Trademark name sales

[EJS]

If I were to sell a domain name with a trademark in it, for example PfizerMedicines.com or something of the like, and the person I sell it to gets a letter from the company demanding the name/threatening a lawsuit, could I be found liable for any damages?

Could I be found just as liable as the current owners? Would I only be on the hook to give the buyer his money back? Or would I be completely free of any litigious action?

People liken domain names to house sales, and it would be illegal to sell a home on a wasteland without disclosing it to the owner, however, with a trademark such as Pfizer, the buyer would know the name has a trademark in it, and it should be buyer beware.

Does anyone have experience or could anyone provide any info?

[NostraDomainus]

Great Question EJS -

I too would be interested to hear the answer to such a question and appreciate anyones experienced insight into this.

Are there Any Legal obligations on previous owners of TM domains after they sell them?

I know you can legally hold TM domains, as long as you don't infringe upon the TM - but if the TM domain buyer (knowing of the TM issue) then violated the TM (even thou you didn't) - can you still be liable?

[jberryhill]

Yes.

Yes.

No.

No.

Yes.

[NostraDomainus]

I like your style!

Works well when having to charge by the minute.

Thanks John!

[EJS]

I like your style!

Works well when having to charge by the minute.

Thanks John!

Hi John,
Can you please specify what your YES and NO was each in reference to?

Ultimately, if someone sells "Joe" a name with a registered trademark "CitibankStocks.com" for example (just the name, no content, Hosting, or anything else for that matter), and Joe decides to make it a porn site and the company sues Joe, how would the former owner liable? He has has no affiliation with the current owner, site or content. If the domain name was only registered for a year, and the current owner renews the registration, would this absolve the previous owner of any obligation since he sold it only for the time remaining on the registration?

Also, if that company sues for any kind of infrindgement, would a LLC protect the owner's personal assets from any litigation?

Thank you very much for your advice.

[NostraDomainus]

I believe it was for your 5 Questions.

[EJS]

I believe it was for your 5 Questions.

Thanks. I thought the response was to your post, so I was a bit confused. I am still not sure how the seller would be liable or for what percentage - or how long that would be effective.

Are there any examples of this occurring?

[jberryhill]

Yes it happens. Under the ACPA the TM claimant is free to go after everyone who has ever held the domain name.

Read what this says:

(1)
(A) A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person—

(i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and

(ii) registers, traffics in, or uses a domain name that—

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or

(III) is a trademark, word, or name protected by reason of section 706 of title 18 or section 220506 of title 36.

Okay, now there are three different acts - "registers, traffics in, or uses".

If you register a domain name and sold it to someone, did you register it? Yes. Did you traffic in it? Yes. Did you use it? Maybe.

The worst part now is that if the TM claimant sues the guy who has the domain name AND you, then you are the only person in the room who has nothing with which to bargain.

I've seen this in two cases, including this one, where the TM claimant went after SnapNames, and the entity which bought the domain name from SnapNames:

www.johnberryhill.com/telepathy.pdf

Now, that's not exactly the situation you were describing, but I've seen that in at least two other cases.

[MusicWave]

berry interesting....

[EJS]

Yes it happens. Under the ACPA the TM claimant is free to go after everyone who has ever held the domain name.


I've seen this in two cases, including this one, where the TM claimant went after SnapNames, and the entity which bought the domain name from SnapNames:

www.johnberryhill.com/telepathy.pdf

Now, that's not exactly the situation you were describing, but I've seen that in at least two other cases.

John,
I appreciate the case history and your experience. It appears that your efforts in the particular case helped the defendant have this action dismissed.

I guess a person should use their best judgement when registering a trademarked name. There are thousands of them (if not more), and most people don't find trouble, however, there is the potential that litigious action could be taken. I appreciate your willingness to share your valuable insight and knowledge.

[Ovicide]

Is there any value to an agreement where the buyer agrees that the seller will not indemnify the name?

