TRX.com Domain Name Cybersquatting Case: Ninth Circuit Court of Appeals Upholds the Original Decision

Recently, the Ninth Circuit Court of Appeals upheld the original decision in the TRX.com domain name cybersquatting case, confirming that the domain name owner's purchase behavior did not constitute a domain name cybersquatting, and ultimately ruled that the plaintiff JFXD TRX ACQ LLC must pay approximately $40,000 in attorney fees.

Case Review

In April 2022, Lu Ziming (Ming) purchased TRX.com on the 4.cn domain name trading market for $138,000.

In October of the same year, Fitness Anywhere LLC (a bankrupt company that claimed to own the "TRX" trademark) filed a domain name cybersquatting lawsuit under the UDRP (Uniform Domain Name Dispute Resolution Policy). The following month, the UDRP panelists made a dispute decision and awarded the domain name to the complainant.

Because Ming did not respond to the dispute notice, the domain name was once at risk of transfer. To prevent this transfer, he filed a lawsuit against Fitness Anywhere LLC in Arizona. Because the other party was bankrupt, the case was shelved.

In February 2023, JFXD TRX ACQ LLC (claiming to be the successor in interest of Fitness Anywhere LLC) filed an "in rem action" in Virginia, where the domain name was registered, with the intention of obtaining ownership of TRX.com. However, since Arizona was already handling related litigation, JFXD TRX's move was unusual.

Ming then requested that the lawsuit be transferred to Arizona to ensure that the case was heard in accordance with the precedent of the Ninth Circuit Court of Appeals.

Key Legal Decisions

Ninth Circuit Court precedent indicates that in ACPA (Anti-Domain Cybersquatting Consumer Protection Act) litigation, the relevant registration date is the initial registration time of the domain name, not the latest transaction time.

TRX.com was registered in 1999, and the plaintiff's "TRX" trademark was obtained thereafter. Therefore, even if Ming purchased the domain name many years later, it did not constitute an ACPA cybersquatting act.

The district court held that JFXD TRX's legal arguments were full of contradictions and its submitted documents were unclear, which required the court and the defendants to speculate on their own basis for the lawsuit. Ultimately, the court ruled in favor of Ming and ordered JFXD TRX to pay approximately $40,000 in attorney fees.

JFXD TRX appealed the verdict to the Ninth Circuit Court of Appeals, attempting to overturn the lower court's ruling. However, the Ninth Circuit Court upheld the original verdict and found that JFXD TRX had engaged in abusive litigation during the litigation process, including:

Filing a lawsuit in Virginia despite knowing that there was a related case in Arizona;

During the litigation process, the legal and factual basis submitted were vague, making the case difficult to hear;

Ignoring court orders, communicating unilaterally with the court, and frequently changing positions.

Observation and Reflection

In this case, Ming purchased TRX.com through legitimate means and paid the corresponding price for it, which reflects his reasonable behavior as an investor. His purchase did not constitute domain name squatting, but was a legitimate investment decision.

However, the case also highlights the issue of procedural justice in legal proceedings. JFXD TRX attempted to seize the domain name through litigation, but there were obvious loopholes in the legal basis and litigation strategy. In the end, it not only lost the case, but also had to pay high attorney fees. This has formed an important legal demonstration role for subsequent similar lawsuits, and also reminds companies to act cautiously in trademark and domain name disputes.

In the future, with the development of the domain name market, similar disputes may still occur. But for domain name holders who trade legally, the ruling of this case undoubtedly provides a certain legal basis.