The cybersquatting lawsuit was filed this earlier this summer in June by Exxxotica. Exxxotica is seeking the maximum statutory damage award ($100,000 for each cybersquatted domain name) under the Anti-cybersquatting Consumer Protection Act (ACPA).

The dispute between the adult fan-show companies has at its epicenter the Los Angeles Convention Center, where Adultcon has been holding shows for years. However, this year Exxxotica decided to expand its fan base (which normally is covered by Exxxotica shows in Miami and New Jersey) into the L.A. market by scheduling a show at the same venue Adultcon has been regularly hosting adult show events.

Exxxotica alleges that Adultcon has registered and is using 19 domain names infringing on Exxxotica’s federally registered trademark ‘EXXXOTICA’. The domain names in dispute are;

Exxxotica-lv.com, ExxxoticaExpo-LA.com, ExxxoticaExpo-LV.com, ExxxoticaExpoLA.com, ExxxoticaExpoLV.com, ExxxoticaLA.com, ExxxoticaLasVegas.com, ExxxoticaLosAngeles.com, Exxxoticalv.com; ExxxoticaVegas.com; ExoticaExpo-LA.com, ExoticaExpo-LV.com, ExoticaExpoLA.com, ExoticaExpoLV.com, ExoticaLA.com, ExoticaLosAngeles.com, ExoticaLV.com, ExoticavaLasVegas.com and ExoticaVegas.com.

In response to the cybersquatting allegations, Adultcon argues that Exxxotica’s trademarks have become generic and thus unenforceable;

It will be very interesting to see how this dispute plays out. From a cursory inspection of the 19 disputed domain names, it appears that Adultcon may have subjected itself to massive liability (19x $100,000).

Because everyone of the 19 disputed domains bears some form of Exxxotica’s ‘EXXXOTICA’ trademark, unless Adultcon can prove that Exxxotica’s trademarks are generic it is possible that Adultcon could be left paying huge fines in statutory damages for these 19 disputed domain names.

The norm in recent court rulings involving internet litigation has been to reinforce a trend in cybersquatting disputes being decided in favor of large companies. Following are some examples of representative of this trend;

* ArcelorMittal Awarded 5 Cybersquatted Domain Names in WIPO Arbitration Proceeding

* Metropark USA Wins Default ‘in rem’ Cybersquatting Judgment 

* Verizon’s Landmark Cybersquatting Victories in the US Courts 

* BMEZine Contests Ownership BME.com

It came to Molson’s attention that Canadian.biz was owned and used by a Canadian citizen. Molson immediately contacted the domain name owner and requested he transfer ownership of the domain name, citing its trademarked ‘CANADIAN’ as it applies to beer. The domain name owner explained to the brewery that he intended to use Canadian.biz as an all-purpose meeting place for Canadian businesspeople and that he would not be in competition with Molson Canadian beer but despite this, Molson repeated its demand that Black hand over the domain.

At the early stages of this cybersquatting dispute, Molson filed an arbitration dispute over ownership of the Canadian.biz domain name. Canadian citizen and Toronto resident Douglas Black appeared to defend his ownership of the Canadian.biz domain name and as happens all too commonly; the arbitration panel awarded a judgment in favor of the big dogs in the suit.

However, Black wasn’t yet prepared to give up on his domain name. Because the arbitration disputes do not have an appeal process, he contested the arbitration panel’s findings by filing a cybersquatting lawsuit in the Canadian court system.

Black v. Molson was then heard before the Toronto Supreme Court. Delivering the judgment of the court, Justice Blenus Wright determined that Douglas Black is the rightful owner of Canadian.biz and that the beer company Molson has no claim the domain name.

This cybersquatting case represents a big win for the little guy. Not only was the Canadian.biz domain name successfully protected by a private citizen against a huge corporation, but Justice Wright also ordered the corporation (who took the first step in this dispute by initiating the arbitration proceeding) to pay Black’s attorney’s fees!

Factors in favor or Black’s ownership of Canadian.biz;

• Use of the domain name - Wright noted in his ruling that Molson did not outline how it intended to use Canadian.biz, and that there was sufficient evidence that Black intended to use the domain name for Canadian business purposes.
• Widespread use of the generic word ‘Canadian’ - Wright also noted that hundreds of businesses use the word “Canadian” in their names.

Black’s lawyer in this suit, Zak Muscovitch, is claiming the ruling sets important precedents;

• “If he hadn’t brought this case to an Ontario court, he would have lost his domain name to Molson Canada for no legal reason whatsoever.”
• “On a legal level, it’s the first case in Canada that a person who has lost their domain name at the quasi-arbitration stage … has appealed to a Canadian court.”
• “And it’s the first case worldwide with respect to a dot-biz decision from a court.”

