to the bidders the inevitable UDRP filing. Feel free to call GoDaddy right now, I am sure they will tell you the same thing. The onus is on the domain name bidder, even if they have been contacted by TM holder.
     
    Last edited: Jun 23, 2018
  8. WebSolutions.GA

    WebSolutions.GA DrivebyDomains.com Blue Account

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    Unethical is putting it lightly, but unfortunately, the courts are going to rule with GoDaddy due to the disclaimers that they have in place in their ToS. In my opinion, I feel that they should have to end the auction after being notified and not allow it to take place at all, allowing the verified trademark holder to file against the current owner and protecting the buyer. But, I don't see them doing that and potentially losing money from commissions. The only ones profiting from the TM domain are GoDaddy and the seller. The buyer should be doing their due diligence, but, should also be notified that there has been a notice of intent to file suit sent to GoDaddy.

    Greed will eventually lead to the downfall of any company. They have zero legal obligation to alert the buyer as the courts have upheld. But, they do have a moral obligation to not profit from, by allowing to continue, the sale of a domain that they have been notified by a verified TM holder that the buyer of that domain will face inevitable legal action.

    Again, and I have said it before:
    This is just my opinion, It isn't worth much, but it's mine.
     
  9. Jahe

    Jahe Established Member

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    @WebSolutions.GA Very good points. I did notice GoDaddy changed their expired Auctions to 30 days non-redeemable. That was a positive improvement, as I heard many domain speculators complain of winning GoDaddy auctions, paying and then days later being notified that the domain had been renewed. So, somebody at GoDaddy is reading positive critiques on NamePros of their services. Sure, the 9th circuit ruled the registry had no obligation to conduct due diligence trademark searches, but the issue in that case was not: Do registries have an obligation to alert bidders on an auctioned domain name after receiving an intent to file notification from a verified TM holder?

    As of today, that issue has not been considered by the Courts that I am aware of. However, as you said, there is a moral consideration, that a company with long term outlooks needs to consider on this subject.
     
  10. WebSolutions.GA

    WebSolutions.GA DrivebyDomains.com Blue Account

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    @Jahe
    "Do registries have an obligation to alert bidders on an auctioned domain name after receiving an intent to file notification from a verified TM holder?

    As of today, that issue has not been considered by the Courts that I am aware of."

    I am not aware of any opinions on this either, however, admittedly I am not versed in TM cases. Unfortunately, I don't think that we will be seeing any opinions on this in the near future either.
     
  11. Kate

    Kate Domainosaurus Rex VIP ★★★★★★★★★★

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    This is scummy if true.
    Imagine an auctioneer is selling some piece of artwork, and while the auction is in progress he is notified
    by a third party that the item may have been taken in a burglary.
    And yet he stays mum and proceeds with the sale.
    The right thing to do would be to halt the sale and reach out to bidders.
    The onus of due diligence doesn't mean you can knowingly sell tainted merchandise.
     
  12. Jahe

    Jahe Established Member

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    @WebSolutions.GA Duly noted. But at a minimum, as domain speculators we owe it to ourselves to hold GoDaddy to the highest standard as the world's largest registry. The least we can do provoke needed conversations on the platforms available to us. This thread is just an attempt to create needed conversation on an aspect of domain auctions I personally find troubling. Hopefully more erudite IP thinkers will join the discussion.

    @Kate You provided a great analogy. I believe it is a moral bankrupt policy. It is the script that GoDaddy has instructed its CSR reps to use when asked by customers on the topic. So I assume it is company policy to not notify bidder of TM holder intent to file alerts. I invite everyone to call GoDaddy and report back here with affirmation or new info.
     
  13. WebSolutions.GA

    WebSolutions.GA DrivebyDomains.com Blue Account

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    @Kate I agree, the morally right thing to do would be to stop the sale. However, unfortunately, the corporate world largely lacks a moral compass and will place profits over people daily.
     
  14. Kate

    Kate Domainosaurus Rex VIP ★★★★★★★★★★

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    I am not a lawyer, but even if you bought a blatant TM and you're clearly in the wrong, I would guess that GD would still be liable for prosecution. Is concealment the proper word ?
     
  15. WebSolutions.GA

    WebSolutions.GA DrivebyDomains.com Blue Account

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    I have to say no in my opinion, due to the disclaimers and other rulings and opinions in the courts showing that auction operators are not liable for the trademark infringement of the sellers and buyers. The auction platform operators are considered protected third parties.
    Again, my opinion, that is a little above my pay grade in the legalese department.
     
  16. sharjeep

    sharjeep Established Member ★★★★★★★★★★

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    But then again, Ebay will pull seller's auction the second it gets a Notice of TM infringement from a TM holder. I really fail to see how GoDaddy (or any) domain auctions operate differently. Sedo does some kind of check, not sure how extensive, before allowing listing. I'm pretty sure if they got an official notice, they would pull an offending listing.

