Nat Cohen analyzes a recent UDRP case for TRX.com.
A National Arbitration Forum panel ordered the transfer of TRX.com to Fitness Anywhere LLC.
The owner of the domain did himself no favors. It appears to have used incorrect Whois information and has not responded to the dispute. But still, should this domain have been lost in a UDRP?
In the current Internet Commerce Association UDRP Digest, domain investor Nat Cohen digs into the case and offers his thoughts. I reproduce 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 confines of UDRP case law. The Complainant owns an internationally known mark and is the dominant worldwide user of the mark. The defendant apparently used false Whois information, charged a high price for the domain name, and failed to respond to the complaint. Panelist Sorkin did not unreasonably determine, on a balance of probabilities, that the Respondent had the Complainant in mind when it recently acquired the trx.com domain name and listed it for sale.
Still, the decision is troubling nonetheless. 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. An asking price of over $1 million is ambitious, but not unreasonable to expect. The asking price alone was not strong evidence that the valuation reflects the value of the trademark rights rather than the inherent value of the domain name. Sorkin acknowledged this by concluding that the asking price was not determinative of bad faith:
The price requested by the Respondent of €1.2 million for the domain name is relevant but not determinative, since such a price could have been based either on its value linked to the mark, or on its value as three-letter “.com” domain name.
The original domain name TRX.com predates Complainant’s existence by several years. The Complainant chose to present as TRX in 2006, knowing that the trx.com domain name was already registered and used by a well-established travel transaction processing company. The TRX travel agency 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 shortly after.
The plaintiff, the fitness company TRX, is not the exclusive or even primary user of the TRX brand. The many commercial uses of TRX include:
- TRX is the name of a coin on the TRON cryptonet that retains a multi-billion dollar market valuation. The #trx hashtag on Twitter refers to the TRX coin and automatically populates with its symbol.
- TRX is a gold mining company (trxgold.com). TRX is its ticker 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 conclude bad faith? He noted that 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 dispute the allegations.
On this meager record, he determined that it was “more likely than not” that the Respondent purchased TRX.com to sell to the Complainant or a competitor.
As Zak Muscovitch pointed out in his recent commentary 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% chances of being wrong.
The scope of the UDRP is not self-limiting. It is up to the panelists to determine whether the circumstances of the dispute lend themselves to resolution by an abbreviated procedure intended to resolve proven cases of cybersquatting, but often ill-suited to other types of disputes.
The UDRP is highly subjective as panelists can declare anything they wish to be in bad faith. He has a low level of evidence in which a decision can be made despite a panel self-assessing that he has a 49% chance of having made the wrong decision. The UDRP was designed to address clear cases of cybersquatting. It is suitable for this purpose. It is not suitable for dealing with more nuanced disputes.
The practical consequence of the TRX.com decision, in my view, is that the Complainant obtained an undeserved windfall from a domain name to which the Complainant was not necessarily legally entitled by the application of a Policy which does not was not well suited to the circumstances relying on insufficient evidence of bad faith targeting. Not only was the respondent deprived of a valuable asset, but all other commercial users of the term TRX, who would probably also have liked to own the domain name TRX.com, were deprived of the possibility of acquiring the name of field in the open market.
Panelists may want to consider whether a fair result requires concluding that unclear cases with a thin evidentiary record are not amenable to resolution under the UDRP. Panelists should be reluctant to upset the status quo and normal operation of market forces by making a decision that has a substantial likelihood of causing undue material harm, particularly when the decision is based on speculation that is little better than Toss a coin to determine the result.
Editor: Nat Cohen is a guest commentator this week. Nat is an established investor in domain names through his company, Telepathy Inc., and is also a director of the ICA. Nat was recently invited to speak at a WIPO UDRP workshop to provide a domain name investor perspective. You can read a CircleID article based on those remarks here.