ConsumerDirect’s “Plan B” Fails: A Deep Dive into the PrivacyMaster.com Reverse Domain Name Hijacking Ruling

In a significant ruling highlighting the integrity of the Uniform Domain Name Dispute Resolution Policy (UDRP), ConsumerDirect, Inc. has been found guilty of Reverse Domain Name Hijacking (RDNH) concerning the domain name PrivacyMaster.com. This case serves as a crucial reminder that the UDRP system is not a backdoor for domain acquisition after failed purchase attempts, but rather a mechanism designed to combat abusive domain registrations, specifically cybersquatting.

Understanding the UDRP and Reverse Domain Name Hijacking

The UDRP is an administrative procedure established by the Internet Corporation for Assigned Names and Numbers (ICANN) to resolve disputes regarding the abusive registration of domain names. It provides a streamlined and cost-effective alternative to traditional litigation for trademark holders who believe their rights are being infringed by a domain name registrant. To succeed under the UDRP, a complainant must prove three conjunctive elements:

1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights.
2. The domain name registrant has no rights or legitimate interests in respect of the domain name.
3. The domain name has been registered and is being used in bad faith.

However, the UDRP also includes provisions to protect legitimate domain registrants from harassment by trademark holders. This protection comes in the form of Reverse Domain Name Hijacking (RDNH), which occurs when a complainant attempts to use the UDRP unfairly to obtain a domain name from a legitimate registrant. A finding of RDNH signifies that the complainant knew or should have known that they could not establish one of the three elements required under the UDRP, yet still pursued the complaint in bad faith.

The PrivacyMaster.com Dispute: A “Plan B” Gone Awry

The Parties and the Disputed Domain

The core of this dispute revolved around the domain name PrivacyMaster.com. The complainant, ConsumerDirect, Inc., offers a credit monitoring product also named “Privacy Master.” Their trademark for this product, however, was registered significantly later than the domain name’s initial registration. The respondent, Barry Walters, had registered PrivacyMaster.com way back in the year 2000. At the time of registration, Walters served as the Freedom of Information Act (FOIA) and Privacy Law counsel for the Department of the United States Air Force, a role that inherently aligns with the descriptive nature of the domain name.

A Timeline of Discrepancies and Unsuccessful Acquisitions

The most glaring issue for ConsumerDirect was the vast temporal gap between the domain’s registration and their trademark rights. Barry Walters registered PrivacyMaster.com in 2000. ConsumerDirect, on the other hand, only claimed first use of its “Privacy Master” trademark 21 years after Walters had secured the domain name. This chronological mismatch is often a fatal flaw for complainants in UDRP cases, as bad faith registration (the third UDRP element) typically requires that the domain name was registered with the trademark in mind. It is extremely difficult to prove bad faith registration when the domain predates the trademark by decades.

Recognizing the desirability of the domain name, ConsumerDirect actively attempted to purchase PrivacyMaster.com from Mr. Walters, reportedly offering as much as $55,000 over a period exceeding two years. Only after these direct acquisition efforts failed did ConsumerDirect resort to filing a UDRP complaint. This pattern of failed negotiation followed by a UDRP filing is colloquially known as the “Plan B” strategy, which UDRP panels frequently scrutinize and often view with suspicion.

ConsumerDirect’s Flawed Argument: Bad Faith Renewal

Aware of the insurmountable challenge presented by the 21-year gap in registration dates, ConsumerDirect attempted to circumvent the UDRP’s core requirements by arguing that the domain’s *renewal* constituted a “re-registration” in bad faith. This argument sought to reset the clock, implying that each renewal should be treated as a new registration, thereby bringing the bad faith claim within the appropriate timeline relative to their trademark rights. However, UDRP jurisprudence has largely rejected this “bad faith renewal” argument, holding that renewal does not typically equate to a new registration unless specific circumstances (such as a change in ownership or use explicitly targeting a new trademark) are present.

