Westerdal files counterclaims against Thought Convergence in legal battle.

Name Intelligence founder Jay Westerdal has filed a counterclaim (pdf) against Thought Convergence, Inc. (TCI) in a legal battle over TCI’s acquisition of his company.

In the counterclaim document filed with the California Central District Court, Westerdal claims there were “Myriad of deliberate misrepresentations made by TCI during the negotiation process and execution of the agreement.” Specifically, Westerdal alleges:

-”TCI knowingly misrepresented the stability of its business, its domain parking practices, its reliance on a very small number of customers for the majority of its revenue stream, its revenue loss free fall, its lack of debt, and its use of the banned industry practice of arbitrage”. Westerdal further claims that arbitrage represented a large portion of TCI’s revenues.

-TCI estimated its company value at $200M, which Westerdal claims was “grossly inflated”. That would have valued the stock payments to Name Intelligence’s owners at $32M, according to the documents.

-TCI discussed negotiating an IPO that would include Name Intelligence’s assets.

-There were “significant material adverse changes” to the company between December 31, 2006 and when the agreement was executed on May 2, 2008, contrary to representations made by TCI.

-There were loans made to TCI prior to execution of agreement, which were not disclosed.

-TCI failed to pay Westerdal his $120k annual salary

Furthermore, Westerdal claims he “performed his obligations of employment to NIL under the Offer Letter, or was excused from doing so because of NIL’s breach of the Offer Letter.”

Thought Convergence and Westerdal have agreed to drop DOTMOVIE from the lawsuit (pdf), as Westerdal says it’s not a business entity and has no employees.

Westerdal and Name Intelligence Inc. (a holding company owned by Westerdal) also filed a response (pdf) to TCI’s claims, basically deny all of the negative allegations.

Talk.com latest big ticket domain name sale.

Domain brokerage Sedo has sold the domain name Talk.com for $500,000. The seller, according to whois records, is Cavalier Telephone, LLC of Virginia. The domain name is currently in Sedo’s control, so the buyer is not yet known. [Update: The Buyer is National A-1, the same company that bought Contests.com from Yahoo for $380,000 two weeks ago and runner up in the $5.1M Toys.com auction.]

Sedo also turned in another six figure sale this past week, completing a transaction for TimeManagement.com at $100,000. The seller was Roy Messer, famous for his sale of Vodka.com for $3 million (also brokered through Sedo). The buyer is in the Philippines.

Here are other top sales completed by Sedo this past week.

.Com
talk.com 500,000 USD
timemanagement.com 100,000 USD
refinancerates.com 30,000 USD
medicarepartd.com 28,000 USD
directbuys.com 24,500 USD
brainstorming.com 18,000 USD
sporthub.com 17,600 USD
plugincars.com 15,000 USD
armbanduhren.com 11,000 EUR
biorust.com 7,000 GBP
sportroom.com 6,000 USD
solarox.com 6,000 USD
bankruptcy-attorney.com 5,400 USD
wiretap.com 5,301 USD
espaciolibre.com 5,000 EUR
designarea.com 5,000 USD
clickonline.com 5,000 USD
aprec.com 5,000 USD

Country Codes
kreishandwerkerschaften.de 14,875 EUR
bravado.de 9,000 EUR
careers.us 7,795 USD
zeitschriftenabo.de 6,300 EUR Magazine subscription in German
tarot.cn 6,200 USD
adhesif.fr 5,000 EUR Adhesive in French
nsl.co.uk 5,000 GBP
sport.us 5,000 USD
fueralles.de 4,500 EUR For all in German
zeitungsabo.de 4,300 EUR Newspaper subscription in German

Other
descargas.net 33,000 EUR
economics.net 10,000 EUR
babynames.net 9,000 USD
mariages.net 9,000 EUR
homepage.info 4,000 EUR

Bank tries to get domain registered years before it gets trademark.

Success Bank, an Iowa bank, should stick to the banking business.

The company failed at arbitration to get the domain name SuccessBank.com from its owner, who registered the domain name in 2003. The bank changed its name to Success Bank only in 2007, at which point it filed a trademark for the term. The trademark was granted in 2008. Success Bank uses the inferior domain SuccessBank.Net.

If you register a domain before another company obtains a trademark, it is impossible for the trademark holder to prove that the domain was “registered and used in bad faith”, as required under UDRP.

In his typical wit, the respondent’s attorney John Berryhill noted to the arbitration panel:

The Complainant’s proposition here is that the Respondent has such powerful psychic ability as to be able to predict, in October 2003, that the Davis County Savings Bank of Iowa would change its name to “Success Bank” in December 2007. The Respondent denies such psychic powers.

The panel found that the domain wasn’t registered and used in bad faith, and that Success Bank didn’t establish a prima facie case that the respondent lacked rights or legitimate interests in the domain name.

For some reason the panel didn’t address the issue of reverse domain name hijacking. But its decision does note that Success Bank’s argument in the case was extreme:

The Complainant relies on the argument that once a complainant shows good title in a mark, the burden shifts to Respondent to defend use and bad faith. Complainant seeks to stretch that argument to the extreme. While Complainant has some rights in the SUCCESS BANK mark, those rights are years junior to the rights of Respondent due to registration of the domain. To hold for Complainant would be to say that one could peruse the lightly used or parked domains, initiate a trademark registration application years after the a disputed domain name was registered and then claim UDRP rights in the domain under the first element of the UDRP.

