Avoiding Adverse UDRP Decisions: A NAF Transfer Order of The Million Dollar Domain LH.com Does Not Bode Well For Domainers

On April 17, 2008 a NAF Arbitration Panel (David Sorkin Dissenting) ordered the transfer of lh.com from Future Media Architects, Inc. to Deutsche Lufthansa AG. Read the cybersquatting and transfer decision here. The most interesting part of the decision was the Panel's conclusion that buying and holding domain names was not a legitimate use. The Panel stated:

"Respondent’s business model involves the indiscriminate acquisition and use of as many such domain names as possible. The traditional analyses of the rights to or legitimate interests element should not apply in gross when a registrant is not seeking to use any particular domain name to conduct business, is not otherwise known by that name, and has no interest in the nature of the transferor’s rights there from."

The panel further concluded that a strong of adverse cybersquatting transfer orders against Respondent and adlinks to Complainant's competitors established bad faith.

Complainant contends Respondent has engaged in a pattern of bad faith domain name registrations that prevent the owner of a trademark from reflecting the mark in a corresponding domain name as evidenced by previous UDRP disputes. See Calcar, Inc. v. Future Media Architects, Inc., FA 1080147 (Nat. Arb. Forum Nov. 6, 2007); see also Nat'l Rifle Ass'n of Am. v. Future Media Architects, Inc., FA 781430 (Nat. Arb. Forum Oct. 13, 2006); see also QNX Software Sys. Ltd. v. Future Media Architects, Inc., D2003-0921 (WIPO Feb. 26, 2004).  The Panel may find Respondent has registered and used the disputed domain name in bad faith pursuant to Policy 4(b)(ii). See Westcoast Contempo Fashions Ltd. v. Manila Indus., Inc., FA 814312 (Nat. Arb. Forum Nov. 29, 2006) (finding bad faith registration and use pursuant to Policy 4(b)(ii) where the respondent had been subject to numerous UDRP proceedings where panels ordered the transfer of disputed domain names containing the trademarks of the complainants); see also Philip Morris Inc. v. r9.net, D2003-0004 (WIPO Feb. 28, 2003) (finding that the respondent's previous registration of domain names such as, pillsbury.net, schlitz.net, biltmore.net and honeywell.net and subsequent registration of the disputed marlboro.com domain name evidenced bad faith registration and use pursuant to Policy 4(b)(ii)); see also Armstrong Holdings, Inc. v. JAZ Assocs., FA 95234 (Nat. Arb. Forum Aug. 17, 2000) (finding that the respondent violated Policy 4(b)(ii) by registering multiple domain names that infringe upon others' famous and registered trademarks).

Avoiding adverse decisions under the UDRP is becoming more important for domainers, as is taking proactive steps to ensure that their adlink pages do not link to competitors of trademark holders. The value of this domain was the domain itself. Assuming that the Respondent was not, in fact, attempting to divert traffic from the trademark holder, Respondent should have protected its valuable domain by making sure it was not in fact diverting traffic. This does mean a loss in PPC traffic. But the reality of the current state of UDRP decisions is that domainers need to make a choice between domain value and PPC revenue.

This matter has gone to federal court in New York.  You can read the first amended complaint here. Download FMALH_Com_AmendedComplaint.pdf (466.6K); The complaint filed by Future Media Architects against Deutsche Lufthansa AG seeks a declaration that FMA's ownership of the domain name does not violate Defendant's alleged rights, a declaration that Defendant's alleged mark is invalid, void or otherwise unenforceable, that Defendant has tortiously interfered with its prospective business relations, that Defendant achieved the UDRP cybersquatting transfer order by fraud and requests that the court cancel Defendant's filed trademark.   

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