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Purchase of Lapsed Domain Name

Registration of a lapsed domain name to a party with equal rights can be an irrecoverable loss. This is so because purchase of lapsed domain name is not a per se violation of the UDRP.  Trademark owners hold domain names for a term and have renewal rights without end, and in this respect domain names can be thought of as being “owned” rather than “leased,” but loss by lapse can bring an end to domain name ownership. The loss cannot be compared to losing trademark registration for failure to renew because if there is marketplace evidence of continued use there is no abandonment. If there is no abandonment the mark remains protected under common law principles. There is no such comparable principle for domain names. The first question with lapse is whether it was abandoned or inadvertent. The stronger the mark, the likelier a complainant is able to recover its domain name, but this applies only if the new holder’s choice cannot be explained. For example, the new holder operates a business whose trade name happens to correspond to the domain name, Berenson & Company, Inc. v. Berenson Corp. c/o Babij, Terry, FA0909001283183 (Nat. Arb. Forum October 23, 2009) (<berenson.com>, another company by the same name).

In Jeremy Same v. Richard Weston / dreamGEAR, LLC, FA1311001531432 (Nat. Arb. Forum January 20, 2014)(<isound>) Complainant alleged that

On approximately October 2, 2012, Complainant removed the ISOUND website from the Internet to begin work on an updated website and mobile application for the ISOUND brand that would reflect an updated revenue model, which had not been changed in over eight years. While Complainant worked on an updated business model, the Domain Name was linked to a one page website which continued to use the Trade Mark and informed former users of Complainant’s service that Complainant’s business model was moving to a new form.

On April 30, 2013, the Domain Name was wrongfully transferred to Respondent when the domain name expired and Complainant was not informed of its expiration.

Respondent appeared with the following counter-story:

Respondent owns registrations for the I.SOUND Mark in several jurisdictions worldwide, including a registration in the US with a filing date of September 3, 2004, registration date of June 20, 2006 and first use in commerce date of October 7, 2004, and an international registration registered on April 26, 2005.

Complainant offered to sell the Domain Name to Respondent two years ago, citing a valuation akin to Apple’s then-recent purchase of “iCloud.com” for over $4 million. Respondent was not interested, and Complainant let the Domain Name go abandoned. It was then registered by a third party who subsequently sold it to Respondent.

Assume the lapse was inadvertent, then Respondent has an independent legal right to the domain name as a trademark owner for the term. Respondent is also a purchaser in good faith even though it knew the identity of the former holder. It acquired its registration from a third-party registrant after the lapse:

[The facts are] more consistent with (1) Complainant’s use of the Trade Mark not commencing until several years after Respondent had registered and commenced use of its I.SOUND Mark; and (2) Complainant having abandoned or at least suspended the use of the Trade Mark at the material time.

 

The record leaves it unclear whether Complainant abandoned the trademark. As a domain name holder/trademark owner Complainant had every right to sell its asset to a coexisting trademark owner but cannot reclaim the domain name if the registration lapses and it is purchased by a third-party. The fact that the third-party may have used the domain name in bad faith does not stain a purchaser in good faith who uses it legitimately for its business. In assessing alleged facts the offering party is vulnerable to counter-facts that undercut its credibility.

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