Company shows consistency in domain name sales.

Domain seller NameMedia, which sells domain names through BuyDomains and Afternic, sure is consistent. It seems that every week they total $600,000 or so in announced domain sales. That sort of consistency can only come with a large inventory of domain names. This past week the company sold about 400 domain names, or an annualized 20,800 names. Assuming an inventory of a million domain names, that’s a 2% turnover per year.

I point this out because it’s easy to look at NameMedia’s sales and wonder, “why am I not selling more of my domains”. You look at the list and think your domains are better than the ones that are selling for a $1,000 here or $2,000 there. But keep in mind:

1. If you own 1,000 domains like these, you would sell 1 or 2 a month at a 2% annual turnover.

2. NameMedia prices nearly all of its company-owned domain names. This results in more sales than the “make offer” approach.

3. The company gets great placement on GoDaddy and other registrars, resulting in a good number of sales. This sort of promotion is slowly being offered to NameMedia’s customers under “Premium Promotion”.

4. Your smaller portfolio doesn’t have the breadth that NameMedia and its sellers’ portfolios have.

5. NameMedia spends a lot of money advertising to end users and on trained sales staff.

I’ll end my soapbox and get to the list. Here are the top sales in .com for the past week:

mediashopping.com $10,000
botanicalextracts.com $8,000
fiberpedia.com $7,150
autodns.com $7,100
thetvstore.com $6,600
applab.com $5,400
twosteps.com $5,400
silq.com $5,188
jokesrwild.com $5,000
cruisesandtours.com $5,000
tfpt.com $5,000
interakta.com $4,800
newsbus.com $4,588
militarymoves.com $4,500

And here are the top sales in other extensions. I’m particularly impressed with BrownSugar.net.

blc.net $7,500
brownsugar.net $6,195.90
tstore.net $3,688
russianbride.org $3,288
hema.net $3,270
hotelportal.net $2,977
tourette.org $2,388
atmu.net $2,088
seaturtle.net $2,000

Filings unlikely to give a leg up in application process.

Companies are filing with the United States Patent and Trademark Office for service marks related to new TLDs. For example, Top Level Domain Holdings, Ltd (AIM: TLDH) has filed trademarks for .movie, .kids, .books, .buy, .baby, .poker, .golf, and .casino. (Top Level Domain Holdings is an investor in new TLD consulting firm Mind + Machines and dotNYC, LLC.)

Other examples include .eco, a trademark filed by Colored Planet of Connecticut that appears close to being approved. A Canadian company has also filed for the .eco mark. Neither of the applicants appear to be the group endorsed by Al Gore.

Given that applications aren’t being accepted for new top level domain names yet, you may wonder how anyone could file a trademark for them. Companies have frequently tried such filings to stake a claim to a TLD before it was launched. Companies have filed for everything from .radio to .god to .gay. Many of these were filed in the late 90s and almost all were rejected.

That few of these filings have been approved should not come as a surprise, says attorney John Berryhill. He points to section 1215.02(d) of Trademark Manual of Examining Procedure, which states that top level domain names can’t be trademarked for registry services:

If a mark is composed solely of a TLD for “domain name registry services” (e.g., the services of registering .com domain names), registration should be refused under Trademark Act 1, 2, 3 and 45, 15 U.S.C. 1051, 1052, 1053 and 1127, on the ground that the TLD would not be perceived as a mark. The examining attorney should include evidence from the LEXIS database, the Internet, or other sources to show that the proposed mark is currently used as a TLD or is under consideration as a new TLD.

This may explain why some trademark applicants, including one applicant for .eco, use different classes of service such as “Providing specific information as requested by customers via the Internet” to try to slip by the examiner.

An existing registry, mTLD, attempted to trademark .mobi a couple years ago. The organization faced push back from the internet community, especially since mTLD is merely a steward for the TLD and doesn’t actually own it. This issue was also addressed in 2000 when Image Online Design, Inc. claimed it should be the only group to be awarded .web because of trademark rights. It failed.

So why would a company try to trademark a TLD it doesn’t (yet) operate? There are a few potential reasons. It may use the trademark in an attempt to get a leg up with ICANN, either when applying for a TLD or if it is ever assigned to a different registry. It may also use it to lodge a claim at another company that applies for a TLD.

Or it could be for defensive purposes, as TLDH Chief Operating Officer Antony Van Couvering claims.

“TLDH is applying for trademarks for “dot name” in areas we, or our clients, might want to apply for a top-level domain,” wrote Van Couvering in an e-mail to Domain Name Wire. “We don’t actually believe that they are necessary or even helpful, but we want to avoid having to deal with someone else’s trademark-based claim in the event that we decide to apply for one of these.”

John Berryhill has written about a similar situation for second level domains, when companies tried to trademark single letter .com domain names. In an article published on his web site, Berryhill predicted that this sort of “pre-emptive trademarking” would occur for new TLDs:

This type of gamesmanship should be penalized during the allocation of single character domain names. Rewarding this behavior will have consequences that also reach into the assignment of new top-level domains, as the identical sort of game is being played in that arena as well, which is a story for another day.

Perhaps that day has come.