UDRP Spotlight: When Domain Name Disputes are Also in Court

Sometimes being embroiled in just one domain name dispute isn’t enough for some people.

Though rare, some domain owners have filed court cases against a brand owner who has just served them with a UDRP complaint.  The UDRP rules say that “in the event of any legal proceedings initiated prior to or during an administrative proceeding in respect of a domain name dispute that is the subject of the complaint, the Panel shall have the discretion to decide whether to suspend or terminate the administrative proceeding, or to proceed to a decision.”  The key word here is “discretion” and the suspension of a UDRP case in favor of court proceedings is certainly not mandatory.

The reasons for and against suspending or terminating a case were discussed recently in a case brought by the Regency Towers Owners’ Association against a company it had hired to redesign its website and to take over the vacation rentals side of its business.  Here, the domain owner filed a law suit in a Florida court soon after it was served with the UDRP complaint.  It then sought to have the UDRP case dismissed in favor of the court action.

Weighing How to Proceed

The Panel carefully considered the request and discussed prior domain name disputes dealing with this issue.  On the one hand, UDRP cases have not been stayed or terminated where the court proceedings “do not touch directly on the disposition of the disputed domain name or on the parties’ intellectual property rights.”  If all the litigation involves are claims concerning breach of contract, unjust enrichment, money damages, and other strictly commercial claims, it may be perfectly appropriate for a UDRP dispute to proceed since, by its very nature, it only involves ownership of a domain name.

However, where the court case directly involves intellectual property or other claims which could directly impact ownership of the domain, holding off on the UDRP case while a court sorts things out might be the better course of action.  After all, courts have a much more robust process involving things like discovery, witness testimony, and cross-examination and are better suited to get to the bottom of more complex issues.

In the present domain name dispute, the owner had filed for declaratory judgment that Regency Towers owed it money for unpaid commissions relating to its web design work and its management of vacation rental properties. Not surprisingly, the Panel found that these claims have no bearing whatsoever upon the domain name.  However, the court case also included claims that the disputed domain name is not in violation of the Anti-Cybersquatting Consumer Protection Act (ACPA). These claims are “the core issues in the case” and so the Panel decided that the UDRP claim “should not proceed where there is pending litigation involving the same issues and requesting the same relief.”

Of some interest was the Panel’s mention of other court claims that, while not directly impacting ownership of the domain, challenged Regency Towers’ authority to bring the UDRP complaint based upon certain provisions of Florida corporation law and its status as a non-profit condominium owners’ association.  Although Regency Towers asserted that its actions do not violate Florida law, it remains clear that a genuine dispute exists as to the interpretation of local statutory law.  The Panel decided that “interpretation of state statutory provisions such as those involved in this case are outside the scope of the UDRP; they should be determined by a local court in the state of Florida.”

Leaving the Window Open for a Future Filing

In the end, the UDRP case was dismissed “without prejudice” thereby deferring the matter to the Florida court but leaving a window open for Regency Towers to re-file the domain dispute in the event that the litigation, for whatever reason, is terminated or otherwise doesn’t fully resolve the question of who should own the disputed domain name.

Of course, at least a portion of this dispute could have been avoided if the parties had checked with their lawyers when they first started doing business together and signed an agreement that mentions who owns the domain and other intellectual property!