Muscovitch also doesn’t think Molson will appeal the ruling, “I don’t (believe) that they’ll appeal because this is a convincing and decisive case that should never have been brought to court in the first place.”

Muscovitch says this type of decision in a domain name dispute (where the little guy wins) is uncommon;

• “This was a peculiar case in the sense that it’s very rare in law, especially in Canada, for a single person to take on a large corporation like this.”
• “And the fact that he won so handily really says something because it’s not easy to beat a large company that has unlimited financial resources.”

Black’s thoughts about this cybersquatting dispute over his ownership of Canadian.biz;

• Although he admitted to being daunted at the outset of the dispute, Black admits to being “pleased” with the decision, “I found it stressful because of the size of the company, but I think we were pretty confident from the start based on trademark law.”

For more information on this domain name dispute;

DNAttorney (from Toronto (CP)) – Toronto man wins court battle against Molson for rights to Canadian.biz

In its complaint arguing for the panel to recognize the uniqueness of the ‘ARCELOR’ mark, ArcelorMittal stated, “It has no meaning in English or in any other language. A Google search of the word “arcelor” displays several results, all related to the complainant (ArcelorMittal).”

The WIPO decision was handed down on July 23, 2010 by a sole panelist, James A Barker. The panelist found that Defendant Taj Group of Companies (a Mumbai-based firm) was in violation of the federal Anti-cybersquatting Consumer Protect Act (ACPA) and infringing on AcelorMittal’s trademark for its conduct in registering and use of the following domain names:

1. www.arcelorcement.com
2. www.arcelorchemicals.com
3. www.arcelorchemicals.net 
4. www.arcelorlaboratories.com
5. www.arcelorlabs.com
Presiding over and deciding the WIPO arbitration dipute, Barker found that the above mentioned names all infringed upon AcelorMittal’s ‘ARCELOR’ (Reg. No 2935304) and ‘ARCELORMITTAL’ (Reg. No 3643643) federally registered trademarks. Furthermore, Panelist Barker found that the domains were registered in bad faith and that each of the five disputed domains were either in part identical or confusingly similar to ‘ARCELOR’ trademarks.

Consequently, the WIPO issued the finding on this proceeding that the five disputed domains should be turned over to AcelorMittal.

The WIPO case is – Arcelormittal v. PrivacyProtect.org, Taj Pharmaceuticals Ltd., Taj Group of Companies, Case No. D2010-0899

For more related information on this lawsuit and on cybersquatting in general;

ArcelorMittal wins cybersquatting case

ArcelorMittal wins cybersquatting case against Mumbai firm

ArcelorMittal wins cybersquatting case against Mumbai firm

Wiki – Arcelor Mittal

Apparently Zuccarini has contacted auction promoter Rick Latona and TRAFFIC organizers Rick Schwartz and Howard Neu, with threats of legal action if they proceed with auctioning off the remaining domain names.

In response to the letters, Henry M. Burgoyne of Kronenberger Burgoyne, LLP, filed an application of contempt of court (PDF – courtesy of DomainNameWire) by Zuccarini for allegedly interfering with the auction plans.

Burgoyne’s application reproduces communications from Zuccarini to Latona, Schwartz, and Neu threatening legal action if they proceed to auction the domains at TRAFFIC while there are ongoing legal disputes. The application covers this communication from Zuccarini to Neu over Neu’s previous representation of Zuccarini in the Office Depot lawsuit, Zuccarini’s letter reads;

“As you are aware, as you represented me when the Office Depot case was first filed in April 2000, and while your name is not present on the Pacer web site, you had make telephone contact with the attorney of record at that time for Office Depot in hopes of coming to a settlement, although that did not work out in the end.

You did as you may recall, as I checked the Pacer site today, on December 13, 2000 file an affidavit on my behave, although it was rejected by the Court, as you had forgotten to use lined numbered paper for the document. No doubt though that document is on file with the court.

In consideration of these circumstances, I believe it to be extremely unethical, for you to conduct and if not illegal, also completely unethical, for you to financially benefit from any auction of the domain names for the Office Depot case.”

Internet Lawyers should stay tuned to these interesting developments to see how the court handles this newest matter in the ongoing John Zuccarini cybersquatting disputes.

