AOL Claim To Ad.com Is Based More On A Pending Trademark: The Inside Story
DomainNameWire.com broke the news today that the owner of Ad.com, Marcos Guillen filed a lawsuit against Directi and Skenzo for refusing to close on the purchase of the domain name Ad.com at the Moniker.com TRAFFIC show auction.
I have know about the situation for quite a while, and even alluded to it yesterday in my nominations for Domainer of the year.
As way of background, AOL bought advertising.com back in 2004 for $435 Million dollars.
This is where this problem started.
AOL claim on the domain ad.com, is based on much more than a pending trademark application.
The problem is that advertising.com has become to be commonly known, in the advertising industry, as ad.com.
Here are just a few examples of what I’m talking about:
From a Media Week article from last month:
“”"Dave Katz, head of trading at Media Contacts:
“The decision to change it to AOL Advertising was clearly a decision to realign itself back to Ad.com, which is part of the division and a brand more people recognise and a way to make the division clearer to understand.”"”"
From a Business Week Artcile back in 2006:
“”"On Aug. 2, Time Warner is expected to announce a plan to tie AOL’s fate even more tightly to advertising, phasing out $2 billion a year in already-shriveling subscription revenue. Such a radical move would be unthinkable without Ad.com, which provides almost 20% of AOL’s ad revenue. Its sales doubled to $259 million between 2003 and 2005.
Even with Ad.com, AOL’s plan is a stretch. Ad.com will need phenomenal growth to cover just half the lost subscription profits. But without it, AOL would be toast. “If AOL had not purchased Ad.com, I don’t think there would be an AOL today,” says Jeff Lanctot, general manager of Avenue A/Razorfish, the largest Internet ad agency.”"
From the Baltimore Business Journal in an article from this year:
“”"”Some industry analysts said the companies will be received favorably despite the fact AOL’s revenue — including that from ads — has been falling.
But even though Ad.com was a strong foundation for a once growing advertising business model for AOL, the company has taken a large brunt of the recession’s impact because its ad network is less profitable than others, one analyst said.
It could take a less significant role within AOL regardless of whether Time Warner ultimately goes through with a sale.
Ad.com runs a network of ad space across the Internet, through which it sells to advertisers access to particular demographics. It also earns money when its ads prompt consumers to take actions such as requesting more information about a product.
AOL said the company was a significant piece of its strategy when it formed a new ad unit, Platform-A, in 2007. Ad.com’s network makes up a large chunk of AOL’s online ad space.
It’s unlikely Ad.com would be parceled out from Platform-A and AOL and sold on its own again.”"”
There are a lot of stories, just like these in the media world, where AOL’s advertising.com is referred to as ad.com.
My understanding of the case, is that AOL, based on industry “usage”, believes it has a claim to ad.com as advertising.com has been commonly known as ad.com in the industry.
As you know you can obtain trademark rights by filing a application, or by common law usage.
Although harder to prove a common law usage claim is eligible for protection under the Lanham Act.
The fact that many third parties acknowledge that common law usage, will certainly be a factor in determining the validity of the claim.
My further understanding of the case is that AOL will claim it notified the owner of Ad.com, well before the Moniker.com auction, of its claim of right to ad.com, but the owner of ad.com, may or may not have gotten the notice.
Obviously it’s a very unfortunate situation for all parties.
The Seller, the Buyer, the auction house (Moniker.com) , the show organizer and the domain industry as a whole.
I would look for someone, in this suit, most likely the defendant, to bring AOL, which is owned by Time Warner, into the suit as a third party defendant.
Look for this to be a very long, drawn out expensive litigation.
I have been telling domainers for a while, that claims of trademark and rights in and to generic words is going to be a huge issue for them.
This case, is one of the reasons and examples of why I have been warning domainers.
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I saw that video on youtube, any chance schwartz, Moniker, and gullien worked together on this and Div was played like a fiddle?
So true that the name failed to sell many times before with only a $300K reserve!!!! Wow.
Get the popcorn
Dear MHB,
I understand that you don’t pretend to be a reporter, but checking both with your sources and the guys you are talking about is considered best practice, anyhow. Please contact me next time before suggesting I’m negligent.
I didn’t know anything about the AOL claim before the sale, period. I only found out when AOL contacted Skenzo, days after the sale was made, when payment was already due, and late.
Furthermore, I don’t live in the US, I don’t read your blog or your trade magazines, and before this I couldn’t care less about who Adverising.com was or how lame AOL can be. I have owned this domain name since 1997. It is a GENERIC domain name, and nobody has ever contacted me to make any claim of it, spurious or otherwise.
