news The dark side of granting “lease to own” domain sales via Afternic

[News]

Afternic is rolling out the option of offering lease to own (LTO) opportunities to potential domain buyers.
Copied from Dan.com that streamlined the process, the Afternic process appears to be a welcome option for domain investors.

Read More.

 

[yb1313]

Yes there's the risk that a domain will be abused by a buyer once he rents it, but as domainers we should probably just deal with it/hope for the best and still provide the lease to own option, since it increases the chance of selling a domain i.e. sell-through-rate, to the best of my knowledge. Also, once you sell a domain using LTO you're not really its owner anymore as it goes to an escrow account of the middleman (AN) and you don't operate it anymore so logically you're not liable for it.
Furthermore, I'd like to believe that Afternic will act reasonably too, and in the case of extreme domain misuse would comply with a request to end such LTO deal if the seller or anyone reports and proves that the buyer completely misuses it - after all, Dan and Afternic (which control this secondary market) want to protect themselves too.

 

[Optixgroup]

Does anybody know how/if Afternic’s indemnification on LTO plans differs from Dan’s?

 

[jberryhill]

Also, once you sell a domain using LTO you're not really its owner anymore as it goes to an escrow account of the middleman (AN) and you don't operate it anymore so logically you're not liable for it.

Afternic's terms literally contradict that.

In order to protect themselves, they keep you as the underlying registrant, but they control the domain name as your agent, as further explained in the terms. If you were not maintained as the registrant, there is no reason for them to get to specifically acknowledge that you are bound by the UDRP - which ONLY applies to the registrant.

 

[yb1313]

@jberryhill
The above does not contradict my point, which is that Afternic is expected to act with common if a LTO domain is abused (also, it's easy to prove that someone else uses it so generally sellers should be legally protected). By the way, in the terms you quoted, it doesn't say that Afternic keeps the seller as the "underlying registrant", but instead it makes clear they can transfer it to a third party; I'm not sure where you got that info from but it'd be great to know.

 

[jberryhill]

Afternic is expected to act with common if a LTO domain is abused (also, it's easy to prove that someone else uses it so generally sellers should be legally protected)

“act with common”? I don’t know what that means, along with it being “easy to prove that someone else uses it”. Could you clarify what you mean there?

As far as the way the UDRP works, GoDaddy redacts most Whois information these days. When a UDRP is filed, the provider notifies the registrar and the registrar identifies the registrant.

There is no need for anyone other than the registrant to agree to “be bound by the UDRP” so perhaps you might explain the point of having someone other than the domain registrant agree to be bound by the UDRP. The only people to whom a UDRP applies are the registrant, the complainant and the registrar. So, since the seller is not the complainant or the registrar, then perhaps you might fill me in on how one “agrees to be bound by the UDRP” if they are not the registrant.

It makes total sense to maintain the seller as the registrant of the domain name, but to have them agree that they don’t control the name during the LTO. That provides protection to Afternic, since they don’t get dragged into a dispute proceeding the way that Domain Capital regularly does.

 

[jberryhill]

For example, take a look at the nonsense that goes on when an escrow service is the registrant:

https://www.adrforum.com/domaindecisions/1609855.htm

Because Afternic is affiliated with a registrar, it’s a lot simpler just to keep the seller as registrant but have them agree to surrender control during the term, and it reduces exposure. GoDaddy also runs a TLD registry and one is disqualified from obtaining new TLDs if one has three UDRP losses within a few years (the exact number escapes me at the moment). It would be idiotic for them to put that on the line for LTO sellers.

 

[D Haynes]

The latest DNW podcast covers exactly this issue with Kate Buckley. She explains how she approaches LTOs to try to mitigate the risks of domain abuse. Worth a listen.

 

[yb1313]

@jberryhill, Again, where does it say that the seller remains the registrant in a LTO deal @Afternic? It cleally says that Afternic will "control the LTO domain during the LTO period" (see last paragraph of the terms you quoted). It's the opposite of what you're saying - AN says they will be the registrant! But if my understanding is wrong please enlighten us otherwise you seem to have extensive knowledge in this field - with official TOS citation.
Btw, here's my own experience with this matter: Last year I sold a domain through LTO at Dan (I still receive monthly payments for it) - as soon as I sold it I transferred it away from my account to Dan's account, therefore I'm not the owner/registrant anymore, Dan appears to be (proved by a simple whois search too that shows a different Holland-based registrar&t). As Dan and AN are now both Godaddy properties and they make things similar in both (same commission for example) we can assume it will be similar in AN too.