    Personally, I don't want GoDaddy making their own calls on this, but if they get an official notice from the TM holder, that is a different story. They should pull the auction, period. Let the seller try to dump it elsewhere.
     
  17. WebSolutions.GA

    WebSolutions.GA DrivebyDomains.com Blue Account

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    I agree they should, and they have a moral responsibility to do so. However in the US, the Lanham Act is interpreted differently, in different courts and doesn't always apply to auction sites. It's ridiculous.. The solution is simple in my opinion, if you have been told by a verified trademark holder that they intend to file any sort of legal action and you continue to allow the questionable item to be sold and you profit from it you are liable for secondary infringement. I don't know why auction sites are not always held to this standard. But for whatever reason, they aren't.

    I feel the same way @Jahe does. I hope that this discussion can open a door for civil conversation that can better our community while upholding the laws. Hopefully, we see companies such as GoDaddy change their policies and practices to one that is protective for all parties involved and not one that is protecting profits over people.

    Below is an excerpt from a report by the New York City BAR Association:

    ..."The Lanham Act contains no explicit language allowing for a cause of action of contributory infringementor vicarious liability. In the seminal case ofInwood Labs., Inc. v.Ives Labs., Inc., however, the Supreme Court interpreted that statute to imply such a cause of action and enunciated what remains the standard for contributory trademark infringement. The Court stated that a party which“intentionally induces another toinfringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement ... is contributorially responsible for any harm done as a result of the deceit.”
    Stated differently, the determination of contributory infringement depends upon a defendant’s intent and knowledge of the wrongful activities."...

    BUT


    ..."Various trademark plaintiffs have asked the courts to apply these principles to the Internet, with varying degrees of success. To date, there have been no decisions that have addressed, head-on, the application of secondary trademark liability to online auction sites."...

    Source: http://www.nycbar.org/pdf/report/Online Auction Sites Final Report.pdf
     
  18. nitg16

    nitg16 DNDiary.com VIP

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    If GD received trademark infringement notice and they are auctioning it on their website, wouldn't they be first in the line to be sued?

    Intentionally auctioning off a domain even after receiving potential trademark conflict is no less than creating a for sale lander for a trademarked domain.
     
  19. Jahe

    Jahe Established Member

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    @nitg16 It's an open-ended question if GoDaddy should be liable for secondary liability in cases where they have received notice from a verified TM holder of intent to sue or file UDRP on an expired auction domain. I didn't find any case law on that issue/question at this stage. IMO, it provides an opportunity for GD and other registries to make the morally correct change (policing themselves) without the need for a judicial decision. But then again, we talk about free markets and self-policing; but too often industries fall short when they become greedy/monopolistic in their leanings. Will registries do the right thing and modify their policy or not? We shall see..
     
  20. nitg16

    nitg16 DNDiary.com VIP

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    Yes, morally/ethically they should mention trademark notice.

    BTW, who legitimately owns domain during expiry period? Previous owner who let the domain expire or the registrar? If it is the registrar then they are legally liable IMO.
     
    Last edited: Jun 25, 2018
  21. Jahe

    Jahe Established Member

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    @nitg16

    The registries would probably say the original domain registrant, as the domain on GD will be pushed to auction on the 26th day after expiration. However, the domain registrant will have 4-5 days to renew the domain while on auction. On Day 31 the domain is non-redeemable to the original registrant. So, GoDaddy sells the rights to a domain that they do not own and which is redeemable the entire time the domain is on expired auction.

    Why not simply start the auction on Day 31 when it can not be redeemed by the original registrant?

    There are many things I am still learning about registry auction behavior.
     
  22. WebSolutions.GA

    WebSolutions.GA DrivebyDomains.com Blue Account

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    That is a very valid point.

    In my opinion, If they are the actual owner, it wouldn't even fall under secondary infringement. At that point they are the sole owner and, once they receive a notice of intent, GoDaddy would be knowingly acting in bad faith by continuing the sale of and profiting from a product that they have reason to believe is infringing upon the TM rights of the verified TM holder.

    They no longer should be able to fall under the protections offered to third parties.

    Again though, Just my opinion and I haven't found any case law to support (I haven't researched it a great deal today either, I just woke up :) )
     
  23. sharjeep

    sharjeep Established Member ★★★★★★★★★★

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    That is an excellent point. There could be the case where the owner was warned of the UDRP filing (or just on their own) decided to let the TM domain expire. Maybe they even actually agreed to let the domain expire.

    Then along comes GD and puts the expiring name up for auction. :-/
     
  24. WebSolutions.GA

    WebSolutions.GA DrivebyDomains.com Blue Account

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    Now @Jahe we can't expect the worlds largest registrar to wait a whole 5 days to make money! That would be insane! It's their money and they want it now!!! :ROFL::ROFL:
    Even though they have no rights to ANY of it until that day.
     
  25. Jahe

    Jahe Established Member

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    @WebSolutions.GA It pays to be a dot-Com focused registry. How dare I ask for reasonable self-regulation/policing...wishful thinking:xf.sick:
     

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