Lawsuit against domain name is dismissed but domain owner’s suit to stop UDRP transfer is still pending.
I said the judge was going to be unimpressed, and I was right. Today, U.S. District Judge Roslyn O. Silver dismissed a lawsuit filed against TRX.com.
Background
Loo Tze Ming bought the domain name trx.com for $138,000 in April 2022 at domain marketplace 4.cn.
In October 2022, Fitness Anywhere LLC, a company going through bankruptcy that claimed rights in TRX, filed a cybersquatting claim under UDRP. The following month, the panelist awarded the Complainant the domain name in a controversial decision.
Ming overlooked the dispute notice and didn’t respond, so he sued Fitness Anywhere in Arizona to stay the transfer.
Then, in February 2023, a company called JFXD TRX ACQ LLC, which described Fitness Anywhere as its predecessor in interest, filed an in rem lawsuit against trx.com in Virginia, where the .com registry is based.
Ming successfully petitioned the court to move the in rem case to Arizona, where he filed his original lawsuit.
Moving the case was key because Arizona is in the Ninth Circuit. There’s precedent in the Ninth Circuit that the original registration date of a domain is the relevant date for a case under the Anticybersquatting Consumer Protection Act (ACPA).
Trx.com was registered in 1999. The plaintiff got trademark rights in the second-level domain term TRX sometime after that, and then Ming bought the domain years after the trademark was established. However, according to the Ninth Circuit, because the original registration in 1999 predated the plaintiff’s trademark rights, the plaintiff can’t win.
A first chance to clarify
In January, the judge overseeing the case asked JFXD TRX to explain a couple of things.
First, she asked how, under Ninth Circuit precedent, a domain registered in 1999 before it got trademark rights violates the ACPA.
Second, she asked for clarification on the relationship between Fitness Anywhere and JFXD TRX.
The relationship between the parties is interesting. The plaintiff’s lawyer, Alain Villeneuve, has represented both Fitness Anywhere and JFXD TRX. But there’s confusion about which entity owned the trademarks and at what time. The judge wrote (emphasis mine):
The filings in this case, as well as the filings in the case pending before Judge Logan [the case Ming filed to stay the UDRP transfer], show some confusion regarding the current owner of the TRX-related property and the proper defendant for Ming’s challenge to the order transferring trx.com. According to statements made by Mr. Villeneuve, Fitness Anywhere owned all TRX-related property, including the TRX trademarks, until it sold that property to JFXD in August 2022. Despite no longer owning any TRX-related property, in October 2022 Mr. Villeneuve initiated a domain name dispute proceeding on behalf of Fitness Anywhere. During those proceedings Mr. Villeneuve stated Fitness Anywhere was “the owner of the famous trademark TRX.” That administrative proceeding resulted in an order that trx.com be transferred to Fitness Anywhere. If Fitness Anywhere no longer owned the TRX-related property prior to the administrative proceeding, it would appear the transfer order was improper. If, however, Fitness Anywhere did own the property and continued to own the property, Ming’s claims against Fitness Anywhere pending before Judge Logan are the proper avenue for resolving ownership of trx.com. In that situation, however, JFXD’s current complaint is improper because JFXD does not own the TRX-related property. In explaining why its complaint does not state a claim for relief, JFXD must explain the conflicting positions adopted by Mr. Villeneuve. In particular, JFXD must explain whether Fitness Anywhere owned any TRX-related property at the time Mr. Villenueve stated Fitness Anywhere “is the owner of the famous trademark TRX.”
JFXD TRX subsequently tried to explain how the 2022 sale of the domain trx.com is a new registration and thus should be considered cybersquatting. But the explanation didn’t make much sense.
And JFXD TRX didn’t try to explain the relationships between the parties.
The judge dismissed the case but gave JFXD TRX one more chance: she said the case could be amended if JFXD TRX could show that the domain expired and was registered anew by Ming. And she said that any such amended complaint must be filed along with a statement explaining the relationship between the parties.