For more information on John Zuccarini, cybersquatting domain names, and some history of Zuccarini’s typosquatting domain names;

Domains Attached to a Legal Judgment Accidently Auctioned Off on NameJet, Catching $65,000

Latona’s to Auction Off Remaining Zuccarini Domains at TRAFFIC

The Anticybersquatting Consumer Protection Act

The decision (but because it is a Magistrate ruling it is really only a recommendation) was rendered and entered in default on July 8, 2010 in the U.S. District Court for the Eastern District of Virginia, Alexandria Virginia. In this federal cybersquatting claim, the D.C. for the E.D. Virginia exercised in rem jurisdiction over Defendant Domain Name www.Metropark.net and because the Domain Name registrant failed to reply to the complaint or otherwise appear before the court in these proceedings the Magistrate judge entered her recommendation in a default ruling against the Defendant Domain Name.

Brief history of the parties involved;

Plaintiff Metropark USA is a Delaware corporation and has continued to be the federally registered trademark owner of the mark at issue, the plain text ‘METROPARK’, since September 2004. Metropark USA is also the valid registrant of www.Metroparkusa.com, through which it solicits and offers services in the business of operating retail stores and selling men’s and women’s clothing and accessories to millions of people each year.

On October 2, 2009, a registrant registered the domain name www.Metropark.net (Defendant/Domain Name). Subsequent to registration, the Domain Name has been used commercially by the registrant to advertise the sale of men’s and women’s clothing and accessories in competition with Metropark USA’s services. Web users who visit the Domain Name are presented with links to commercial web sites other than that operated by Plaintiff where they can find goods and services that are substantially identical to and competitive with the goods and services offered by Metropark USA.

Metropark USA sought a permanent injunction to transfer ownership of the Domain Names to Metropark USA;

Plaintiff Metropark USA alleged that it had suffered and continues to suffer, irreparable harm to its reputation and goodwill as a result of the registration and ongoing use of the Domain Name. Therefore, Metropark USA sought a permanent injunction transferring ownership of the Domain Name to Metropark USA.

The Lanham Act under the Anti-cybersquatting Consumer Protection Act;

Under authority provided by the Lanham Act, Metropark USA was able to file an in rem civil action against the Domain Name in the district in which the domain name registrar, registry, or other authority that registered or assigned the domain is located, where that domain name violates any right of the owner of a mark protected under 15 U.S.C. § 1125(a) or (c).

Consequently, Metropark USA was able to bring this action against the www.metropark.net domain name in the U.S. District Court for the Eastern District of Virginia, Alexandria Virginia, because the registry service for that domain name is located within the district.

In support of a finding of bad-faith registration of the Domain Name;

Although this is an in rem proceeding against the Domain Name and not the registrant (owner), a finding of a history of bad-faith domain name registration on behalf of the registrant does lend weight to a determination of bad-faith registration in the current proceeding. Along these lines, Magistrate Judge Buchanan found these factors highly influential in determining whether the current Domain Name registration was in bad-faith;

1. Registrant previously involved in numerous past actions in which it was accused of engaging in a pattern of bad-faith registration and use of domain names;
2. Registrant lost numerous proceedings in which it was accused of engaging in a bad-faith registration and use of domain names; and
3. Registrant is the current registrant of multiple domain names that typoquat or mimic famous trademarks of third-parties, including <bankofamericaa.com>, <dicksportinggood.com>, <abcnewschicago.com> and <officedeppotcom.com>.

Magistrate Judge Buchanan found: a likelihood of confusion between the Defendant domain name and Plaintiff’s services; Defendant’s registrant engaged in a pattern of bad faith registration; and Defendant domain name was registered with bad faith intent of profiting from Plaintiff’s trademark;

“The Domain Name is continuing to be used to market goods and services that are substantially identical to and competitive with the goods and services that plaintiff offers under the Mark. (Compl. ¶ 20.) The minimal differences between the site associated with the Domain Name and plaintiff’s site merely serves to further deceive customers and harm plaintiff. Additionally, registrant has engaged in a pattern of bad faith registration and use of domains by acquiring multiple domain names which it knows to be identical or confusingly similar to the marks of others that are distinctive at the time of registration of such domain names. (Compl. ¶¶ 40-41.).”

Conclusion;

U.S. Magistrate Judge Theresa Carroll Buchanan delivered the opinion of the court, recommending that default judgment be entered in favor of Metropark USA for the transfer of ownership of the Domain Name (www.metropark.net) for violations of the Anti-cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(a).

For more Internet Lawyer information and updates for Trademark Infringement Attorneys on cybersquatting, trademarks, and domain name disputes;

UDRP Arbitrator Shares Insights on Trademark, Domain Name Disputes and Cybersquatting Issues

Good Faith and Bad Faith Analyzed in N.D.C.A. Cybersquatting Claim Brought Under the ACPA – Rearden LLC., v. Rearden Commerce

Verizon’s most recent efforts to fight cybersquatting of its ‘VERIZON’ mark have been in the form of Uniform Domain-name Resolution Policy (UDRP) arbitration disputes filed through the World Intellectual Property Organization (WIPO).

