Over the last fifteen years, federal courts in Michigan have heard nearly 50 cases involving alleged violations of the Anticybersquatting Consumer Protection Act (ACPA). Although each has contributed to a better understanding of cybersquatting law, perhaps the most unique case is Ford Motor Co. v. Greatdomains.com, Inc.

What Happened in this Case?

The defendant’s website, greatdomains.com, operated similarly to ebay.com, except that greatdomains catered specifically to auctioning off Internet domain names. After obtaining rights to a certain domain name by paying the registration fee, a person could then go to greatdomains.com and sell those rights to the highest bidder. For providing this service, among others, greatdomains.com earned a fixed percentage of the price of every domain sold over its website.

Ford Motor Company eventually discovered that someone who registered domain names which Ford believed infringed its marks of “Ford,” “Lincoln,” “Jaguar,” and “Volvo” was attempting to sell them via greatdomains.com. Ford sued the parties trying to sell the domain names, as well as greatdomains.com for providing the auctioning service. In turn, the defendants moved the court to dismiss the claims.

Was Greatdomains.com Liable?

In its decision, the United States District Court for the Eastern District of Michigan dismissed Ford’s claims under the ACPA against greatdomains.com, but allowed the claims against the parties who registered the infringing domain names to move forward.

The court explained that the first part of establishing a claim under the ACPA is proving that the defendant registered, used, or trafficked in the relevant domain names. Ford did not claim that greatdomains.com registered any of the alleged infringing domain names, nor did greatdomains.com actually register any of the names. Further, the court explained that under the ACPA, greatdomains.com couldn’t be found to “use” any of the domain names because the ACPA mandates that “using” a domain name involves either registering the domain name in question or being the authorized licensee of the domain name. Therefore, the final inquiry hinged on whether greatdomains.com “trafficked” in the domain names.

Adopting a straightforward approach, the court concluded that the plain meaning of “traffics in” as stated in the ACPA “refers to transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.” The court identified that the key words were “transfer” and “receipt” which both implied “some level of ownership or control passing between the person transferring and the person receiving.” Since greatdomains.com did not transfer or receive the domain names sold on its site, its activity couldn’t be considered trafficking.

The court found further support that its interpretation of “traffics in” was sound by considering the “bad faith intent to profit” element required under the ACPA. The court explained that bad faith focuses on the legitimacy of the defendants’ use of the domain name, and only persons directly transferring or receiving a property interest in the domain name could be liable. Since the first element of establishing a claim wasn’t met, the suit against greatdomains.com alleging violations of the ACPA was dismissed.

Takeaway

This case involved a rather unique set of facts that gave rise to claims under the ACPA. Moreover, the court considered a number of other complex legal issues, which included deciding what claims the court could properly hear, whether an auctioning site could be found contributorily liable in the sale of domain names, and many others. The moral of the story here is that experienced legal counsel can make all the difference.

For more information about cybersquatting, contact Revision Legal’s Internet attorneys here or call 855-473-8474.

The ACPA’s “Trafficking” Element Analyzed

The Ford v. Greatdomains.com case is significant for its interpretation of the “traffics in” element of the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d)(1)(A). The ACPA imposes liability on any person who “registers, traffics in, or uses a domain name” that is identical or confusingly similar to a distinctive mark, or dilutive of a famous mark, with a bad faith intent to profit. The court’s conclusion that an auctioneer who facilitates the sale of domain names is not itself “trafficking in” those names was a significant limitation on ACPA liability.

The ACPA’s legislative history defines “traffics in” as “transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.” The Ford court’s reading focused on the word “consideration”—Greatdomains.com received a commission for providing the auction service, not consideration for transferring the domain names themselves. This distinction has been followed in later cases and limits the exposure of secondary market platforms that facilitate domain transactions without being a party to the transfer of domain name rights.

The Nine Bad Faith Factors

The ACPA’s bad faith analysis under § 1125(d)(1)(B) is guided by nine non-exclusive factors that courts weigh holistically. These factors include:

• The registrant’s trademark or other intellectual property rights in the domain name
• Whether the domain name contains the registrant’s legal name or commonly used personal name
• The registrant’s prior use of the domain name in connection with a bona fide offering of goods or services
• The registrant’s noncommercial or fair use of the mark in the domain name
• Whether the registrant intended to divert consumers from the mark owner’s online location for commercial gain or with intent to tarnish the mark
• The registrant’s offer to sell the domain to the mark owner or any third party for financial gain without prior use in commerce
• The registrant’s provision of false contact information in registering the domain
• The registrant’s registration of multiple domain names incorporating others’ marks
• The extent to which the mark at issue is distinctive and famous

Courts have emphasized that the list is non-exhaustive—a court may find bad faith based on factors not listed—and that the presence of any safe harbor factor (the first four on the list) does not automatically defeat a bad faith finding.

Remedies Under the ACPA

A successful ACPA plaintiff may recover: (1) an order for the forfeiture, cancellation, or transfer of the infringing domain name; (2) actual damages and lost profits; (3) statutory damages in lieu of actual damages, ranging from $1,000 to $100,000 per domain name as the court considers just; and (4) attorney fees in exceptional cases. The statutory damage range makes ACPA litigation attractive to trademark owners whose actual damages may be difficult to quantify—courts have discretion to award up to $100,000 per domain even where the trademark owner cannot prove specific monetary harm.

In Rem Actions Against Domain Names

One of the ACPA’s most innovative features is its in rem jurisdiction provision, § 1125(d)(2), which allows trademark owners to sue the domain name itself—rather than its registrant—when the registrant cannot be found or when personal jurisdiction over the registrant cannot be established. In rem ACPA actions are filed in the judicial district where the domain name registrar or registry is located. VERISIGN’s registry is in Virginia, making the Eastern District of Virginia a common venue for in rem ACPA actions. Judgment in an in rem action results in cancellation or transfer of the domain name but cannot include damages against an individual defendant.

If your trademark is being used as a domain name by a cybersquatter, or if you believe you are being falsely accused of cybersquatting, contact the internet attorneys at Revision Legal at 855-473-8474 or complete the contact form on this page. We have experience on both sides of ACPA litigation and can assess your options quickly.