Jurisprudence under the Provision of the Anticybersquatting Consumer Protection Act

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Berkeley Technology Law Journal Volume 18 Issue 1 Article 15 January 2003 Jurisprudence under the Provision of the Anticybersquatting Consumer Protection Act Bhanu K. Sadasivan Follow this and additional
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Berkeley Technology Law Journal Volume 18 Issue 1 Article 15 January 2003 Jurisprudence under the Provision of the Anticybersquatting Consumer Protection Act Bhanu K. Sadasivan Follow this and additional works at: Recommended Citation Bhanu K. Sadasivan, Jurisprudence under the Provision of the Anticybersquatting Consumer Protection Act, 18 Berkeley Tech. L.J. 237 (2003). Available at: Link to publisher version (DOI) This Article is brought to you for free and open access by the Law Journals and Related Materials at Berkeley Law Scholarship Repository. It has been accepted for inclusion in Berkeley Technology Law Journal by an authorized administrator of Berkeley Law Scholarship Repository. For more information, please contact TRADEMARK: DOMAIN NAME JURISPRUDENCE UNDER THE INREMPROVISION OF THE ANTICYBERSQUATTING CONSUMER PROTECTION ACT By Bbanu K Sadasivan The Anticybersquatting Consumer Protection Act ( ACPA )' provides a cause of action for trademark owners against cybersquatters 2, who register domain names 3 containing trademarks in order to profit from the marks. Cybersquatters fall into two categories: (1) those who can be found, and on whom a United States court can assert personal jurisdiction; (2) those who cannot be found, or are beyond personal jurisdiction because they are located in foreign countries. The ACPA addresses both categories of cybersquatters. The trademark provision 4 of the ACPA imposes liability on cybersquatters who can be found and are within a United States court's personal jurisdiction while the in rem provision 5 grants relief against those cannot be found or are beyond personal jurisdiction. It is the in rem provision of the ACPA that is the focus of this Note. In Part I, this Note surveys the jurisprudence that has developed under the in 2003 Berkeley Technology Law Journal & Berkeley Center for Law and Technology U.S.C. 1125(d) (2000). 2. Cybersquatting refers to the deliberate, bad faith, and abusive registration of Internet domain names in violation of the rights of trademark owners. S. REP. No , at 4 (1999); see Benjamin B. Cotton, Comment, Prospecting or Cybersquatting: Registering Your Name Before Someone Else Does, 35 J. MARSHALL L. REv. 287, (2002) (describing three types of cybersquatters: ransom grabbers who register a domain name in hopes of selling it to the mark owner at a substantial profit; competitor grabbers who register domain names containing typographical errors of famous names; and those who warehouse their domain names. Warehousers register a domain name but do not put it to commercial use; instead they wait for the mark owner to realize that his domain name has been taken by someone else and then bargain a transfer fee with the mark owner for the domain name.). 3. Domain names are easy-to-remember textual addresses that correspond to a numerical address called the IP address, which is assigned to every computer attached to the Internet. Domain names consist of a second-level domain ( SLD ) and a top-level domain ( TLD ). For example, in the domain name Harrods.com, Harrods is the SLD and corn is the TLD. See Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, (2d Cir. 2000) (describing the domain name system) U.S.C. 1125(d)(1). 5. Id. 1125(d)(2). In rem is a technical term used to designate proceedings or actions instituted against the thing, unlike personal actions, which are said to be in personam. BLACK'S LAW DICTIONARY 797 (7th ed. 1999). BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 18:237 6 rem provision of the ACPA. This Note then examines in Part 11 the bad faith intent to profit element of the ACPA and analyzes the conflicting constructions by the courts regarding bad faith intent to profit as an element of the in rem provision. Finally, in Part III this Note explores the criticisms concerning the constitutionality and international overreach of the in rem provision of the ACPA. I. BACKGROUND The ACPA can be broadly divided into two sections: trademark and in rem. The trademark section of the ACPA imposes liability on a person, such as a cybersquatter, while the in rem section authorizes jurisdiction of 7 a court over a domain name rather than a person. A. The Trademark Provision of the ACPA This section provides a cause of action against a person for registering, trafficking in, or using a domain name confusingly similar or identical to a distinctive or famous mark with bad faith intent to profit. In order to bring a successful suit under this provision, the plaintiff must show that: a) her mark is distinctive or famous; b) the domain name is identical or confusingly similar to a distinctive or famous mark or is dilutive of a famous mark; and c) the registrant registered, used, or trafficked in the domain name with a bad faith intent to profit from plaintiffs mark. 9 The ACPA contains a safe harbor provision to allow innocent registrants a defense of good faith and any other defense that is available to the defendant under the Lanham Act. 10 Finally, the provision provides both injunctive relief, including forfeiture, cancellation and transfer, 11 and damages remedy including statutory damage award for the offending domain name 12 and attorney fees to the prevailing plaintiff For a review of jurisprudence under the trademark provision of the ACPA, see Jian Xiao, Note, The First Wave of Cases Under the ACPA, 17 BERKELEY TECH. L.J. 159, (2002). 