Domain name giant Marchex may be holding up to $24M in trademark-infringing domains.
David Kesmodel’s expose on domain company Marchex (NASD: MCHX) continues to dig up dirt. After discovering that the company was monetizing a number of trademark typos through its parking program, Kesmodel has now uncovered a number of potentially trademark-infringing domains that the company actually owns. These include ibmlaptops.com, ibestbuy.com, chasemortgagega.com, cheapdisneytickets.com and carnivalsinglescruises.com.
After Kesmodel contact Marchex’s legal counsel and read through the company’s financial statements, he found out that the company acquired a substantial number of potentially trademark-infringing domains when the company bought the Ultimate Search portfolio in a landmark transaction. Marchex is holding $24M in escrow accounts pending resolution to the issue. The company might end up paying less for the portfolio acquisition if it is determined that a substantial number of the domains have legal issues. However, it is unclear if $24M represents the number of domains (about 1/6 the purchase price) or if it includes possible liabilities for infringing trademarks.
The domain name whois records show they are protected by Moniker’s privacy service. Regardless of whether the company was aware of these domains before, it will be interesting to see if they take action. By monetizing these domains they might be opening up the door to legal action. Marchex has not stopped monetizing the domains that Kesmodel brought to its attention a couple weeks ago.
Source: Wednesday, November 29th, 2006 – Policy & Law
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