There is no ‘ad.com’ AOL trademark, there is not valid claim, and I had no reason to believe that anybody was going to be stupid enough to promote my domain name without owning it.
You don’t believe me? Fine. That’s what the justice system is for, well do it the hard way.
Best regards,
Marcos Guillen
Marcos, I don’t see anything that Mike wrote that implies any wrongdoing on your part, so your reaction is a bit off. AOL is claiming rights to your name. That is all Mike said.
You should be pissed off. Very pissed off. – at AOL.
Sorry i havent read everyones comments. So please excuse me for repeating anyone else. Personally this is a clear case of reverse hi jacking. AOL cant make a claim to any generic term that is used in the industry. If AOL failed to brand the term ADVERTISING.com then it shows a lack of care if people are referring to the site as ad.com. Furthermore who abbreviates a URL? Would that mean the entity that own television.com should make a claim to TV.com?
Advertising tight space? So if this lawsuit favors AOL, then AOL can make any claim to any domain name with advertising, advertise or ad within the URL. This clearly would allow AOL to monopolize online advertising. If there is proof that the previous owner had the domain registered prior to 2004 the transaction should have AD.com be a part of an LLC and transfer the LLC to the new buyer. Im no a lawyer but this would make the most logical sense. Furthermore the USPTO should of stated that theres no claim to the use of “advertising” apart from the mark.
Marcos
I have not talked to any party related to this suit.
Its not like I got Skenzo’s version but not your.
I have some “information” from another source that is the background for my opinion on this situation which is the subject of this blog.
I also understand, but not necessarily agree, with AOL position.
The previous story on this issue, published by domainnamewire.com indicated that AOL claim was based solely on its failed Ad.com trademark application.
I explained AOL claim is based on usage and acceptance of use in the media industry
I don’t think its wise as a business practice to take the position “Furthermore, I don’t live in the US, I don’t read your blog or your trade magazines, and before this I couldn’t care less about who Adverising.com was or how lame AOL can be.”
You certainly could have set up a Google alert and gotten an e-mail any day that aol and ad.com appeared in any news story from anywhere on the world that hit the internet. As you can see there were plenty.
I appreciate you stating your position here, and as you say the courts will make it the decision after hearing all the facts.
It appears, and seems clear Aol doesn’t want the domain name, there is no reverse hijacking here. They simply said you cannot start using this name in a manner that will confuse the consumer.
Marcos used to point this domain to Artifical Development (look at archive.org) and that was his right since he owned the name. Had it been pointing to Advertising related content since 1997 then he would have prior rights. Its not just about the date of registration, but the use. Plenty of AD initialed companys out there to sell your name to.
And Marcos comment above seemed like there was more to this story he’s not telling…..
This is PURE Nonsense! Big corporate America smuck company bullying the little guys! BS!!! So in other words if we get a trademark for someone’s MEGA Million dollar company before they do we can push our trademark and take their domain? This is BS!!! Especially if the domain was secured long before the trademark!
WE should ALL UNDERSTAND that selling domains cheap UNDERCUTS and UNDERMINES the entire business we are in like a cheap prostitute!!! Everyone should network together and shoot beyond the stars concerning our asking price and stand firm to raise the stakes!
Joe “DOMAINS” Saladino
Funny how little the used car salemenesque domainers know about trademark law.
This is a perfect chance to enlighting those who never took the time to understand it yet alone follow it.
Maybe one day there will be a happy medium between domainers and brand owners. Until then, its best to know what you’re talking about and let the facts play out.
sorry… but I just don’t see anyone being granted sole use of the term “advertising” to do… uhh… advertising?
While AOL may have purposely misled and misspoke “ad.com” in any number of ways, it really is not up to the owner of ad.com to police that… Mike, I don’t think you can blame him. He is from another country, he admittedly is not in the advertising space… I don’t need to draw more of a picture to see this I’m sure.
But, no matter what “use” AOL claims – on either terms, I see them getting cornholed by the judge over this one… adding “.com” does not give you sole rights to a common term that exactly describes the entire industry… just cannot fly.
Advertise.com beat AOL to the punch and filed their own suit a day before AOL filed theirs…
The C/D letter from AOL’s attorney is an interesting read as well… he DOES indeed claim that AOL owns and operates not only the Advertising.com name and mark but also the AD.COM name and mark.
Advertise.com has some fun in pointing out to the court the fallacious nature of that claim and states quite clearly that AOL has never owned that domain.
@hooked on phonics – you can kiss my used car salesman ass.
“Its not just about the date of registration, but the use.”
Q. What was on sale at the auction?
A. The domain name.
So, here’s what you have to do to auction a domain name. First, even if you are not thinking of selling a domain name you have been using for years, you were supposed to set up Google alerts on news articles which referred to it.
