District Court Denies Motion to Dismiss on Reverse Domain Name Hijacking Claim — Airfx.com v. AirFX LLC

[Post by Venkat Balasubramani, with comments from Eric]

Airfx.com v. AirFX LLC, 11-01064 (D. Ariz.; Oct. 20, 2011). See also the UDRP ruling, AirFX, LLC v. ATTN AIRFX.COM,

Claim Number FA1104001384655 (NAF May 16, 2011).

Lurie is an indoor skydiving enthusiast and inventor. He invested in “SkyVenture” brand wind tunnels. In 2006, he looked for an alternate brand and ultimately adopted the trade name “AIRFX.” He hadn’t publicly launched his business, but he undertook preparations to launch (e.g., lined up a customer and partners). He tried to register Airfx.com but it was already registered. Lurie purchased it from the then-current registrant on February 2, 2007.

AirFX LLC is an Indiana-based business that uses the AIRFX trademark for motorcycle and vehicle parts. In 2010, it contacted Lurie and tried to wrestle the domain name from him. He declined. In April 2011, AirFX LLC brought a UDRP action. The panel ruled that the domain name should be transferred to AirFX LLC.

Lurie brought a lawsuit for reverse domain name hijacking in federal court. AirFX LLC moved to dismiss or to have the case transferred to Indiana.

Reverse hijacking: The court declines to dismiss Lurie’s reverse hijacking claim. As the court notes, a reverse hijacking claim was provided in the statute to address the situation where a trademark owner “overreaches” when exercising the trademark owner’s ACPA rights. In order to succeed on a reverse hijacking claim, a plaintiff (registrant) must show that (1) the plaintiff’s name was “suspended, disabled, or transferred” under a registrar’s policy, (2) the trademark owner has notice of the action, and (3) plaintiff’s use or registration of the domain name is not unawful. The court says that plaintiff need only show that the use or registration is not unlawful under the ACPA (and not under the Lanham Act).

AirFX LLC largely relied on the UDRP panel’s findings plus the fact that, as a trademark owner, it had an obligation to police infringements. The court says that the UDRP rulings are not binding on federal courts and rejects AirFX LLC’s arguments that a plaintiff has to show “harassment” in order to prevail on a reverse hijacking claim. Lurie’s reverse hijacking claim moves forward.

Procedural disputes: The parties disputed a couple of peripheral procedural issues. AirFX LLC sought to have the action transferred to Indiana. The court rejects this argument because AirFX was required to submit to jurisdiction over a subsequent challenge to the UDRP in “either the location of the registrar’s office or where plaintiffs are located.” The registrar (GoDaddy) is located in Arizona, so having agreed to this forum in the UDRP filings, AirFX can’t move the dispute to Indiana.

AirFX LLC was also hit with an award of costs and fees in the amount of $4,086.30 because it refused to waive service of process. AirFX LLC had a variety of menial arguments for why the waiver did not comply with the rules (lack of a specified return date, an alleged failure to include a self-addressed stamped envelope), but the court rejects these arguments.

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Reverse hijacking argument claims are rare. A provision under subsection (v) (invoked here) allows for declaratory and injunctive relief. There’s also a separate provision (subsection (iv)) which allows for damages but requires the registrant to show that the person claiming rights to the domain name made “knowing and material” misrepresentations. (See Eric’s post on the Digimedia case from last year: “Wildcarding Subdomains Is OK; Reverse Domain Name Hijacking Isn’t–Goforit v. Digimedia.”)

I’m not sure about the court’s comment that the registrant bringing a claim under subsection (v) has to show just that the registrant’s conduct was lawful under the ACPA, and not address any Lanham Act arguments. Subsection (v) says that the registrant may file an action “to establish that the registration or use of the domain name by such registrant is not unlawful under this chapter.” [emphasis mine] (Here’s a link to the statute.)

To begin with, AirFX LLC is not going to have an easy time showing that Lurie violated its rights under the ACPA, but the court also drops a footnote to the GoPets case, under which Lurie may be able to tack his registration to the previous owner’s. (Here’s my post on that case from earlier this month: “Re-registration of Domain Name is not a “Registration” Under the ACPA — GoPets Ltd. v. Hise.”) Why AirFX LLC did not just participate in the market like Lurie and try to purchase the domain name from the former registrant I don’t know, but that’s one question I’d be asking if I were the court.

(h/t to Marc Randazza, who is counsel for Lurie)

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Eric’s Comments

This is a fine example of how trademark owners claim the “policing” duty to justify trademark bullying. On the surface, there appears to be nothing wrong with Lurie using “airfx” in the pseudo-skydiving business in parallel with AirFX’s use in the automobile industry. Because of the unrelated industries, AirFX doesn’t have any policing “duty” here. In effect, AirFX appears to be assuming it’s the only company in the world that gets to use the trademark–effectively, that it should get dilution-style protection for a trademark that can’t meet the requisite requirements.

AirFX’s efforts to claw back the domain name are particularly troubling. AirFX doesn’t get to preclude all other uses of “airfx,” so it is does not “deserve” the domain name airfx.com. Yet, it’s able to cheaply pursue a UDRP…and wins! (There is some discussion in the UDRP ruling that Lurie offered to “rent” the domain name and put up PPC links on the parked domain; the panelist seemed to ignore the former and focus on the latter). AirFX overclaimed its trademark rights, the UDRP deck is stacked against domain name registrants, and the result is that Lurie has to spend significant money first to fight the UDRP and then to sue in court. What’s wrong with this picture?

To me, this seems like a stereotypical example of trademark bullying as conceived by Sen. Leahy. You recall the Department of Commerce doesn’t believe such a thing exists, but consider the results of this litigation battle: AirFX imposed a bunch of legal costs on Lurie for him just to stay in place, making his court “victory” a Pyrrhic one.

As Venkat points out, we’ve had very few successful claims of ACPA reverse domain name hijacking. It would have been more exciting if Lurie could get ACPA damages (maybe that will come in due course), but even without that, this opinion is noteworthy for the domain name owner’s ACPA success.

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