Verizon wins default judgment against top 15 domain registrar.
Customers of OnlineNic, Inc., a top 15 domain registrar with over 1,000,000 domains registered, should be concerned about the state of the registrar after a judge ordered the company to pay $33 million to Verizon (NYSE: VZ).
A judge entered the default judgment of $50,000 for each of the 663 domain names OnlineNic owned that allegedly infringed Verizon’s trademarks. OnlineNic didn’t respond to the lawsuit, which was filed back in June.
Verizon has lodged a number of trademark lawsuits, including against Houston based iREIT (which it settled) and Navigation Catalyst (which was also settled). Verizon is also a member of Coalition Against Domain Name Abuse (CADNA).
Although aggressive itself in filing domain name trademark suits, Verizon and other CADNA members seem to be hypocritical as they use “error services” to show ads on typo domains. In fact, Navigation Catalyst counter-sued based on this error service. It appears that the countersuit may have helped Navigation Catalyst, as it settlement basically says that it can no longer cybersquat on Verizon’s trademarks. Perhaps Verizon didn’t want to deal with the embarrassment of its typo redirect service.
This case brings up an important question and a reminder.
First, what non-financial penalty could a registrar face for participating in cybersquatting? I assume the $33 million judgment, if ever collected, would doom OnlineNic. But what role and under what timeline should ICANN step in to protect customers of OnlineNic?
Second, this case should serve as a stark reminder to trademark infringers that they have more to lose than just a UDRP. They can lose up to $100,000 per infringing domain under the Lanham Act.
“…or each of the 663 domain names OnlineNic owned that allegedly infringed Verizon’s trademarks.”
Those 663 domains were registered by Onlinenic for their own account and not by their customers?
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“OnlineNic didn’t respond to the lawsuit”
I remember Onlinenic being a Chinese firm.
Maybe they thought they were immune or never received notice.
Not responding = automatic default judgment which doesn’t make sense considering the potential damages.
The WhoIs for onlinenic .com lists a US
address in Oakland but the tel # goes to China.
Country code 86 is China.
As pointed out by George Kirikos on DNForum,
“their own Terms of Service specify California jurisdiction”.
Patrick – if they weren’t in OnlineNic’s name, Verizon wouldn’t have sued them. So it sounds like the California address is maybe a front for its main operations in China.
So they sued the registrar, not the registrant? Or was OnlineNic also the registrant?
“So they sued the registrar, not the registrant? Or was OnlineNic also the registrant?”
Andrew says Onlinenic was both the Registrar and the registrant.
OUCH.
Typo traffic is huge huge business, and I’m not surprised that Chinese companies find it a normal way to make money from these things, its been that way for ages and normal mentality. $33m should sink OnlineNic like the Titanic, but it will be interesting to see how Verizon will get the money out of China with all those strict exchange rules.
The lawyers working for Verizon are just parasiting for a living, imho.
1 million domains. thats US$33 each domain.
4 x times gross earnings. or there about.
I dont know if Verizon feels a bit guilty.
perhaps there traffic spike mid year was caused from typo redirects won out of court. .
I think OnlineNIC getting failed in their business this time.
OnlineNIC were always going to fail. Their customer service is virtually non-existent and their entire business model is removing expired domains from their customers’ accounts and supposedly auctioning them off. I’ve enquired a dozen times how I can participate in these auctions and they simply never reply. They always wind up in the commonest Chinese names such as Susie Wong with listed addresses where snail mail sent is returned “return to sender”. I believe that OnlineNIC is the beneficial owner of all such names.