Thu 5. Sep 2024, 08:51
Domain investor Elliot Silver draws attention to a risk for domain investors: in a current legal dispute before ‘The United States District Court For The District Of Arizona’, GoDaddy must answer for itself as the auction house that withdrew the domain calor.com from the successful bidder after two months and awarded it back to the previous owner.
The applicants in the preliminary injunction proceedings are the Swedish company Crisby Studio AB and the Swede Niklas Thorin. Thorin had submitted a bid of US$ 11,427.17 at the auction for the domain calor.com, whose registration had expired, making him the second highest bidder. However, the winning bidder did not pay, so Thorin won the bid on 4 April 2024, paid on 5 April 2024 and changed the domain's DNS and MX records. The domain was transferred to his GoDaddy account. On 27 May 2024, the complainant entered into a joint venture agreement with the Romanian company QLSC Consulting S.R.L. to develop a dating app for a Spanish-speaking clientele. A corresponding page has been set up at calor.com, which can be used to register for the upcoming service. On 29 May 2024, the claimant received a purchase request from the GoDaddy subsidiary ‘123 Reg Limited’, through which the domain was registered. The applicants rejected this, referring to their plans for calor.com and the joint venture that had been finalised. On 4 June 2024, the applicants then received a message from the respondent's ‘CEO team’ that there had been an unexpected error and that the domain calor.com should not have been for sale at all. ‘To correct the error‘, the domain was removed from the claimants’ account, the purchase price was reversed and an additional US$ 350 was added as compensation. In the application filed on 23 August 2024 (2:24-cv-02165) before the United States District Court For The District Of Arizona, the applicants now demanded, among other things, the return of the domain because they had become the rightful owner of the domain. The defendant itself confirmed this by email, including when it submitted an offer to purchase. GoDaddy has not yet opposed the proceedings. The court has ordered GoDaddy to ensure that the domain remains registered and is not resold. The court has scheduled a telephone hearing for 4 September 2024 to find a date for a hearing in the preliminary injunction proceedings.
Elliot Silver sees his own concerns as a domain investor and reseller confirmed in these proceedings. For him, it is a normal process to resell a domain that has just been purchased at auction. If the auctioneer then withdraws it from the buyer because there was some kind of error, he fears that the buyer will turn to him. He refers to similar cases at GoDaddy in which completed auctions were cancelled because the domain owner paid his registration fee after all. In a tweet dated 19 March 2021, GoDaddy referred to rare borderline cases, such as legal disputes, trademark rights, technical or human errors, death and others, in which a reversal occurs. The GoDaddy Auctions Membership Agreement states in section 6: ‘These expired domain names may be offered on the website at the time of their expiration. However, they will not be finally sold until forty-five (45) days after the expiry date. As described in the domain name registration agreement, the original registrant has the right to reclaim the expired domain name during the buyback period.’ Domain investors are therefore consciously taking this risk with GoDaddy - if they actually read the contract. If the auction house withdraws an auctioned domain that the bidder has resold from the buyer due to an error in the auction, the buyer has a claim for damages against the bidder. The problem becomes bigger if the buyer has started a domain project and invested in it, similar to the current case of Thorin v GoDaddy. We will be watching to see how the proceedings develop.
The article by Elliot Silver can be found at:
https://domaininvesting.com/canceled-go ... n-lawsuit/Thorin's statement of claim can be found at:
https://www.courtlistener.com/docket/69 ... orporated/