What are your risks with UDRP cases?

Monte: Right, right. Hey let me pop a couple questions at you before you go into the other points because they’re popping up on the form.

Stephen: Go for it.

Monte: Abettermall asks, if you register a domain name that violates a trademark, is your risk limited to having to hand over the domain name or can the company sue you for damages? Obviously, in a UDRP case, its much different than in a federal trademark case.

Stephen: Yes. Under UDRP the only thing you risk is losing the domain name. In federal and state courts, they can make an argument that you have acted in bad faith. The same basic argument that’s been done UDRP but that you are . . .

Monte: But with damages. Like you did damage to me. You prevented me from making money. You damaged my brand and mark somewhat by using it.

Stephen: Well, they can ask for money. Damages under trademark law are rare. It has to be a special case. For instance, say someone managed to get McDonald’s2.com or McDonald’sBigMacburgers.com and started making money off of it. Well that person obviously knew what they were doing. Let’s say they’re actually selling hamburgers but they were selling second rate meat. Argument they could sell it over the internet. They could sell it frozen. That’s a case where somebody where McDonald’s could possibly get actual damages because they’ve harmed them in some actual way. They’ve derighted their trademark and possibly they might get sued for this bad meat that went out there. Maybe somebody could get sick or something like that. 90% of the time, and you’re only going to get, have to turn over the domain. It’s that 10% where the company is able to show that you’ve acted in bad faith. Now understand that if you look at all the different statutes like the cyber squatting statute, there’s a substantial amount in there that actually has monetary damages in there. I can guarantee that a large company with a lot of money and attorneys is going to try to get money out of you. If you don’t have the ability to defend, well then they’re going to win because you won’t be able to say no that’s not right. A standard trademark case is going to cost $75,000.

Monte: Wow, that’s a lot.

Stephen: Yeah, in federal court and it can go a lot higher.

Monte: Yeah. I remember I’ve defended myself, well I mean I had a lawyer to defend myself, I forget which company it was, I had, I had . . . oh I can’t remember the name. It was a long time ago. It was like 1997 and I got pulled into a, you know back then they didn’t have a UDRP board or WIFO board. It was trademark law and I had, oh network engineer. It was some kind of network engineer name. One of the large companies that used this network engineer name or whatever sued like hundreds of people with any kind of domain name with a variation of network engineer. They strong armed basically by putting a big lawsuit out to numerous parties all at one time, spending thousands and thousands of dollars. Even to get out of that thing, even though I felt I could fight it and I was right and all that, it cost me something like 18 or $19,000 dollars at the time. It was very expensive, just to close it up, not even go to court. It was so expensive.

Stephen: Yeah, that’s unfortunately the way it is. Unfortunately, might makes right often within the industry. Although I should note that the company that did that did something very, very wrong. That was an abuse of the court system. What should have happened is everyone should have banded together to fight them as a class action suit against them.