In one corner: Christian Castillo, owner of Failbook.com , who embedded the popular site Failbooking.com --a hub for LOL-worthy Facebook updates--to "show what the domain could be used for." In the other: Cheezburger Network CEO Ben Huh , owner of Failbooking.com, who claims Castillo "was trying to confuse and defraud our users by marketing the content and site as his own and trying to profit from it." Ready, set, fight!
The Cheezburger Network--which runs FAILblog, LOLcats, and a host of other ways to kill time at work--launched Failbooking on January 5, roughly four years after Castillo registered Failbook. A few days later, Castillo embedded Failbooking on Failbook, and tried to sell the latter for $50,000. He also posted the site on Digg , promoting Failbooking's content as if it were his own.
Shortly thereafter, Cheezburger Networks asked Castillo  to reimburse their legal expenses (which they said were $9,000) and agree in writing that he would not "violate our trademark or promote others to violate our trademark." Castillo quickly denied any wrongdoing. "Failbooking encourages users to...'Put this fail on your blog: (Copy & paste code),'" he blogged. "Failbook just did so in an automated manner."
Which, you know, would be fine. If Castillo made it clear that's what he was doing. Instead, he repurposed Failbooking to draw attention--and buyers--to a site with a similar name, and made light of the whole situation with a "humorous" Message to the Judge . As TechDirt points out , this may not be lawsuit-worthy. But it's definitely suspect.
As it stands, both parties are locked in a game of he-said, he-said: Castillo says Huh just wants his domain name. Huh says he's trying to protect his brand. Stay tuned for settlement updates.