Cyberlaw Central

ICANN has today approved an expansion of the top level Internet domains from the familiar ones (.com, .net, .org, etc) to an unlimited array of choices. All that will be required is a showing of technical ability to manage the requested domains. Details are currently sketchy regarding the application process, it appears that ICANN has yet to approve the final implementation steps. For more, including a limited FAQ, here’s a link to ICANN’s press release.

General Media Communications, Inc. v. Crazy Troll, LLC (No. 06 Civ. 40581 LAKFM, Order re: partial summary judgment, January 16, 2007), 2007 WL 102988 (S.D.N.Y.)

Plaintiff, General Media, is the publisher of Penthouse magazine.  At one time, it owned the domain name penthouseboutique.com, but its bankruptcy trustee allowed it to lapse.  General Media still has valid trademark rights in the Penthouse Boutique mark.  Defendant Crazy Troll registered the domain name after it re-entered the general pool of names.  General Media then brought an action under the UDRP to recover the domain name, which it lost, and also was found by the UDRP panel to be guilty of reverse domain name hijacking.  General Media brought the current case under ACPA to recover the domain.  Before the Court is General Media’s motion for partial summary judgment on the count in the complaint where it seeks a declaration that it acted in good faith in bringing the UDRP action.

The Court grants General Media’s motion, noting that the UDRP panelist that found otherwise didn’t have the full facts available to it.  General Media’s claims met the required elements for bringing an action.  It certainly had every reason to believe that Crazy Troll had no rights or legitimate interest in the domain name, and that it was using the name in bad faith.

Reverse domain name hijacking is where a trademark owner brings an action in bad faith against an entity that has been using a domain name in good faith, but has inferior trademark rights to that of the trademark owner.  It is alleged where the trademark owner is using the power of the prior trademark registration to unfairly attempt to take the domain name away from the registrant.

Since Crazy Troll had no right or legitimate interest in the domain when it registered it, General Media brought its action in good faith, and therefore was entitled to summary judgment on its declaratory relief.  Further adjudication will be needed on the remaining counts in the complaint.

Cyberlaw Central Commentary:
Just because a domain name is available for registration, it does not mean that it should be registered.  The Plaintiff here had legitimate trademark rights that were violated when the domain was registered and used by the Defendant.  We’ll see how the remaining counts are dealt with in future opinions, but I agree with this one.

Northwest Airlines, Inc. v. Bauer; 06 CV 086, D. North Dakota. Order granting temporary restraining order, December 15, 2006.

Plaintiff is Northwest Airlines, the 5th largest U.S. air carrier with a family of NORTHWEST marks. It offered special coupons called E-Certificates as a courtesy to passengers who suffer from delays or other service interruptions. The coupons at issue in the case were not intended to be sold, but could be transferred without cost. Recently, Northwest has reduced the availability and effectiveness of these coupons due to the actions of Defendant Bauer and those operating similar businesses.

Defendant Bauer operates a website at the domain northwestdiscountcoupons.com where these e-certifcates can be purchased.

Northwest brought a case against Bauer alleging trademark infringement, dilution, and cyber squatting due to the operation of the above-referenced site by Bauer, as well as allegations of unlawful trade practices, deceit, conversion, and interference with business arising under the laws of North Dakota. Before the court was Northwest’s motion for a temporary restraining order.

The court ruled that Northwest was likely to succeed on the merits of its trademark infringement claims and granted the TRO. Since Bauer’s website contains the word NORTHWEST, it believed that consumers were likely to believe Bauer’s site was somehow authorized or endorsed by Northwest. Bauer was scheduled to appear on January 2, 2007 for a preliminary injunction hearing to show cause why the TRO should not extend for the life of the case.

Cyberlaw Central Commentary:
I believe the TRO should not have been issued. The court has placed too much emphasis on the fact that the website in question contains the word NORTHWEST. While Northwest could still win at trial, I believe the additional elements of the domain name, DISCOUNTCOUPONS, should have been sufficient for consumers to not be confused. The discount coupons are from Northwest, so Bauer should be able to argue nominative fair use of Northwest’s trademark in the domain name. We shall see how the preliminary injunction hearing goes before reserving judgment on the remainder of the case.

Angé v. Templer
Decided February 21, 2006
No. C 05-05169 WHA, 2006 WL 436139 (N.D.Cal.)

Plaintiffs, an individual and a California corporation named Gap International, Inc., sued in state court for the conversion of the domain name Gapinternational.com. Defendants include the hosting company who took the Plaintiff’s domain name and the Pennsylvania company named Gap International, Inc. the domain was ultimately transferred to. The defendants convinced a state court judge that the action needed to be removed to Federal court by arguing that Plaintiffs claims, although couched in state law claims, really were claims for cybersquatting under the Lanham Act. Before the court was Plaintiff’s motion to remand the case back to state court.

Upon reviewing the briefs, the court agreed with plaintiffs and remanded the case back to state court. While the property at issue is a domain name, not all disputes over them constitute cybersquatting. For instance, there were no claims based on confusion between two domain names. Rather, defendants had taken an asset of the plaintiffs and interfered with a contractual relationship. Specifically, a fifty million dollar business deal had gone sour as a result of the theft and conversion of the domain name.

The court has a particularly good quote regarding the intersection of federal and state claims over domain names:

At bottom, defendant’s arguments suffer from an attempt to translate every issue relating to the Internet into a federal question. The Internet is not a talisman bestowing federal jurisdiction. There remains a place for state courts to determine the rights and responsibilities in the constantly evolving world of Internet law. Congress has not indicated an intent to strip state courts of this role. While the Lanham Act bestows federal jurisdiction, it does so only over claims that explicitly fall under its scope.

Defendants were required to pay plaintiff’s costs in bringing the remand motion, which were $2,600.00.

Analysis: This case is a reminder that state law claims can exist in the context of domain name disputes. While Federal jurisdiction may be appropriate for some claims, here it was not what the plaintiffs wanted. It seems clear that they wanted a state court to hear its claim and award it monetary damages for the domain name theft since it caused fifty million dollars in funding to fall through. Defendants clearly wanted the court to view it through the lens of cybersquatting, which particular crime they may be innocent of. Conversion, though, is a state law claim which properly should be before a state court if there is no other reason for Federal jurisdiction.

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.