Presently, Verizon has at least two live UDRP complaints still pending and has won a victory for ‘VERIZON’ cybersquatted domain names including;

• verizoin.com
• verizonswireless.com
• verizonwieless.com
• verizoon.com
• verizopn.net
• versizon.net
• vewrizon.net
• virazon.com
• verion.com

Speculators suggest that Verizon’s recent change of tactics could be a result of the location of the cybersquatted domains being foreign, thus making it harder to get a judgment against the trademark infringing domains via US court system.

For more information on Verizon’s fight against cybersquatters to protect its intellectual property rights check out any of these;

Domains Dispute Alert: A federal court in Northern California has awarded $33.15 million in a default judgment to Verizon Communications in what the company is calling the largest cybersquatting judgment ever

Verizon v Navigation Catalyst Cybersquatting Lawsuit Settled: NCS Continues to Cybersquat Trademark Protected Domains

Verizon Changes Tactics: Files UDRP Complaints Instead of Lawsuits

The case is Digby Adler Group LLC v. Image Rent a Car, Inc., 2010 U.S. Dist. LEXIS 76309, 1-2 (N.D. Cal. July 20, 2010). Plaintiff Digby Adler Group LLC (Adler) originally filed suit in federal district court in the Northern District of California against Defendants Image Rent A Car, Inc. (Image) and Van Rental Co., Inc. (Van Rental), alleging cybersquatting, unfair competition, and false advertising under the Lahnam Act, as well as common law trademark infringement and violation of Section 17200 of California’s Business and Professions Code.

The instant decision was for a Motion to Dismiss or Transfer Venue to the Eastern District of New York and was issued by U.S. District Judge Samuel Conti.

Brief background of the parties involved;

Plaintiff Adler is a California limited-liability company headquartered in San Francisco which rents cars and vans, with a focus on long-term rentals to touring music groups. It has done business under the mark ‘Bandago’ since 2003 and filed an application to register the mark with the U.S. Patent and Trademark Office (USPTO) in 2008 but has not yet received a certificate of registration (here it is important to note that a plaintiff may sue on its mark under a theory of ‘use’ without the mark actually being a federally registered trademark). In 2003, Alder registered the domain name www.bandago.com and has since used that domain in connection with its van rental business.

Defendants Image and Van Rental are also in the business of renting vans and other automobiles. Both Image and Van Rental share the same CEO and both are New York domestic business corporations. Both also have their primary place of business in Brooklyn, New York and maintain rental offices in New York and Florida. Image uses the website www.Imagerentacar.com in conjunction with its van rental services.

Adler alleged that in 2008, Van Rental (as an agent for Image) registered and began using the website www.Bandago.net to redirect visitors to www.Imagerentacar.com. Adler further alleged that Van Rental and Image had never before used the “Bandago” name in commerce, and that they used www.Bandago.net solely to divert Adler’s customers to Image’s website. Adler also claims that it has received calls from confused customers, and claims that some customers have used Defendants’ services rather than Plaintiff’s.

The Motion to Dismiss or Transfer Venue to the Eastern District of New York;

With this motion Van Rental and Image sought to have the case against them dismissed for a lack of jurisdiction or, in the alternative, to transfer venue to the Eastern District of New York. Arguing against the motion, Adler argued that the N.D. California court may properly exercise personal jurisdiction over Van Rental and Image without violating the Due Process Clause of the United States Constitution.

As he addressed the motion, Judge Conti noted that the Ninth Circuit provides a three-part test to determine if jurisdiction comports with due process;

(A) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;

(B) The claim must be one which arises out of or results from the defendant’s forum-related activities; and

(C) Exercise of jurisdiction must be reasonable.
Panavision v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998).

Addressing the first prong (A) of the Panavision test, Conti stated that it can be satisfied either by a party that has purposefully availed itself of the privilege of conducting business activities within the forum or purposefully directed activities toward the forum;

“Purposeful direction exists when a defendant has committed an act outside of the forum state that was intended to and does in fact cause injury within the forum. Calder v. Jones, 465 U.S. 783, 788-89, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984). Under Calder’s “effects test,” the defendant must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) which causes harm that the defendant knows is likely to be suffered in the forum state. Id.; see also Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010).”

Conti then found that the (1) ‘intentional act’ under the Calder effects test was satisfied by Van Rental’s conduct in registering and using the www.bandago.net domain name to redirect users to the www.Imagerentacar.com website.

