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Brands used to bully owners of domain names that the brands did not like, without any real legal basis. A new reverse domain name hijacking (“RDNH”) case may prevent this bullying from happening again and cause brands to think twice before initiating suspect legal claims creating a seismic shift in the bargaining powers between domain name owners and trademark owners.

Trademark owners, brands and celebrities often file Uniform Domain Name Resolution (“UDRP”) complaints knowing they have nothing to lose, other than the cost of the filing, to force domain name holders to give up domain names without real legal justification—the definition of RDNH. Because of a recent ruling against the City of Paris, the domain owner can now bite back and recover up to $100,000 in fines, plus actual damages and attorneys’ fees.

RDNH occurs when a trademark owner files legally deficient arbitration complaints or lawsuits against a domain name’s lawful owner to try and scare them into turning over the domain name. If the first threatening letter from the brand’s lawyer did not work, the brand could easily file a UDRP complaint. The UDRP is an arbitration process where the rights to the domain name are decided based only on the papers submitted by the parties. Brands had no risk because no damages could be awarded through a UDRP arbitration for either side. Yes, the arbitrator could rule a trademark owner overreached and engaged in RDNH, but the result was akin to merely having to write your name on the board back in elementary school.

Even if litigation got filed in the U.S. under the Anti-Cybersquatting Consumer Protection Act, and the judge found there was RDNH, the court would only award actual damages and attorneys’ fees. In most cases, the actual damages were small because, while the case was pending, the domain name could still be used, there would just be a lock to prevent its transfer. So what domain name owner would pay thousands of dollars to defend a case just to hope for an award that would result in the payment of his fees and whatever little actual damages he suffered? It was usually easier to transfer the domain to the better-funded brand and move on.

Meanwhile, the trademark owner could seek its actual damages, attorneys’ fees, but also ask the court to grant it a statutory award ranging from $750 to $100,000 if he won. The theory is that the brand name may not suffer much actual damage when a domain name owner takes advantage of a common misspelling or other abuse, so the statutory penalties are in place to deter cybersquatting. As a result, not only did the economics lean in favor of the trademark owner, but all the risk was placed on the owner of the challenged domain name with little upside. Of course, many domain name holders would rather settle than fight that uphill battle—until the City of Paris went too far and the court said enough.

A federal judge in Houston, for the first time, allowed the domain name holder to receive the same statutory damages previously only available to the trademark owners in a RDNH case. The court found the same policy that supported statutory damages applied to victims of RDNH. Along with attorneys’ fees and the maximum statutory award of $100,000, the judge ordered the City of Paris, France to transfer the rights to the domain name parvi.org to a California man. Without the statutory award, the victorious domain name holder would have only received his attorneys’ fees, which would not have been a wise economic gamble.

It all started when Jeffrey Walter registered “parvi.org” as a conjugated form of the Latin word parvus, meaning small, which appealed to Mr. Walter who was providing a software “kernel”, or small core of programming at the heart of a computer operating system. A few years later, the City of Paris filed a UDRP complaint because Paris obtained a French trademark for PARVI for services related to its Wi-Fi services.

The effort was part of an all out war by the City of Paris over domain names held by U.S. citizens such as WifiParis.com, Wifi-Paris.com, paris.com and paris.tv. The fight for parvi.org was the only one where the City of Paris was successful at the UDRP level—at least at first. By filing the complaint, as with all UDRP filers, the City of Paris agreed to be subject to a court action in the jurisdiction of the registrar. In this case, Mr. Walter registered his domain name with GKG.net of Bryan, Texas. Despite agreeing to be subject to jurisdiction in Texas, the City of Paris refused to appear and defaulted.

At the hearing, Mr. Walter’s team put on evidence of Paris’s abusive efforts to take away domain names from U.S. citizens. For years, Paris has been sending threatening cease and desist letters to holders of domain names containing the word “paris” hoping the underfunded individuals would capitulate. Despite the registration of French trademarks, the City of Paris would have no rights to many of those names under U.S. law. Before formal arbitrations were filed, a couple of domain name holders preemptively sued in U.S. courts, but the City of Paris would claim immunity and nothing of lasting precedent would come from those suits. Much like bullies, when truly confronted and forced to defend themselves under U.S. law, the City of Paris refused to show up and defaulted.

The case has garnered attention because of the international intrigue associated with a federal court in Texas claiming the City of Paris, France, behaved improperly. The court faulted Paris for taking advantage of immunity defenses when challenged by U.S. domain name holders and then ignoring its agreement to resolve disputes in the jurisdiction of the registrar.

More important than the novelty of a penalty against the City of Lights, this ruling may provide the precedent for other domain name holders to fight back under the Anti-Cybersquatting Consumer Protection Act. If the domain name holders can prove the trademark owners acted in bad faith under the circumstances of their own case, they, too may put some teeth into a RDNH claim. Until now, it was nothing more than a growl.

About Travis Crabtree:  Travis Crabtree is a lawyer with the law firm of Looper Reed of McGraw, P.C. who worked on the team representing the Mr. Walter in Cause No. 09-3939; Walter  v. The City of Paris, In the Southern District of Texas. Mr. Crabtree focuses his practice on internet and marketing law, and you can read about this case and other legal issues dealing with emerging media and the internet on his blog www.emedialaw.com.

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