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Fraudulent Transfer: Recovering Stolen Domain Names

Either because of laxness on the part domain name holders or cunning on the part of thieves, registrars have been duped into transferring domain names to fraudsters’ accounts. I discussed the matter last year in Recovering Domain Names Lost to Fraudulent Transfer. These cases are mostly filed in the Eastern District of Virginia, Alexandria Division, for the good reason that the registry for dot com is located in that jurisdiction and they are mostly recovered.

In a very recent case, Alston v. www.calculator.com, No. 20-cv-23013 plaintiff commenced the action in the Southern District of Florida and moved, successfully ex parte for a temporary restraining order and preliminary injunction which directed the registrar, GoDaddy.com “within one business day of receipt of this Order . . . [to] immediately transfer the Domain Name www.calculator.com to Plaintiff,” GoDaddy complied, and the purchaser, Stands4 Ltd. (an Israeli company), who paid $180,000 for the domain name, moved for an “Expedited Order to Dissolve the Temporary Restraining Order” which the Court denied:

[A]lthough it is likely that the monetary harm Stands4 will suffer pursuant to the TRO is significant, the Court gives more weight to the evidence Plaintiff submitted demonstrating the ongoing, irreparable injuries she is suffering due to the alleged theft of the Domain Name.

Following denial of Stands4’s motion, Alston dismissed the action against it in a stipulation that Stands4 “will no longer contest the Plaintiff’s ownership of the mark and domain name calculator.com, and Plaintiff hereby states that she is satisfied that Stands4 did not act in bad faith in relation to the acquisition of the calculator.com domain name.”

There were, in essence, two victims in this action: for plaintiff, the heavy cost to recover the stolen domain name, and the purchaser, it’s out-of-pocket loss. It might be pointed out that Stands4 found itself in a precarious position since it could not have taken good title from a thief. The general rule at common law is that “[o]ne who purchases, no matter how innocently, from a thief, or all subsequent purchasers from a thief, acquires no title in the property. Title always remains with the true owner.” Kingdom of Spain, 616 F.3d at 1030, n.14 (quoting Marilyn E. Phelan, Scope of Due Diligence Investigation in Obtaining Title to Valuable Artwork, 23 Seattle U. L. Rev. 631, 633—34 (2000). Crocker Nat’l Bank v. Byrne & McDonnell, 178 Cal. 329, 332, 173 P. 752 (1918): “This notion traces its lineage to Roman law (nemo dat quod non habet, meaning ‘no one gives what he does not have.’”).

By Gerald M. Levine, Intellectual Property, Arbitrator/Mediator at Levine Samuel LLP

Information about the firm can be found on the Firm’s website at iplegalcorner.com. Mr. Levine has a litigation and counseling practice representing clients in Intellectual Property rights and management, Internet and Cyberspace issues, domain names and cybersquatting, as well as a diverse range of legal and business matters from working with client to resolve commercial disputes, to copyright and trademark counseling and registrations. He is the author of a treatise on Trademarks, Domain Names, and Cybersquatting, Domain Name Arbitration: A Practical Guide to Asserting and Defending Claims of Cybersquatting Under the Uniform Domain Name Dispute Resolution Policy. A Second Edition of the treatise was published July 2019 and is available from Amazon or from the publisher, Legal Corner Press (LCP). For inquiries to LCP write to .(JavaScript must be enabled to view this email address) or Mr. Levine at .(JavaScript must be enabled to view this email address).

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