Reverse Domain Hijacking Case Proceeds Despite UDRP Loss

A federal district court in Arizona (where domain name registrar GoDaddy.com, Inc. is located) has allowed a reverse domain name hijacking claim to proceed, despite a UDRP proceeding ordering transfer of the domain name and defendant's argument that plaintiff failed to plead that defendant harassed plaintiff.

Plaintiff Mark Lurie was an indoor skydiving enthusiast with investments in wind tunnel facilities. In 2006, Lurie embarked on a marketing effort to adopt a new brand for his wind tunnels, "AIRFX."  In preparation for launching his new brand, Lurie identified a manufacturing partner, consulted with an aerodynamic specialist, and located a potential first customer.  After Lurie decided to use the trademark AIRFX, he purchased the airfx.com domain name from the then-owner, who transferred it to him in 2007.  Lurie planned on officially launching the airfx.com website when his first completed facility was launched.

Defendant AirFX LLC owned the trademark for "AIRFX" in connection with motorcycle and vehicle parts.  About a year after plaintiffs acquired the airfx.com domain name, defendant contacted Lurie and threatened to sue if he did not sell the domain to defendant.  Lurie refused.  Defendant against contacted plaintiff in 2010 stating that plaintiffs "must turn over control" of the website, and again Lurie refused.  

In April 2011, defendant submitted a domain dispute complaint under the Uniform Domain Name Dispute Resolution Policy ("UDRP").  The UDRP panel issued its decision transferring the domain to defendant.  Plaintiff subsequently sued defendant in federal court in Arizona for reverse domain name hijacking pursuant to 15 U.S.C. § 1114(2)(D)(v).  Defendant moved to dismiss the case, or in the alternative, to transfer to Indiana, defendant's home state.

The Anticybersquatting Consumer Protection Act ("ACPA), prohibits the bad-faith registration of internet domain names for profit, a practice known as cybersquatting.  Cybersquatters who violate the ACPA are said to "hijack" a domain name from someone who, because of his trademark ownership, would be expected to possess the right to use that domain name.  Conversely, if a trademark owner overreaches when exercising his ACPA rights, he "reverse hijacks" the domain name from the person who registered it.

Defendant's argument for dismissal was that plaintiff failed to allege that "defendant both knew of the plaintiffs' legitimate interest in the domain name and harassed plaintiffs."  To support this argument, defendant cited to the UDRP panel's decision.  The court ruled, however, that UDRP decisions are given no deference by federal courts in an ACPA case.  Instead, a reverse domain hijacking claim under the ACPA requires the plaintiff to prove four elements: (1) plaintiff is a domain name registrant; (2) plaintiff's domain name was "suspended, disabled, or transferred under a policy implemented by a registrar as described in 15 U.S.C. § 1114(2)(D)(ii)(II);" (3) the trademark owner prompting the domain name to be transferred "has notice of the action;" and (4) plaintiff's use or registration of the domain name was not unlawful.  

The court ruled that here, the plaintiff had properly alleged all four elements in his complaint.  Specifically, plaintiff alleged that  he made extensive use of the AIRFX mark, chose a domain name that reflected his brand of wind tunnels, did not use the defendant's trademark, had never offered to sell the domain name, and did not seek to divert defendant's customers.  Regarding defendant's argument that there was no harassment by defendant, the court ruled that no harassment was required in order to prevail on a reverse hijacking action.  The court did not give any deference to the prior UDRP proceeding.

The lesson from the AIRFX case is that UDRP proceedings are not the last word in domain name disputes.  While the UDRP process can be an inexpensive, relatively fast way to assert trademark rights, using the procedure to strip legitimate holders of domain names can lead to a lawsuit under the ACPA.  The trademark holder could then find itself in a costly legal battle even without kind of harassment of the domain holder. 

This case is AIRFX.com v. AirFX LLC, No. CV 11-01064-PHX-FJM (D. Ariz. Oct. 20, 2011).  Read the district court order here.  The UDRP decision can be found here.