[DNQuest.com]

I guess a person should use their best judgement when registering a trademarked name.

I find that most domainers DO NOT use any judgement when registering TMed domain, they just see $$$$$$$ lol

[jberryhill]

Ovi,

You mean where the buyer indemnifies (insures, holds harmless) the seller against any third party claims.

Yes, that can be in an agreement between a buyer and a seller, but putting it in an agreement and having it work out that way can be two different things. There is more than one dispute that can be triggered when:

A sells domain to B. TM claimant C sues both A and B.

C is suing A for having registered and sold the name, and is suing B for having the name. Then, of course, B might sue A on the basis of an implied warranty, for example.

It's not clear to me whether all of the questions on this thread are talking about A's potential liability to C, or A's potential liability to B, but it should be clear that the person in the deepest hole here is A.

And that's the last place you want to be in these situations - in the A hole.

[Ovicide]

There is more than one dispute that can be triggered...

I didn't understand that "A" is potentially liable to both "B" and "C".

After selling a name, and after being paid, I'd want the transaction to be closed for all time. Most other sellers probably would also.

Thanks for explaining, John.

[EJS]

Hi John,
So if you were defending person "A," would you hope for a settlement? What type of defense would you amount?

If you knew someone who sold a domain name with a trademark in it, not fully knowing the laws, what would you advise them to do in order to reduce their liability several months after the sale?

[DNQuest.com]

John, that was extremely funny, I think I woke the kids up. lol

A is liable to C because A registered C's TM

A is liable to B because A sold B the domain (IE- illegal domain)

Just because you sold the domain does not mean you are off the hook, You at one point owned the domain and profited from it. It just like if you steal a car, sold it to someone else. You are still liable for selling something which you had no right to sell.

And if a case where C sued both A and B, yes, settlement would be the best solution. The penalty for squatting is $100,00.00 and if the compny went after both A and B, then C is not playing aorund.

As far as not knowing the laws, ignorance is never a good defense.

[EJS]

So what should a person do if they have already sold a name like this before any suits or actions are filed? Obviously pleading ignorance wouldn't be a viable defense, but if this was the case, how can it be rectified months after the sale?

Should they just hope for the best? Should they explain to the buyer that they didn't realize this was "squatting" and it is illegal, so they should offer to buy the name back and then let it expire? Should they assume that a major lawsuit isn't a common occurance, and the chances of a huge problem isn't likely?

Is there a typical process for a company to get a name that is trademarked? For example, would they send out an email to the owner requesting him to turn over the name and no action would be taken, or would they automatically sue the owner and previous owner? (Keeping in mind that the domain name is not being used for any website.)

I am very new to this business and would be grateful to receive any advice from someone who is familiar with the business. Thank you very much in advance for your valued opinions.


Here is another wrinkle...

What if the domain name was registered one week before the company registered the trademark with the US Trademark office?

[DNQuest.com]

What if the domain name was registered one week before the company registered the trademark with the US Trademark office?

Makes no difference (unless it is for future use), it is the date of first use that matters.

As far as the quesitons, you will almost never see a company go after A. But the question was about liability. So I won;t sweat it if you sold a TMed domain.

[actnow]

John,

Thank you for posting that case. It was very informative.

A few things jump out at me from this case.

1. The lawyer was trying to save a few dollars by registering it at GoDaddy instead
of paying Network Solutions going rate.

2. He had the option of paying $ 150 for it during redemp. cycle. And, he had the option of paying $ 300. for it from Cohen. Which, I assume he refused to pay out of principle.

3. Reading between the lines, he apparently tried to "bully" throughout the whole process.

4. He had filing fees, serving fees, probably a lot of phone conversations, etc.

Wouldn't it had been better for him to pay $ 35. originally?

Egos can be very expensive for everyone.

[Ovicide]

Was the complainant required to pay the defendant's attorney fees after the Telepathy case was dismissed?