Cybersquatting claim is dead, but battle continues in bankruptcy court.
The saga of Grandma Heidi Powell and the domain name HeidiPowell.com seems like it will be settled in bankruptcy court after a federal district judge said a settlement agreement in its court must be honored.
A bit of background…
A somewhat-famous fitness instructor named Heidi Powell filed a cybersquatting lawsuit against Grandma Heidi Powell to try to get the domain name HeidiPowell.com. Never mind that Grandma Heidi Powell owned the domain name well before Fitness Heidi Powell adopted the last name Powell, and never mind that the domain name exactly matches Grandma’s name.
Grandma Heidi Powell responded with counterclaims asserting reverse domain name hijacking.
The two parties went at it in court. They also entered into settlement negotiations in which both parties agreed to drops the claims with prejudice and both parties would pay their own legal fees.
Before submitting the settlement to the court, Grandma Heidi Powell’s lawyers figured out why Fitness Heidi Powell was suddenly willing to settle the matter — she had found another avenue to procure the domain name.
It turns out that Grandma Heidi Powell had filed for bankruptcy in Washington in 2012. So Fitness Heidi Powell went to the trustee in the bankruptcy case and offered to pay $10,000 for the domain name if the trustee reopened the case. (Grandma Heidi Powell, not surprisingly, hadn’t thought to declare ownership of the domain name as an asset during bankruptcy.)
Once Grandma’s lawyer David Weslow understood what was happening, he informed Fitness Heidi Powell’s lawyer that the proposed stipulation needed to include a line “making clear that Defendants will retain ownership of the HeidiPowell.com domain name.”
Fitness Heidi Powell’s lawyers said no dice, you already agreed (apparently via email) to the dismissal without that clause.
This week, U.S. District Judge Susan Bolton sided with Fitness Heidi Powell, ruling (pdf) that the settlement was enforceable. She also said that, even if the settlement stated that Grandma Powell would retain the domain name, that wouldn’t preclude Fitness Heidi Powell from trying to get the domain name through the bankruptcy court.
(Bolton also ruled that Grandma Heidi Powell didn’t need to pay Fitness Heidi Powell’s legal costs for enforcing the settlement, primarily because it would cause hardship.)
So, this brings the case to bankruptcy court in Washington.
At first, the trustee determined “It is unclear whether the domain name is an asset of the bankruptcy estate. It is unclear whether Debtors properly claimed the exemption in the domain name.”
Grandma Powell had some exemption amount and agreed to pay the difference between it and the $10,000. So the trustee moved to essentially sell the domain name back to Grandma.
Then Fitness Heidi Powell upped her offer to the bankruptcy trustee to $20,000. Now the trustee is saying that the domain name is property and should have been scheduled in the bankruptcy proceedings, even though it really seemed to have nominal value at the time.
This drags up the long-running question of “are domain names property?”. Fitness Heidi Powell’s lawyers provided some examples (pdf) of courts seemingly finding this. It brings up some old cases, including the Sex.com theft and the lawsuit between Jay Westerdal and Name Intelligence.
The circumstances in this battle should serve as a warning to lawyers entering into settlement agreements in cybersquatting/reverse domain name hijacking cases. They need to word the settlement such that it’s clear the other party won’t try to get the domain name through any other legal means, not just a cybersquatting claim.
Although David Weslow defended Grandma Powell pro bono in the cybersquatting case, Powell has now had to hire a bankruptcy lawyer. She has a GoFundMe page to raise funds to pay the bankruptcy lawyer.