Nat Cohen analyzes a recent UDRP case for TRX.com.
A National Arbitration Forum panel has ordered TRX.com transferred to Fitness Anywhere LLC.
The domain owner didn’t do himself any favors. He appears to have used incorrect Whois information and didn’t respond to the dispute. But still, should this domain have been lost in a UDRP?
In today’s Internet Commerce Association UDRP Digest, domain investor Nat Cohen dug into the case and provided his opinion. I’m reprinting it here with permission:
I appreciate the opportunity to offer some thoughts on this decision from the perspective of a long-time investor in three-letter dot-com domain names.
The TRX.com decision falls squarely within the bounds of UDRP jurisprudence. The Complainant owns an internationally well-known trademark and is the dominant global user of the mark. The Respondent apparently used false Whois information, set a hefty price for the domain name and did not respond to the complaint. Panelist Sorkin not unreasonably determined on the balance of probabilities that the Respondent had the Complainant in mind when it recently acquired the trx.com domain name and put it up for sale.
Yet the decision is nevertheless troubling. A valuable domain name was transferred based on little more than guesswork. No evidence was presented that the Respondent, by listing trx.com for general sale, was specifically targeting the Complainant.
Three-letter dot-com domain names can fetch substantial sums, including QNB.com for $1 million, DXL.com for $1.1 million and AFS.com for $2 million. A $1+ million asking price is ambitious, but not unreasonable to hope for. The asking price alone was not strong evidence that the valuation reflects the value of the trademark rights rather than the inherent value in the domain name. Sorkin recognized this in finding that the asking price was not determinative of bad faith:
Respondent’s asking price of €1.2 million for the domain name is relevant but not determinative, as such a price could plausibly have been based on either its trademark-related value or its value as a three-letter “.com” domain name.
The original TRX.com domain name predates the Complainant’s existence by many years. The Complainant chose to brand itself as TRX in 2006 knowing that the trx.com domain name was already registered and in use by a well-established travel transactions processing company. The TRX travel company and trx.com domain name were acquired in 2013. Last year, the domain name was acquired by a domain name investor and then apparently resold to the Respondent a short while later.
The Complainant, the fitness company TRX, is not the exclusive or even senior user of the TRX mark. The many commercial uses of TRX include:
- TRX is the name of a coin on the TRON crypto network that retains a multi-billion USD market valuation. The #trx hashtag on Twitter refers to the TRX coin and auto-populates with its symbol.
- TRX is a gold mining company (trxgold.com). TRX is its stock symbol.
- TRX is a defense company (trxsystems.com/)
- TRX is a new truck model, the 2023 Ram 1500 TRX
On what basis, then, did Sorkin find bad faith? He noted the asking price was relevant but not determinative. He noted that the reference to Iceland in the WHOIS contact details was likely inaccurate. He noted that the Respondent did not appear to contest the allegations.
On this thin record, he determined that it was “more likely than not” that the Respondent bought TRX.com to sell it to the Complainant or a competitor.
As Zak Muscovitch pointed out in his recent comment on the cloverskypay.com dispute, relying on the “more likely than not standard” means that a decision that has a 51% chance of being correct has a 49% chance of being wrong.
The scope of the UDRP is not self-limiting. It is up to the discretion of the panelists to determine whether the circumstances of the dispute are appropriate for resolution by an abbreviated procedure intended to resolve clear-cut instances of cybersquatting yet is often ill-suited for other types of disputes.
The UDRP is highly subjective as Panelists can declare whatever they wish to be bad faith. It has a low standard of evidence in which a decision can be issued despite a panel self-assessing that they have a 49% chance of having made the wrong decision. The UDRP was designed to remedy clear-cut instances of cybersquatting. It is fit for that purpose. It is not fit to address more nuanced disputes.
The practical consequence of the TRX.com decision, in my view, is that the Complainant obtained an undeserved windfall of a domain name that the Complainant was not necessarily legally entitled to through the application of a Policy that was not well-suited to the circumstances in reliance on insufficient evidence of bad-faith targeting. Not only was the Respondent deprived of a valuable asset, but all the other commercial users of the TRX term, who likely would also have desired to own the TRX.com domain name, have been deprived of the opportunity to acquire the domain name in the open market.
Panelists may wish to consider whether a just outcome requires finding that unclear cases with a thin evidentiary record are not suitable for resolution under the UDRP. Panelists should hesitate to upset the status quo and normal operation of market forces by making a decision that has a substantial probability of causing significant unjustified harm, especially when the decision is based on speculation that is little better than flipping a coin to determine the outcome.
Editor-in-Chief: Nat Cohen is a Guest Commentator this week. Nat is an established domain name investor through his company, Telepathy Inc., and is also a Director of the ICA. Nat was recently invited to speak at a WIPO workshop on the UDRP to provide a domain name investor’s perspective. You can read a CircleID article based on these remarks here.