DomainNameWire.com broke the news today that the owner of Ad.com,  Marcos Guillen filed a lawsuit against Directi and Skenzo for refusing to close on the purchase of the domain name Ad.com at the Moniker.com TRAFFIC show auction.

I have know about the situation for quite a while, and even alluded to it yesterday in my nominations for Domainer of the year.

As way of background,  AOL bought advertising.com back in 2004 for $435 Million dollars.

This is where this problem started.

AOL claim on the domain ad.com, is based on much more than a pending trademark application.

The problem is that advertising.com has become to be commonly known, in the advertising industry, as ad.com.

Here are just a few examples of what I’m talking about:

From a Media Week article from last month:

“””Dave Katz, head of trading at Media Contacts:

“The decision to change it to AOL Advertising was clearly a decision to realign itself back to Ad.com, which is part of the division and a brand more people recognise and a way to make the division clearer to understand.””””

From a  Business Week Artcile back in 2006:

“””On Aug. 2, Time Warner is expected to announce a plan to tie AOL’s fate even more tightly to advertising, phasing out $2 billion a year in already-shriveling subscription revenue. Such a radical move would be unthinkable without Ad.com, which provides almost 20% of AOL’s ad revenue. Its sales doubled to $259 million between 2003 and 2005.

Even with Ad.com, AOL’s plan is a stretch. Ad.com will need phenomenal growth to cover just half the lost subscription profits. But without it, AOL would be toast. “If AOL had not purchased Ad.com, I don’t think there would be an AOL today,” says Jeff Lanctot, general manager of Avenue A/Razorfish, the largest Internet ad agency.””

From the Baltimore Business Journal in an article from this year:

“”””Some industry analysts said the companies will be received favorably despite the fact AOL’s revenue — including that from ads — has been falling.

But even though Ad.com was a strong foundation for a once growing advertising business model for AOL, the company has taken a large brunt of the recession’s impact because its ad network is less profitable than others, one analyst said.

It could take a less significant role within AOL regardless of whether Time Warner ultimately goes through with a sale.

Ad.com runs a network of ad space across the Internet, through which it sells to advertisers access to particular demographics. It also earns money when its ads prompt consumers to take actions such as requesting more information about a product.

AOL said the company was a significant piece of its strategy when it formed a new ad unit, Platform-A, in 2007. Ad.com’s network makes up a large chunk of AOL’s online ad space.

It’s unlikely Ad.com would be parceled out from Platform-A and AOL and sold on its own again.”””

There are a lot of stories, just like these in the media world, where AOL’s advertising.com is referred to as ad.com.

My understanding of the case, is that AOL, based on industry “usage”, believes it has a claim to ad.com as advertising.com has been commonly known as ad.com in the industry.

As you know you can obtain trademark rights by filing a application, or by common law usage.

Although harder to prove a common law usage claim is eligible for protection under the Lanham Act.

The fact that many third parties acknowledge that common law usage,  will certainly be a factor in determining the validity of the claim.

My further understanding of the case is that AOL will claim it notified the owner of Ad.com, well before the Moniker.com auction, of its claim of right to ad.com,  but the owner of ad.com, may or may not have gotten the notice.

Obviously it’s a very unfortunate situation for all parties.

The Seller, the Buyer, the auction house (Moniker.com) , the show organizer and the domain industry as a whole.

I would look for someone, in this suit, most likely the defendant,  to bring AOL, which is owned by Time Warner, into the suit as a third party defendant.

Look for this to be a very long, drawn out expensive litigation.

I have been telling domainers for a while, that claims of trademark and rights in and to generic words is going to be a huge issue for them.

This case, is one of the reasons and examples of why I have been warning domainers.

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