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Vendor/Agent Holding Domain Name Hostage for Alleged Nonpayment of Fees

In a federal action under 15 U.S.C. 8131 (Cyberpiracy protections for individuals) the district court for the Middle District of Florida held that “cyber-extortion is not a permissible way of recovering a debt”), Salle v. Meadows, 6:07-cv-1089-Orl-31 (August 6, 2007). No federal cases on the “debt” issue have been found under Sec. 1125(d), but there is no reason to believe an unfavorable ruling for the trademark owner. Under the UDRP “cyber-extortion” of the kind litigated in Salle is generally regarded as being outside the scope of the Policy.

Vendor/Agent disputes generally rest on claims of contractual obligations, unrequited. Parties are not strangers to each other. The consensus holds that genuine disputes are outside the scope of the Policy [Clinomics Biosciences, Inc. v. Simplicity Software, Inc., D2001-0823 (WIPO August 28, 2001) ]; alleged disputes [Map Supply, Inc. v. On-line Colour Graphics, FA 96332 (Nat. Arb. Forum February 6, 2001); Ecoyoga Ltd v. siteleader.com, Siteleader Hosting, D2009-1327 (December 11, 2009)] and tortious conduct, such as illicitly transferring the disputed domain name as ransom for alleged unpaid fees [Grace From Fire, LLC v. ConnectDomain.com Worldwidedomains, Inc, D2010-0143 (WIPO March 9, 2010) ()] are within the scope. These three cases illustrate distinct factual patterns. A genuine dispute is not that because respondent alleges it. The dispute is genuine because that is what the evidence establishes. In Map Supply and Ecoyoga the dispute concerned the domain name rather than an unrequited obligation. In Grace From Fire, the Panel made it clear that “self-enforcement” (Respondent substituting itself for Complainant as “administrator”) supported a finding of bad faith.

While Panels may recognize that properly documented and supported claims (the genuine dispute) could give rise to a legitimate interest in the disputed domain name [Amy’s Orchids v. EIC, D2009-0466 (WIPO June 8, 2009)] they have generally refrained from drawing ultimate conclusions [Airbak Tech, LLC v. Blazon Marketing, Inc., D2012-1000 (WIPO August 15, 2012)]. Complaints in cases with disputed facts should be decided by traditional means, as they turn on questions of law beyond the Policy:

Notwithstanding this recognition [“may” and “could”] … a genuine dispute over a respondent’s contractual or legal right to retain the domain name in dispute as security for payment would require further evidence and an evaluation of the commercial law of liens.

The Panel in the latest case on the debt issue, Lescottstewart Limited v. Saeed Izadifar, D2012-1998 (WIPO December 4, 2012), not pleased by the Respondent’s position but recognizing that the record facially supports a genuine dispute articulates a co-equal reason for denying the complaint: the parties are bound by contract. Where there is a contractual relationship, the complainant has “a heavier burden of proof” which in Lescottstewart the Complainant failed to carry.” Where the Panel has no way of accessing the merits of the dispute the case is beyond the scope of the Policy.

The irony here is that the advantage is clearly with the respondent where it submits a full record of the contract obligations and ensuing dispute in that it continues to hold and use the domain name until challenged in a court of law. But, as indicated above, I am unaware of any challenges. The kind of “cyber-extortion” within the jurisdiction of the Policy is generally practiced by parties who are strangers to each other; and where they are not, as with former employees and vendors/agents without any persuasive defense of a genuine dispute, the domain name is either cancelled or transferred to complainant.  Where there is a persuasive defense, complainant’s remedy is in a court of law.

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