Happened when a UDRP was filed against a domain on LTO — Here’s what

Investors concerned regarding UDRPs filed against domains on payment plans ought to review this case.

One of the concerns people have regarding selling domains through lease-to-own payment plans is if the domain name becomes subject to legal action or a cybersquatting dispute.

Well, here’s an example of what can happen when a UDRP is filed against a domain on an LTO.

NEX Foundation filed a dispute with World Intellectual Property Organization against the domain name nex.org.

Nex Marketing, LLC bought the domain on a 36-month LTO at Dan.com in August 2022. Following GoDaddy purchased Dan.com, the registration was transferred to Afternic Services, LLC.

The UDRP panelist considered Nex Marketing to be the domain’s registrant, and Nex provided the evidence to successfully defend the domain name.

This was a fairly clean case given the beneficial registrant’s identity. It could get trickier if the acquirer did not have such clear-cut rights and interests in the domain name.

One thing to note is that the panel considered the date that Nex Marketing entered into the LTO as the registration date. While the lessor’s prior buyout date wasn’t a factor in this case, I could envision a lessor/seller having to step in to argue they are the true registrant of the domain and citing their initial registration date.

If you are concerned regarding this type of issue, there are a couple of things you can do:

1. It might make sense only to offer LTO on less expensive domains. Consider your threshold on what you’d be willing to lose if a UDRP is filed against a domain you’ve leased.
2. For more expensive domains, it might be worth entering into a contract with the buyer that explains roles and responsibilities in the event of a cybersquatting claim.