The UDRP Panel’s Resounding Rejection and RDNH Finding

A three-person UDRP panel meticulously reviewed the evidence and delivered a decisive ruling, finding ConsumerDirect, Inc. guilty of Reverse Domain Name Hijacking. The panel’s decision meticulously dismantled ConsumerDirect’s arguments and reinforced fundamental UDRP principles. Their rationale, in part, stated:

Here, Complainant is represented by legal counsel and the present case fits the “Plan B” model as Complainant pursued the present case only after its many unsuccessful attempts to purchase the privacymaster.com domain name from Respondent. It then asserts an outdated and rejected line of argument in an attempt to overcome the fact that the disputed domain name was registered twenty-one years prior to the earliest existence of its trademark rights. However, even had Complainant been correct in its assertion that Respondent’s renewal of the disputed domain name created a “re-registration” to satisfy the conjunctive nature of Policy ¶ 4(a)(iii), it has still failed to prove that Respondent acted in bad faith by specifically targeting Complainant and its mark. There is no evidence that Respondent’s website has ever displayed any content that touched on Complainant or its field of business and Complainant knew of Respondent’s position as Director, Office of Support Operations and Chief FOIA and Privacy Officer at the United States SEC which provides a rational basis for its good-faith interest in a domain name consisting of the descriptive phrase “privacy master”. Finally, Complainant mischaracterized the message of a registrar broker as Respondent’s “obvious attempt to extort Complainant”. The facts, as demonstrated by Complainant’s own evidence, are clear that Respondent itself never offered to sell the domain name to Complainant – it was Complainant who initiated all communications with Respondent and Respondent never engaged in discussions with Complainant, stated a price, or even indicated its willingness to sell the domain name.

While it is clear that Complainant was highly motivated to acquire the privacymaster.com domain name, having offered as much as USD $55,000 over the course of more than two years, the aim of the Policy is not to award transfers to party who claims it will put a given domain name to a better or more productive use, but only to address abusive domain names that target a complainant’s trademark. The latter scenario is simply not present here and this reality should have been recognized by Complainant and its counsel.

Key Aspects of the Panel’s Decision Explained:

• The “Plan B” Model: The panel directly addressed ConsumerDirect’s strategy, noting that the UDRP complaint was initiated only after extensive, failed attempts to purchase the domain. This pattern strongly suggests an opportunistic rather than genuinely aggrieved motive for the complaint.
• Outdated Arguments: ConsumerDirect’s attempt to use the “bad faith renewal” argument was deemed “outdated and rejected,” signaling that experienced legal counsel should have known better. This contributed significantly to the RDNH finding.
• Lack of Bad Faith Targeting: Even if the renewal argument had held water, ConsumerDirect failed to demonstrate that Mr. Walters renewed the domain name with the specific intent to target ConsumerDirect or its mark. There was no evidence of the domain name ever being used in a way that related to ConsumerDirect’s business or products.
• Respondent’s Legitimate Interest: Crucially, the panel recognized Barry Walters’ compelling legitimate interest in the domain name. His professional background as a FOIA/Privacy Officer for the U.S. government provided a clear and rational basis for his interest in a domain name containing the descriptive phrase “privacy master.” This directly negated ConsumerDirect’s claim that Walters had no rights or legitimate interests in the domain.
• Mischaracterization of Evidence: The panel criticized ConsumerDirect for falsely accusing Walters of extortion. The evidence, including ConsumerDirect’s own submissions, showed that Walters never initiated sales discussions, set a price, or indicated a willingness to sell. All acquisition attempts originated from ConsumerDirect.
• UDRP’s Purpose Clarified: The ruling emphatically reiterated that the UDRP is not designed to transfer domain names to parties who simply believe they can make “better or more productive use” of them. Its sole purpose is to address abusive registrations that target established trademarks, a scenario entirely absent in this case.

Implications for Domain Owners and Trademark Holders

This case serves as a vital precedent and a stark warning to trademark holders. Attempting to leverage the UDRP as a means to acquire a desirable domain name after failed negotiations is a risky strategy that can lead to a finding of Reverse Domain Name Hijacking. Such a finding not only results in the loss of the complaint but also carries a reputational stain, signaling an abuse of the administrative process.

For domain registrants like Barry Walters, this decision reinforces the importance of maintaining legitimate interests in their domain names and documenting their registration history. It provides reassurance that the UDRP system is capable of protecting long-standing, legitimately registered domains from aggressive acquisition tactics by trademark holders.

The panel’s clear articulation of UDRP principles, particularly regarding the timing of trademark rights versus domain registration and the definition of bad faith, provides valuable guidance for future disputes. It underscores that due diligence, adherence to policy guidelines, and ethical conduct are paramount for all parties engaging in the domain name dispute resolution process.

Rutan & Tucker LLP represented ConsumerDirect, Inc. in this matter, while Jason Schaeffer of ESQwire.com, P.C. successfully represented the domain owner, Barry Walters.