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Pat Murphy//December 12, 2022
Suit over ‘unauthorized’ sale of web domain name advances

Pat Murphy//December 12, 2022
A Massachusetts insurance agency has edged closer to recovering damages from the online marketplace that allegedly sold without authorization the domain name of the agency’s primary website.
U.S. District Court Judge Richard G. Stearns recently denied a defense motion to dismiss in its entirety a lawsuit filed in June 2022 by Premier Shield Insurance against Afternic Services.
An affiliate of the web hosting company GoDaddy Inc., Afternic operates a marketplace for the purchase and sale of domain names. In its lawsuit, Premier alleged that in 2021 Afternic sold its GoDaddy-registered domain (PSI) to an Indonesian gambling site for $1,126.
According to Premier, the insurance agency never authorized the sale of the domain name for the website through which it had been conducting business since 2016.
In his Dec. 8 ruling on Afternic’s motion to dismiss, Stearns decided that while Premier had failed to state a claim for relief under the federal Anticybersquatting Consumer Protection Act, 15 U.S.C. §1125(d), the plaintiff had stated plausible claims for violations of the federal Computer Fraud and Abuse Act and the Massachusetts Fair Business Protection Act, G.L.c. 93A, §11, as well as a claim for conversion.
In its complaint, Premier alleged that Afternic violated the CFAA by: (1) obtaining protected information by intentionally accessing a computer without authorization; (2) intentionally damaging a protected computer by knowingly causing unauthorized transmission of a program, information, code, or command; and (3) causing damage by intentionally accessing a protected computer without authorization.
In terms of sufficiently alleging intentional access without authorization, Stearns observed that in 2021 the U.S. Supreme Court in Van Buren v. U.S. read the statutory terms “without authorization” and “exceeds authorized access” as “gates-up-or-down” inquiries, meaning one either can or cannot access a computer system or certain areas within the system.
“Afternic argues that Premier granted it a blanket authorization to access Premier’s computer system to sell Premier’s various domain names; therefore, as in Van Buren, it is alleged only to have misused its authorization in a ‘gates-up’ scenario,” Stearns wrote. “The [plaintiff’s first amended complaint], however, alleges that, under Afternic’s [Fast Transfer network] agreement, Afternic’s authorized access was limited domain-by-domain, creating a ‘gates closed’ scenario for the PSI Domain. This allegation is sufficient to survive a 12(b)(6) motion to dismiss.”
In terms of adequately alleging damages, the judge wrote that Premier’s complaint stated a valid claim under the CFAA because the plaintiff claimed that Afternic’s unauthorized sale of the PSI domain led to a $600,000 loss in revenue due to the interruption of its online insurance services.
According to court records, Afternic maintains a domain marketplace offering more than 5 million premium internet addresses for sale. Transactions conducted by the defendants “Fast Transfer” service allows buyers to assume control of URLs immediately upon purchase.
The series of unfortunate events leading to Premier’s trip to federal court started in March 2021 when Premier decided to list one of its other domains — — for sale. The agency received an “opt-in notification” email that introduced it to Afternic.
According to Premier, the insurance agency later decided to sell off several of its other domains, in each case receiving emails from Afternic specifying the URLs Premier had agreed to sell, along with their listing price. None of those emails listed the company’s flagship website, around which it had built a business that won several industry awards.
Nonetheless, on Sept. 24, 2021, Premier received an email delivering the stunning news that Afternic had sold via its Fast Transfer network.
Premier alleges it never offered for sale and thus never agreed to the Fast Transfer terms of service or to its membership agreement with regard to such a transaction.
The 12-page decision is Premier Shield Insurance, LLC v. Afternic, LLC, Lawyers Weekly No. 02-418-22.
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