7. In in rem jurisdiction, the court has jurisdiction over property such as a domain name. By contrast, in personal jurisdiction, the court has jurisdiction over the person U.S.C. 1125(d)(1). 9. Id. 1125(d)(1)(A). 10. See 4 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COM- PETITION 25:78, at (4th ed. 2000) (discussing availability of other defenses to a defendant under the ACPA through a savings clause) U.S.C. 1125(d)(1)(C). 12. Id. 1117(d). Under the statute, the court has the discretion to award statutory damages ranging from a minimum of $1000 per infringing domain name to a maximum of $100,000. See, e.g., E. & J. Gallo Winery v. Spider Webs Ltd., 129 F. Supp. 2d 1033, 2003] ANTICYBERSQUATTING CONSUMER PROTECTION ACT 239 It is easier for a mark owner to prevail under the ACPA than under traditional trademark law. Plaintiffs bear a lower burden in proving fame or distinctiveness. The plaintiff is only required to show that the mark is either distinct or famous but not both. 14 Moreover, in determining whether a mark is famous or distinctive, courts are not restricted to the factors enumerated in traditional trademark law, but may consider other circumstances of the case. 15 Similarly, the plaintiff need only show that the domain name is confusingly similar to the mark rather than meet the tougher likelihood of confusion standard. 16 Under the confusingly similar standard, courts compare only the domain name and the mark without reference to the goods or services of the parties. 17 In addition, the plaintiff need not shoulder the more stringent burden of proving that the domain name is dilutive of a famous mark because the plaintiff need only show that the mark is distinctive.' 8 Finally, plaintiffs seem to enjoy remarkable success in meeting the bad faith intent to profit element. Courts have consistently found bad faith intent to profit by domain name registrants in a majority of cases examined 1048 (S.D. Tex. 2001) (awarding $25,000 in statutory damages for use of the infringing domain name ERNESTANDJULIOGALLO.COM) U.S.C (a). Courts in exceptional cases may also award reasonable attorney fees to the prevailing party in addition to statutory damages per offending domain name. See, e.g., Shields v. Zuccarini, 254 F.3d 476, 487 (3d Cir. 2001) (affirming an award of attorney fees of almost $40,000 because of the egregiousness of Zuccarini's conduct and also awarding $10,000 for each offending domain name). But see People for Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 370 (4th Cir. 2001) (refusing to award attorney fees because defendant believed he had a legitimate right to make a parody website using plaintiff s trademark) U.S.C. 1125(d)(1)(A)(ii). See Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 497 (2d Cir. 2000) (discussing the requirements of famous and distinctive marks). 15. See, e.g., Victoria's Cyber Secret Ltd. P'ship v. V Secret Catalogue, Inc., 161 F. Supp. 2d 1339, 1350 (S.D. Fla. 2001) (finding mark famous based on the nonenumerated factor of large advertising budgets and extensive worldwide promotion of merchandise bearing the mark). 16. See Xiao, supra note 6, at N. Light Tech., Inc. v. N. Lights Club, 97 F. Supp. 2d 96, (D. Mass. 2000). 18. See MCCARTHY, supra note 10, 25:78, at n.28 (commenting that a mark owner is more likely to show that the mark is distinctive rather than proving dilutive of famous mark because the latter requires proof of two factors: the mark is famous and the offending domain name is dilutive of the famous mark). BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 18:237 so far. 19 Indeed, commentators have criticized the courts for their ready finding of bad faith intent to profit and their reluctance to use the safe harbor provision. Nevertheless, bad faith intent to profit remains the critical element in prevailing under the trademark provision of an ACPA suit 21 and is also the central issue in the courts' split on the elements of an in rem suit. 22 B. The in rem provision of the ACPA The in rem provision authorizes a court's exercise of jurisdiction over a domain name where a domain name registrant cannot be found or served in the United States. 23 To bring a claim under this provision, the plaintiff must show that: a) the trademark is registered with the United States Patent and Trademark Office ( USPTO ) or is protected under Section 43(a) or (c) of the Lanham Act, 24 and b) the plaintiff was unable to establish personal jurisdiction over the registrant or was unable to locate the registrant after the exercise of due diligence. 