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FedEx Sued in Domain Dispute

Web firm Dostana turns tables amid cybersquatter accusations.

By Allison B. Ebel, PCWorld   

One clash pits Dostana Enterprises, a small Internet consulting company, against shipping giant Federal Express. Dostana has registered www.worldontime.com; Federal Express says it's too similar to its registered service mark, "The World On Time."

Like many others, this dispute has landed in a federal court. But here's the switch: The smaller, unknown Web company filed suit against the giant.

"We are the first case in which we, in a sense, have turned the tables," says Peter J. Toren, the attorney representing Dostana, Brown & Wood, LLP. Consider it David's preemptive strike at Goliath.

"We've been accused of being the cybersquatter," Toren says. "We went ahead seeking an order from the court." Cybersquatters typically register a domain name solely to resell it. Toren contends Dostana has a legitimate claim to the domain in dispute.

Dostana registered for www.medontime.com in May 1999 to launch an online database of medical specialists. Expanding its business, Dostana has secured 11 additional "on time" names, including www.eyeontime.com, www.webontime.com, and www.foodontime.com. It anticipates that one name, www.worldontime.com, will be the gateway to all Dostana services.

Enter FedEx. The shipping company wrote to Dostana last September, saying the Web company appears "to be intentionally using the intellectual property of Federal Express for its own advantage."

In December, Dostana offered to sell the domain name to FedEx for no less than $250,000, even though it had "invested a great deal of time and money" in creating its "ontime" brand. Dostana's offer letter also notes the $7 million eCompanies paid entrepreneur Marc Ostrofsky last November for the domain name Business.com.

Who's the Squatter?

Toren says FedEx rejected the offer and then accused Dostana of violating the Anti-Cybersquatting and Consumer Privacy Act of 1999. Dostana responded by filing civil suit February 2 in a U.S. District Court in New York.

The suit seeks a declaratory judgment that Dostana's domain name does not infringe on Federal Express' registered trademark. Dostana also seeks $5 million in damages, based on "the interference with [Dostana's] right to use this particular mark" and any damage to its reputation by FedEx.

FedEx responded Tuesday. It denies Dostana's allegations, maintains its right to the domain, and claims Dostana registered the domain to extort money from FedEx.

FedEx will not comment on lawsuits in progress, but a representative did address its need to defend the integrity of trademarks.

"When you have a trademarked name or phrase, the company--any company--is obligated to demonstrate that they have tried to protect it from anybody else," says Sally Davenport, FedEx spokesperson. If a company does not make an effort to protect itself, it risks losing its trademark in the future.

Dostana always planned to use worldontime.com as an umbrella for its ontime sites, Toren says.