Judge rules case is exceptional and warrants attorney’s fees.
The judge overseeing a dispute over TRX.com has ordered the plaintiff to pay the domain name owner’s attorney’s fees and expenses.
Ruling that the case was “exceptional,” U.S. District Judge Roslyn O. Silver ordered JFXD TRX ACQ LLC to pay Loo Tze Ming $41,098.77.
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. That case was stayed because Fitness Anywhere is in bankruptcy.
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.
Given the ongoing suit in Arizona, it was odd that JFXD TRX filed an in rem suit against the domain name because it knew who the domain owner was and how to contact him.
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 couldn’t win.
Discrepancies
Both Fitness Anywhere in the UDRP and JFXD TRX in the instant lawsuit were represented by the same counsel, Alain Villeneuve.
It later surfaced that Fitness Anywhere had sold its intellectual property to JFXD TRX before Fitness Anywhere filed its UDRP. The judge wrote (emphasis added):
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.”
This is where things got particularly hairy for Villeneuve.
The judge gave the lawyer leave to file an explanation of this discrepancy, as well as an explanation of why Ninth Circuit precedent didn’t apply to the case at hand.
In a court filing, Villeneuve explained (or rather, made a stab at explaining) the second part but not the IP ownership discrepancy. He sent an explanation about the IP ownership discrepancy in an ex parte communication directly to the judge. The judge admonished him for not filing that part of his response on the docket.
She wrote:
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.
Judge Silver dismissed the case.
Order for Attorney’s Fees
Ming filed a petition with the court for attorney’s fees of approximately $40,000. Villeneuve tried to argue against it. Again, his arguments fell flat.
In her decision to award attorney’s fees, Silver said JFXD’s “improper behavior” extended in its opposition to awarding attorney’s fees. Among the reasons:
- JFXD repeatedly argues the Court should have applied “2nd Circuit law” because the case was transferred from Virginia. (Doc. 99 at 3, 4). Virginia is in the Fourth Circuit, not the Second Circuit.
- JFXD argues the Court should not have applied Ninth Circuit law. JFXD did not make this argument while the case was pending.
- JFXD argues “extreme poor lawyering in GoPets misled the 9th Circuit to ignore the relevant portion of the ACPA.” (Doc. 99 at 3). JFXD appears to believe “poor lawyering” is a basis to ignore binding precedent. It is not.
- JFXD argues it will request GoPets be overruled and that argument “is not frivolous litigation but a public service.” (Doc. 99 at 5). Before judgment, JFXD never argued GoPets was incorrect. Rather, JFXD consistently maintained, without explanation, that GoPets did not apply in this case because of factual differences.
- JFXD argues the Court required he file an amended complaint by February 21, 2024, despite the fact that Mr. Villeneuve was “leaving on February 14, 2024 to return on February 27, 2024 for a romantic anniversary.” (Doc. 99 at 7). JFXD did not seek an extension of the February 21 deadline and it is unreasonable to argue the Court should have considered Mr. Villeneuve’s undisclosed “romantic anniversary” plans in setting a briefing schedule.
- JFXD presents a strange argument that, despite naming Ming as a defendant, JFXD continues to believe Ming is a “fraud.” (Doc. 99 at 1). JFXD allegedly attempted to investigate Ming and what it found was “chilling.” (Doc. 99 at 9). JFXD cites postings on an Internet message board allegedly discussing fraud committed by Ming. The Court cannot understand what JFXD is attempting to establish through this argument because it was JFXD’s decision to sue Ming. Any argument from JFXD that Ming is not a proper party is frivolous.
Silver pointed out major issues in JFXD’s pleadings throughout the case, such as:
- In the fall of 2022, Fitness Anywhere asked Mr. Villeneuve to file a domain name dispute regarding ownership of <trx.com>.1 (Doc. 68-2). Mr. Villeneuve prepared the necessary paperwork and on October 19, 2022, filed the dispute with a nongovernmental entity. In that dispute Mr. Villeneuve stated, “Fitness Anywhere LLC is the owner of the famous trademark TRX.” (Doc. 68-2 at 4). That was false. As of October 2022, JFXD, not Fitness Anywhere, owned “the famous trademark TRX.”