Note that this post's article's touches upon the issue of what sellers can do in cases of "unlawful usage", arguding that sellers are quite limited, which I agree is a big issue but yet I think we should expect AN to act with "common sense" in such cases, i.e. AN it will act in reasonable manner if our domain is abused and they're informed about it, and terminate such a deal. Thus sellers should generally trust we'll not be responsible for usage of domains we lease-to-own to someone else, because A) someone else technically uses it, not us, obviously, and B) A LTO buyer also has to abide by the law as well UDRP rules of course, and AN would redirect any blame on the buyer (yes, unfortunately they can still misuse it, but not without consequences).

 

[jberryhill]

@jberryhill, Again, where does it say that the seller remains the registrant in a LTO deal @Afternic?

Because the terms require the seller to acknowledge they remain "bound by the UDRP". That makes no sense absent them being the registrant. It also reduces potential liability by Afternic.

Explain why, in your opinion, the terms require the seller to acknowledge they are "bound by the UDRP" absent them being the registrant of the domain name.

AN it will act in reasonable manner if our domain is abused and they're informed about it, and terminate such a deal.

Knowing that someone is sending out, for example, phishing emails, or that a URL under the domain name is the reference target of phishing emails is not something that is readily observable.

But, more importantly, knowing that someone is pitching an otherwise dictionary-word domain name to a longstanding TM owner is not something that anyone is going to know.

But stopping abuse is not really the point. Yes, GoDaddy will generally shut down ANY domain names which are credibly involved in abuse - LTO deal or not. That's not really the issue.

The point is that the terms do acknowledge, correctly, that the domain name could end up being lost as a consequence of the buyer's actions. But the terms DO NOT, anywhere I can find, state that the buyer remains liable to the seller for the value of the domain name.

In fact, there is not even a coherent set of terms between buyer and seller which even match up. I had posted a Twitter thread about my hunt for those terms and while, yes, I found the LTO seller terms on Afternic, I could not find the buyer terms. Afternic responded and said that the buyer agrees to the LTO terms on Dan:

Now, again, let's remember what is the question:

What, if any, recourse does the seller have if the LTO buyer does something that results in loss of the domain?

What's truly banana pants about Afternic's response is that my question relates to the AFTERNIC LTO terms to which the seller agrees, and under which, for example:

The terms to which the buyer agrees, at Dan, say:

So you have a situation in which the seller makes an agreement with one company, Afternic, subject to the terms posted by Afternic. On the other side, the buyer makes an agreement with a different company, Dan, subject to the terms posted by Dan.

Since you have all this figured out, then why not just enlighten me, because I'm obviously too damned stupid:


---------------------
Bob has MonsterFan.com. It is on PPC for horror movies. Bob lists the domain name on Afternic for LTO purchase. Charlie agrees to buy the domain name in an LTO deal for $60,000, paying $5,000 per month for one year.

One day after getting the DNS set up for the domain name, Charlie sets up email and sends an email to the people who make Monster brand energy drinks and says, "Hi, I'd like to sell you this domain name for $100,000." Charlie's plan is to get them to agree, pay off the balance of the LTO deal, and make $40,000 profit.

Instead, the Monster people file a UDRP, say that Bob tried to sell them the domain name using an email address from the domain name itself. Bob says, "It wasn't me, it was the guy using the domain name." The UDRP panel doesn't care, because registrants are responsible for conduct which occurs using their domain name. The UDRP panel orders the domain name to be transferred.

Bob now has no domain, and no $60,000. What recourse do the terms provide Bob against Charlie?
------------

How anyone was supposed to be knowing what emails Charlie was sending, or how a domain abuse policy would have prevented it from happening?

Is Bob is entitled to recover the remaining $55,000 from Charlie?

Should he file an arbitration in the US under the terms he agreed with Afternic, or a lawsuit in the UK under the terms the buyer agreed with Dan?

Now, yes, there are risks with an LTO. But you are handing the keys to your car over to someone who can drive that car over a cliff, and the terms to which everyone agrees provide you with NO recourse if that happens. At least with your car, you can insure it, but you can't do that with a domain name.

So, go ahead and tell me what you would suggest Bob do?