Adler sought to demonstrate that the (2) ‘express aiming’ requirement was satisfied and attached 19 print outs of web pages on Image’s website tending to show that Defendants advertised and rented to customers in California. Judge Conti then iterated why these pages were not indicative of advertising to customers in California;

“The numerous web pages Plaintiff cites to contain a great deal of text, most of which is incomprehensible nonsense likely so positioned as an attempt to optimize search engine results through “keyword stuffing.” See Eric Goldman, Deregulating Relevancy in Internet Trademark Law, 54 Emory L.J. 507, 531 n.69 (Winter 2005) (describing “keyword stuffing” as a process in which web developers add repeated text with no relevance to the  content they are publishing to websites in an attempt to improve search engine result rankings and thus increase web traffic). For these reasons, the Court finds that the Imagerentacar.com website alone, absent “something more,” does not satisfy the “express aiming” requirement.”

Continuing to examine ‘express aiming’, operating a passive website doesn’t satisfy express aiming, ‘something more’ is required;

“While maintenance of a passive website alone cannot satisfy the express aiming prong, operating a passive website in conjunction with “something more –conduct directly targeting the forum — is sufficient to confer personal jurisdiction.” Rio Properties, Inc. v. Rio Intern. Interlink, 284 F.3d 1007, 1020 (9th Cir. 2002). Within the cybersquatting context, Panavision suggests that merely registering a domain name and linking it to a website does not alone constitute “express aiming.” 141 F.3d at 1321. In Panavision, the “something more” was the defendant’s scheme to obtain money from the plaintiff — the plaintiff sent the defendant a cease-and-desist letter, and the defendant demanded $ 13,000 in exchange for the name. Id. at 1319.”

The ‘something more’ found to be satisfied where the two parties are in direct competition with each other;

“Defendants allege that they do no business in California, and thus do not compete with Plaintiff for California customers. However, the Court reads Brayton Purcell to hold that the location of the customers is irrelevant, as long as the plaintiff and defendant are in direct competition, the defendant’s alleged tort was in furtherance of this competition, the defendant knew the plaintiff resided in the forum state, and the defendant knew the harm would be felt in the forum state. 606 F.3d at 1130-31. Because all the above elements are alleged by Plaintiff and not rebutted by Defendants, the express aiming prong is satisfied.”

The third requirement of the effects test, (3) that defendant engaged in conduct which causes harm that the defendant knows is likely to be suffered in the forum state is satisfied when the defendant’s intentional act has ‘foreseeable effects’ in the forum.  Judge Conti then found that it was foreseeable that Adler would be harmed by Van Rental’s use of the www.bandango.net domain name, and that the harm would occur in Adler’s principal place of business, California.

With the effects test satisfied, the court found that Van Rental and Image’s activity was sufficient to demonstrate purposeful direction. Then Judge Conti went on to conclude that the second (B) claims arise out of the defendants’ forum-related activities was satisfied because Van Rental and Image’s conduct infringed on Adler’s mark. Further, Conti concluded that (C) an exercise of jurisdiction is reasonable because Defendants failed to specifically address the reasonableness prong in their Motion.

Conclusion;

Judge Conti found in favor of Adler and jurisdiction is proper over Defendants Image Rent A Car, Inc. and Van Rental Co., Inc., and transfer of venue to the Eastern District of New York would not serve the interest of justice. Van Rental and Image’s Motion to Dismiss or Transfer was denied.

What you can retain from this ruling by Judge Conti;

• Conduct that qualifies as infringing on another’s trademark can subject you to specific jurisdiction in that party’s home state (or if a corporation- principal place of business and place(s) of incorporation)
• If a party to a trademark-infringement lawsuit, specifically address all pertinent points of law (in this case Defendants failed to address whether the exercise of jurisdiction was reasonable)
• Foreseeability can extend to situations where one has made use of a domain name that is similar to another’s mark and/or domain name (ex: don’t register and use www.bandago.net if www.bandago.com is in use by the ‘Bandago’ mark owner)

Originally the Mattapoisett, MA, located Kavanaugh-Brownell Boat Stands, LLC (Kavanaugh) sued the Fairhaven, MA, located Brownell Trailers, LLC (BT) over use of the ‘BROWNELL’ trademark. In that first suit Judge Young presiding over the case determined that BT could continue to sell its boat stands under the ROK trademark so long as the mark made it clear to consumers that the products for sale were boat stands. BT then adopted the above ‘ROK’ trademark which was approved by Judge Young. In conjunction with adoption of the ROK mark, BT also registered and began use of www.rokboatstands.com.

