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When is Re-Registration or Renewal of Registration Actionable Under the ACPA?

Jysk Bed’N Linen v. Dutta-Roy , 13-15309 (11th Cir. December 16, 2015)

Although the UDRP and the ACPA have different architectures—the former is a conjunctive while the latter is a disjunctive model—and have the same purpose of combatting cybersquatting, they compel different results in some fact situations. This is particularly the case when the question concerns the point in time from which bad faith is to be measured: should it be from the original registration or renewal of registration?  Under the UDRP bad faith is s traditionally measured from the original registration of the domain name, not the renewal of registration which is regarded as a continuation of the registration rather than a new beginning. The reason for this is that complainant has to prove both registration in bad faith and use of the domain name in bad faith, not one or the other as it is under the ACPA.

Registrants challenged in UDRP proceedings who either register domain names prior to trademarks or register and use dictionary words or common descriptive phrases non-infringingly at first, but subsequently commence infringing use, cannot be deprived of their domain names. The consensus has been criticized, and for good reason, but for the moment it has not been dislodged.

In Jysk Bed’NLinen the defendant registered the domain name in bad faith (by taking it in his own name rather than the company’s) and then renewing the registration without plaintiff’s authorization, which the court held was a continuation of the bad faith. If this fact pattern were to occur under the UDRP the result could be different because some Panels could take the position that the original registration was authorized. But, the ACPA is less obliging to the domain name holder when it registers or renews an infringing domain name. In fact, the Eleventh Circuit is very definitely in the camp that measures bad faith from either of the two points, which I’ll explain below.

We learn this also from DSPT International v. Nahum, 624 F.3d 1213 (9th Cir. 2010) and Newport News Holdings Corporation v. Virtual City Vision, Incorporated, d/b/a Van James Bond Tran, 650 F3d 423 (4th Cir. 2011) (Registered in good faith; subsequent use in bad faith.) In DSPT the Court held that “[e]ven if a domain name was put up innocently and used properly for years, a person is liable under 15 U.S.C. §1125(d) if he subsequently uses the domain name with a bad faith intent to profit from the protected mark by holding the domain name for ransom.” This results from the fact that the necessary proof is either/or; either registering, trafficking in, or using the domain name in bad faith.

DSPT and Newort News did not concern the measuring points at all; the courts went directly to the use to which holders were putting their domain names and found them infringing as cybersquatters. However, when federal courts focus on the measuring points they come to inconsistent conclusions, although they are probably reconcilable if we closely examine more closely why one goes in one direction and the other in the other. But, for the moment I want to focus on the different conclusion reaching by Schmidheiny v. Weber, 319 F.3d 581 (3d Cir. 2003) and GOPETS Ltd. v. Hise, Digital Overture, Inc., 657 F.3d 1024, 1032 (9th Cir. 2011).

The Third and Ninth Circuits construe the concept of “registration” under the ACPA differently. To put the issue in perspective, there is a difference between holding and using domain names lawfully and opportunistically using them at a later date. Schmidheiny involved opportunistic use; GOPETS did not. For example, in Southern Grouts & Mortars, Inc. v. 3M Company, 575 F.3d and side1235 (11th Cir. 2009) 3M came into possession of legally by acquiring the company that registered it years earlier. Its offense (as the plaintiff saw it) was not that it was using the domain name but was holding it inactive. Southern Grouts “accuse[d] 3M not of a design to sell a domain name for profit but of a refusal to sell one.” The Court stated that “The Senate Report accompanying the Anticybersquatting Consumer Protection Act bolsters our understanding that a ‘bad faith intent to profit’ is the essence of the wrong that the Act seeks to combat….The report says nothing about those who [acquire a domain name in good faith and] hold onto [it through repeat renewals of registration] to prevent a competitor from using it.”

Since 3M’s possession of the domain name had always been lawful, from acquisition through renewals, there was no legal basis for forfeiture. But, that is not always the case as already noted with opportunistic use of domain names. Renewals that continue bad faith use that are not generally actionable under the UDRP can be actionable under the ACPA.

According to the Eleventh Circuit in Jysk BedN’Linen, which now sides with the Third Circuit, the Ninth Circuit erred in “view[ing] the domain-name registration through the lens of property law, rather than through the Third Circuit’s analogy to contract law.” Of these three cases, only GOPETS had a prior history in UDRP, making it one of those rare cases in which the domain name holder loses in the administrative proceeding and prevails in the ACPA action (renewal not considered a registration).