What section of the terms - at Afternic or Dan - Bob will enforce against Charlie to get the $55,000 in value which Charlie destroyed.

 

[jberryhill]

Thus ws sellers should generally trust we'll not be responsible for usage domains we lease-to-own to someone else, because A) someone else technically uses it, not us, and B) Obviously, a LTO buyer has to abide by the law as well UDRP rules too, and AN would redirect any blame to him (yes, ofc they can still misuse it).

That's simply not true. Afternic doesn't have the power to "redirect any blame" if someone is suing you for cybersquatting, trademark infringement, or any of the various things one can get sued for.

In fact, the "but the registrar was parking my domain name" defense loses all of the time in UDRP disputes, because the registrant of the domain name is held responsible for whatever happens with the domain name. That's actually one of the things that ICANN requires you to acknowledge when you REGISTER a domain name.

https://www.wipo.int/amc/en/domains/search/overview3.0/#item35

3.5 Can third-party generated material “automatically” appearing on the website associated with a domain name form a basis for finding bad faith?​

Particularly with respect to “automatically” generated pay-per-click links, panels have held that a respondent cannot disclaim responsibility for content appearing on the website associated with its domain name (nor would such links ipso facto vest the respondent with rights or legitimate interests).

Neither the fact that such links are generated by a third party such as a registrar or auction platform (or their affiliate), nor the fact that the respondent itself may not have directly profited, would by itself prevent a finding of bad faith.

People lose domain names in UDRP disputes as a consequence of "something someone else did" all of the time.

 

[yb1313]

Good research on the topic. And if you ask for my opinion, I agree with most of those concerns.
It should not be a shocker however, that selling a domain through lease-to-own (LTO) entails some risk. Let's remember that the selling side enjoys some benefits too, such as a higher sale price (if the sale period is longer than 1 year) as well as a chance to get the domain back after receiving payments for it (if buyer stops paying and defaults).

As for the risks involved, to the best of my understanding in this situation:
- LTO deals at AN do come with the risk of abuse that may lead to loss in domain reputation or in extreme cases, ownership, indeed. Spammers/scammers usually register cheap-ass domains, but of course one may invest in a serious name and engage in things like spamming/phishing/whatever, causing the domain to lose online authority/reputation, and in rare cases its entire possession, due to TM issue for example as you rightly noted. (As opposed to a car sale, at least the buyer can't run away and disappear with your domain without paying in full tho, lol)
- TOL deals at AN do not appear to legal risks for sellers in the sense that they will be liable for buyer's actions; there's still no indication that the seller remains the registrant; to the contrary - it appears Afternic will be the registrant (or maybe even the buyer is? It's probably easy to find out by simply making such a transaction). It's worth noting that Afternic states above that a seller in a LTO deal is "bound by our Uniform Domain Name Dispute Resolution Policy" i.e. bound by their own terms, simply as the domain seller in a LTO deal (which does not necessary mean the selling side remains in a registrant position), as one may wish to complain or anything. Thus there's practically no way that (in your example, the seller) Bob will be in legal trouble for abuse done by Charlie's (buyer) behavior, as the latter did the abuse and that's easily provable (surely, buyers may still harm the domain).

To sum it up, the risk of losing the domain's authority or possession is a serious and legitimate concern, which can hardly be mitigated (as noted, people lose domains they own too). If someone had any experience with the above, it would be interesting to hear it here.
As for getting in legal trouble for buyer's action, that would just make no sense - A should not be responsible for B's actions and the law must take it into account (whether A is officially the registrant or not, and it appears he's not); it's not the same as one displaying ads on a domain they control.
Note that Afternic also has an arbitration process for such matters. Ironically there may be an issue with my sold LTO domain at Dan and luckily it seems to have a better and rather fair conditions for sellers but I hope there will be no need to find out nor dig into that subject further.

 

[jberryhill]

A should not be responsible for B's actions and the law must take it into account

I hear a lot about what the law "should" do. People have the weirdest ideas, based on nothing, about what the law "should" do or not do.

Do you remember this whole debacle:

https://techstartups.com/2022/02/04...cease-using-brand-due-trademark-infringement/

Canvas.com loses its domain name after district court judge ordered the diversity recruiting startup to cease using the brand due to trademark infringement​

Maybe you do, or maybe you don't... but it got a lot of attention at the time.

