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Exercising Self Help to Effect Settlement of a Claim

Nothing could be easier for a registrar owed money (or, in the case herein discussed, the reseller of a registrar) to simply change the registration of the domain name into its own name and hold it for ransom. Grace From Fire, LLC v. Worldwidedomains, Inc, D2010-0143 (WIPO March 9, 2010) (<>). But, is it legal? Removing property is either conversion civilly or larceny criminally. Holding a domain name for ransom is condemned as an act of bad faith under paragraph 4(b)(i) of the Policy. These acts fall into two classes of cases: respondents known to the complainant – former employees, partners, consultants and agents – and those unknown who have hijacked the domain name by fraudulently arranging for a transfer of registration. Grace From Fire is in the first class. Taeho Kim v. Skelton Logic, FA1002001305934 (Nat. Arb. Forum March 22, 2010) is in the second class.

Of course, in order to maintain a proceeding the complainant must be a trademark holder. In Taeho Kim, alas, the Complainant alleged that his “ account was hacked … and the domain names [<>, <> and <> ] were sold to a third party and re-sold to Respondent. Thus, Complainant alleges that Respondent purchased stolen domain names.” In Grace From Fire, the Respondent took “self help” in improving its bargaining position on a non-payment dispute by taking control of <>. The Panel in Takaso Rubber Products Sdn Bhd v. Selim Tasci and Tasci Dis Tic. Ltd. STI, D2006-1263 (WIPO December 16, 2006) noted that the “demand by Respondent for … a business concession in exchange for transfer of the disputed domain name constitutes an offer to transfer the disputed domain name for valuable consideration.”

Although there may have been an issue in early cases whether disputes with former employees, partners, agents, etc. were within the scope of the Policy, the consensus is that they are, essentially equating tortious and criminal conduct with cybersquatting. Leverage and extortion cases are generally treated as violations under paragraph 4(b)(i) of the Policy. Examples cited in Grace From Fire include Birinyi Associates, Inc. v. Convert, D2001-0395 (WIPO June 20, 2001) and Robilant & Associati Srl v. POWERLAB snc (ROBILANT6-DOM), D2006-0991 (WIPO October 5, 2006).

A claim for alleged past due amounts on service contracts does not justify taking possession of another’s property. “Respondent’s rather frank admission that he intends to use the disputed domain name to leverage compensation for copyright materials allegedly taken from his website suggests that the motive was to use the domain name as a bargaining means for another dispute. This is improper and in the Panel’s view is a clear illustration of bad faith,” Coppertown Drive-Thru Systems, LLC v. R. Snowden, FA0605000715089 (Nat. Arb. Forum July 17, 2006); also, Nexxt Development Corp. v. Richard Spence, D2008-0530 (WIPO May 29, 2008): “passively holding the domain names for use in possible settlement negotiations of the dispute between the parties constitutes use of the domain names in bad faith.” Ultimately, “non-payment of fees by the Complainant to the Respondent does not establish rights or legitimate interests in the disputed domain name in the Respondent.” Ecoyoga Ltd., Siteleader Hosting, D2009-1327 (December 11, 2009).

Gerald M. Levine <>

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