Second, during the auction, you are supposed to run around the room and ask each bidder what they want to use the domain name for.
In this instance, Marcos was supposed to go to the first bidder, and if that bidder was Affiliated Distributors (Affiliated Distributors is the largest wholesale buying and marketing group in North America http://mya-d.net/portal/site/MyA-D/), then Marcos was supposed to say, “Okay, you can go ahead with your bid.”
Then, if the second bidder was Skenzo, Marcos was supposed to say, “Oh no, you can’t bid.”
The only thing being auctioned here was the domain name. The notion that the seller is supposed to know what each of the bidders’ geographic and market intentions are in advance, is insane.
ONLY the bidder knows why he/she/it wants to buy the domain name.
John
I understand your position.
But I assume Affiliated didn’t want the domain after AOL position was on this domain was made clear, otherwise they would have went ahead and bought it.
Did AOL notify the Seller, whether the Seller received the notice or not, prior to the auction that they laid claim to the domain?
I don’t know.
I do knows it’s a horrible situation for all concerned, the Seller the Buyer and the auction house.
I couldn’t tell you what I would do, had I been the buyer and received notice from AOL asserting a claim on a domain, threatening to file a lawsuit against you, if you go ahead with the sale, knowing that your looking at a legal bill that might exceed the cost of the domain, and that you might lose.
It’s a very hard call.
On the other hand, I do not blame the Seller for suing the buyer for breach of contract, nor do I blame Oversee for suing for their commission.
I don’t have any problem with any of the parties or all of the parties, bringing in AOL into this for contractual inference.
However both you and I both know what the legal costs of such a suit will be once AOL is involved.
Probably more than the cost of the domain.
Clearly there are no winners in this situation and feel for all parties involved.
“Did AOL notify the Seller, whether the Seller received the notice or not, prior to the auction that they laid claim to the domain?”
Only AOL would know if they sent notice the seller did not receive. Unless they sent it signed receipt requested or by courier, or other method which confirms receipt. I mean, it’s kind of a silly question to ask me if AOL sent notice that Marcos didn’t receive. Marcos wouldn’t even know the answer to that question.
It’s the classic “Are you dead?” question. Nobody ever says “yes”.
But I have a hard time with the notion that someone needs to set google news alerts on all of their domains. The terms of the auction define the obligations here. If the agreement required an affirmation that you haven’t received any Google news alerts for two years, then that would be a bit on the whacktarded side of things.
But, again, the only thing in the auction was the domain name which, as noted, does not inherently infringe any claimed mark. If Alfred Dumbass wants to bid on a domain name consisting of his initials, then he can go right ahead. Whether a proposed use of any name infringes most marks (with the exception of the inherently distinctive fanciful or famous marks – which this isn’t) is a situation determined by the buyer/user of the name, not the seller. Requiring the seller to predict the intentions of a set of unknown bidders is well beyond any reasonable standard – it’s just plain silly.
Even the string “ad.com” is a substring of a prior registered mark:
Word Mark HISPANIC AD.COM THE TOOL FOR THE HISPANIC ADVERTISING & MEDIA PROFESSIONAL
Goods and Services IC 041. US 100 101 107. G & S: providing an on-line trade magazine with articles of interest to Hispanic advertising and media professionals. FIRST USE: 19990130. FIRST USE IN COMMERCE: 19990201
Registration Number 2690503
Registration Date February 25, 2003
Now, Mike, if you take a look at the status history of that mark, and you just might notice something interesting and non-coincidental, if you are familiar with the US registration system. There’s another shoe to drop here.
“I couldn’t tell you what I would do, had I been the buyer and received notice from AOL asserting a claim on a domain”
What would you do before you bid? You seem to have different starting points on the diligence clock for the buyer and seller here.
John
Should a potential buyer know more about the domain than the guy who owns it does?
You seem to indicate they should
However, business as its been done up to this point in these auctions from the buyer perspective, has in large part been done with no due diligence by 99% of the buyers.
I can tell you I have sat around domainers who actively bought at domain auctions, who didn’t even look at the list of domains that were up for auction until they walked into the room (I’m not saying the buyer in this case did or did not do this).
So this case now becomes a cautionary tale for all domainers at these auctions, you better do your research, and figure out what your buying before you buy or even bid.
So this is a
Well where is ads.com, advertised.com, advertiser.com, advertisments.com in the mix of things? At what point will AOL stop? The bottom line is that the generic term doesnt even resolve to the URL. it redirects to platform-a.com. So would it be safe to say that the trademark isnt really in use by the general population?