Investors concerned about UDRPs filed against domains on payment plans should review this case.
One of the concerns people have about selling domains through lease-to-own payment plans is if the domain name becomes subject to legal action or a cybersquatting dispute.
Well, here’s an example of what can happen when a UDRP is filed against a domain on an LTO.
NEX Foundation filed a dispute with World Intellectual Property Organization against the domain name nex.org.
Nex Marketing, LLC bought the domain on a 36-month LTO at Dan.com in August 2022. After GoDaddy acquired Dan.com, the registration was transferred to Afternic Services, LLC.
The UDRP panelist considered Nex Marketing to be the domain’s registrant, and Nex provided the evidence to successfully defend the domain name.
This was a fairly clean case given the beneficial registrant’s identity. It could get trickier if the acquirer did not have such clear-cut rights and interests in the domain name.
One thing to note is that the panel considered the date that Nex Marketing entered into the LTO as the registration date. While the lessor’s prior acquisition date wasn’t a factor in this case, I could envision a lessor/seller having to step in to argue they are the true registrant of the domain and citing their initial registration date.
If you are concerned about this type of issue, there are a couple of things you can do:
- It might make sense only to offer LTO on less expensive domains. Consider your threshold on what you’d be willing to lose if a UDRP is filed against a domain you’ve leased.
- For more expensive domains, it might be worth entering into a contract with the buyer that explains roles and responsibilities in the event of a cybersquatting claim.
That’s another reason to front-load LTOs with big down payment and limit them to 24 months, preferably 12 months.
Not too long ago on X , Berryhill Esq. Had posted on this topic.
Don’t remember the date.
“I could envision a lessor/seller having to step in to argue they are the true registrant of the domain and citing their initial registration date.”
Oh, really? And how would they even know about it?
Understand that the GoDaddy LTO is silent on who gets notice of things like this. The lessor/seller is not the admin contact email address for obvious reasons. So, where do those notices go? To whom does the GoDaddy LTO terms require such notices to be sent?
And, think about this, who would leave the defense of their domain name up to “some person” who was leasing it.
Maybe the lessor/seller knew this was going on, but maybe not. We really don’t have any way of knowing. But, the way that many businesses operate, if they don’t have a contractual obligation to do something, then they don’t go out of their way.
One could also think of collusive scenarios in which the lessor, acting as a straw party for the TM claimant, leases a domain name for the purpose of setting up an infringing use in order to provide a less ambiguous claim of cybersquatting.