In each of these cases the common element is that parties are either subsequent registrants or if original are renewing their registrations. In Schmidheiny, the original registration (of a personal name rather than a trademark actionable at that time under the Lanham Act section 1129, now 15 U.S.C. 8131 (Cyberpiracy protections for individuals)) was not unlawful because there was no law to make it so when the domain name was originally registered; the re-registration that triggered the lawsuit (actually a new registration by a subsequent registrant) became unlawful as a result of the enactment of the ACPA.

In GOPETS the original registration was not unlawful because it predated the existence of the trademark, but arguably became an abusive registration (and so found by the UDRP Panel) when the transferee (a related party to the original registrant) registered the domain name after the trademark came into existence. In Jysk BedN’Linen the original registration was unlawful because the registrant, a web designer, listed himself and not his principal as the owner; the triggering event occurred when the web designer renewed the registrations corresponding to the trademarks.

The Third Circuit held that it did not “consider the ‘creation date’ of a domain name to control whether a registration is subject to the Anti-cybersquatting Act, and we believe that the plain meaning of the word ‘registration’ is not limited to ‘creation registration.’” It continued: “the word ‘registration’ includes a new contract at a different registrar and to a different registrant.” In direct contrast, the Ninth Circuit held that “[w]e see no basis in ACPA to conclude that a right that belongs to an initial registrant of a currently registered domain name is lost when that name is transferred to another owner. . . . Nothing in the text or structure of the statute indicates that Congress intended that rights in domain names should be inalienable.” However, in GOPETS  the transfer was to a related party so the different results in Schmidheiny and GOPETS can equally be explained by the factual circumstances, rather than viewed through contract and property law lenses.

The different results in Schmidheiny and GOPETS have been absorbed into the UDRP jurisprudence. For example, in Twitter, Inc. v. Geigo, Inc., D2011-1210 (WIPO November 2, 2011) the three member Panel noted that Panels

owe[ ] great deference to the national courts. Their rulings may well be part of “applicable law” that a panel must consider (Rules, paragraph 15(a)), may become directly relevant in relation to mutual jurisdiction in the event of a court challenge (Policy, paragraph 4(k)), and are forged upon a record developed through full adversary proceedings. Nevertheless there are occasions when a [UDRP] panel may decline to follow a court’s interpretation. The Schmidheiny case cited but not followed by the Ninth Circuit and its reasoning offer grounds for this Panel to follow the Third Circuit’s holding. These two courts are co-equal; any difference in their rulings can only be resolved by the Supreme Court of the United States or superseding legislation. This Panel finds the Third Circuit’s reasoning in Schmidheimy more convincing than the Ninth Circuit’s in GoPets.

The conclusion in Twitter notwithstanding, the Panel did note that the “GoPets case is factually distinguishable from this proceeding, as the transfer in GoPets was concededly between affiliates, from one person to a company controlled by him and his brother, and was arguably for a valid business reason.” Central to the conclusion in all these cases is the question of whether registration refers to a domain name that is not unlawful when originally registered but becomes unlawful because of a subsequent registrant, that is the domain name is registered by a new holder (Schmidheimy and Twitter); the original registration is registered before the existence of the trademark alleged to be infringed (GOPETS), or renewed by a person who originally registered the domain name in bad faith (Jysk).

What makes the GOPETS holding problematic is that it could suggest (as the Respondent argued in Twitter) that no subsequent holder of the accused domain name can be charged and found liable for abusive registration, a view that has been soundly rejected by UDRP Panels. However, the Ninth Circuit concluded as it did because it had to work with the facts in the record. Were it to get a Jysk case it would surely be unlikely to rule against the plaintiff because re-registering or renewing a registration for a domain name postdating the trademark is clearly actionable under the ACPA regardless of the lens for weighing the facts.

Mr. Levine is the author of a treatise on trademarks, domain names, and cybersquatting, Domain Name Arbitration, A Practical Guide to Asserting and Defending Claims of Cybersquatting under the Uniform Domain Name Dispute Resolution Policy. (2015, 558 pages). Learn more about the book at Legal Corner Press. Available from Amazon and Barnes & Noble.  Ongoing Supplement here.

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