However, Young’s ruling did not end the dispute between these two parties. Just recently, BT brought a lawsuit against Kavanaugh for typosquatting, cybersquatting and related trademark claims stemming from BT’s trademark ‘BOK’ for use in conjunction with its boat stands business. BT’s recent suit alleges that Kavanaugh registered www.rokkboatstands.com after BT began use of www.rokboatstands.com , that Kavanaugh’s conduct in using this domain constitutes typosquatting, cybersquatting, unfair competition and that Kavanaugh is infringing upon BT’s trademark rights.

Usually these types of disputes are handled under a Uniform Domain Resolution Policy (UDRP) arbitration proceeding. However, perhaps smartly recognizing that Judge Young has already presided over the history behind this dispute, BT has chose to file lawsuit against Kavanaugh in the same court that handled the previous litigation between the parties.

As Kavanaugh’s use of www.rokkboatstands.com  makes use of a domain name that is only 1 character (rokk in place of rok) different from BT’s domain name and because it incorporates BT’s mark it is highly unlikely that Kavanaugh will be able to retain this domain name in the upcoming litigation.

The most recent case is, Brownell Trailers, LLC v. Kavanaugh-Brownell Boat Stands, LLC, 10-11234-WGY (D. Mass. July 22, 2010).

More on this story can be found here;

Boat Stand Makers Rok A Rematch Before Judge Young

Plaintiffs Heavenly Valley filed the complaint on June 3, 2009 alleging that Defendant improperly and without authorization used the ‘HEAVENLY’ trademarks in the name ‘The Chateau at Heavenly Village.’

A quick search through the Trademark Electronic Search System (TESS) revealed that among the myriad ‘HEAVENLY’ federally registered trademarks the Plaintiffs Heavenly Valley, a Delaware corporation limited partnership, are the registered owners of the ‘HEAVENLY VALLEY’ mark, Serial No. 74151462.

Magistrate Judge Hollows noted that jurisdiction was properly asserted over Defendants by the California E.D. court and that Defendants failed to file an answer to the summons and complaint or otherwise failed to appear for this action. Therefore, the Magistrate Judge directed that default judgment be entered against Defendant Lake Tahoe Development Company.

After determining that an entry of default judgment was warranted, Magistrate Judge Hollows then assessed Heavenly Valley’s requests for injunctive relief. Although Hollows did not address how the unfair business practice (non-compete) of false advertising might have played a roll in Defendant Lake Tahoe Development Company’s use of the ‘HEAVENLY’ mark to refer to its product, he did address cybersquatting and trademark infringement claims. After enumerating that the Lanham Act provides injunctive relief to prevent trademark infringement and the Anti-cybersquatting Consumer Protection Act (ACPA) provides for injunctive relief to prevent use of a confusingly similar mark in a domain name, he said;

“The injunctive relief requested is reasonable and specifically tailored. Plaintiffs seeks to permanently enjoin defendant from using the name, “The Chateau at Heavenly Village,” the internet domain name www.chateauheavenlyvillage.com, Heavenly’s trademarks or other confusingly similar designations. Plaintiffs also seeks an order preventing defendant from using or reproducing any of the Heavenly trademarks as part of a brand name for its products or services, including the aforementioned names. Also requested is an order requiring defendant to destroy all items in their possession which contain the Heavenly trademarks or aforementioned names. In regard to the www.chateauheavenlyvillage.com domain name, plaintiffs seek an order requiring defendant to relinquish all interest in it or any confusingly similar domain name and transfer all such domain names to HVLP. Finally, plaintiffs seek a permanent injunction preventing defendant, or others acting in concert with defendant, with actual notice from aiding anyone else in engaging in any of the aforementioned activities.”

Magistrate Hollows determined that all of Plaintiff Heavenly Valley’s requests were reasonable and specifically tailored and resolved to recommend to the U.S. District Judge assigned to the case that Plaintiff’s request for injunctive relief be granted accordingly to the terms set forth in Plaintiff’s proposed judgment (quoted above).

Curiously, Lake Tahoe Development Company is still in possession of the domain chateauheavenlyvillage.com. It will interesting to find out if this Magistrate ruling on cybersquatting and trademark-infringement is implemented by the District Judge. If so, Heavenly Valley will likely immediately change traffic going to chateauheavenlyvillage.com to redirect to the Heavenly Valley Website or change chateauheavenlyvillage.com to advertise Heavenly Valley products/services.

Magistrate Hollows’ full recommendation can be found here, Valley v. Lake Tahoe Dev. Co., 2010 U.S. Dist. LEXIS 74488 (E.D. Cal. July 22, 2010)

Information for Internet Lawyers: more information and related articles on the ACPA, the Lanham Act, and Cybersquatting;

Attorneys Handling Cybersquatting Cases Under the Uniform Domain Name Dispute Resolution Policy (UDRP) and the Anticybersquatting Consumer Protection Act (ACPA)

Domain Name Registrars & Cybersquatting: How The ACPA Applies To GoDaddy Parked Pages

Domain Name Dispute and Arbitration Resources

1) A presumption of bad faith flows directly from any indication that a domain name owner, after already being accused of cybersquatting on a mark, registered additional domain names infringing (potentially) on the complainant’s mark to exacerbate the conflict. Instead, any party registering domain names that may potentially be infringing should register those domain names ‘as part of its program to connect with customers’.