The amended complaint
The plaintiff filed an amended complaint (pdf) on the deadline, February 21.
It appears that the plaintiff only changed a couple of things in the complaint.
Sloppilty, the complaint still stated why jurisdiction existed in Virginia, not Arizona, where the case is now being heard.
More importantly, it seems the plaintiff’s only attempt to show the domain expired and was registered anew by the current owner is to state that’s what happened and underline it. There are two changes between the previous complaint and the amended complaint.
In paragraph 23, the amended complaint states:
…Upon information and belief, TRX has owned the TRX® brand at least since 2005. Upon information and belief, in the period of 2018 to 2022, the URL would have expired and returned to the public domain, and in 2022, it was purchased by Defendant from the public domain subsequent to the senior rights of TRX in violation of the ACPA.
and in paragraph 45, it states:
TRX’s federally registered TRX Marks were famous, well-known, and distinctive before Defendant’s registration and/or acquisition of on or before 2022 from the public domain and are entitled to protection under the Lanham Act.
(The underlined portion of paragraph 45 is the only part that changed.)
The plaintiff’s attorney didn’t file an explanation explaining the relationship between the parties on the docket.
Judge dismisses case
The judge was not impressed by the amended complaint.
First, she noted that it does nothing to explain the plaintiff’s erroneous claim that the domain expired and was registered by the current registrant:
Plaintiff appears to be alleging the domain name was available for anyone to register when Defendant registered the domain name with a registrar. But Plaintiff has already argued that registering a publicly available domain name with a registrar costs $19.99 per year. (Doc. 83 at 5). Plaintiff has also argued Defendant purchased for $138,000. (Doc. 68 at 5; Doc. 83 at 7). Thus, the amount paid by Defendant for establishes Defendant did not register in 2022 with a registrar. Instead, as Defendant has repeatedly claimed, the purchase price shows Defendant bought the domain name on the secondary market.
Second, she noted that the plaintiff’s counsel, Alain Villeneuve, sent an email to the judge rather than filing a statement about the ownership contradictions with the court.
Villeneuve was in a tough spot, and the judge explained:
If Fitness Anywhere did not own “the famous trademark TRX” as of October 2022, Mr. Villeneuve’s statement in the dispute resolution proceeding was false. Alternatively, if that statement was accurate and Fitness Anywhere continues to own “the famous trademark TRX,” Mr. Villeneuve’s statements in this case that Plaintiff JFXD owns the domain name [sic] have been false.
The judge didn’t like the explanation that he emailed to the court:
As for the contents of Mr. Villeneuve’s letter, it is largely indecipherable. The letter appears to state that as of October 2022, Mr. Villeneuve was not aware that his client, Fitness Anywhere, had declared bankruptcy and sold its assets. Thus, Mr. Villeneuve appears to be stating he initiated the domain name dispute proceeding on behalf of a client that no longer owned the relevant property. There is no explanation how an attorney might be unaware that his client had declared bankruptcy and sold off all the property relevant to the attorney’s work. The letter contains a variety of additional statements, but the Court is unable to understand what Mr. Villeneuve is attempting to convey. All that can be determined is that Mr. Villeneuve still has not explained why he stated Fitness Anywhere owned the TRX trademark months after Fitness Anywhere sold all its assets.
What’s next
JFXD TRX’s lawsuit to try to get the domain trx.com is now dead. But that’s not the end of it.
Recall that this whole thing was kicked off by Fitness Anywhere filing a UDRP against trx.com. It seems, based on the record, that the UDRP Complainant incorrectly represented that it owned the trademark in question. Since it did not, the Complainant effectively gave false information to the panelist, who relied on that information to order the domain transferred.
After the panel ordered the domain transferred, the domain owner sued to halt the transfer. That lawsuit is stayed because Fitness Anywhere is in bankruptcy.
However, the UDRP that the lawsuit is based on was filed with false information, which could create a sticky situation in court.
Post link: Judge dismisses TRX.com cybersquatting claim
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