25 Under the in rem provision, remedy is limited to forfeiture, cancellation, or transfer of the domain name to the mark owner; it does not extend to the plaintiffs money damages or attorney's fees. 26 This limitation is appropriate considering that the parties' rights in the property are adjudicated in absentia. 27 By allowing a mark owner to file an action against the domain name itself, Congress tacitly declared that domain names are property, thereby expanding United States courts' reach to include foreign registrants. Courts, however, have been circumspect in construing the in rem provi- 19. See Elizabeth D. Lauzon, Annotation, Validity, Construction, and Application of Anticybersquatting Consumer Protection Act, 15 US.C. 1125(D), 177 A.L.R. FED (2002) (listing cases where courts have found good faith intent to profit or the lack thereof). 20. See John Brogan, Note, Much Ado About Squatting: The Constitutionally Precarious Application of the Anticybersquatting Consumer Protection Act, 88 IOWA L. REV. 163, 194 (2002); Jonathan Ward, Comment, The Rise and Fall of Internet Fences. The Overbroad Protection of the Anticybersquatting Consumer Protection Act, 5 MARQ. IN- TELL. PROP. L. REV. 211, 228 (2001); Xiao, supra note 6, at See infra Part See infra Part Prior to the enactment of the ACPA, mark owners did not prevail in an in rem action. Although Trademark Dilution Act did not expressly preclude such actions, it was construed to favor in personam actions alone. Porsche Cars N. Am., Inc. v. Porsch.com, 51 F. Supp. 2d 707, 712 (E.D. Va. 1999) U.S.C. 1125(d)(2)(A)(i) (2000). 25. Id. 1125(d)(2)(A)(ii). 26. Id. 1125(d)(2)(D)(i). 27. Alitalia-Linee Aeree Italiane S.p.A. v. Casinoalitalia.Com, 128 F. Supp. 2d 340, 346 n. Il (E.D. Va. 2001). 2003] ANTICYBERSQUATTING CONSUMER PROTECTION ACT 241 sion, imposing restrictions on the availability of forums for in rem jurisdiction and adding to the plaintiffs requirements for establishing a court's personal jurisdiction over the domain name registrant. 1. Domain names are property Prior to the passage of the ACPA, courts were split as to whether a domain name is property or a service contract right. In Network Solutions, Inc. v. Umbro Intern., Inc.,28 the court concluded that a domain name was a product of a service contract between a domain name registrant and a registrar because domain names do not exist absent the registrar's services to make them operational Internet addresses. 29 By contrast, the Northern District of California concluded in Kremen v. Cohen 30 that domain names are intangible property. The court reached this decision based on the dissent's position in Network Solutions, Inc. v. Umbro Intern., Inc. 31 that the right to use domain names exists separate and apart 32 from the various services required to make domain names operational Internet addresses. 33 Since the passage of the ACPA, courts have viewed domain names as property. 34 Even where courts have considered domain names to be merely data, they have found. them.. to be property:.. Congress. 9,35 can make data property and assign its place of registration as its situs. 2. Establishing lack ofpersonaljurisdiction over the registrant can be difficult To bring an in rem action, a mark owner must show the absence of personal jurisdiction over the registrant in any judicial district in the United States. 36 Proving lack of personal jurisdiction can be burdensome S.E.2d 80 (Va. 2000). 29. Id. at 86. See Dorer v. Arel, 60 F. Supp. 2d 558, (E.D. Va. 1999) (analyzing domain names containing trademarks under trademark law and stating that trademarks are not assets that can be freely traded apart from the goodwill to which they are attached ) F. Supp. 2d 1168 (N.D. Cal. 2000) S.E.2d Id. at Kremen, 99 F. Supp. 2d at 1173 n Caesars World, Inc. v. Caesars-Palace.Com, 112 F. Supp. 2d 505, 508 (E.D. Va. 2000); Lucent Techs., Inc. v. Lucentsucks.com, 95 F. Supp. 2d 528, 535 (E.D. Va. 2000). 35. Lucent Techs, 95 F. Supp. 2d at 535 (quoting Judge Bryan in Caesars World, Inc. v. Caesars-Palace.Com, No A, at *5 (E.D. Va. filed Mar. 3, 2000)). 36. Goldstein v. Gordon, No. 3:00-CV-0022-P, 2002 WL , at *4 n.5 (N.D. Tex. Feb. 27, 2002). BERKELEY TECHNOLOGY LAW JOURNAL (Vol. 18:237 As the court noted in Heathmount A.E. Corp. v. Technodome.com, 37 the burden of proving the absence of personal jurisdiction by a preponderance of evidence is difficult to apply-requiring the plaintiff to prove a negative., 38 In Alitalia-Linee Aeree Italiane S.p.A. v. Casinoalitalia. Com, 3 9 the court declined to assert in rem jurisdiction over the domain name holding that personal jurisdiction over the registrant was available. 4n In this case, the mark owner, an Italian Airline, brought suit against the registrant, a Dominican entity, for infringing on its mark by using a domain name similar to its own in the registrant's online gambling business. 