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June 6 — The National Arbitration Forum has arbitral immunity from a claim it was biased towards a trademark owner's counsel in its refusal to modify a domain name decision, a federal court ruled June 6 ( Virtualpoint Inc. v. Poarch Band of Creek Indians, C.D. Cal., No. 8:15-cv-02025, 6/6/16 ).
Judge Cormac J. Carney of the U.S. District Court for the Central District of California rejected the plaintiff's argument that its allegations of bias provided an exception to immunity.
The decision clarifies that domain arbitration providers can't be held liable for the errors of independent neutrals.
Website developer Virtualpoint Inc., registrant of windcreek.com, lost in a Uniform Domain Name Dispute Resolution Policy proceeding against the owner of the WIND CREEK mark. Virtualpoint filed a federal lawsuit against the mark owner and the Forum to overturn the ruling (20 ECLR 1736, 12/16/15).
Virtualpoint sought a court order requiring the Forum to modify, take down or redact the UDRP decision because it allegedly contained several errors. The decision incorrectly identified Virtualpoint as a generic domain name reseller and stated that it used a “privacy service” rather than a “parking service,” the company charged.
Virtualpoint said those characterizations might have a negative effect on future arbitration decisions.
Virtualpoint said the Forum's refusal to amend the decision to remove those characterizations was biased on the grounds that—according to statistics on the Forum's website—the mark owner's counsel routinely wins UDRP arbitrations. The Forum moved to dismiss the claim (21 ECLR 746, 5/18/16).
The court looked to In re Nat'l Arbitration Forum Trade Practices Litig., 704 F. Supp. 2d 832 (D. Minn. 2010), in which a federal district court in Minnesota ruled the Forum couldn't assert arbitral immunity against a claim that it unfairly favored creditors appearing in arbitration proceedings. The Minnesota court said the allegations of bias were “systemic, pervasive, and far-reaching” and rendered “every single arbitration performed by NAF suspect.”
The Virtualpoint court said that unlike in In re NAF, Virtualpoint didn't allege that the Forum's processes or systems were corrupt. Instead, it argued that the Forum favored a particular law firm who participated in many arbitrations before it.
“But allegations of this sort cannot overcome arbitral immunity,” the court said.
Kinder Law Group represented Virtualpoint. Dorsey & Whitney LLP represented the Forum.
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