Domain name dispute: Digital Telemedia, Inc. vs. C. I. Host, Inc.

Digital Telemedia, Inc., d/b/a Logicworks vs. C. I. Host, Inc. and Logicworks Corporation, No. 04 Civ. 1734(CSH) – Southern District of New York
2006 WL 300465 (S.D.N.Y.)

Decided February 8, 2006

The plaintiff, Digital Telemedia, Inc., does business as “Logicworks.” It alleges trademark infringement, cyberpiracy, unfair competition, and deceptive trade practices against two defendants. The defendants, C.I. Host, Inc. and Logicworks Corporation, are related companies that share the same address. Before the court is Logicwork’s motion for partial summary judgment seeking transfer of the domain name “logicworks.com” from defendants to plaintiff.

Held: Summary judgment is denied.

Important Facts
The plaintiff is a web hosting company formed in 1993. It renamed itself as “Logicworks” in 2001. At the time, it did a trademark search and discovered the name was available for its services. However, the domain name “logicworks.com” was already registered to a Logicworks Corporation, but could not make contact with anyone at the phone number or email address listed in the domain name registry. It was able to determine that defendant C.I. Host was at the same address, but it did not send any written communications there. An investigator also called two C.I. Host employees, who had never heard of Logicworks Corporation. Accordingly, it registered the domain name “logicworks.net” instead. Plaintiff then registered several trademarks in the LOGICWORKS name. An investigator once emailed Logicworks Corporation to determine whether the .com name was available for purchase, but was told that no “bid less than $100,000 cash” would be considered.

The domain name “logicworks.com” was originally registered in 1999 and did some limited business in 2001 and 2002 before ceasing operations. At some time, the domain name was redirected to point to the C.I. Host website. At the start of this litigation, it was redirected once again to point to a blank page. Defendants never intended to sell the domain name, but instead responded with the $100,000 offer to make the plaintiff go away. Apparently there is some current commercial activity by Logicworks Corporation in the area of software development and sales in California and Texas.

Plaintiff claims that there have been cases of actual confusion, such as customers emailing the plaintiff at the .COM extension rather than the correct .NET address. C.I. Host and Logicworks offer similar web hosting services, so there are also allegations of customers purchasing services from the defendants rather than the plaintiff.

Trademark Infringement Claims
Summary judgment is appropriate only when there is no genuine issue of a material fact once all of the evidence and pleadings are considered. If an issue of fact remains, then a trial must be held. Defendants do not dispute that Logicworks has valid trademark registrations, but instead argues that there is no likelihood of confusion. Plaintiff offers web hosting services, while defendant Logicworks Corporation only provides software development and sales. In support of the argument, it points out that the plaintiff had previously argued in a Response to Office Action before the trademark office that there was no likelihood of confusion between its LOGICWORKS mark and another LOGICWORKS for “computer programs for use as a computer software and database design tool.” That argument was successful, resulting in the Plaintiff’s registration of its mark.

The court notes that most of the confusion between the parties seems to be a result of the plaintiff’s choice to use the .NET address when it knew the .COM address was already registered.

The question as to whether pointing the domain name to the C.I. Host website constitutes infringement is more difficult. A number of theories were advanced, including “initial interest confusion.” These theories depend, however, on the defendant not having valid rights in the name at issue. Here, the defendants have perfectly reasonable explanations for their actions. All of the unused domains registered by the company’s owner pointed to Logicworks.com. Further, the domain name had been used by the defendant prior to the plaintiff’s rebranding of itself as Logicworks. The issue of who properly has the right to the name LOGICWORKS remains a material fact in dispute, resulting in denial of the summary judgment motion.

Cyberpiracy Claims
In order to prevail on a claim under the Anticybersquatting Consumer Protection Act (“ACPA”), the plaintiff must prove:
1) the mark is distinctive or famous;
2) that the domain name is identical or confusingly similar to that mark; and
3) that the domain name was registered, trafficked in, or used with a bad faith intent to profit from that mark.

Even if the first two prongs are met here, the court was not convinced that the plaintiff had established use in bad faith by the defendants. The domain was registered before the plaintiff’s rebranding. Further, the court believed that defendant’s explanation of its later use of the mark was reasonable. Since there is a material issue of fact regarding the bad faith of the defendant, summary judgment was not appropriate.

Analysis
The defendant here is in the unenviable position of owning a domain name it can’t easily use in commerce. Since the domain was registered before the plaintiff started using its mark, only later use in bad faith could result in the registrant losing the domain. Whether pointing to its other company’s website constitutes bad faith is an open question, especially when the company is a competitor of the plaintiff. I’m not convinced that the defendant’s normal practice of pointing its unused domains to the C.I. Host website will be enough to prove that it isn’t now profiting from a domain it once had the right to use in commerce but now may not. If the plaintiff can prove the services are similar enough, then there likely will be infringement based upon this kind of use.

At trial, I would expect the plaintiff to have a much better chance of making its case. Still, its choice of going forward with the .NET domain name when the .COM was already registered was a calculated risk, one that in hindsight was probably not the best one to make. I’m not too sympathetic about its confusion claims since, as the court points out, the confusion was self inflicted. What the plaintff didn’t expect, though, was the domain name being used to point to a competitor’s website. That use is likely what will be at issue at trial.

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