That name was on a payment plan through Escrow.com.

Note that Afternic also has an arbitration process for such matters

That's between Afternic and its customers. There is utterly nothing that would require the buyer to show up or care.

 

[mdent]

Would it help if the registrant information were changed to that of the buyers, while the domain is in the LTO holding account? Would it even be feasible, considering the legal side of things, 60-day locks, etc?

 

[Future Sensors]

Because the terms require the seller to acknowledge they remain "bound by the UDRP". That makes no sense absent them being the registrant. It also reduces potential liability by Afternic.

Explain why, in your opinion, the terms require the seller to acknowledge they are "bound by the UDRP" absent them being the registrant of the domain name.



Knowing that someone is sending out, for example, phishing emails, or that a URL under the domain name is the reference target of phishing emails is not something that is readily observable.

But, more importantly, knowing that someone is pitching an otherwise dictionary-word domain name to a longstanding TM owner is not something that anyone is going to know.

But stopping abuse is not really the point. Yes, GoDaddy will generally shut down ANY domain names which are credibly involved in abuse - LTO deal or not. That's not really the issue.

The point is that the terms do acknowledge, correctly, that the domain name could end up being lost as a consequence of the buyer's actions. But the terms DO NOT, anywhere I can find, state that the buyer remains liable to the seller for the value of the domain name.

In fact, there is not even a coherent set of terms between buyer and seller which even match up. I had posted a Twitter thread about my hunt for those terms and while, yes, I found the LTO seller terms on Afternic, I could not find the buyer terms. Afternic responded and said that the buyer agrees to the LTO terms on Dan:


Show attachment 243537

Now, again, let's remember what is the question:

What, if any, recourse does the seller have if the LTO buyer does something that results in loss of the domain?

What's truly banana pants about Afternic's response is that my question relates to the AFTERNIC LTO terms to which the seller agrees, and under which, for example:

Show attachment 243538

The terms to which the buyer agrees, at Dan, say:

Show attachment 243539


So you have a situation in which the seller makes an agreement with one company, Afternic, subject to the terms posted by Afternic. On the other side, the buyer makes an agreement with a different company, Dan, subject to the terms posted by Dan.

Since you have all this figured out, then why not just enlighten me, because I'm obviously too damned stupid:


---------------------
Bob has MonsterFan.com. It is on PPC for horror movies. Bob lists the domain name on Afternic for LTO purchase. Charlie agrees to buy the domain name in an LTO deal for $60,000, paying $5,000 per month for one year.

One day after getting the DNS set up for the domain name, Charlie sets up email and sends an email to the people who make Monster brand energy drinks and says, "Hi, I'd like to sell you this domain name for $100,000." Charlie's plan is to get them to agree, pay off the balance of the LTO deal, and make $40,000 profit.

Instead, the Monster people file a UDRP, say that Bob tried to sell them the domain name using an email address from the domain name itself. Bob says, "It wasn't me, it was the guy using the domain name." The UDRP panel doesn't care, because registrants are responsible for conduct which occurs using their domain name. The UDRP panel orders the domain name to be transferred.

Bob now has no domain, and no $60,000. What recourse do the terms provide Bob against Charlie?
------------

How anyone was supposed to be knowing what emails Charlie was sending, or how a domain abuse policy would have prevented it from happening?

Is Bob is entitled to recover the remaining $55,000 from Charlie?

Should he file an arbitration in the US under the terms he agreed with Afternic, or a lawsuit in the UK under the terms the buyer agreed with Dan?

Now, yes, there are risks with an LTO. But you are handing the keys to your car over to someone who can drive that car over a cliff, and the terms to which everyone agrees provide you with NO recourse if that happens. At least with your car, you can insure it, but you can't do that with a domain name.

So, go ahead and tell me what you would suggest Bob do?

What section of the terms - at Afternic or Dan - Bob will enforce against Charlie to get the $55,000 in value which Charlie destroyed.

@GoDaddy

I think Mr Berryhill has some excellent points here. Could you please answer his main concerns here in this thread?

 

[jberryhill]

Could you please answer his main concerns here in this thread?

No one from GoDaddy is going to get into a discussion over the terms of service. They aren't allowed to.