41 Although the registrant was a foreigner and had no offices in the United States, the court found personal jurisdiction over the registrant because the registrant had conducted activities aimed at the forum state 42 and therefore had sufficient minimum contacts with the forum state to satisfy due process requirements. 43 This case exemplifies the difficulty the plaintiff faces in proving a court's lack of personal jurisdiction over the domain name registrant. Not only must the plaintiff establish a lack of personal jurisdiction over the registrant, she must establish an absence of personal jurisdiction in any forum in the United States and not just the forum where the suit is filed. 44 In Goldstein v. Gordon, 45 a Texas court refused to assert in rem jurisdiction stating that personal jurisdiction was available over the registrant in the State of California. 46 Courts have required that the plaintiff establish a lack of personal jurisdiction over the registrant in all forums in F. Supp. 2d 860 (E.D. Va. 2000). 38. Id. at F. Supp. 2d 340 (E.D. Va. 2001). 40. Alitalia argued that because 15 U.S.C (d)(4) provides that in rem jurisdiction established under [paragraph 2] shall be in addition to any other jurisdiction that otherwise exists, whether in rem or in personum, both in rem and in personum actions can be maintained simultaneously. The court rejected this argument stating that such a reading paralyze[s] with one hand what [Congress] sought to promote with the other. Id. at 345 n Id. at The activities included providing real-time gambling opportunities to residents of Virginia and requiring members to enter into contract with Casinoalitalia.Com in order to play games. Id. at Id. 44. Goldstein v. Gordon, No. 3:00-CV-0022-P, 2002 WL , at *3 (N.D. Tex. Feb. 27, 2002). 45. No. 3:00-CV-0022-P, 2002 WL (N.D. Tex. Feb. 27, 2002). 46. Id. at *4. 20031 ANTICYBERSQUATTING CONSUMER PROTECTION ACT 243 the United States although the ACPA does not explicitly require such a showing. a7 Such a strict requirement that the plaintiff show a lack of personal jurisdiction over the registration anywhere in the United States is in keeping with the settled principle that in rem jurisdiction is an alternative basis for jurisdiction where in personam jurisdiction is unavailable. 4 8 The legislative intent behind the enactment of the in rem provision of the ACPA is also consistent with such a strict requirement. 49 Congress enacted the in rem provision to address the difficulty of obtaining personal jurisdiction over cybersquatters who live in foreign countries or provide false contact information when registering their domain names. Thus, where personal jurisdiction is available, in rem action should not be allowed. Nonetheless, the Fourth Circuit, in Porsche Cars North America, Inc. v. Porsche.Net, 51 ruled that a court could, under certain circumstances, continue to exercise in rem jurisdiction over a defendant after personal jurisdiction becomes available. 52 In this case, the defendants raised an objection to the court's in rem jurisdiction just three days prior to the trial date although a full nine months had passed since their initial jurisdictional challenge, 53 stating that they had decided to submit to personal jurisdiction in another court in the United States. 54 In light of this lengthy delay, the court refused to dismiss in rem jurisdiction stating that the existence of jurisdiction should not be subject to manipulation in the later stages of litigation, for otherwise a person with an interest in a case could properly yank it across the country a few days before trial merely to express his outrage, thus increasing the opponent's costs and imposing additional expense on the federal courts as a whole. Alitalia-Linee Aeree Italiane S.p.A. v. Casinoalitalia.Com, 128 F. Supp. 2d 340, 347 n.14 (E.D. Va. 2001). 48. See generally CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE 1070 (2d ed. 1987) ( Jurisdiction based on property most typically is invoked when one or more defendants or persons with potential claims to the property are nonresidents or jurisdiction over their person cannot be secured... In this sense in rem or quasi-in-rem jurisdiction represents an alternative to in personam jurisdiction. ). 49. S. REP. No , at 10 (1999) (stating that the bill will enable a mark owner to institute an in rem action in those cases where, after due diligence, a mark owner is unable to proceed against the domain name registrant because the registrant has provided false contact information and is otherwise not to be found ). 50. H.R. REP. No , at 14 (1999) F.3d 248 (4th Cir. 2002). 52. Id. at Id. 54. Id. at Porsche Cars N. Am., Inc. v. Porsche.Net, 302 F.3d 248, 258 (4th Cir. 2002). BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 18: Exercising due diligence in locating the registrant Proving that the plaintiff exercised due diligence 56 to find the registrant has also been difficult. Courts, in construing the ACPA, have not provided clear direction on how to meet the re
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