Domain was purchased in backorder; buyer wins arbitration.
Imagine buying a domain for $166,000 through a backorder only to be hit with a UDRP arbitration dispute a day later.
That’s exactly what happened to Xedoc Holding SA, which bought Shoppers.com at Pool in February. The domain was previously registered at Network Solutions, but was not auctioned at NameJet due to a glitch.
As we reported last month, a UDRP commenced on February 14, 2008 for the domain name. That put Xedoc and its $166,000 purchase at risk.
Xedoc won the case, and now we have all of the juicy details. The complainant was SUPERVALU, Inc, which owns trademarks for groceries and pharmaceuticals for the term “Shoppers”. Essentially it runs a chain of grocery stores.
According to its filings, SUPERVALUE knew of the backorder auction and even participated (but lost). It filed a UDRP and notified Pool.com, but Pool.com let the auction proceed:
At the time Complainant filed its Complaint, Pool.com, Inc. was the owner of the domain name and was holding an auction relating to the domain name. Pool.com was placed on notice of Complainant’s trademark rights to the domain name on February 4, 2008. Additionally, Complainant requested by telephone conversation with Pool.com’s attorney that Pool.com stop the auction so that no third party would obtain the domain name. Pool.com was not making a legitimate, noncommercial use of the domain name
. Pool.com intentionally allowed third parties to bid on the domain name despite the fact that the domain name is subject to federal trademark registrations. Moreover, Pool.com auctioned the domain name to the highest bidder, which cannot be considered a legitimate use and is indicative of bad faith. Pool.com failed to stop the auction, and awarded the domain name to Respondent on February 5, 2008. Respondent obtained the domain name on February 5, 2008, through the Pool.com auction.
Xedoc pointed out that SUPERVALUE was aware of the auction and submitted to Pool’s terms and conditions of the auction and thus the validity of the auction.
In the end, reason prevailed. The panel found that SUPERVALUE has a trademark to Shoppers for only its limited use, the domain was being used legitimately, and it was not registered in bad faith.
The panel looked at the final sale price as proof that the domain name is a generic term with wide use:
Involved here is a common, descriptive word. It is not, in fact, associated by most people in the English-speaking world with the trademark of a regional US grocery chain. This domain name is worth $166,000 at auction precisely because it is a popular generic term with commercial connotations.
So what happened here? A business wanted a domain name. When bidding got too high, it decided to go with plan B: file a frivolous complaint under UDRP to steal the domain. It may not meet the standard definition of reverse domain name hijacking, but it certainly appears to be the case.
Jeff says
There is justice in this world after all! I’m impressed by the fact that the panel looked at the auction and the sale price as an element of the case. This should help protect holders of valuable domains.
tommus says
Hoorah! A great win for Xedoc. Congrats.
CCC says
Now go bust their balls….. so to speak. 🙂
Jamie says
So what happens to Pool.com since they owned the domain when the complaint was filed then sold it and “passed on” the problem?
Andrew says
Jamie, I think because it was determined “there was no problem”, nothing happens to Pool. It’s clear that they aided the buyer with the UDRP defense. If the buyer had lost, he probably would have gone back to Pool since they knew about it already.
ParkQuick says
Supervalue came after me for ShoppersPharmacy.com and I ended up giving it to them. I did hire an attorney to challenge their C&D letter, but they came back with evidence that they had used the term “Shoppers Pharmacy” in trade before I bought the name. Under the circumstances it did not seem worth the trouble.
If you are in the U.S. they won’t bother with a UDRP, they will go a C&D and a court case. I’m certainly glad that they lost this one. The term “shoppers” is way too generic to be turned-over under circumstances like these.
damir says
Great post and GREAT NEWS.
J.R. Jackson says
Another example of legal abuse.
Richard Schreier says
Hi Andrew,
I’d like to provide a bit of clarification for your readers in regards to the snippet of information drawn from the NAF decision that has been included in your blog posting. Note that this paragraph was drawn from the Complainant’s submission and reflects “their side of the story”. There are a number of very key issues related to this particular incident that bear clarifying. First, the complainant made reference to Pool being placed on notice of their trademark rights. In fact, our legal counsel was informed, by telephone, by one of the auction participants while the auction was progressing that they had a trademark claim and Pool should stop the auction. It is not Pool’s practice to arbitrarily stop an auction based on a bare assertion of trademark or other prior rights. Particularly when the assertion is issued by one of the auction participants themselves. Our customers take great care in selecting the domain names they want to secure and would be extremely upset if we simply withdrew names from availability because some other bidder suggested they had a prior right. This is particularly true for a generic name like “shoppers.com”.
The UDRP process is one that Pool.com endorses and requires all of our customers to respect. Our rights and powers are no greater than our registrar partners, who have neither the authority nor the responsibility to arbitrate in prior right issues. Clearly, the UDRP process is well established to meet these goals. We believe that it would be unfair to our customers to allow auctions to be manipulated through informal claims of prior rights.
In this case, we were informed by the registrar that held the domain that a UDRP complaint had been filed both after the completion of the auction and registration of the domain in the name of the auction winner. On receipt of this notice, we advised the winning bidder and considering the generic nature of the name, the winning bidder opted to vigorously defend its right to the domain. And while having to proceed through a UDRP filing, I believe the auction winner is satisfied with this final outcome. They have obtained an exceptional name at what I believe is an even more exceptional price.
One final point relates to a comment made by the panel which further supports the actions taken by Pool.com in this auction. The panel decision states:
“Contrary to the Complainant’s assertions, trademark law did not in any way prevent the auction of this domain. It does not give a mark owner exclusive right against the world, especially in regard to common words. Exclusive rights belong only to famous or coined marks and this one is neither. Further, famous marks give exclusive rights only in the jurisdiction where they are famous.”
I welcome comments and questions from your readership Andrew and would concur with your observation that the actions taken by the Complainant in this case could easily be viewed as reverse domain name hijacking, an issue which the panel chose not to address.
Richard Schreier
CEO, Pool.com
Andrew says
@ Richard – thanks for filling in the gaps and clarifying. When I read the panel decision it became apparent that Pool helped Xedoc defend itself by providing relevant information, which I believe was the right thing to do.
It was also fair for Pool to let the auction proceed. Heck, if I could stop all of your auctions by merely picking up the phone and telling you I had a trademark, you’d be out of business.