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Tuesday, June 25, 2002

Contract Law Meets Domain Name Auctions

In a published decision filed yesterday (Lim v. The .TV Corporation International, via FindLaw), the California Court of Appeal, Second District, Division Four, held that a Web solicitation of bids for the registration of a domain name (here, ""), can constitute a legally valid offer to sell registration rights to the highest bidder. The defendant's argument that its email confirmation of the plaintiff's bid - which referred to the domain as "--golf" - was a counter-offer and not an acceptance went nowhere, partly because a domain name preceded by hyphens goes nowhere:
Defendant put the name "" up for public auction, and plaintiff bid on that name and no other. As we have discussed, that was an offer and acceptance, and formed a contract. The distinction between "" and "-" comes from the acceptance e-mail sent by defendant. Of course, if a contract already had been formed, the designation in that communication would be almost immaterial. Certainly the hyphens preceding the name "golf" could not defeat the existence of an already-formed contract. It is only if, as a matter of law, defendant's website posting was a solicitation for an offer, so that plaintiff's bid constituted the offer, that the difference is material. But here, once again, the communications must be read in context. Defendant was accepting plaintiff's bid; it plainly was not making a counter offer, particularly since, according to the pleading, the name "- -Golf" did not "compute"; it did not qualify as a domain name. At least for purposes of pleading, the e-mail must be read as an acknowledgment of plaintiff's winning bid and acceptance, if not confirmation, of the contract.
The Court also held the complaint's fraud claim to be adequately pled and overruled the trial court's order sustaining a demurrer to the complaint. The case will return to the trial court for further proceedings before Judge Haley Fromholz, in which plaintiff Je Ho Lim presumably will continue to urge his entitlement to "" (for which he paid $1,010) and damages for his "time, money and effort in developing plans to commercially exploit the name."

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