2) A presumption of conduct indicating good faith is supported when a domain name owner accused of cybersquatting immediately ceases use of the infringing (allegedly) domain name after the cybersquatting allegations are brought to the domain owner’s attention.

3) (carrying the most weight in this opinion) A domain name owner accused of cybersquatting or trademark infringement can demonstrate ‘good faith’ by offering to unconditionally transfer the (possibly) infringing domain names to the complaining party.

Overview;

Plaintiff in this suit is Rearden LLC (Rearden), founded by Steve Perlman. Rearden owns the federal registered trademark for ‘REARDEN’ – Serial No. 77194957.

The Defendant, Rearden Commerce Inc., (RC), adopted that name in January 2005. RC owns the federal registered trademark for ‘REARDEN COMMERCE’ – Serial No.76632927.

At issue in this ACPA lawsuit are the following domain names; ReardenInc.net, ReardenInc.org, ReardenInc.us, ReardenCo.com, ReardenCo.net, ReardenCo.org, ReardenCo.us, ReardenC.net, ReardenC.org, ReardenC.us, ReardenLLC.com, ReardenLLC.net, ReardenMobile.com and MobileRearden.com.

Brief background history of this suit and of the Parties involved;

Steve Perlman is an intellectual property entrepreneur and inventor who co-founded WebTV and acted as the former president & CEO of OnLive. Perlman also founded Rearden Steel, Inc. in 1999 and later changed the company’s name to Rearden LLC. Through Rearden LLC, Perlman registered and has continually used rearden.com since 2001 and has since then procured federal trademark registrations for ‘REARDEN’, ‘REARDEN STEEL’ (no longer a live mark), ‘REARDEN STUDIOS’, ‘REARDEN COMMUNICATIONS’ and ‘REARDEN COMMERCE EMAIL’ among others.

Defendant RC registered the following families of domain names on March 4, 2005: ReardenInc (ReardenInc.net, ReardenInc.org and ReardenInc.us); ReardenCo (ReardenCo.com, ReardenCo.net, ReardenCo.org and ReardenCo.us) and ReardenC (ReardenC.net, ReardenC.org and ReardenC.us).

On October 8, 2006, RC opened up dialogue with Rearden about purchasing the Rearden.com domain. Two days later, Perlman replied stating: 1) the domain name was not for sale; 2) he had obtained an extension of the review period for RC’s “Rearden Commerce” trademark application; and 3) he was considering seeking a further extension to decide whether to oppose the application.

Later that October, after receiving Rearden’s negative reply to its offer to purchase Rearden.com, RC instructed its employees to register both ReardenLLC.com and ReardenLLC.net.

Judge Marilyn Hall Patel, presiding over this Northern California District Court case, acknowledged in the opinion that Sandoval (as RC’s counsel) may have been on tenuous ground by registering ReardenLLC.com;

“At this time, Sandoval was aware both that Perlman’s company was a limited liability company (“LLC”) and that RC was not and had never been an LLC. Nor were there any plans regarding RC becoming an LLC. Indeed, RC does not and has not ever used the phrase “Rearden LLC” to refer to or describe its business, and neither party has applied for a federally registered trademark for “ReardenLLC.” Sandoval testified that “there’s no written policy” for registering domains, “processes were informal,” “a lot of it’s haphazard,” and “there was no rhyme or reason to it.”

Defendant RC didn’t stop there, in November 2006 it went on to register ReardenLLC.net, ReardenMobile.com and MobileRearden.com.

Plaintiffs filed suit on November 30, 2006.

Rearden LLC, et al., v. Rearden Commerce, Inc., No. 06-7367, N.D. Calif.; 2010 U.S. Dist. Lexis 65567

In this opinion, decided on July 1, 2010, Judge Patel decided both parties’ cross-motions for summary judgment regarding impermissible cybersquatting under the Anti-Cybersquatting Consumer Protection Act (“ACPA”), 15 U.S.C. § 1125(d), and unfair competition under California Business and Professions Code section 17200 as it relates to cybersquatting.

Plaintiff Rearden moved for summary judgment regarding the ReardenLLC domain names under the ACPA and California’s unfair competition law, and Defendant RC moved for summary judgment regarding all fifteen ‘Rearden’ domain names claiming its acquisitions did not violate the ACPA.