- JFXD’s response addressing the viability of its claim in light of GoPets [9th Circuit precedent] was exceptionally difficult to understand. It appeared JFXD misunderstood basic aspects of litigating a cybersquatting claim. For example, JFXD titled one section of its response “Further Evidence a Registrar Owns this URL.” (Doc. 83 at 8). A “registrar” is a company that registers “domain names with registries on behalf of those who own the names.” Off. Depot Inc. v. Zuccarini, 596 F.3d 696, 699 (9th Cir. 2010). It was undisputed <trx.com> was not currently owned by a “registrar.” Thus, JFXD’s statement that <trx.com> was owned by a “registrar” was inexplicable.
- JFXD’s response also recounted a sequence of events it described as “worthy of a fiction book.” (Doc. 83 at 8). JFXD allegedly attempted to buy <trx.com> through GoDaddy, a nonparty brokerage that connects buyers with sellers of domain names. JFXD claims it was contacted by a GoDaddy agent and “[t]here was the smell of money in the air, the same vibe as entering a used car showroom.” The agent “was forceful . . . and tried to bully [JFXD] in giving an initial seven number initial offer” to purchase <trx.com>.” (Doc. 83 at 8). JFXD refused to do so. These events had no relevance to the current dispute. GoDaddy is not a party nor is there any connection between GoDaddy and Ming. The fact that JFXD believed it had been mistreated by GoDaddy was irrelevant to the claim JFXD was pursuing in this case.
JFXD previously filed a notice of appeal to the 9th circuit. It will be interesting to see if it follows through on that appeal or cuts its losses.
John Berryhill says
If he does follow up on that Notice of Appeal, his brief is likely to be entertaining. There’s something obviously wrong with that guy, and he doesn’t realize it.
Eric Borgos says
Very interesting reading, thanks for summarizing it all.
CS Watch says
David Sorkin’s TRX.COM UDRP decision could just be dismissed as institutionalized racism, but who else is harmed? Let’s plot the course of disease. Sorkin muses about his power to “draw inferences” in grabbing this 1.2M asset, opting to ignore the domain date of creation. But if one upends the laws of property on assets which can sell for $872M (CARS.COM), what are the consequences to public safety? We had a 2015 shootout in Cedar Rapids, Iowa to obtain a domain name, what do you think is happening in rural China? If Mr. Ming owns a $1.2M domain on Monday, and his murder on Tuesday transforms that into a $15 domain, then murder is going to become a business plan staple. You can be sure it already is in many parts of the world. Yet that loss of public safety is wholly avoidable under the 9th Circuit’s holdings.
The 9th Circuit has examined more domain issues than any other circuit, by a country mile. Because of Silicon Valley, the 9th has been hacking tech thickets at a sophistication level exponentially higher than other jurisdictions for decades. That long history begets a long view. To wit: Any registration, by any party, which predates the trademark is proof that the domain asset has inherent value unrelated to the mark. And if so, then that shunts the dispute to our rich century of trademark infringement case law. Thereby, no one need “draw inferences” to grab a valuable domain, which many will see as callow theft.
The callow theft of a domain echoes around the globe, because so many people own a domain name and note those news stories. So if you’re an octogenarian in the 3rd Circuit who can’t use email, for instance, you ought, in good conscience, to defer to the 9th Circuit. Otherwise one might accuse you of being a prideful peckerwood croney, and ignorance is no excuse. And you certainly will be in ignorance, because this field is esoteric and this is the GLOBAL suffix—you will not know that decades ago your plaintiff tried to steal PRU.COM from a black engineer from Duke, and failing that, they’re now stealing it from your Chinese defendant via a bog standard phone scam made possible by the broker in Arizona in search of his 20 percent, and in furtherance of your plaintiff’s ongoing infringement of the UK Pru company in the exact same field of trade, which holds the prior mark right, as they both concurrently expand into China.
The courts favor bright line rules, and GoPets’ domain date of creation is that bright line rule. Bright line rules are a bulwark against injustice. Absent that firm stance, judges birth a miasma which serves croneyism and foments crime.
CS Watch says
(Corr’n, the 2023 PRU.COM case was before the 4th Circuit, not 3rd.)