Partners in a business rarely title real property in the name of one individual partner. Businesses do not let employees title bank accounts for the business in their individual names. Yet, when it comes to domain names, businesses often are lax in the structure of the ownership, allowing an information technology (IT) professional, a vendor or someone else to register the domain name. As a result, disputes often arise when a partner leaves, an employee is terminated or a contractor or vendor is at odds with the business. When that happens, the domain name − the business’s key website asset − becomes the subject of litigation. As discussed below in the context of a recently filed California federal court lawsuit involving a securities law firm and a former partner, businesses would be better served by ensuring the domain registration is sorted out before any issues arise.
The Parties and the Alleged Conduct
In Trowbridge Sidoti LLP v. Kim Lisa Taylor and Syndication AttorneysPLLC, Civil Case No. 8:16-cv-771 (C.D. Cal. 2016), Trowbridge Sidoti LLP (Trowbridge), a boutique securities law firm headquartered in California, commenced suit against one of its ex-partners, Kim Lisa Taylor (Taylor), and her new firm, Syndication Attorneys PLLC (SAP), a Florida professional limited liability company. Subsequent to forming Trowbridge & Taylor LLP (a previous iteration of Trowbridge) in 2009, the Complaint alleges that Taylor registered a number of domain names on the firm’s behalf. These domain names (collectively, “Allegedly Converted Domain Names”) reportedly were:
Of the Allegedly Converted Domain Names, SyndicationLawyers.com became the primary domain name for Trowbridge & Taylor LLP’s website; all of the other domains/uniform resource locators (URLs) were purportedly automatically redirected to SyndicationLawyers.com.
The Complaint alleges that in March 2016, Taylor left Trowbridge. The Complaint further alleges that she subsequently transferred all data and accounts relating to the SyndicationLawyers.com website to the former firm, but refused to transfer the accounts and control of the remaining Allegedly Converted Domain Names to Trowbridge. Taylor reportedly relocated to Florida where she established codefendant SAP. On March 31, 2016, Taylor filed a U.S. Trademark Application claiming individual ownership of the applied-for trademark SyndicationAttorneys.com. Taylor and SAP appear to be using the Syndication Attorneys and SyndicationAttorneys.com marks and designations.
The Complaint alleges that Taylor has no right to retain the accounts and control of the Allegedly Converted Domain Names because she purchased them on behalf of, for the benefit of, and with the funds of Trowbridge & Taylor LLP. Moreover, the website that resolved when someone visited the domains was allegedly maintained with firm funds. As such, Trowbridge claims that it is the lawful owner of the Allegedly Converted Domain Names as Trowbridge & Taylor LLP’s successor-in-interest. The Complaint further alleges that the Syndication Attorneys and SyndicationAttorneys.com marks are confusingly similar to Trowbridge’s Syndication Lawyers marks, and that Taylor and SAP are attempting to “piggyback off plaintiff’s goodwill and reputation in the securities law market.” In short, Trowbridge alleges that Taylor’s conduct amounts to false designation of the marks’ origin, which is likely to cause (1) initial interest confusion, (2) reverse confusion, (3) mistake, and (4) deception as to the affiliation, connection or association of the parties and as to the origin, sponsorship or approval of Taylor’s commercial activities.
Trowbridge’s Complaint centers on a Lanham Act Section 43(a) false advertising claim for which the firm seeks injunctive relief, treble damages and attorney fees. The Complaint also asserts a California Statutory Unfair Competition claim (Cal. Bus. & Prof. Code Sec. 17200), a Common Law Unfair Competition claim and a claim for Conversion.
The authors have no independent knowledge of the facts underlying the dispute and express no opinion on the likely outcome of the matter. However, regardless of the merits and the ultimate victor, the Trowbridge law firm is embroiled in a federal court litigation. It may expend considerable resources to prosecute the claim, and will undoubtedly assert that it lost business or had its reputation damaged as a result. The Trowbridge firm is not alone; to the contrary, the Trowbridge “scenario” is common among small businesses and organizations. Often, the IT person or an outside vendor will register a domain name, which at the time may seem fairly benign. The person who is managing the website places the ownership in his/her name to facilitate administration of the website. While a relationship remains strong, there are no apparent repercussions from the titling of the domain. But at the first sign of strife, the ownership of the domain can become a point of dispute and significant leverage.
Businesses and organizations do not want their websites and domains held hostage. With the growing importance of one’s online platform, ownership of the location of the website becomes critical. If a business advertises the location of its website and nothing appears when visitors type in the URL (because the titled owner has seized control of the domain and deleted any content), the business’s reputation could be irreparably harmed.
The “takeaway” is that there is an easy fix to this scenario. Best practices dictate that all domain names be registered to the company or organization. A domain manager, either internal to the business or an external vendor, can ensure that the records properly indicate the correct titled owner of the domain. The business or organization should periodically verify that this procedure is followed. A website audit also can provide the assurance that proper protocol is in place. The bottom line is that online locations are now just as valuable, if not more so, than their real property counterparts and steps should be taken to enable the business or organization to protect its interests.