If a GoDaddy employee were to post something along the lines of "Oh, this clause in the contract means X" then someone could attempt to use that as an authoritative "official" interpretation of the contract in a dispute later on. So, no, the GoDaddy legal folks aren't going to let employees do that, and the employees know better than to stick their necks out and try to tell you what the terms of service mean. The only time that will happen is when they are acting as puppets and repeating the lines they've been told to repeat.

 

[jberryhill]

Would it help if the registrant information were changed to that of the buyers

In a word, no.

Would it help if the buyer went bankrupt during the LTO and a freeze was put on all assets held in the name of the buyer during the bankruptcy?

No, that would not help.

Look, any business decision has its risks and its rewards. If you want to reap the value of a domain name from a buyer who does not have or prefers not to pay, the total value up front, then an LTO is an attractive option. In exchange for that bargain, you take on the risk that the domain name might be lost for any of a variety of reasons, that the buyer will not pay the rest of the balance after that, and you'll be left with a bucket of nothing.

The Afternic terms are designed to protect Afternic, not you. That's not some sort of evil machination. That's just the way a large public company has to manage THEIR risks in dealing with people who do all kinds of unpredictable and potentially risky things.

My only curiosity in this was whether the Afternic, or even the Dan, terms attempted to allocate risk of loss of the domain name between the parties by even pretending to keep the buyer on the hook for the remaining balance in the event the domain name is lost. I've been helping parties manage LTO transactions for quite a long time for very high end domain names, and how to allocate the risk of various kinds of losses is always an interesting discussion in mediating those kinds of negotiations.

There aren't a lot of options that are going to make everyone happy in the kind of "one size fits all" volume business for low-end transactions that GoDaddy is seeking to facilitate here, and it pretty much looks like they (a) decided not to explicitly address the topic because it can be a can of worms, or (b) just don't care. Option (b) makes a lot of sense because that is a "customer problem" and not a "GoDaddy problem". GoDaddy doesn't pay legal staff to solve YOUR problems.

 

[biggie]

Hi

@jberryhill

question:
since the buyer in an LTO does not own the domain,
a then shouldn't AN/GD have a clause that states buyer cannot offer or solicit the domain name for sale or sublease, while LTO is still in effect or until payments have been made in full.

there should be some stated restrictions on usage during the LTO period.

BTW: thanks for your input on this subject

imo....

 

[Future Sensors]

No one from GoDaddy is going to get into a discussion over the terms of service. They aren't allowed to.

Thanks for giving GoDaddy this simple escape to not have to respond anymore.

 

[jberryhill]

shouldn't AN/GD have a clause that states buyer cannot offer or solicit the domain name for sale or sublease, while LTO is still in effect or until payments have been made in full.

You can make an argument either way about whether this should or should not be allowed. This sort of thing goes on under all kinds of LTO arrangements.

Example - You set up a company to sell rugs online and you buy rugs.tld for $12,000 in 12 one month payments. You expect to sell $15,000 of rugs in a year. Two months into it, someone comes along and says, I'd like to buy rugs.tld for $100,000. What are you going to do?

If the LTO agreement allows you to pay off the balance early, you surely might consider arranging to sell the name, use the payment to pay off the LTO balance and transfer it to the buyer.

In fact, LTO arrangements are one way of securing an exclusive option to sell, which has been the basis of several LTO arrangements I've done for clients.

The Dan.com terms ("updated July 24, 2023, lol) say...

https://dan.com/terms_of_use

c. Buyer may not grant any third party any rights to the LTO Domain, including any right to use the LTO Domain.

That would cover your subleasing prohibition, and would, arguably, prohibit granting a buyer the right to purchase the domain name in a transaction contingent on your paying off the balance.

But, and you might want to think about how you set up your LTO purchase... If you had set up a single-purpose company to operate rugs.tld in the first place, you can certainly offer to sell your company to anyone, and they would buy your company along with the LTO agreement to which your company is a party.

But you can see how much skill, thought and care they put into these things:

So, if you want to buy a previous LTO domain, then get some beer and a DJ, I guess.

They don't even read the crap they have you agree to.

 

[jberryhill]

Thanks for giving GoDaddy this simple escape to not have to respond anymore.

If you run an $11B public company, you can't have low level employees running around saying things that might end up being used against you in a legal proceeding.

The takeaway is this - LTO has benefits and risks. Even if risk of loss of the domain name were allocated to the buyer, the practical likelihood of recovering that value in the event of loss ultimately depends on the ability, and willingness, of the buyer to make that up.