Cybersquatting under the ACPA;

Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), was passed by Congress in 1999 and is designed to defend against cybersquatting. Judge Patel painted a nice characterization of cybersquatting in the opinion as she noted;

“Cybersquatting is the Internet version of an unlawful land grab. Cybersquatters register well-known brand names as Internet domain names in order to force the rightful owners of the marks to come forward and pay for the right to engage in electronic commerce under their own name.” Interstellar Starship Servs., Ltd. v. Epix, Inc., 304 F.3d 936, 946 (9th Cir. 2002).

The ACPA protects both federal registered trademarks and common law marks (established through use). Violations of the ACPA arise where a person uses a trademark owned by a third party and that person;

(A) has a bad faith intent to profit from that mark, and
(B) registers, traffics in, or uses a domain name [that is confusingly similar to another's mark or dilutes another's famous mark].

In order to prevail on a claim under the ACPA, a valid trademark owner must establish that;

(1) it has a valid trademark entitled to protection;
(2) its mark is distinctive or famous;
(3) the defendant’s domain name is identical or confusingly similar to, or in the case of famous marks, dilutive of, the owner’s mark; and
(4) the defendant used, registered, or trafficked in the domain name…
(5) with a bad faith intent to profit.” Bosley Medical Inst., Inc. v. Kremer, 403 F.3d 672, 681 (9th Cir. 2005)

(Prongs (1) and (5) were at issue but (1) was quickly resolved in favor of Plaintiff Rearden)

Bad Faith v. Good Faith (prong 5);

Judge Patel enumerated a number of factors in regards to whether RC used, registered, or trafficked in the domain name with a bad faith intent to profit.

As noted earlier, RC didn’t register ReardenLLC.com and ReardenLLC.net until after its offer to purchase Rearden.com from Plaintiff Rearden was rejected and Rearden put RC on notice that it may contest RC’s federal trademark registration of ‘REARDEN COMMERCE’.

In spite of this (remember that RC is not a LLC and has no plans to become one), Judge Patel, examining the facts according to a summary judgment standard, found that RC’s conduct conclusively demonstrates good faith.

In reaching this good-faith determination, Judge Patel pointed to a number of factors. She asserted that a jury could reasonably find that RC had not earlier considered ReardenLLC domain names during its ‘initial registration frenzy’ and instead registered them when it became aware of them as part of its program to connect with customers (and that this does not constitute bad faith). Also, Patel stated that RC’s immediate cessation of use of the ReardenLLC domain names when the alleged cybersquatting activity was brought to RC’s attention demonstrates good faith. Finally and conclusively in support of RC’s conduct in registering the ReardenLLC domains in good faith, Patel stated that, “RC’s recent offer to unconditionally transfer the ReardenLLC domain names to Rearden conclusively demonstrates RC’s good faith.”

After finding that Rearden was unable to satisfy the (5) prong to succeed on a claim brought under the ACPA, Patel awarded summary judgment in favor of RC with respect to the ReardenLLC domain names and then expanded this ruling to apply to all of the RC’s registered domain names at issue in this suit.

Unfair Competition;

California’s Unfair Competition Law defines unfair competition as “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200

Plaintiffs’ arguments regarding the unlawful prong of the UCL are identical to their cybersquatting arguments; thus, for the reasons stated above, summary judgment on this prong is granted in favor of defendant.

Conclusion;

Judge Patel ruled that Plaintiff Rearden’s summary judgment motion is denied and Defendant’s summary judgment motion is granted;

“Here, plaintiffs have presented no evidence of harm, save their argument that the cybersquatting “likely impacted Rearden LLC’s ability to connect with potential clients, investors, members of the media, and jobseekers.” Docket No. 276 (Reply) at 11:11-17. Pure argument, with no supporting evidence, is insufficient to meet the summary judgment standard. Moreover, in light of the court’s prior ruling that there does not exist a strong likelihood of confusion, it is unclear how this misdirection was “unfair.” Indeed, it is unclear whether plaintiffs suffered any harm whatsoever from RC’s actions. Consequently, summary judgment on this prong is granted in favor of defendant.”

For related articles on good faith and cybersquatting under the ACPA;

UDRP Panel Recognizes that where a Registrant Reasonably Believed that what He was Doing was Legitimate, then Registrant’s Domain Name Registration Cannot be in Bad Faith

Bad News for Google, Facing Typo-squatting Lawsuit After its Motion for Summary Judgment was Denied

California District Court Finds in Favor of Intel Corporation, Denying ANIPs Motion to Dismiss in Trademark Infringement and Cybersquatting Lawsuit Brought to Protect the Intel Trademark