Is it a big risk? Depends on the name and the buyer. Is it a name that is susceptible to an obvious loss mechanism? Is it a doomed name to begin with... etc.

But do understand - because GoDaddy puts it in plain English in the thing no one reads - there are circumstances in which that domain name can be lost, and you will have no recourse. Actually enforcing these kinds of things is a game with a high price of admission.

It's not about "Bad GoDaddy" or "Good GoDaddy", it's simply about you managing your risks and understanding that GoDaddy answers to only one higher power - their shareholders. It is their highest legal duty to maximize their value and return to those shareholders.

So, yes, they will drop crazy money on someone who is already wealthy one year, and then turn around and kick low-paid salaried employees out on their ass the next, because they are not there to make anyone feel good. They have slapped this thing together without any coherent contractual framework, and agreements full of holes, because the marketplace folks know they have to make the numbers go up or next year it's them who will be trying to figure out how to pay their mortgages and their kids' tuition. The legal department is not a revenue center. So, have some consideration for the kind of pressure they live under.

Ultimately, in the vast majority of instances, the LTO buyer will pay off the name, or they will default and you'll get the name back. In the interval between, you'll make money you wouldn't have had because the buyer couldn't or wouldn't agree to a one-off sale. That's good news. They are delivering a service their customers wanted and from which their customers will benefit.

The upshot is that you must understand that there is some risk. If you do not understand the risk, don't take the risk. If you can't evaluate the risk, find someone who can help you.

 

[Peter45]

the risk of losing the domain's authority or possession is a serious and legitimate concern

The point is that the terms do acknowledge, correctly, that the domain name could end up being lost as a consequence of the buyer's actions.

URDP: Bad faith
a) at the moment of registration and
b) while using the domain.

How can a Complainant prove that the lessor/seller back then registered the domain in bad faith?

 

[Peter45]

People lose domain names in UDRP disputes as a consequence of "something someone else did" all of the time.

Ok but again, if the lessor/seller loses the leased domain because of the lessee/buyer behaviour, without any sign that he registered the domain in bad faith, doesn't this contradict blatantly ICANN Uniform Domain Name Dispute Resolution Policy wording?

(iii) your domain name has been registered and is being used in bad faith.

In the administrative proceeding, the complainant must prove that each of these three elements are present.

 

[jberryhill]

How can a Complainant prove that the lessor/seller back then registered the domain in bad faith?

It would probably be enlightening for you to subscribe to the daily WIPO UDRP decision email service to become familiar with the ways in which these things are decided, and what kinds of things are used to make those decisions. https://www3.wipo.int/newsletters/en/#domain_names

Because these things tend to be fact-dependent, an abstract question like yours has no answer other than "on the facts, and what will be inferred from them."

For example, lets say that there is a company that provides financial services called "STAIRCASE". They launched in 2010 and registered a trademark in 2014.

You register the domain name staircase.com in 2018 because it dropped at auction and it is a generic word. You then put it up for sale or lease.

Someone leases the domain name from you in 2020. They use the name to provide financial services in competition with the trademark owner.

So, here's the way the case looks:

The Complainant has a longstanding mark for STAIRCASE for financial services. The domain name is obviously being used to infringe the Complainant's mark. The Complainant states that the fact it is being used to infringe their mark is evidence of bad faith intent in having registered it in the first place.

(Now, I'm going to stop here and discuss the word "evidence" for a second, because most people do not actually understand that word. Evidence is something which, if shown, makes a given conclusion either more likely or less likely. "Evidence" is not the same thing as proof. If, for example, a bank was robbed five minutes ago and I am pulled over for running a stop light somewhere near the bank, and I have a lot of cash sitting on the seat next to me, then that is "evidence" that I may have robbed the bank. Of course, it could be that I just happened to be driving by with cash on my seat. That is the difference between "evidence" and "proof".)

Okay, so, the domain registrant is going to respond to that with "I didn't register the name in bad faith. The guy who rented it merely used it in bad faith."

That defense is most likely going to lose. At best, you didn't care what the domain name was going to be used for, and you are getting paid, in part, from the proceeds of the infringing business being conducted there. The UDRP defense of "Yes, it's being used for an unlawful purpose but it's someone else's fault and was not my intention" has a long history of losing. Saying, "The thing that happened within my control is not the thing I intended to happen" is, already, an uphill battle, given the usual inference that "what people did" is what they intended to do.

But the bottom line is that the evidence shows the domain name is being used for an infringing purpose, from which one can infer intent. Against that evidence, you have the person responsible saying, "I didn't mean for that to happen" without any evidence otherwise.

Then, there are the examples in the UDRP itself:

------------

b. Evidence of Registration and Use in Bad Faith. For the purposes of Paragraph 4(a)(iii), the following circumstances, in particular but without limitation, if found by the Panel to be present, shall be evidence of the registration and use of a domain name in bad faith:

(i) circumstances indicating that you have registered or you have acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or

------------

So we have a situation here in which you have rented the domain name to a competitor of the trademark owner, and you are going to argue this is not a circumstance indicating you acquired the domain name in order to rent it to a competitor of the complainant. I'm not saying that is an impossible task, but it is obviously going to be an uphill battle.

Given the fact that the domain name was being used to infringe the mark, you'll need to have something better than "that's not what my intent was when I registered the domain name" because the subsequent use of the domain name is evidence of your intent. We usually assume that people are doing what they intended to do by the fact that they are doing it, absent some tangible reason to believe otherwise - and certainly more than a self-serving denial.

The standard here is not some standard of absolute truth. Nobody can know what goes on in someone else's head. The standard here is "What a UDRP panelist is going to believe is more likely or not". If it looks like a 49% chance you acted in good faith, you lose.

"How does one prove intent?" is a question that comes up in much larger contexts than just the UDRP, and is frequently raised in the context of not having had a lot of experience in legal disputes involving intent. Needless to say, it is not a big deal in the context of criminal law where things like "possession of (illegal substance) with intent to deliver" is one of the most common criminal charges.

Finally, the "I didn't intend for the thing that actually happened to happen" defense is further viewed as an opening to an end-run around whatever rule is involved. Applying it to the UDRP, you can have a whole ecosystem built around infringers renting domain names from registrants who can all claim that's not what they intended to happen.

Again, there are arguments that might involve the overall timing of events, the degree of distinctiveness of the mark, and other specific facts that could cause a case to go one way or the other.

But let me ask you something....

You go into a store and pick up a piece of merchandise. On your way to the checkout, you meet an old friend and chat for a while. You completely forgot you hadn't paid. You walk out of the store with the merchandise. You are arrested in the parking lot for shoplifting.

Now, sure, you did not intend to steal the merchandise. That is the truth. What do you think the likelihood is that you are going to avoid a conviction for shoplifting just by saying, "I didn't intend to do that."

How are they going to prove you intended to steal the merchandise? Simple. You walked out without paying for it. That's how.

And, sure, after anyone is caught shoplifting, they are going to say exactly what you are saying, "Oh, I forgot to pay, it was just a mistake." You are going to need more than that.

 

[Peter45]

Thanks for taking the time and energy for that explanation JB

as we can't enter people's head we can only deduct their intentions from their deeds.
If Peter's deeds point in one direction it's mostly useless for Peter to claim that his intentions pointed in the opposite direction.
I get it.

But that's not what are we talking about here.
Here we are talking about deducting Peter's intention from Tom's deeds.

So we have a situation here in which you have rented the domain name to a competitor of the trademark owner, and you are going to argue this is not a circumstance indicating you acquired the domain name in order to rent it to a competitor of the complainant.

No. I wouldn't argue that way.
I agree that if I knew that the lessee is a competitor or the TM owner, that would be a circumstance indicating my bad faith at the moment of registration.
I don't deny that.
I would instead argue that I didn't know that the lessee was a competitor of the TM owner.

Allow me to modify your wording:

So we have a situation here in which you have rented the domain name to someone who unbeknown to you happens to be a competitor of the trademark owner, and you are going to argue this is not a circumstance indicating you acquired the domain name in order to rent it to a competitor of the complainant.

Yes

Given the fact that the domain name was being used to infringe the mark, you'll need to have something better than "that's not what my intent was when I registered the domain name" because the subsequent use of the domain name is evidence of your intent.

The current lessee's (mis-)use of the domain name is considered evidence of the seller's intent at the moment of registration?

you didn't care what the domain name was going to be used for

What can the lessor do which can be used as evidence that he did care about what the domain name was going to be used for?

"The thing that happened within my control is not the thing I intended to happen"

After the seller lease out the domain, what is precisely within his control?